Exhibit 4.3
EXHIBIT 4.3
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MGC COMMUNICATIONS, INC.
MPOWER HOLDING CORPORATION
13% SENIOR NOTES DUE 2010
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INDENTURE
Dated as of March 24, 2000
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HSBC BANK USA
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Trustee
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)...................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3) .................................................... N.A.
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.10
(b) ....................................................... 7.10
(c) ....................................................... N.A.
311 (a) ........................................................ 7.11
(b) ....................................................... 7.11
(c) ....................................................... N.A.
312 (a)......................................................... 2.05
(b)........................................................ 10.03
(c) ....................................................... 10.03
313 (a) ........................................................ 7.06
(b)(1) .................................................... 7.06
(b)(2) .................................................... 7.06
(c) ....................................................... 7.06; 10.02
(d)........................................................ 7.06
314 (a) ........................................................ 4.03; 10.05
(b)........................................................ N.A.
(c)(1) .................................................... 10.04
(c)(2) .................................................... 10.04
(c)(3) .................................................... N.A.
(d)........................................................ N.A.
(e) ...................................................... 10.05
(f)........................................................ N.A.
315 (a)......................................................... N.A.
(b)........................................................ 7.05
(c) ...................................................... 7.01
(d)........................................................ N.A.
(e)........................................................ N.A.
316 (a)(last sentence) ......................................... N.A.
(a)(1)(A).................................................. N.A.
(a)(2) .................................................... N.A.
(b) ....................................................... 6.07
(c) ....................................................... 2.13
317 (a)(1) ..................................................... 6.08
(a)(2)..................................................... 6.09
(b) ....................................................... 2.04
318 (a)......................................................... N.A.
(b)........................................................ N.A.
(c)........................................................ 10.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................ 1
Section 1.02. Other Definitions.......................................... 17
Section 1.03. Incorporation by Reference of Trust Indenture Act.......... 18
Section 1.04. Rules of Construction...................................... 18
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................ 18
Section 2.02. Execution and Authentication............................... 19
Section 2.03. Registrar and Paying Agent................................. 20
Section 2.04. Paying Agent to Hold Money in Trust........................ 20
Section 2.05. Holder Lists............................................... 21
Section 2.06. Transfer and Exchange...................................... 21
Section 2.07. Replacement Notes.......................................... 32
Section 2.08. Outstanding Notes.......................................... 32
Section 2.09. Treasury Notes............................................. 33
Section 2.10. Temporary Notes............................................ 33
Section 2.11. Cancellation............................................... 33
Section 2.12. Defaulted Interest......................................... 33
Section 2.13. Record Date................................................ 34
Section 2.14. CUSIP Number............................................... 34
ARTICLE 3
REDEMPTION AND CERTAIN REPURCHASES
Section 3.01. Notices to Trustee......................................... 34
Section 3.02. Selection of Notes to Be Redeemed.......................... 34
Section 3.03. Notice of Redemption....................................... 35
Section 3.04. Effect of Notice of Redemption............................. 36
Section 3.05. Deposit of Redemption Price................................ 36
Section 3.06. Notes Redeemed in Part..................................... 36
Section 3.07. Optional Redemption........................................ 37
Section 3.08. Mandatory Redemption....................................... 37
Section 3.09. Offer to Purchase With Excess Asset Sale Proceeds.......... 37
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes........................................... 39
Section 4.02. Maintenance of Office or Agency............................ 40
Section 4.03. Reports.................................................... 40
i
Section 4.04. Compliance Certificate..................................... 41
Section 4.05. Taxes...................................................... 42
Section 4.06. Stay, Extension and Usury Laws............................. 42
Section 4.07. Restricted Payments........................................ 42
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................... 45
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock......................................... 46
Section 4.10. Asset Sales................................................ 48
Section 4.11. Transactions with Affiliates............................... 50
Section 4.12. Liens...................................................... 50
Section 4.13. Limitations on Sale and Leaseback Transactions............. 51
Section 4.14. Corporate Existence........................................ 51
Section 4.15. Offer to Purchase Upon Change of Control................... 51
Section 4.16. Business Activities........................................ 52
Section 4.17. Insurance.................................................. 56
Section 4.18. Payments for Consent....................................... 56
ARTICLE 5
SUCCESSORS; RELEASE
Section 5.01. Merger, Consolidation or Sale of Assets.................... 57
Section 5.02. Successor Corporation Substituted.......................... 58
Section 5.03 Option to Release MGC...................................... 59
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.......................................... 59
Section 6.02. Acceleration............................................... 60
Section 6.03. Other Remedies............................................. 61
Section 6.04. Waiver of Past Defaults.................................... 61
Section 6.05. Control by Majority........................................ 61
Section 6.06. Limitation on Suits........................................ 61
Section 6.07. Rights of Holders of Notes to Receive Payment.............. 62
Section 6.08. Collection Suit by Trustee................................. 62
Section 6.09. Trustee May File Proofs of Claim........................... 63
Section 6.10. Priorities................................................. 63
Section 6.11. Undertaking for Costs...................................... 64
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.......................................... 64
Section 7.02. Rights of Trustee.......................................... 65
Section 7.03. Individual Rights of Trustee............................... 66
Section 7.04. Trustee's Disclaimer....................................... 66
Section 7.05. Notice of Defaults......................................... 66
Section 7.06. Reports by Trustee to Holders of the Notes................. 67
Section 7.07. Compensation and Indemnity................................. 67
Section 7.08. Replacement of Trustee..................................... 68
Section 7.09. Successor Trustee by Merger, etc........................... 69
ii
Section 7.10. Eligibility; Disqualification.............................. 69
Section 7.11. Preferential Collection of Claims Against the Company...... 69
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance... 69
Section 8.02. Legal Defeasance and Discharge............................. 69
Section 8.03. Covenant Defeasance........................................ 70
Section 8.04. Conditions to Legal or Covenant Defeasance................. 70
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions...................... 72
Section 8.06. Repayment to the Obligors.................................. 72
Section 8.07. Reinstatement.............................................. 72
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes........................ 73
Section 9.02. With Consent of Holders of Notes........................... 73
Section 9.03. Compliance with Trust Indenture Act........................ 75
Section 9.04. Revocation and Effect of Consents.......................... 75
Section 9.05. Notation on or Exchange of Notes........................... 75
Section 9.06. Trustee to Sign Amendments, etc............................ 75
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls............................... 77
Section 10.02. Notices.................................................... 77
Section 10.03. Communication by Holders of Notes with Other Holders
of Notes................................................... 78
Section 10.04. Certificate and Opinion as to Conditions Precedent......... 78
Section 10.05. Statements Required in Certificate or Opinion.............. 78
Section 10.06. Rules by Trustee........................................... 79
Section 10.07. No Personal Liability of Directors, Officers, Employees
and Stockholders........................................... 79
Section 10.08. Governing Law.............................................. 79
Section 10.09. No Adverse Interpretation of Other Agreements.............. 79
Section 10.10. Successors................................................. 79
Section 10.11. Severability............................................... 79
Section 10.12. Counterpart Originals...................................... 79
Section 10.13. Table of Contents, Headings, etc........................... 79
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
iii
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
iv
INDENTURE dated as of March 24, 2000 between MGC Communications, Inc.
("MGC"), Mpower Holding Corporation ("Mpower") and HSBC Bank USA, as trustee
(the "Trustee").
MGC, Mpower and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the holders of the 13% Senior
Notes due 2010 and the Exchange Notes (as defined below) (collectively, the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Security" means the global security in the form of
Exhibit A hereto bearing the Global Security Legend and the Private Placement
Legend and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the Notes
sold in reliance on Rule 144A.
"Acquired Debt" 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.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For 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 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 beneficial ownership of 25% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Security, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Attributable Debt" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty), after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3
and 13d-5 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days; provided that a Person will not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and (2)
is not also then reportable on Schedule 13D or Schedule 13G (or any successor
schedule) under the Exchange Act.
"Board of Directors" means, unless otherwise specified, the Board of
Directors of the Company or the Obligor, as the case may be, or any authorized
committee thereof.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and (iii) in the case of a partnership,
partnership interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Certificated Security" means a certificated Note registered in the
name of the holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto, except that such Note shall not
bear the Global Security Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Security" attached thereto.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition, in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries, taken as a whole, to any Person or
group (as such term is used in Section 13(d)(3) and 14(d)(2) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company, (iii) any Person or group (as defined above) other than the
Permitted Holders is or becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the total Voting Stock or Total Common Equity of the Company,
including by way of merger, consolidation or otherwise or (iv) the first day on
which a majority of the members of the Board of Directors of the Company are not
Continuing Directors.
2
"Closing Price" on any Trading Day with respect to the per share
price of any shares of Capital Stock means the last reported sale price regular
way or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq National Market but the issuer
is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange, or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on Nasdaq
National Market and the issuer and principal securities exchange do not meet
such requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Trustee.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means MGC at all times prior to the Release and Mpower at
all times after the Release.
"Consolidated Cash Flow Leverage Ratio" with respect to any Person
means the ratio of the Consolidated Indebtedness of such Person to the
Consolidated EBITDA of such Person, in each case, for the most recently ended
full fiscal quarter for which internal financial statements are available
immediately preceding the transaction requiring this calculation, annualized,
provided, that (1) if the Company or any Restricted Subsidiary of the Company
has incurred any Indebtedness (including Acquired Debt) or if the Company has
issued any Disqualified Stock or if any Restricted Subsidiary of the Company has
issued any Preferred Stock since the beginning of such period that remains
outstanding on the date of such determination or if the transaction giving rise
to the need to calculate the Consolidated Cash Flow Leverage Ratio is an
incurrence of Indebtedness (including Acquired Debt) or the issuance of
Disqualified Stock by the Company, Consolidated EBITDA and Consolidated
Indebtedness for such period will be calculated after giving effect on a pro
forma basis to (A) such Indebtedness, Disqualified Stock or Preferred Stock, as
applicable, as if such Indebtedness had been incurred or such stock had been
issued on the first day of such period, (B) the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness or sale of stock as if such discharge had
occurred on the first day of such period, and (C) the interest income realized
by the Company or its Restricted Subsidiaries on the proceeds of such
Indebtedness or of such stock sale, to the extent not yet applied at the date of
determination, assuming such proceeds earned interest at the rate in effect on
the date of determination from the first day of such period through such date of
determination, (2) if since the beginning of such period the Company or any
Restricted Subsidiary of the Company has made any sale of assets (including,
without limitation, any Asset Sales or pursuant to any Sale and Leaseback
Transaction), Consolidated EBITDA for such period will be (A) reduced by an
amount equal to Consolidated EBITDA (if positive) directly attributable to the
assets which are the subject of such sale of assets for such period or (B)
increased by an amount equal to Consolidated EBITDA (if negative) directly
attributable thereto for such period and (3) if since the beginning of such
period the Company or any
3
Restricted Subsidiary of the Company (by merger or otherwise) has made an
Investment in any Restricted Subsidiary of the Company (or any Person which
becomes a Restricted Subsidiary of the Company) or has made an acquisition of
assets, including, without limitation, any acquisition of assets occurring in
connection with a transaction causing a calculation of Consolidated EBITDA to be
made hereunder, which constitutes all or substantially all of an operating unit
of a business, Consolidated EBITDA for such period will be calculated after
giving pro forma effect thereto (including the incurrence of any Indebtedness
(including Acquired Debt)) as if such Investment or acquisition occurred on the
first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of assets, the pro forma calculations
will be determined in good faith by a responsible financial or accounting
Officer of the Company, provided, however, that such Officer shall assume (i)
the historical sales and gross profit margins associated with such assets for
any consecutive 12- month period ended prior to the date of purchase (provided
that the first month of such 12-month period will be no more than 18 months
prior to such date of purchase) and (ii) other expenses as if such assets had
been owned by the Company since the first day of such period. If any
Indebtedness (including, without limitation, Acquired Debt) bears a floating
rate of interest and is being given pro forma effect, the interest on such
Indebtedness will be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period.
"Consolidated EBITDA" as of any date of determination means the
Consolidated Net Income for such period (but without giving effect to
adjustments, accruals, deductions or entries resulting from purchase accounting,
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) provision for taxes based on income or profits of such Person and
its Subsidiaries, or, in the case of the Company, its Restricted Subsidiaries
for such period, (ii) Consolidated Interest Expense, (iii) depreciation,
amortization (including amortization of goodwill and other intangibles) and
other non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period and
excluding non-cash interest and dividend income) of such Person and its
Subsidiaries, or, in the case of the Company, its Restricted Subsidiaries for
such period, in each case, on a consolidated basis and determined in accordance
with GAAP. Notwithstanding the foregoing, the provision for taxes on the income
or profits of, and the depreciation, amortization, interest expense and other
non-cash charges of, a Subsidiary, or, in the case of the Company, a Restricted
Subsidiary of the referent Person shall be added to Consolidated Net Income to
compute Consolidated EBITDA only to the extent (and in same proportion) that the
Net Income of such Subsidiary, or, in the case of the Company, such Restricted
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary, or, in the
case of the Company, such Restricted Subsidiary or loaned to the Company by any
such Subsidiary, or, in the case of the Company, such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary, or,
in the case of the Company, such Restricted Subsidiary or its stockholders.
"Consolidated Indebtedness" means, with respect to any Person, as of
any date of determination, the aggregate amount of Indebtedness of such Person
and its Subsidiaries, or, in the case of the Company, its Restricted
Subsidiaries as of such date calculated on a consolidated basis in accordance
with GAAP consistently applied.
4
"Consolidated Interest Expense" means, for any Person, for any
period, the aggregate of the following for such Person for such period
determined on a consolidated basis in accordance with GAAP: (a) the amount of
interest in respect of Indebtedness (including amortization of original issue
discount, amortization of debt issuance costs, and non-cash interest payments on
any Indebtedness, the interest portion of any deferred payment obligation and
after taking into account the effect of elections made under any Interest Rate
Agreement, however denominated, with respect to such Indebtedness), (b) the
amount of Redeemable Dividends (to the extent not already included in
Indebtedness in determining Consolidated Interest Expense for the relevant
period) and (c) the interest component of rentals in respect of any Capital
Lease Obligation paid, in each case whether accrued or scheduled to be paid or
accrued by such Person during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
Capital Lease Obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries, or,
in the case of the Company, its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP; provided that:
(i) the Net Income of any Person that is not a Subsidiary, or, in the
case of the Company, a Restricted Subsidiary or that is accounted for by
the equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid in cash to the referent
Person or a Subsidiary, or, in the case of the Company, a Restricted
Subsidiary thereof,
(ii) the Net Income of any Subsidiary, or, in the case of the
Company, any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or other distributions by that
Subsidiary, or Restricted Subsidiary, as the case may be, of that Net
Income is not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or Restricted Subsidiary, as the
case may be, or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded,
(iv) the cumulative effect of a change in accounting principles shall
be excluded, and
(v) the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the Company or one of its Restricted
Subsidiaries.
"Contingent Investment" means, with respect to any Person, any
guarantee by such Person of the performance of another Person or any commitment
by such Person to invest in another Person. Any Investment that consists of a
Contingent Investment shall be deemed made at the time that the guarantee of
performance or the commitment to invest is given, and the amount of such
Investment shall be the maximum monetary obligation under such guarantee of
performance or commitment to invest. To the extent that a Contingent Investment
is released or lapses without payment under the guarantee of
5
performance or the commitment to invest, such Investment shall be deemed not
made to the extent of such release or lapse. With respect to any Contingent
Investment, the payment of the guarantee of performance or the payment under the
commitment to invest shall not be deemed to be an additional Investment.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 10.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Facility" means any credit facility entered into by and among
the Company or any Restricted Subsidiary and one or more commercial banks or
financial institutions, providing for senior term or revolving credit borrowings
of a type similar to credit facilities typically entered into by commercial
banks and financial institutions, including any related notes, Guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit facility and related agreements may be amended,
extended, refinanced, renewed, restated, replaced or refunded from time to time.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock to the extent that, and
only to the extent that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date on which the Notes mature,
provided, however, that any Capital Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require the Company to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the final maturity of the
Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions applicable to the Notes contained in
Section 4.15 hereof and such Capital Stock specifically provides that the
Company will not repurchase or redeem any such stock pursuant to such provisions
prior to the Company's repurchase of such Notes as are required to be
repurchased pursuant to Section 4.15 hereof.
"Eligible Institution" means a commercial banking institution that
has combined capital and surplus of not less than $500 million or its equivalent
in foreign currency, whose debt is rated "A" (or higher) according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
"Eligible Receivable" means any Receivable not more than 90 days past
due under its scheduled payment terms.
6
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock or that are measured by the value of
Capital Stock (but excluding any debt security that is convertible into or
exchangeable for Capital Stock).
"Equity Offering" means an underwritten offering of Capital Stock
(other than Disqualified Stock) of the Company registered under the Securities
Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
(or any successor act), and the rules and regulations thereunder.
"Exchange Notes" means the 13% Series B Senior Notes due 2010 issued
under this Indenture.
"Exchange Offer" means the exchange offer to be filed with the SEC
pursuant to the Registration Rights Agreement.
"Existing Indebtedness" means all Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Issue Date, including the Notes
issued hereunder on the Issue Date.
"Existing Notes" means MGC's 13% Senior Secured Notes due 2004 and
13% Series B Senior Secured Notes due 2004.
"Fair Market Value" means with respect to any asset or property, the
sale value that would be obtained in an arm's length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect on the Issue
Date.
"Global Security" means, individually and collectively, each of the
Restricted Global Securities and the Unrestricted Global Security, substantially
in the form of Exhibit A.
"Global Security Legend" means the legend set forth in Section
2.06(g)(ii) to be placed on all Global Securities issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection 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.
7
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under Interest Rate Agreements.
"Holder" and "holder" shall mean, when used with reference to a Note,
a Person in whose name a Note is registered.
"IAI Global Security" means the Global Security in the form of
Exhibit A hereto bearing the Global Security Legend and the Private Placement
Legend and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold to Institutional Accredited Investors.
"ILEC" means the incumbent local exchange carrier.
"Indebtedness" means, with respect to any Person, an indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases) or representing any Hedging Obligations, except any
such balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing (other than Hedging Obligations or letters of
credit) would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, all indebtedness of others secured by a Lien on any
asset of such Person (whether or not such indebtedness is assumed by such
Persons), all obligations to purchase, redeem, retire, defease or otherwise
acquire for value any Disqualified Stock or any warrants, rights or options to
acquire such Disqualified Stock valued, in the case of Disqualified Stock, at
the greatest amount payable in respect thereof on a liquidation (whether
voluntary or involuntary) plus accrued and unpaid dividends, the liquidation
value of any Preferred Stock issued by Subsidiaries of such Person or by
Restricted Subsidiaries of the Company, as the case may be, plus delinquent and
unpaid dividends, and also includes, to the extent not otherwise included, the
Guarantee of items that would be included within this definition and any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any of the above. Notwithstanding the foregoing, in no event will the
following items be deemed to be Indebtedness: (i) performance bonds or similar
security for performance so long as such performance bonds or similar security
for performance would not appear as a liability on a balance sheet of such
Person prepared in accordance with GAAP; (ii) letters of credit secured by cash
collateral in an amount equal to the maximum potential liability of the Company
or a Restricted Subsidiary under such letters of credit; and (iii) letters of
credit which are terminated and, if applicable, repaid in full and not replaced
by another letter of credit, no later than the fifth business day following the
date of issuance, provided, if a letter of credit is not terminated and, if
applicable, repaid in full within five business days of its date of issuance or
is so terminated but is replaced by another letter of credit, on the sixth
business day following the date of issuance of the original letter of credit,
the Company or the Restricted Subsidiary, as the case may be, shall be deemed to
have incurred Indebtedness in an amount equal to the maximum potential liability
of the Company or the Restricted Subsidiary under the letter of credit. In
addition, the amount of any Indebtedness in respect of any Guarantee shall be
the maximum principal amount of the Indebtedness so guaranteed.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Independent Appraiser" means a nationally recognized accounting,
appraisal or investment banking firm experienced in the review of similar types
of transactions which does not have, and whose
8
directors, officers and employees or Affiliates do not have, a direct or
indirect financial interest in the Affiliate Transaction and which, in the
opinion of the Board of Directors, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Security through a Participant.
"Initial Purchasers" means Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and Warburg Dillon Read LLC, as initial purchasers in the Offering.
"Interest Rate Agreements" means (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, Contingent Investments, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities of any other Person and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; provided, however, that any investment
to the extent made with Capital Stock of the Company (other than Disqualified
Stock) shall not be deemed an "Investment" for purposes of this Indenture.
"Issue Date" means March 24, 2000.
"Joint Venture" means a Person in the Telecommunications Business in
which the Company holds less than a majority of the shares of Voting Stock or an
Unrestricted Subsidiary in the Telecommunications Business.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date 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
with respect to such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Obligors and sent to all holders of the Notes for use by such
holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or
9
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Marketable Securities" means:
(i) Government Securities;
(ii) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution;
(iii) commercial paper maturing not more than 270 days after the date
of acquisition issued by a corporation (other than an Affiliate of the
Company) with a rating, at the time as of which any investment therein is
made, of "A-1" (or higher) according to S&P or "P-1" (or higher) according
to Moody's;
(iv) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and
(v) any fund investing exclusively in investments of the types
described in clauses (i) through (iv) above.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to Sale and Leaseback Transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries, or, in
the case of the Company, any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
or, in the case of the Company, any of its Restricted Subsidiaries and (ii) any
extraordinary gain (but not loss), together with any related provision for taxes
on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that are
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets. Net Proceeds shall exclude any non-cash
proceeds received from any Asset Sale, but shall include such proceeds when and
as converted by the Company or any Restricted Subsidiary of the Company to cash.
10
"Non-U.S. Person" means a person that is not a U.S. Person as defined
in Rule 902 under the Securities Act.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligor" or "Obligors" means MGC and Mpower, jointly and severally,
at all times prior to the Release and Mpower at all times after the Release.
"Offering" means the offering of Notes, pursuant to the Offering
Memorandum.
"Offering Memorandum" means the offering memorandum of the Company,
dated March 17, 2000, relating to the Offering.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller,
Secretary, Assistant Secretary or any Vice-President of such Person.
"Officers' Certificate" means, with respect to a Person, a
certificate signed by two Officers of such Person, one of whom must be the
principal executive officer, principal financial officer or principal accounting
officer of such Person, delivered to the Trustee.
"Opinion of Counsel" means, with respect to a Person, an opinion from
legal counsel, who may be an employee of or counsel to such Person, any
Subsidiary of such Person or the Trustee, delivered to the Trustee.
"Pari Passu Notes" means any notes issued by the Company which, by
their terms and the terms of any indenture governing such notes, have an
obligation to be repurchased by the Company upon the occurrence of an Asset
Sale.
"Participant" means, with respect to the Depositary, a Person who has
an account with the Depositary.
"Permitted Holder" means (i) Providence Equity Partners Inc., JK&B
Capital, L.P. or any of their respective Affiliates; (ii) any of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ or their respective spouses or
lineal descendants and their respective spouses (collectively, the "Individual
Family Holders") whether acting in their own name or as a majority of persons
having the power to exercise the voting rights attached to, or having investment
power over, shares held by others; (iii) any Affiliate of any member of the
Individual Family Holders; (iv) any trust principally for the benefit of one or
more members of the Individual Family Holders (whether or not any member of the
Individual Family Holders is a trustee of the trust); and (v) any charitable
foundation whose majority of members, trustees or directors, as the case may be,
are persons referred to in (ii) above.
"Permitted Investment" means (a) any Investments in the Company or
any Restricted Subsidiary of the Company; (b) any Investments in Marketable
Securities; (c) Investments by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary of the Company or (ii) such Person is merged, consolidated
or amalgamated with
11
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company; (d) with
respect to Investments in Joint Ventures at any time outstanding, an amount not
to exceed the greater of (x) $35.0 million or (y) 5% of the amount of the Total
Common Equity of the Company; (e) Investments pursuant to any agreement or
obligation of the Company or a Restricted Subsidiary, in effect on the Issue
Date or on the date a Subsidiary becomes a Restricted Subsidiary (provided that
any such agreement was not entered into in contemplation of such Subsidiary
becoming a Restricted Subsidiary), to make such Investments; (f) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (g) Hedging
Obligations permitted to be incurred pursuant to Section 4.09(b) hereof;
(h) bonds, notes, debentures or other securities received as a result of Asset
Sales permitted under Section 4.10 hereof; (i) Investments received in
satisfaction of judgments or in connection with the settlement of any ordinary
course obligations owed to the Company or any Restricted Subsidiary; (j) loans
and advances to employees and officers of the Company or any of its Restricted
Subsidiaries permitted under Section 4.11 hereof; and (k) Investments in any
Person that is primarily engaged in the Telecommunications Business on the date
of the Investment, in exchange for, or out of the proceeds of an offering (that
occurred within 90 days of the date of any such Investment) of, Capital Stock
(other than Disqualified Stock) of the Company (other than to a Restricted
Subsidiary), to the extent that such proceeds have not been used to make a
Restricted Payment pursuant to Sections 4.07(a)(iv)(3) or 4.07(b)(ii) or used to
incur Indebtedness pursuant to Section 4.09(b)(v).
"Permitted Liens" means (i) Liens securing Indebtedness (including
Capital Lease Obligations) permitted to be incurred pursuant to Sections
4.09(b)(i), 4.09(b)(ii) and 4.09(b)(viii) hereof; (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Restricted Subsidiary of the
Company; provided that such Liens were not incurred in contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company; (iv) Liens on property
existing at the time of acquisition thereof by the Company or any Restricted
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the normal course of business; (vi)
Liens existing on the Issue Date; (vii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings timely instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens incurred in the normal course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $3.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Restricted Subsidiary; (ix) Liens on Telecommunications Related Assets existing
during the time of the construction thereof; (x) Liens on Receivables to secure
Indebtedness permitted to be incurred pursuant to Section 4.09(b) hereof, but
only to the extent that the outstanding amount of the Indebtedness secured by
such Liens would not represent more than 80% of Eligible Receivables; (xi) Liens
on Telecommunications Equipment required to be incurred under the terms of the
Existing Notes; (xii) Liens on the proceeds of Indebtedness to secure the
payment of principal and interest on the Indebtedness; (xiii) Liens to secure
letters of credit which are deemed not to be Indebtedness in accordance with
clause (ii) of the penultimate sentence of the definition of Indebtedness; and
(xiv) Liens to secure any Permitted Refinancing of any Indebtedness secured by
Liens referred to in the foregoing
12
clauses (i), (iii), (iv), (v), (vi), (ix), (xi) or (xiii); but only to the
extent that the Liens do not extend to any other property or assets and the
principal amount of the Indebtedness secured by the Liens is not increased by
more than the fees and expenses incurred in connection with the refinancing.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"QIB" means a qualified institutional buyer as defined in Rule 144A
of the Securities Act.
"Receivables" means, with respect to any Person, all of the following
property and interests in property of such Person, whether now existing or
existing in the future or hereafter acquired or arising: (i) accounts; (ii)
accounts receivable, including, without limitation, all rights to payment
created by or arising from sales of goods, leases of goods or the rendition of
services no matter how evidenced, whether or not earned by performance; (iii)
all unpaid seller's or lessor's rights including, without limitation,
rescission, replevin, reclamation and stoppage in transit, relating to any of
the foregoing after creation of the foregoing or arising therefrom; (iv) all
rights to any goods or merchandise represented by any of the foregoing,
including, without limitation, returned or repossessed goods; (v) all reserves
and credit balances with respect to any such accounts receivable or account
debtors; (vi) all letters of credit, security, or Guarantees for any of the
foregoing; (vii) all insurance policies or reports relating to any of the
foregoing; (viii) all collection of deposit accounts relating to any of the
foregoing; (ix) all proceeds of any of the foregoing; and (x) all books and
records relating to any of the foregoing.
"Redeemable Dividend" means, for any dividend with regard to
Disqualified Stock and Preferred Stock, the quotient of the dividend divided by
the difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such Disqualified Stock or Preferred Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Obligors and the Initial
Purchasers relating to the Notes.
"Regulation S Global Security" means the Global Security in the form
of Exhibit A hereto bearing the Global Security Legend and the Private Placement
Legend and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the Notes
sold to Non-U.S. Persons in an offshore transaction in accordance with Rule 904
under the Securities Act.
"Responsible Officer" when used with respect to the Trustee, means
any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
13
"Restricted Certificated Security" means a Certificated Security
bearing the Private Placement Legend.
"Restricted Global Security" means any 144A Global Security,
Regulation S Global Security or IAI Global Security that bears the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payment Credit" means the sum of (i) any cash received by
the Company as repayment of a Restricted Payment and (ii) the lesser of (x) the
net book value of any Restricted Investment at the time it becomes a Permitted
Investment, (y) the fair market value of such Restricted Investment at the time
it becomes a Permitted Investment and (z) the original fair market value of such
Restricted Investment at the time it was made.
"Restricted Subsidiary" means any subsidiary of the Company that is
not designated by the Board of Directors as an Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 904" means Rule 904 under the Securities Act.
"S&P" means Standard and Poor's Rating Services and its successors.
"SEC" means the Securities and Exchange Commission.
"Sale and Leaseback Transaction" means, with respect to any Person,
any direct or indirect arrangement pursuant to which any property (other than
Capital Stock) is sold by such Person or a Subsidiary, or, in the case of the
Company, a Restricted Subsidiary of such Person and is thereafter leased back
from the purchaser or transferee thereof by such Person or one of its
Subsidiaries, or, in the case of the Company, one of its Restricted
Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor act), and the rules and regulations thereunder.
"Senior Indebtedness" means any Indebtedness permitted to be incurred
by the Company under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is subordinated
in right of payment to the Notes. Notwithstanding anything to the contrary in
the foregoing, Senior Indebtedness will not include (i) any liability for
federal, state, local or other taxes owed or owing by the Company, (ii) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates,
(iii) any trade payables or (iv) any Indebtedness that is incurred in violation
of this Indenture.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
14
"Significant Subsidiary" means (i) any Restricted Subsidiary that
would be a "Significant Subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date hereof, (ii) any Subsidiary which holds any permit or
license which is material to the operations of the Company and its Restricted
Subsidiaries taken as a whole, and (iii) Mpower.
"Subsidiary" of any Person means (i) any corporation, association or
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 such 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 one or more Subsidiaries of such Person or
any combination thereof.
"Telecommunications Business" means, when used in reference to any
Person, that such Person is engaged primarily in the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunications Business and (iii) evaluating,
participating or engaging in or pursuing any other activity or opportunity that
is related to those identified in (i) or (ii) above; provided that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the Board of Directors of the Company.
"Telecommunications Equipment" means telecommunications switches and
related equipment and inventory, including, without limitation, all remote
switching nodes, modems, line cards, transport hardware and equipment or
hardware necessary to install and operate the telecommunications switches.
"Telecommunications Related Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, real
or personal, used or to be used in connection with a Telecommunications
Business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"Total Common Equity" of any Person means, as of any date of
determination, the product of (i) the aggregate number of outstanding primary
shares of Common Stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such Person) and (ii) the average Closing Price of such
Common Stock over the 20 consecutive Trading Days immediately preceding such
day. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (ii) of the preceding sentence
shall be determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
"Total Market Capitalization" of any Person means, as of any day of
determination, the sum of (i) the consolidated Indebtedness of such Person and
its Subsidiaries (except in the case of the Company, in which case of the
Company and its Restricted Subsidiaries) on such day; plus (ii) the product of
(x) the aggregate number of outstanding primary shares of Common Stock of such
Person on such day (which shall
15
not include any options or warrants on, or securities convertible or
exchangeable into, shares of Common Stock of such Person); and (y) the average
Closing Price of such Common Stock over the 20 consecutive Trading Days
immediately preceding such day; plus (iii) the liquidation value of any
outstanding shares of Preferred Stock of such Person on such day; less (iv) cash
and cash equivalents (other than restricted cash and restricted cash
equivalents) as presented on such Person's consolidated balance sheet on such
date. If no Closing Price exists with respect to shares of Common Stock, the
value of such shares for purposes of clause (ii) of the preceding sentence shall
be determined by the Company's Board of Directors in good faith and evidenced by
a resolution of the Board of Directors filed with the Trustee.
"Trading Day" with respect to a securities exchange or automated
quotation system, means a day on which such exchange or system is open for a
full day of trading.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Certificated Security" means one or more Certificated
Securities that do not and are not required to bear the Private Placement
Legend.
"Unrestricted Global Security" means a permanent global security in
the form of Exhibit A attached hereto that bears the Global Security Legend and
the "Schedule of Exchanges of Interests in the Global Security" attached
thereto, and that is registered in the name of the Depositary, representing
Notes that do not bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of
the Board of Directors filed with the Trustee.
"Vendor Indebtedness" means any Indebtedness of the Company or any
Restricted Subsidiary incurred in connection with the acquisition or
construction of Telecommunications Related Assets.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (x) 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 (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; provided, that with respect to Capital
Lease Obligations, that maturity shall be calculated after giving effect to all
renewal options by the Lessee.
16
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"............................... 4.11
"Asset Sale".......................................... 4.10
"Bankruptcy Law"...................................... 4.01
"Change of Control Offer"............................. 4.15
"Change of Control Payment"........................... 4.15
"Change of Control Payment Date"...................... 4.15
"Commission".......................................... 4.03
"Covenant Defeasance"................................. 8.03
"Custodian"........................................... 6.01
"Event of Default".................................... 6.01
"Excess Proceeds"..................................... 4.10
"Excess Proceeds Offer"............................... 3.09
"incur"............................................... 4.09
"Legal Defeasance" ................................... 8.02
"New Note Exchange" .................................. 5.03
"New Notes" .......................................... 5.03
"Offer Amount"........................................ 3.09
"Offer Period"........................................ 3.09
"Paying Agent"........................................ 2.03
"Payment Default"..................................... 6.01
"Permitted Refinancing"............................... 4.09
"Purchase Date"....................................... 3.09
"Refinance"........................................... 4.09
"Registrar"........................................... 2.03
"Release"............................................. 5.03
"Restricted Payments"................................. 4.07
"Retire".............................................. 4.07
"SEC Reports"......................................... 4.03
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
17
"obligor" on the Notes means the Obligors and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a capitalized term has the meaning assigned to it under this
Article 1;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation; and
(5) words in the singular include the plural, and in the plural
include the singular.
ARTICLE 2
THE NOTES
SECTION 2.01. AMOUNT UNLIMITED; FORM AND DATING.
Subject to the provisions of Section 4.09, the aggregate principal
amount of Notes which may be authenticated and delivered under this Indenture is
unlimited.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Obligors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Security Legend and the
"Schedule of Exchanges in the Global Security" attached thereto). Notes issued
in definitive form shall be substantially in the form of Exhibit A attached
hereto (but without the Global Security Legend and without the "Schedule of
Exchanges of Interests in the Global
18
Security" attached thereto). Each Global Security shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the holder thereof as required by Section 2.06
hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of each Obligor shall sign the Notes for the Obligors by
manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid. In addition, if a Person is not an Officer at the time a Note is
authenticated, but becomes an Officer on or prior to the delivery of the Note,
the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of an authorized signatory of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Obligors signed by two
Officers of each Obligor, authenticate Notes for original issue.
The Trustee may appoint an authenticating agent acceptable to the
Obligors to authenticate Notes. 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 the
Trustee to deal with the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Obligors shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Obligors may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Obligors may change any
Paying Agent or Registrar without notice to any holder. The Obligors shall
notify the Trustee and the Trustee shall notify the holders of the Notes in
writing of the name and address of any Agent not a party to this Indenture. If
the Obligors fail to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Obligors or any of its Subsidiaries
may act as Paying Agent or Registrar. The Obligors shall enter into an
appropriate agency agreement with any Agent not a party to this Indenture, which
shall incorporate the provisions of the TIA. The agreement
19
shall implement the provisions of this Indenture that relate to such Agent. The
Obligors shall notify the Trustee of the name and address of any such Agent. If
the Obligors fail to maintain a Registrar or Paying Agent, or fail to give the
foregoing notice, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.07 hereof.
The Obligors initially appoint The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Securities.
The Obligors initially appoint the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global
Securities. Except as otherwise specifically provided herein, (i) all references
in this Indenture to the Trustee shall be deemed to refer to the Trustee in its
capacity as Trustee and in its capacities as Registrar and Paying Agent and (ii)
every provision of this Indenture relating to the conduct of or affecting the
liability of or offering protection, immunity or indemnity to the Trustee shall
be deemed to apply with the same force and effect to the Trustee acting in its
capacities as Paying Agent and Registrar.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Obligors shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Obligors in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Obligors at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to any Obligor, the
Trustee shall serve as Paying Agent and Registrar for the Notes.
SECTION 2.05. HOLDER LISTS.
If it is the Registrar, 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 all holders and shall otherwise comply with TIA ss.
312(a). If the Trustee is not the Registrar, the Obligors shall furnish to the
Trustee 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 the holders of the Notes and the Obligors shall otherwise comply with TIA ss.
312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Securities. A Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
20
successor Depositary or a nominee of such successor Depositary. All Global
Securities will be exchanged by the Obligors for Certificated Securities if (i)
the Obligors deliver to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Obligors in their sole
discretion determine that the Global Securities (in whole but not in part)
should be exchanged for Certificated Securities and delivers a written notice to
such effect to the Trustee. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Certificated Securities shall be issued in such
names as the Depositary shall instruct the Trustee. Global Securities also may
be exchanged or replaced, in whole or in part, as provided in Section 2.07
hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a
Global Security or any portion thereof, pursuant to Section 2.07 hereof, shall
be authenticated and delivered in the form of, and shall be, a Global Security.
A Global Security may not be exchanged for another Note other than as provided
in this Section 2.06(a), however beneficial interests in a Global Security may
be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Securities. The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the procedures of the Depositary therefor.
Beneficial interests in the Restricted Global Securities shall be subject to
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. The Trustee shall have no obligation to
ascertain the Depositary's compliance with any such restrictions on transfer.
Transfers of beneficial interests in the Global Securities also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Security.
Beneficial interests in any Restricted Global Security may be transferred
to Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Security in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Security may be transferred only to
Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Security. No written orders or instructions shall
be required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Securities. In connection with all transfers and exchanges of
beneficial interests (other than transfers of beneficial interests in a
Global Security to Persons who take delivery thereof in the form of a
beneficial interest in the same Global Security), the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in the
specified Global Security in an amount equal to the beneficial interest to
be transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Certificated Security in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding
the Person in whose name such Certificated Security shall be registered to
effect the transfer or exchange referred to in (1) above. Upon an Exchange
Offer by the Obligors in accordance with Section 2.06(f) hereof, the
requirements
21
of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon
receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the holder of such beneficial interests in the
Restricted Global Securities. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Securities
contained in this Indenture, the Notes and otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Security pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Security. Beneficial interests in any Restricted Global Security may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in another Restricted Global Security if the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Security, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Security or the IAI
Global Security, then the transferor must deliver (x) a certificate
in the form of Exhibit B hereto, including the certifications in item
(2) thereof, (y) an Opinion of Counsel in form reasonably acceptable
to the Obligors and the Registrar to the effect that such transfer is
in compliance with the Securities Act and such beneficial interest is
being transferred in compliance with any applicable blue sky
securities laws of any State of the United States and (z) if the
transfer is being made to an Institutional Accredited Investor and
effected pursuant to an exemption from the registration requirements
of the Securities Act other than Rule 144A under the Securities Act,
Rule 144 under the Securities Act or Rule 904 under the Securities
Act, a certificate from the transferee in the form of Exhibit D
hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Security for Beneficial Interests in the Unrestricted Global
Security. Beneficial interests in any Restricted Global Security may be
exchanged by any holder thereof for a beneficial interest in the
Unrestricted Global Security or transferred to Persons who take delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Security if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the related letter of transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of any Obligor;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
22
(1) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such beneficial
interest for a beneficial interest in the Unrestricted Global
Security, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Security, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (3) thereof;
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Obligors
and the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act, and
such beneficial interest is being exchanged or transferred in
compliance with any applicable blue sky securities laws of any State
of the United States.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Security has not yet been
issued, the Obligors shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Securities in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Security cannot
be exchanged for, or transferred to Persons who take delivery thereof in
the form of, a beneficial interest in any Restricted Global Security.
(c) Transfer or Exchange of Beneficial Interests for Certificated
Securities.
(i) If any holder of a beneficial interest in a Restricted Global
Security proposes to exchange such beneficial interest for a Certificated
Security or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Certificated Security, then, upon
receipt by the Registrar of the following documentation (all of which may
be submitted by facsimile):
(A) if the holder of such beneficial interest in a Restricted
Global Security proposes to exchange such beneficial interest for a
Restricted Certificated Security, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than Rule
144A, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2)(c) thereof, a certificate
from the transferee to the effect set forth in Exhibit D hereof and
an Opinion of Counsel from the transferee or the transferor
reasonably acceptable to the Obligors
23
and the Registrar to the effect that such transfer is in compliance
with the Securities Act and such beneficial interest is being
transferred in compliance with any applicable blue sky securities
laws of any State of the United States;
(D) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(2)(a) thereof; or
(E) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2)(b) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Security to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Obligors shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Certificated
Security in the appropriate principal amount. Certificated Securities
issued in exchange for beneficial interests in a Restricted Global
Security pursuant to this Section 2.06(c) shall be registered in such
names and in such authorized denominations as the holder shall instruct
the Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Trustee shall deliver such Certificated
Securities to the Persons in whose names such Notes are so registered.
Certificated Securities issued in exchange for a beneficial interest in a
Restricted Global Security pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.
(ii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest in
a Restricted Global Security may exchange such beneficial interest for an
Unrestricted Certificated Security or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Certificated Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the related letter of transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of any Obligors;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such beneficial
interest for a Certificated Security that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof;
24
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form of a
Certificated Security that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (3) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Obligors
and the Registrar, to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not required
in order to maintain compliance with the Securities Act, and such
beneficial interest in a Restricted Global Security is being
exchanged or transferred in compliance with any applicable blue sky
securities laws of any State of the United States.
(iii) If any holder of a beneficial interest in an Unrestricted
Global Security proposes to exchange such beneficial interest for a
Certificated Security or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Certificated Security, then,
upon satisfaction of the conditions set forth in Section 2.06(b)(ii), the
Trustee shall cause the aggregate principal amount of the applicable
Global Security to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Obligors shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Certificated
Security in the appropriate principal amount. Certificated Securities
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such names and in such authorized
denominations as the holder shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Certificated Securities to the
Persons in whose names such Notes are so registered. Certificated
Securities issued in exchange for a beneficial interest pursuant to this
section 2.06(c)(iii) shall not bear the Private Placement Legend.
Beneficial interests in an Unrestricted Global Security cannot be
exchanged for a Certificated Security bearing the Private Placement Legend
or transferred to a Person who takes delivery thereof in the form of a
Certificated Security bearing the Private Placement Legend.
(d) Transfer or Exchange of Certificated Securities for Beneficial
Interests.
(i) If any holder of Restricted Certificated Securities proposes to
exchange such Notes for a beneficial interest in a Restricted Global
Security or to transfer such Certificated Securities to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted
Global Security, then, upon receipt by the Registrar of the following
documentation (all of which may be submitted by facsimile):
(A) if the holder of such Restricted Certificated Securities
proposes to exchange such Notes for a beneficial interest in a
Restricted Global Security, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item (2)(b)
thereof;
(B) if such Certificated Securities are being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
25
(C) if such Certificated Securities are being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2)(c)
thereof;
(D) if such Certificated Securities are being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than Rule
144A, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2)(c) thereof, a certificate
from the transferee to the effect set forth in Exhibit D hereof and
an Opinion of Counsel from the transferee or the transferor
reasonably acceptable to the Obligors and the Registrar to the effect
that such transfer is in compliance with the Securities Act and such
Certificated Securities are being transferred in compliance with any
applicable blue sky securities laws of any State of the United
States;
(E) if such Certificated Securities are being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(2)(a) thereof; or
(F) if such Certificated Securities are being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2)(b) thereof,
the Trustee shall cancel the Certificated Securities, increase or cause to
be increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Security, in the case of clause
(B) above, the 144A Global Security, in the case of clause (C) above, the
Regulation S Global Security, and in all other cases, the IAI Global
Security.
(ii) A holder of Restricted Certificated Securities may exchange such
Notes for a beneficial interest in the Unrestricted Global Security or
transfer such Restricted Certificated Securities to a Person who takes
delivery thereof in the form of a beneficial interest in the Unrestricted
Global Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the related letter of transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of any Obligor;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
26
(1) if the holder of such Certificated Securities proposes
to exchange such Notes for a beneficial interest in the Unrestricted
Global Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(c)
thereof;
(2) if the holder of such Certificated Securities proposes
to transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global
Security, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (3) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Obligors
and the Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not required
in order to maintain compliance with the Securities Act, and such
Certificated Securities are being exchanged or transferred in
compliance with any applicable blue sky securities laws of any State
of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Certificated Securities
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Security.
(iii) A holder of Unrestricted Certificated Securities may exchange
such Notes for a beneficial interest in the Unrestricted Global Security
or transfer such Certificated Securities to a Person who takes delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Security. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the Unrestricted Certificated Securities and increase
or cause to be increased the aggregate principal amount of the
Unrestricted Global Security.
If any such exchange or transfer from a Certificated Security to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Security has not yet been
issued, the Obligors shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Securities in an aggregate principal amount to the principal
amount of beneficial interests transferred pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above.
(e) Transfer and Exchange of Certificated Securities. Upon request by
a holder of Certificated Securities and such holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Certificated Securities. Prior to such registration of transfer or
exchange, the requesting holder shall present or surrender to the Registrar the
Certificated Securities duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such holder or
by his attorney, duly authorized in writing. In addition, the requesting holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Certificated Securities may be transferred to and
registered in the name of Persons who take delivery thereof if the
Registrar receives the following:
27
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2)(c) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B
hereto, including the certifications in item (3) thereof, (y) an
Opinion of Counsel in form reasonably acceptable to the Obligors and
the Registrar to the effect that such transfer is in compliance with
the Securities Act and such beneficial interest is being transferred
in compliance with any applicable blue sky securities laws of any
State of the United States and (z) if the transfer is being made to
an Institutional Accredited Investor and effected pursuant to an
exemption from the registration requirements of the Securities Act
other than Rule 144A under the Securities Act, Rule 144 under the
Securities Act or Rule 904 under the Securities Act, a certificate
from the transferee in the form of Exhibit D hereto.
(ii) Restricted Certificated Securities may be exchanged by any
holder thereof for an Unrestricted Certificated Security or transferred to
Persons who take delivery thereof in the form of an Unrestricted
Certificated Security if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the related letter of transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of any Obligor;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Restricted Certificated
Securities proposes to exchange such Notes for an Unrestricted
Certificated Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(c)
thereof;
(2) if the holder of such Restricted Certificated
Securities proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Certificated
Security, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (3) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Obligors
and the Registrar to the effect that such exchange or
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transfer is in compliance with the Securities Act, that the
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain compliance
with the Securities Act, and such Restricted Certificated Security is
being exchanged or transferred in compliance with any applicable blue
sky securities laws of any State of the United States.
(iii) A holder of Unrestricted Certificated Securities may transfer
such Notes to a Person who takes delivery thereof in the form of an
Unrestricted Certificated Security. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Certificated Securities pursuant to the instructions from the holder
thereof. Unrestricted Certificated Securities cannot be exchanged for or
transferred to Persons who take delivery thereof in the form of a
Restricted Certificated Security.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Obligors shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Securities in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Securities tendered for acceptance by Persons
that have certified in the related letter of transmittal that they are not (x)
broker-dealers, (y) Persons participating in the distribution of the Exchange
Notes or (z) Persons who are affiliates (as defined in Rule 144) of any Obligor
and accepted for exchange in the Exchange Offer and (ii) Certificated Securities
in an aggregate principal amount equal to the principal amount of the Restricted
Certificated Securities accepted for exchange in the Exchange Offer. Concurrent
with the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Securities to be reduced accordingly,
and the Obligors shall execute and the Trustee shall authenticate and deliver to
the Persons designated by the holders of Certificated Securities so accepted
Restricted Certificated Securities in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Securities and Certificated Securities issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each Global
Security and each Certificated Security (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY HAS NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY OR ANY
INTEREST OR PARTICIPATION HEREIN MAY NOT BE OFFERED, 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, REGISTRATION. THE
HOLDER OF THE SECURITY BY ITS ACCEPTANCE HEREOF AGREES (A) TO
OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1)
TO THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A
PERSON
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IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT OR (6) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE
(5) OR (6), BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT
OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Security or
Certificated Security issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Security Legend. Each Global Security shall bear a legend
in substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.07 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Securities. At such time
as all beneficial interests in a particular Global Security have been exchanged
for Certificated Securities or a particular Global Security has been redeemed,
repurchased or canceled in whole and not in part, each such Global Security
shall be returned to or retained and canceled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security or Certificated Securities, the principal amount of Notes
represented by such Global Security shall be reduced accordingly and an
endorsement shall be made on such Global Security, by the Trustee or by
30
the Depositary at the direction of the Trustee, to reflect such reduction; and
if the beneficial interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security, such other Global Security shall be increased accordingly and
an endorsement shall be made on such Global Security, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Obligors
shall execute and the Trustee shall authenticate Global Securities and
Certificated Securities upon the Obligors' order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Security or to a holder of a Certificated Security
for any registration of transfer or exchange, but the Obligors may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Securities and Certificated Securities issued upon
any registration of transfer or exchange of Global Securities or
Certificated Securities shall be the valid obligations of the Obligors,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Securities or Certificated Securities surrendered
upon such registration of transfer or exchange.
(v) The Obligors shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Obligors may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Obligors shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Securities and
Certificated Securities in accordance with the provisions of Section 2.02
hereof.
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SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Obligors
and the Trustee receives evidence to their satisfaction of the destruction, loss
or theft of any Note, the Obligors shall issue and the Trustee, upon the written
order of the Obligors signed by two Officers of each Obligor, shall authenticate
a replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Obligors, an indemnity bond must be supplied by the holder that
is sufficient in the judgment of the Trustee and the Obligors to protect the
Obligors, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Obligors may charge for their
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Obligors
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the 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. Except
as set forth in Section 2.09 hereof, a Note does not cease to be outstanding
because an Obligor or an Affiliate of an Obligor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under Section
8.02 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than an Obligor, a Subsidiary or an
Affiliate of any thereof) segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date, money sufficient to pay all
principal and interest, if any, payable on that date with respect to the Notes
(or the portion thereof to be redeemed or maturing, as the case may be), then on
and after that date such Notes (or portions thereof) shall be deemed to be no
longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by any
Obligor, or an Affiliate of any Obligor, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee knows are so owned shall be so
disregarded.
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SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Obligors may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Obligors signed by two Officers of each Obligor. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Obligors considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Obligors shall
prepare and the Trustee shall authenticate definitive Notes and deliver them in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
The Obligors at any time may deliver Notes to the Trustee for
cancellation. The Registrar and 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, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act), unless the Company directs canceled Notes to be returned to it.
Certification of the destruction of all canceled Notes shall be delivered to the
Company for all certificates so destroyed. The Obligors may not issue new Notes
to replace Notes that they have redeemed, paid or delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Obligors default in a payment of interest on the Notes, they
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
holders on a subsequent special record date, which date shall be at the earliest
practicable date but in all events at least five Business Days prior to the
payment date, in each case at the rate provided in the Notes. The Company shall
fix or cause to be fixed each such special record date and payment date,
provided that the Company shall fix or cause to be fixed each such special
record date as early as practicable prior to the payment date, and the Company
shall mail or cause to be mailed as early as practicable to each holder a notice
that states the special record date, the related payment date and the amount of
defaulted interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of holders
of the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA ss. 316(c).
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SECTION 2.14. CUSIP NUMBER.
The Obligors in issuing the Notes may use a "CUSIP" number and, if
they do so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Obligors will
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND CERTAIN REPURCHASES
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the clause of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, except
as provided in Section 3.09, the Trustee shall select the Notes to be redeemed
or purchased in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed, or, if the Notes are
not so listed, on a pro rata basis, by lot or in accordance with any other
method the Trustee considers fair and appropriate (and in such manner as
complies with applicable legal and stock exchange requirements, if any),
provided that no Notes with a principal amount of $1,000 or less shall be
redeemed or purchased in part. A new Note in principal amount equal to the
unredeemed or unpurchased portion shall be issued in the name of the holder
thereof upon cancellation of the original Note. On and after the redemption or
purchase date, interest shall cease to accrue on the Notes or portions of them
called for redemption or purchase. In the event of partial redemption by lot,
the particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
them selected shall be in amounts of $1,000 or whole multiples of $1,000; except
that if all of the Notes of a holder are to be redeemed, the entire outstanding
amount of Notes held by such holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption.
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SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each holder
whose Notes are to be redeemed at its registered address (provided that in the
event of a redemption pursuant to Section 3.07(b) hereof arising out of a sale
of the Company's Capital Stock (other than Disqualified Stock) in an Equity
Offering, such notice shall not be mailed prior to the consummation of such
sale).
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes (or portions thereof) called for redemption
ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) 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.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days (unless a shorter
period is acceptable to the Trustee) prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become due and payable on the redemption
date at the redemption price stated in such notice. A notice of redemption may
not be conditional.
35
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Company shall deposit with
the Trustee or with the Paying Agent (or, if the Company or a Subsidiary is the
Paying Agent, shall segregate and hold in trust) immediately available funds
sufficient to pay the redemption price of and accrued interest, if any, on all
Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any funds deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest, if any, on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid redemption price, from the
redemption date until such redemption price is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the holder of the Notes at the
expense of the Company a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in Section 3.07(b) below, the Notes will not
be redeemable at the Company's option prior to April 1, 2005. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 1 of the years indicated below:
Year Percentage
---- ----------
2005................................................. 106.500%
2006................................................. 104.330%
2007................................................. 102.166%
2008 and thereafter.................................. 100.000%
(b) Notwithstanding the foregoing, in the event of the sale by the
Company prior to April 1, 2003 of its Capital Stock (other than Disqualified
Stock) in one or more Equity Offerings, up to a maximum of 35% of the aggregate
principal amount of the Notes originally issued, including any Notes issued
after the Issue Date hereunder, will, at the option of the Company, be
redeemable from the net cash
36
proceeds of one or more Equity Offerings (but only to the extent the proceeds of
such Equity Offering consist of cash or readily marketable cash equivalents) at
a redemption price equal to 113% of the principal amount of the Notes plus
accrued and unpaid interest and Liquidated Damages, if any, on the Notes
redeemed to the redemption date, provided that at least 65% of the aggregate
principal amount of the Notes originally issued, including any Notes issued
after the Issue Date hereunder, remain outstanding immediately after the
occurrence of such redemption and that such redemption occurs within 90 days of
the date of the closing of such Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09 and 4.15 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS.
If at any time the cumulative amount of Excess Proceeds that have not
been applied in accordance with Section 4.10(b) exceeds $10.0 million, the
Company shall, within 30 days thereafter, make an offer to all holders of Notes
and Pari Passu Notes (an "Excess Proceeds Offer"), to purchase the maximum
principal amount of Notes and Pari Passu Notes that may be purchased out of such
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
outstanding principal amount of the Notes to the date fixed for the closing of
such offer and 100% of the accreted value or 100% of the outstanding principal
amount, as applicable, of the Pari Passu Notes, plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date fixed for the closing of
such offer, in accordance with the procedures specified below. The Company may
also voluntarily use the Net Proceeds of any Asset Sale to make at any time an
Excess Proceeds Offer.
The Excess Proceeds Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the maximum principal amount of
Notes and the maximum accreted value or principal amount, as the case may be, of
Pari Passu Notes that may be purchased with such Excess Proceeds (or such pro
rata portion based upon the principal amount of Notes and the accreted value
and/or the principal amount, as the case may be, of Pari Passu Notes tendered if
the principal amount of Notes and the accreted value and/or the principal
amount, as the case may be, of Pari Passu Notes tendered is in excess of the
Excess Proceeds) (which maximum principal amount of Notes shall be the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Notes and Pari
Passu Notes tendered in response to the Excess Proceeds Offer, subject to the
provisions of Section 4.10 hereof.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued interest on the Notes
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
holders
37
who tender Notes pursuant to the Excess Proceeds Offer on the portion of
the tendered Notes purchased pursuant to the Excess Proceeds Offer.
Upon the commencement of any Excess Proceeds Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the holders of
the Notes, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such holders to tender Notes pursuant to the
Excess Proceeds Offer. The Excess Proceeds Offer shall be made to all holders.
The notice, which shall govern the terms of the Excess Proceeds Offer, shall
state:
(a) that the Excess Proceeds Offer is being made pursuant to
Sections 3.09 and 4.10 hereof and the length of time the Excess Proceeds
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note or portion thereof not tendered or accepted
for payment shall continue to accrue interest;
(d) that any Note or portion thereof accepted for payment
pursuant to the Excess Proceeds Offer shall cease to accrue interest after
the Purchase Date;
(e) that holders electing to have a Note or portion thereof
purchased pursuant to any Excess Proceeds 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, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three Business Days before the Purchase
Date;
(f) that holders shall be entitled to withdraw their election if
the Company, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of the Note or portion thereof the holder delivered for
purchase and a statement that such holder is withdrawing his election to
have the Note or portion thereof purchased;
(g) that, if the aggregate principal amount of Notes and the
accreted value or the aggregate principal amount, as the case may be, of
Pari Passu Notes tendered by holders of such notes exceeds the Offer
Amount, the Trustee shall select the Notes to be purchased on a pro rata
basis as described above (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(h) that holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis (as described above) to the
extent necessary, the Offer Amount of Notes or Pari Passu Notes or portions
thereof tendered pursuant to the Excess Proceeds Offer, or if less than the
Offer Amount has been tendered, all Notes or Pari Passu Notes or portions
thereof tendered, and deliver to the Trustee an Officers' Certificate stating
that such Notes or Pari Passu Notes or portions thereof were accepted for
38
payment by the Company in accordance with the terms of this Section 3.09. The
Company or Paying Agent, as the case may be, shall promptly (but in any case not
later than five days after the Purchase Date) mail or deliver to each tendering
holder an amount equal to the purchase price of the Note or portion thereof
tendered by such holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, and the Trustee shall authenticate and
mail or deliver such new Note to such holder equal in principal amount 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. The Company
shall publicly announce the results of the Excess Proceeds Offer on the Purchase
Date. In the event that the aggregate amount of Excess Proceeds exceeds the
aggregate principal amount of Notes, or the aggregate accreted value or the
aggregate principal amount, as the case may be, of Pari Passu Notes or portion
thereof surrendered by holders of such notes pursuant to an Excess Proceeds
Offer, the Company may use the remaining Excess Proceeds for general purposes.
Upon completion of an Excess Proceeds Offer, the amount of Excess Proceeds shall
be deemed to be reset at zero.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof. No repurchase of Notes under this Section
3.9 shall be deemed to be a redemption of Notes.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Obligors shall pay or cause to be paid the principal of, premium,
if any, and interest, on the Notes on the dates and in the manner provided in
the Notes and this Indenture. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than an Obligor,
holds as of the due date money deposited by, or on behalf of, the Obligors in
immediately available funds and desig nated for and sufficient to pay all
principal, premium, if any, and interest then due. The Obligors shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Obligors shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to the then applicable interest rate on the Notes to the extent lawful until
such overdue principal is paid; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful until such overdue installments of interest are paid.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
39
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Obligors shall maintain an office or agency (which may be an
office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar)
where Notes may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Obligors in respect of the Notes and
this Indenture may be served. The Obligors shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Obligors shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Obligors may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Obligors of their obligation to maintain an office or agency for such purposes.
The Obligors shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Obligors hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Obligors in accordance with Section
2.03 hereof.
SECTION 4.03.REPORTS.
(a) So long as any of the Notes remain outstanding, the Obligors
shall cause copies of all quarterly and annual financial reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Securities and Exchange Commission (the "Commission") may
by rules and regulations prescribe) which any Obligor is required to file with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports") to be filed with the Trustee within 15 days of filing with the
Commission. If any Obligor is not subject to the requirements of Section 13(a)
or 15(d) of the Exchange Act or shall cease to be required by the Commission to
file SEC Reports pursuant to the Exchange Act, the Obligor shall nevertheless
continue to cause SEC Reports, comparable to those which it would be required to
file pursuant to Section 13(a) or 15(d) of the Exchange Act if it were subject
to the requirements of either such section, to be so filed with the Commission
(unless the Commission will not accept such a filing) and with the Trustee
within the same time periods as would have applied (including under the
preceding sentence) had the Obligor been subject to the requirements of Section
13(a) or 15(d) of the Exchange Act. Whether or not required by the Exchange Act
to file SEC Reports with the Commission, so long as any Notes are outstanding,
the Obligors shall furnish copies of the SEC Reports to the holders of Notes at
the time the Obligors are required to file the same with the Trustee and make
such information available to investors who request it in writing. In addition,
the Obligors shall, for so long as any Notes remain outstanding, furnish to the
holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. The Obligors shall also comply with the provisions of
TIA ss. 314(a).
(b) The Obligors shall provide the Trustee with a sufficient number
of copies of all SEC Reports that the Trustee may be required to deliver to the
holders of the Notes under this Section 4.03.
40
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) Each Obligor shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Obligor, an Officers' Certificate stating
that (i) a review of the activities of the Obligors and their Restricted
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Obligors have (x) kept, observed, performed and fulfilled, and (y) caused each
of their Restricted Subsidiaries to keep, observe, perform and fulfill, its
obligations under this Indenture, and (ii) as to each such Officer signing such
certificate, that to the best of his or her knowledge (A) the Obligors have
kept, observed, performed and fulfilled, and have caused each of their
Restricted Subsidiaries to keep, observe, perform and fulfill, each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture to
be performed or observed by it (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action each is taking or proposes to take with
respect thereto) and (B) no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if any, on
the Notes is prohibited or if such event has occurred, a description of the
event and what action each is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Obligors' independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention which would lead them to believe that either Obligor has
violated any provisions of Article 4 or Article 5 of this Indenture or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation. In the event that such written statement of the Obligors' independent
public accountants can not be obtained, in whole or in part, each Obligor shall
deliver an Officers' Certificate certifying that it has used its best efforts to
obtain such statement but was unable to do so.
(c) Each Obligor shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Obligor is taking or proposes to take with
respect thereto.
(d) The Company shall deliver to the Trustee an Officers' Certificate
as required by, and in accordance with, Section 4.07(f) hereof.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies, except as contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the holders of the Notes.
41
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each Obligor 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 this Indenture; and each Obligor (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on
account of any Equity Interests of the Company or any of its
Restricted Subsidiaries other than dividends or distributions payable
(A) in Equity Interests of the Company that are not Disqualified
Stock; (B) to the Company or any Restricted Subsidiary; (C) on
Disqualified Stock permitted to be incurred pursuant to Section 4.09
hereof; or (D) pro rata on Common Stock of Restricted Subsidiaries
held by minority stockholders;
(ii) purchase, redeem, defease, retire or otherwise acquire for
value ("Retire" and correlatively, a "Retirement") any Equity
Interests of the Company or any of its Restricted Subsidiaries or
other Affiliate of the Company (other than any such Equity Interests
owned by the Company or any Restricted Subsidiary);
(iii) Retire for value any Indebtedness of the Company that is
subordinate in right of payment to the Notes, except at final
maturity or in accordance with the mandatory redemption or repayment
provisions set forth in the original documentation governing such
Indebtedness; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the
time of such Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of the Restricted
Payment;
(2) after giving effect to such Restricted Payment on a
pro forma basis as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, the Company
could incur at least $1.00 of additional Indebtedness pursuant
to the Consolidated Cash Flow Leverage Ratio test set forth in
Section 4.09(a) hereof; and
(3) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after January 1, 2000
42
(including any Restricted Payments made as permitted by clauses
(i), (v) and (vi) of Section 4.07(b)), minus any Restricted
Payment Credits, is less than the sum of
(x) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting
period) from January 1, 2000 to the end of the
Company's most recently ended fiscal quarter for
which internal financial statements are available 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
(y) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale of
Equity Interests of the Company or of debt securities
or Disqualified Stock of the Company that have been
converted into such Equity Interests (other than
Equity Interests (or convertible debt securities)
sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock) after
January 1, 2000 (other than any such Equity
Interests, the proceeds of which were used as set
forth in clause (b)(ii) below), plus
(z) for each issuance of Common Stock of the
Company after January 1, 2000 as consideration in a
transaction which results in either (a) a Person
becoming a Restricted Subsidiary, (b) a Person being
merged or consolidated with or into the Company or a
Restricted Subsidiary, or (c) a Person conveying all
or substantially all of its assets to the Company or
a Restricted Subsidiary, 100% of the product of (A)
the average Closing Price of the Common Stock for the
20 consecutive Trading Days immediately preceding the
date of issuance and (B) the number of shares of
Common Stock issued as consideration in the
transaction.
(b) The foregoing provisions in Section 4.07(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such date of declaration such payment
would have complied with the provisions of this Indenture;
(ii) the Retirement of (A) any Equity Interests of the Company
or any Restricted Subsidiary of the Company or (B) Indebtedness of
the Company that is subordinate to the Notes in exchange for, or out
of the proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary) of, Equity Interests of the Company (other
than Disqualified Stock);
(iii) the Retirement of any Indebtedness of the Company
subordinated in right of payment to the Notes in exchange for, or out
of the proceeds of the substantially concurrent incurrence of
Indebtedness of the Company (other than Indebtedness to a Restricted
Subsidiary of the Company), but only to the extent that such new
Indebtedness is permitted under Section 4.09 hereof and (1) is
subordinated in right of payment to the Notes at least to the same
extent as, (2) has a Weighted Average Life to Maturity at least as
long as and (3) has no scheduled principal payments due in any amount
earlier than, any equivalent amount of principal under the
Indebtedness so Retired;
43
(iv) the Retirement of any Indebtedness of the Company in
exchange for, or out of the proceeds of the substantially concurrent
incurrence of Indebtedness of the Company or any Restricted
Subsidiary but only to the extent that such incurrence is permitted
under Section 4.09 hereof and only to the extent that such
Indebtedness (1) is not secured by any assets of the Company to a
greater extent than the Retired Indebtedness was so secured, (2) has
a Weighted Average Life to Maturity at least as long as the Retired
Indebtedness and (3) is pari passu or subordinated in right of
payment to the Notes at least to the same extent as the Retired
Indebtedness;
(v) the Retirement of any Equity Interests of the Company or
any Restricted Subsidiary or held by any member of the Company's (or
any of its Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement; provided
that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests may not exceed $1.0 million in
any twelve-month period plus the aggregate cash proceeds received by
the Company during such twelve-month period from any reissuance of
Equity Interests by the Company to members of management of the
Company and its Subsidiaries;
(vi) the payment of cash in lieu of fractional shares (A)
payable as dividends on Equity Interests of the Company; or (B)
issuable upon conversion of or in exchange for securities convertible
into or exchangeable for Equity Interests of the Company; or (C)
issuable as a result of a corporate reorganization; provided that, in
the case of (A) and (B), the issuance of Equity Interests or
securities and, in the case of (C), the corporate reorganization, is
permitted hereunder the Indenture;
(vii) the Retirement of Equity Interests of the Company that may
be deemed to occur upon the exercise of options to acquire Capital
Stock of the Company if options are used to pay all or a portion of
the exercise price of the options;
(viii) the Retirement of Equity Interests of a Restricted
Subsidiary to the extent required by applicable law as a result of
the exercise of dissenters' rights by minority shareholders of a
Person who becomes a Restricted Subsidiary; provided that the
aggregate amount paid for the Retirement of Equity Interests pursuant
to this clause (viii) may not exceed $25.0 million; and
(ix) other Restricted Payments made by the Company or any
Restricted Subsidiary, provided that the aggregate amount of all
Restricted Payments made pursuant to this clause (ix) may not exceed
$2.0 million;
provided, except in the case of clauses (i), (ii), (iii), (iv), and (vii), no
Default or Event of Default shall have occurred and be continuing or occur as a
consequence of the actions or payments set forth therein.
(c) A Permitted Investment that ceases to be a Permitted Investment
pursuant to the definition thereof set forth in Section 1.01 hereof, shall
become a Restricted Investment, deemed to have been made on the date that it
ceases to be a Permitted Investment.
(d) The Board of Directors of the Company may designate any
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default or an Event of Default pursuant to Article 6 hereof, provided,
however, the Company may not designate Mpower or any Subsidiary which holds any
44
permit or license which is material to the operations of the Company and its
Restricted Subsidiaries taken as a whole as an Unrestricted Subsidiary. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
such Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation, except to the extent repaid in cash, and shall reduce
the amount available for Restricted Payments under paragraph (a) of this Section
4.07. All such outstanding Investments will be deemed to constitute Investments
in an amount equal to the greatest of (x) the net book value of such Investments
at the time of such designation, (y) the fair market value of such Investments
at the time of such designation and (z) the original fair market value of such
Investments at the time they were made. Such designation will only be permitted
if such Restricted Payment would be permitted at such time.
(e) The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.09 hereof and (ii) no Default or Event of Default
pursuant to Article 6 hereof would be in existence following such designation.
(f) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements. The Trustee
shall have no duty or obligation to confirm or verify the calculations set forth
in such Officers' Certificate.
SECTION 4.08. 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 to become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries on its Capital Stock or
with respect to any other interest or participation in, or measured
by, its profits, or pay any Indebtedness owed to the Company or any
of its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(iii) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries.
The foregoing shall not restrict any encumbrances or restrictions:
(a) existence on the Issue Date;
(b) existing under or by reason of applicable law;
45
(c) existing with respect to any Person or the property or
assets of a Person acquired by the Company or any Restricted
Subsidiary, existing at the time of the acquisition and not incurred
in contemplation of such acquisition, which encumbrances or
restrictions are 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;
(d) existing by reason of customary non-assignment provisions in
leases entered into in the normal course of business and consistent
with past practices;
(e) existing under or by reason of Indebtedness in respect of a
Permitted Refinancing, provided that the restrictions contained in
the agreements governing such Refinancing Indebtedness are not
materially more restrictive than those contained in the agreements
governing the Indebtedness being refinanced;
(f) with respect to clause (iii) above, existing under or by
reason of performance bonds or similar security for performance which
encumbrances or restrictions do not cover any asset other than the
asset associated with the Company's performance;
(g) existing under or by reason of Indebtedness incurred under
Section 4.09(b)(i) or (b)(ii) hereof;
(h) existing under or by reason of this Indenture and the
Notes; or
(i) with respect to a Restricted Subsidiary, imposed pursuant to
an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and
assets of, the Restricted Subsidiary, provided the sale or
disposition is permitted by the terms of this Indenture; or
(i) in the case of clauses (a), (c), (d), (e), (f), (g), (h) and
(i) above, any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are not materially more
restrictive with respect to such dividend and other payment
restrictions than those contained in such instruments as in
effect on the date of their incurrence or, if later, the Issue
Date.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
(a) The Company and its Restricted Subsidiaries shall not, directly or
indirectly, (i) create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable for the payment of (collectively, "incur" and,
correlatively, "incurred" and "incurrence") any Indebtedness (including, without
limitation, Acquired Debt) or (ii) issue any Disqualified Stock; provided,
however, that the Company and/or any of its Restricted Subsidiaries may incur
Indebtedness (including, without limitation, Acquired Debt) or issue shares of
Disqualified Stock if, after giving effect to the incurrence of such
Indebtedness or the issuance of such Disqualified Stock, the Consolidated Cash
Flow Leverage Ratio for the Company, determined on a pro forma basis (including
a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued at the
beginning of the period
46
used to calculate the Consolidated Cash Flow Leverage Ratio, does not exceed 6.0
to 1. If the Company incurs any Indebtedness or issues or redeems any Preferred
Stock subsequent to the commencement of the period for which such ratio is being
calculated but prior to the event for which the calculation of the ratio is
made, then the ratio will be calculated giving pro forma effect to any such
incurrence of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable period. In making
such calculation on a pro forma basis, interest attributable to Indebtedness
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period.
(b) The foregoing limitation in Section 4.09(a) shall not apply to (with
each exception to be given independent effect):
(i) the incurrence by the Company and/or any of its Restricted
Subsidiaries of Indebtedness under the Credit Facility in an
aggregate principal amount at any one time outstanding (with letters
of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company and/or any of its
Restricted Subsidiaries under the letters of credit) not to exceed
$150.0 million in the aggregate at any one time outstanding, less the
aggregate amount of all Net Proceeds of Asset Sales applied to
permanently reduce the commitments with respect to such Indebtedness
pursuant to Section 4.10 hereof;
(ii) the incurrence by the Company and/or any of its Restricted
Subsidiaries of Vendor Indebtedness, provided that the aggregate
amount of such Vendor Indebtedness incurred does not exceed 100% of
the total cost of the Telecommunications Related Assets financed with
Vendor Indebtedness;
(iii) the incurrence by the Company and/or any of its Subsidiaries of
the Existing Indebtedness;
(iv) the incurrence by the Company and/or any of its Restricted
Subsidiaries of Indebtedness in an aggregate amount not to exceed
$25.0 million at any one time outstanding;
(v) the incurrence by the Company of Indebtedness, but only to the
extent the Indebtedness has a final maturity no earlier than the
final maturity of the Notes and a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Notes, in an aggregate principal amount not to exceed 2.0 times the
sum of the net cash proceeds received by the Company after January 1,
2000 from the issuance and sale of Equity Interests of the Company,
other than Disqualified Stock, or the issuance and sale of debt
securities or Disqualified Stock of the Company that have been
converted into Equity Interests, in each case, other than Equity
Interests or convertible debt securities sold to a Restricted
Subsidiary, plus the fair market value of Equity Interests, other
than Disqualified Stock, or the issuance and sale of debt securities
or Disqualified Stock of the Company that have been converted into
Equity Interests, issued after January 1, 2000 in connection with an
acquisition of a Telecommunications Business or Telecommunications
Related Assets;
(vi) the incurrence (a "Permitted Refinancing") by the Company and/or
any of its Restricted Subsidiaries of Indebtedness issued in exchange
for, or the proceeds of which are used to refinance, replace, refund
or defease ("Refinance" and correlatively, "Refinanced" and
47
"Refinancing") Indebtedness, other than Indebtedness incurred
pursuant to clause (i) above, but only to the extent that:
(1) the net proceeds of such Refinancing Indebtedness
shall not exceed the principal amount of and premium, if any,
and accrued interest on the Indebtedness so Refinanced (or if
such Indebtedness was issued at an original issue discount, the
original issue price plus amortization of the original issue
discount at the time of the repayment of the Indebtedness so
Refinanced) plus the fees, expenses and costs of such
Refinancing and prepayment premiums, if any, in connection with
the Refinancing;
(2) the Refinancing Indebtedness shall have a final
maturity no earlier than, and a Weighted Average Life to
Maturity equal to or greater than, the final maturity and
Weighted Average Life to Maturity of the Indebtedness being
Refinanced; and
(3) if the Indebtedness being Refinanced is
subordinated in right of payment to the Notes, the Refinancing
Indebtedness shall be 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 so Refinanced;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the
Company and any of its Restricted Subsidiaries;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate or foreign currency risk with
respect to any floating rate Indebtedness that is permitted by the
terms of this Indenture to be outstanding;
(ix) the incurrence of Acquired Debt, to the extent that the
principal amount of the Acquired Debt does not exceed the aggregate
book value of the Telecommunications Related Assets acquired
concurrently with the incurrence of the Acquired Debt; and
(x) the incurrence by the Company of Indebtedness to the extent the
net proceeds thereof are promptly:
(1) used to purchase Notes tendered in a Change of
Control Offer made as a result of a Change of Control; or
(2) deposited to defease the Notes as described below
in Article 8.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories described in clauses (i) through (ix) above or is entitled to be
incurred pursuant to Section 4.09(a), the Company, in its sole discretion, may
classify, and may from time to time reclassify, such item in any manner that
complies with this Section and such item shall be treated as having been
incurred pursuant to only one of such clauses or pursuant to Section 4.09(a).
Accrual of interest or dividends, the accretion of accreted value or liquidation
preference and the payment of interest or dividends in the form of additional
Indebtedness, Common Stock or Preferred Stock shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section.
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SECTION 4.10. ASSET SALES.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, whether in a single transaction or a series of related
transactions occurring within any twelve-month period,
(i) sell, lease, convey, dispose or otherwise transfer any
assets (including by way of a Sale and Leaseback Transaction) other
than sales, leases, conveyances, dispositions or other transfers (A)
in the ordinary course of business, (B) to the Company by any
Restricted Subsidiary or from the Company to any Restricted
Subsidiary, (C) that constitute a Restricted Payment, Investment or
dividend or distribution permitted under Section 4.07 hereof or (D)
that constitute the disposition of all or substantially all of the
assets of the Company pursuant to Section 5.01 hereof or
(ii) issue or sell Equity Interests in any of its Restricted
Subsidiaries (other than an issuance or sale of Equity Interests of
any such Restricted Subsidiary to the Company or a Restricted
Subsidiary);
if the assets or securities
(x) have a Fair Market Value in excess of $2.0 million (excluding the
Fair Market Value of Telecommunications Equipment sold to ILECs in
connection with establishing virtual collocation arrangements with
such ILECs) or
(y) are sold or otherwise disposed of for Net Proceeds in excess of
$2.0 million (each of the foregoing, an "Asset Sale"), unless:
(a) no Default or Event of Default exists or would occur as a
result of the Asset Sale;
(b) the Company, or such Restricted Subsidiary, as the case may
be, receives (except in the case of sales of Telecommunications
Equipment to ILECs in connection with establishing virtual
collocations arrangements with such ILECs) consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the
assets or securities issued or sold or otherwise dispose of evidenced
by a resolution of the Board of Directors of the Company set forth in
an Officers' Certificate delivered to the Trustee; and
(c) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash,
provided that (A) the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto), of the Company or any Restricted Subsidiary
of the Company (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any
of the assets pursuant to a customary novation agreement that
releases the Company or the Restricted Subsidiary from further
liability, and (y) any notes, obligations or other securities
received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such
Restricted Subsidiary into cash, shall be deemed to be cash (to the
extent of the cash received in the case of subclause (y)) for
purposes of this clause (c); and (B) an amount equal to the Fair
Market Value (determined as set forth in clause (b) above) of
49
Telecommunications Related Assets received by the Company or any such
Restricted Subsidiary in connection with the Asset Sale that will be
used by the Company or any such Restricted Subsidiary in the
operation of a Telecommunications Business in the United States shall
be deemed to be cash for purposes of this clause (c).
The foregoing provisions shall not apply to a sale, lease, conveyance
or other disposition of all or substantially all of the assets of the Company,
which shall be governed by Article 5 hereof.
(b) Within 365 days after the receipt of Net Proceeds of any Asset
Sale, the Company (or such Restricted Subsidiary, as the case may be) may apply
the Net Proceeds from such Asset Sale to (i) permanently reduce the amounts
permitted to be borrowed by the Company under the terms of any of its Senior
Indebtedness; (ii) the purchase of Telecommunications Related Assets or Voting
Stock of any Person engaged in the Telecommunications Business in the United
States (provided that such Person concurrently becomes a Restricted Subsidiary
of the Company) or (iii) make a Voluntary Excess Proceeds Offer as permitted by
Section 3.09. Any Net Proceeds from any Asset Sales that are not so applied or
invested as provided in the preceding sentence, shall constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company shall be required to make an Excess Proceeds Offer in accordance
with the terms of Section 3.09 hereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of their
respective properties or assets to, or purchase any property or assets from, or
enter into any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless: (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person; (ii) such Affiliate Transaction
is approved by a majority of the disinterested directors on the Board of
Directors of the Company; and (iii) the Company delivers to the Trustee, with
respect to any Affiliate Transaction involving aggregate payments in excess of
$5.0 million, a resolution of a committee of independent directors of the
Company set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clauses (i) and (ii) above and (iv) the Company
delivers to the Trustee with respect to any Affiliate Transaction involving
aggregate payments in excess of $10.0 million, an opinion of an Independent
Appraiser that such Affiliate Transaction are fair to the Company or the
Restricted Subsidiary, as the case may be, from a financial point of view;
provided that (a) transactions pursuant to any employment, stock option or stock
purchase agreement entered into by the Company or any of its Restricted
Subsidiaries, or any grant, issuance or sale of stock, in the normal course of
business that are approved by the Board of Directors of the Company, (b)
transactions between or among the Company and its Restricted Subsidiaries, (c)
transactions permitted by Section 4.07 hereof, (d) loans and advances to
employees and officers of the Company or any of its Restricted Subsidiaries in
the normal course of business in an aggregate principal amount not to exceed
$1.0 million at any one time outstanding and (e) transactions pursuant to
existing contracts to which the Company is a party in accordance with the terms
of such contracts as they exist on the Issue Date, shall be deemed not to be
Affiliate Transactions.
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SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except for Permitted Liens.
SECTION 4.13. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into, assume, Guarantee or
otherwise become liable with respect to any Sale and Leaseback Transaction,
provided that the Company or any Restricted Subsidiary of the Company may enter
into any such transaction if (i) the Company or such Restricted Subsidiary would
be permitted under Sections 4.09 and 4.12 hereof to incur secured Indebtedness
in an amount equal to the Attributable Debt with respect to such transaction,
(ii) the consideration received by the Company or such Restricted Subsidiary
from such transaction is at least equal to the Fair Market Value of the property
being transferred, and (iii) the Net Proceeds received by the Company or such
Restricted Subsidiary from such transaction are applied in accordance with
Section 4.10 hereof.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
existence as a corporation, and the corporate, partnership or other existence of
any Restricted Subsidiary, 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 and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries, taken as a whole,
and that the loss thereof is not adverse in any material respect to the holders
of the Notes.
SECTION 4.15. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (the "Change of Control Offer") to each holder of Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Notes at a purchase price equal to 101% of the aggregate principal
amount thereof of the Notes plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"), provided that if the date of purchase is on or after an interest
record date and on or before the related interest payment date, any accrued
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be paid
or payable to holders who tender Notes pursuant to the Change of Control Offer.
Within thirty (30) days following any Change of Control, the Company shall mail
a notice to the Trustee and each holder stating: (1) that the Change of Control
Offer is being made pursuant to this
51
Section 4.15 and that all Notes or portions thereof tendered will be accepted
for payment; (2) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 40 days (unless required by applicable law)
from the date such notice is mailed (the "Change of Control Payment Date"); (3)
that any Note or portion thereof not tendered will continue to accrue interest
in accordance with its terms; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes or portions thereof accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (5) that holders electing to
have any Notes or portions thereof purchased pursuant to a Change of Control
Offer will 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 Paying
Agent at the address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date; (6) that
holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the holder, the principal
amount of Notes or portions thereof delivered for purchase, and a statement that
such holder is withdrawing his election to have such Notes or portions thereof
purchased; and (7) that holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. 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 or portions thereof in
connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each holder of Notes so accepted payment in an amount equal to
the purchase price for such Notes or portions thereof, and the Trustee shall
promptly authenticate and mail to each holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any; provided,
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
SECTION 4.16. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, engage in any business other than the
Telecommunications Business.
SECTION 4.17. INSURANCE.
The Company shall and shall cause each of its Restricted Subsidiaries
to at all times keep all of their respective properties which are of an
insurable nature insured, with insurers believed by the Company in good faith to
be financially sound and responsible.
52
SECTION 4.18. PAYMENTS FOR CONSENT.
No Obligor shall, or shall not permit any of its Affiliates to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or agreed to be paid to all holders of the Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
ARTICLE 5
SUCCESSORS; RELEASE
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving entity), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless:
(i) the Company is the surviving entity or the entity or Person
formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made is a corporation
organized or existing under the laws of the United States, any state
of the United States or the District of Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made (if other than a wholly-owned
Restricted Subsidiary) assumes all the obligations of the Company
under the Notes and this Indenture pursuant to a supplemental
indenture in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists;
(iv) except in connection with a merger or consolidation with or
into a wholly-owned Restricted Subsidiary or a sale, assignment,
transfer, lease, conveyance or other disposition to a wholly-owned
Restricted Subsidiary, the Company, or any entity or Person formed by
or surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other disposition has been
made, at the time of such transaction after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the
applicable fiscal quarter (including any Indebtedness incurred or
anticipated to be incurred in connection with or in respect
of such transaction or series of transactions), could either (A)
incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Cash Flow Leverage Ratio test described under Section
4.09 hereof or (B) would have (x) Total Market Capitalization of at
least $1.0 billion and (y) total Indebtedness (net of cash and cash
equivalents that are not restricted cash or restricted cash
equivalents as reflected on the Company's consolidated balance sheet
as of the time of such event) in an amount not greater than 30% of
its Total Market Capitalization;
53
(v) such transaction would not result in the loss, material
impairment or adverse modification or amendment of any authorization
or license of the Company or its Restricted Subsidiaries that would
have a material adverse effect on the business or operations of the
Company and its Restricted Subsidiaries taken as a whole; and
(vi) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each to the effect that, with
respect to the transaction, items (i) through (v) as stated above
have been satisfied.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this Indenture
referring to the Company shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company, herein; provided, however, that the predecessor Company shall
not be relieved from the obligations to pay the principal of, premium, if any,
and interest on the Notes, except in the case of a sale of all of the Company's
assets that meets the requirements of Section 5.01 hereof.
SECTION 5.03. OPTION TO RELEASE MGC.
(a) MGC may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate and upon compliance with the
conditions set forth in Section 5.03(c) below, elect to have all of its
obligations under this Indenture and the Notes automatically released and
discharged without any action required on the part of the holders of the Notes,
at any time when:
(i) less than 33 1/3 % of the aggregate principal amount of the
Existing Notes originally issued are outstanding; and
(ii) Mpower owns 100% of the issued and outstanding Equity
Interests of MGC and owns any outstanding debt securities convertible
into or exchangeable for Equity Interests of MGC.
(b) Upon MGC's exercise of its option under Section 5.03(a), MGC
shall be automatically released and discharged from all of its obligations with
respect to the Indenture and all outstanding Notes on the date the conditions
set forth in Section 5.03(c) are satisfied (hereinafter, the "Release") and the
Trustee, on demand of and at the expense of MGC, shall execute proper
instruments acknowledging the same.
(c) The following shall be the conditions to the application of
Section 5.03(a):
54
(i) Each Obligor shall have delivered to the Trustee an Opinion
of Counsel in the United States reasonably acceptable to the Trustee
confirming that: (x) the holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Release (other than income, gain or loss in respect of
the Notes at the time and in the amounts as would have been the case
had such Release not occurred) and (y) after the Release, the Notes
will be as freely tradeable under the Securities Act as they were
immediately prior to the Release; provided, however, if the Opinion
of Counsel required by clause (x) cannot be obtained, the provisions
of this Section 5.03(c)(i) shall nonetheless be satisfied if Mpower
agrees, pursuant to a supplemental indenture between Mpower and the
Trustee, to promptly pay to each holder of outstanding Notes such
additional amounts as will be sufficient to make each holder whole as
if the Release had not occurred.
(ii) No Default or Event of Default shall have occurred and be
continuing on the date of such Release:
(iii) Immediately following the effectiveness of the Release,
MGC or its successor entity is a Restricted Subsidiary of Mpower;
(iv) Such Release shall not result in a breach or violation of,
or constitute a default under, any material agreement or instrument
to which either Obligor or any of their respective Subsidiaries is a
party or by which any of them are bound; and
(v) Each Obligor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent to the effectiveness of the Release have
been complied with.
(d) If, in the opinion of counsel to the Obligors, it is necessary to
exchange the outstanding Notes for new notes of Mpower ("New Notes") in order to
properly effectuate the Release and comply with applicable federal and state
securities laws, then the Notes shall be mandatorily exchangeable into New Notes
provided that such exchange (the "New Note Exchange") shall not commence until
the Obligors have provided to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee that (i) other than such changes as
are necessary to reflect that MGC is not longer an Obligor under the Indenture
and the Notes, the terms of the New Notes are identical to the Notes; (ii) the
holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of the New Note Exchange (other than
income, gain or loss in respect of the New Notes at the time and in the amounts
as would have been the case had such New Note Exchange not occurred); and (iii)
the New Notes shall be as freely tradeable under the Securities Act as they were
immediately before the New Note Exchange.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default":
55
(a) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes;
(b) default in payment when due of principal or premium, if any, on
the Notes at maturity, upon redemption or otherwise;
(c) failure by the Company to perform or comply with the provisions
of Sections 4.07, 4.09, 4.10, 4.15 or 5.01 hereof;
(d) failure by any Obligor for 30 days after notice to the Obligors
from the Trustee or to the Obligors and the Trustee by the
holders of at least 25% in principal amount of the Notes then
outstanding to comply with its other agreements in this
Indenture or the Notes;
(e) default under any mortgage, indenture 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 the 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 Issue Date, which default (x) is
caused by a failure to pay when due principal, premium, if any,
or interest on such Indebtedness within the grace period
provided in such Indebtedness (a "Payment Default"), and the
principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness of the Company
or any Significant Subsidiary under which there has been a
Payment Default or the maturity of which has been accelerated as
provided in clause (y), aggregates $5.0 million or more or (y)
results in the acceleration (which acceleration has not been
rescinded) of such Indebtedness prior to its express maturity
and the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $5.0 million or more;
(f) failure by the Company or any of its Significant Subsidiaries to
pay final judgments (other than any judgment as to which a
reputable insurance company has accepted full liability in
writing) aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed within 45 days after their
entry; and
(g) the Company or any of its Significant Subsidiaries pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
56
(E) admits in writing that it is generally not paying its
debts (other than debts which are the subject of a bona fide
dispute) as they become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that;
(A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case;
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries;
or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries;
and the order or decree remains unstayed and in effect for 60
consecutive days; provided, however; that if the entry of such
order or decree is appealed and dismissed on appeal or otherwise
has ceased to be in effect, then the Event of Default hereunder
by reason of the entry of such order or decree shall be deemed
to have been cured and the related acceleration, provided that
no other Event of Default has occurred and is continuing, shall
be deemed rescinded.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing under this
Indenture, the Trustee, by notice to the Obligors, or the holders of at least
25% in principal amount of the Notes then outstanding, by notice to the Obligors
and the Trustee, may declare all the Notes to be due and payable immediately.
Upon such declaration, the principal of, premium, if any, and accrued and unpaid
interest and Liquidated Damages, if any, on the Notes shall be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising under Sections 6.01(g) or (h) hereof with respect to the Company or any
of its Significant Subsidiaries, the foregoing amount shall ipso facto become
due and payable without further action or notice. No premium is payable upon
acceleration of the Notes except that in the case of an Event of Default that is
the result of an action or inaction by the Company or any of its Restricted
Subsidiaries intended to avoid restrictions on or premiums related to
redemptions of the Notes contained in this Indenture or the Notes, the amount
declared due and payable shall include the premium that would have been
applicable on a voluntary prepayment of the Notes or, if voluntary prepayment is
not then permitted, the premium set forth in this Indenture. Holders of the
Notes may not enforce this Indenture or the Notes except as provided herein.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
or any Restricted Subsidiary with the intention of avoiding payment of the
premium that the Company would have had to pay if the Company then had elected
to redeem the Notes pursuant to Section 3.07 hereof, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law.
If an Event of Default occurs prior to April
57
1, 2005 by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company or any Restricted Subsidiary with the intention of
avoiding the prohibition on redemption of the Notes prior to such date pursuant
to Section 3.07 hereof, then the premium payable for purposes of this paragraph
for each of the years beginning on April 1 of the years set forth below shall be
as set forth in the following table, expressed as a percentage of the amount
that would otherwise be due but for the provisions of this paragraph, plus
accrued interest, if any, to the date of payment:
Year Percentage
2000...................................... 113.000%
2001...................................... 111.700%
2002...................................... 110.400%
2003...................................... 109.100%
2004...................................... 107.800%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, premium,
if any, interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding 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 of a Note 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. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Except as set forth in Section 6.02, holders of not less than
a majority in aggregate principal amount of the Notes then outstanding, by
notice to the Trustee, may on behalf of the holders of all of the Notes, waive
any existing Default or Event of Default and its consequences. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with the law or this Indenture that the Trustee, in its sole
discretion, determines may be unduly prejudicial to the rights of other holders
of Notes or that may involve the Trustee in personal liability. The Trustee may
take any other action which it deems proper which is not inconsistent with any
58
such direction. Notwithstanding any provision to the contrary in this Indenture,
the Trustee shall not be obligated to take any action with respect to the
provisions of the last paragraph of Section 6.02 hereof unless directed to do so
pursuant to this Section 6.05.
SECTION 6.06. LIMITATION ON SUITS.
No holder of any Note shall have any right to institute any
proceeding with respect to this Indenture or the Notes or for any remedy
thereunder, unless:
(i) the holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(ii) the holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(iii) such holder of a Note or holders of the Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense; and
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity.
Otherwise, no holder of any Note shall have any right to
institute any proceeding with respect to this Indenture or the Notes or for any
remedy thereunder, except:
(x) a holder of a Note may institute suit for enforcement of
payment of the principal of and premium, if any, or interest on such Note on or
after the respective due dates expressed in Liquidated Damages, if any, such
Note (including upon acceleration thereof) or
(y) the holders of a majority of the principal amount of Notes
then outstanding may institute any proceeding with respect to this Indenture, or
the Notes or any remedy thereunder, including without limitation acceleration,
provided that, upon institution of any proceeding or exercise of any remedy such
holders provide the Trustee with prompt written notice thereof.
A holder of a Note may not use this Indenture to prejudice the
rights of another holder of a Note or to obtain a preference or priority over
another holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note, 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 the holder of the Note.
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SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
hereof occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Obligors for the
whole amount of principal of, premium and Liquidated Damages, if any, and
interest remaining unpaid on the Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due to the Trustee under Section 7.07 hereof.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to 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 (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the holders of the Notes allowed in any judicial proceedings relative to the
Obligors (or any other obligor upon the Notes), the Obligors' creditors or the
Obligor's property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any Custodian in any such judicial proceeding is hereby authorized by each
holder of a Note to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the holders of
the Notes, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the holders of the Notes may be entitled
to receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing contained herein shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any holder of a Note any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any holder of a
Note thereof, or to authorize the Trustee to vote in respect of the claim of any
holder of a Note in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expenses
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: (i) first to holders of Notes, for amounts due and
unpaid on such Notes for interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Notes for interest,
and (ii) second, to the extent any other monies are available, to holders of
Notes for
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amounts due and unpaid on such Notes for principal and premium and Liquidated
Damages, if any, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal and premium and
Liquidated Damages, if any; and
Third: to the Obligors or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
such payment to holders of Notes.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
holder of a Note pursuant to Section 6.07 hereof, or a suit by holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and shall use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, 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 liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible 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 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any holders of Notes, including, without limitation,
the provisions of Section 6.05 hereof, unless such holders shall have provided
to the Trustee security and indemnity satisfactory to the Trustee against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Obligors.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or documents, 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 Obligors, personally or by agent or attorney.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
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(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 conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from an Obligor shall be sufficient if
signed by an Officer of the Obligor. A permissive right granted to the Trustee
hereunder shall not be deemed an obligation to act.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture, at the request or
direction of any of the holders unless such holders shall have provided to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(g) The Trustee shall not be charged with knowledge of any
Default or Event of Default unless either (i) a Responsible Officer of the
Trustee shall have actual knowledge of such Default or Event of Default or (ii)
written notice of such Default or Event of Default shall have been given to the
Trustee by an Obligor or any Holder.
SECTION 7.03. 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 an Obligor or any
Affiliate of an Obligor with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest, it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as Trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 7.10
and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Obligors' use of the proceeds from the Notes or
any money paid to the Obligors or upon the Obligors' direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to a Responsible Officer of the Trustee, the Trustee shall mail
to holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a
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committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15th beginning with the May 15th
following the date of this Indenture, the Trustee shall mail to the holders of
the Notes a brief report dated as of such reporting date that complies with TIA
ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA ss. 313(b). The Trustee shall also transmit
by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the
holders of Notes shall be mailed to the Obligors and filed with the Commission
and each stock exchange on which the Notes are listed. The Obligors shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Obligors shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Obligors shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Obligors shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture, except
any such loss, liability or expense as may be attributable to the negligence or
bad faith of the Trustee. The Trustee shall notify the Obligors promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Obligors shall not relieve the Obligors of their obligations hereunder. The
Obligors shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee, in its sole discretion, may elect to have separate counsel selected
by it and the Obligors shall pay the reasonable fees and expenses of such
counsel. The Obligors need not pay for any settlement made without their
consent, which consent shall not be unreasonably withheld.
The obligations of the Obligors under this Section 7.07 shall
be joint and several and shall survive the resignation or removal of the Trustee
and the satisfaction and discharge of this Indenture.
To secure the Obligors' payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, interest and Liquidated Damages, if any, on particular Notes.
Such Lien shall survive the resignation or removal of the Trustee and the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the
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fees and expenses of its agents and counsel) are intended to constitute expenses
of administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Obligors. The
holders of a majority in principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Obligors in writing. The
Obligors may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Obligors shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Obligors.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Obligors, or the holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any holder of a Note
who has been a holder of a Note for at least six months fails to comply with
Section 7.10 hereof, such holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Obligors. 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 of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Obligors' obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination by
federal or state authority and shall have a combined capital and surplus of at
least $25.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate and at any time,
with respect to the Notes, elect to have either Section 8.02 or 8.03 hereof be
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Obligors shall be deemed to have
been discharged from their obligations with respect to all outstanding Notes on
the date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, such Legal Defeasance means that the
Obligors shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all of its other obligations under such Notes
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and this Indenture (and the Trustee, on demand of and at the expense of the
Obligors, shall execute proper instruments acknowledging the same), except for
the following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of holders of outstanding Notes to receive from the
trust described below payments in respect of the principal of, premium, if any,
and interest on and Liquidated Damages with respect to such Notes when such
payments are due, or on the redemption date, as the case may be; (b) the
Obligors' obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust; (c) the rights, powers, trust, duties and immunities of the
Trustee, and the Obligors' obligations in connection therewith; and (d) the
Legal Defeasance provisions of this Indenture.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Obligors shall be released from
their obligations under the covenants contained in Sections 4.03, 4.04, 4.05,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, and 4.18 hereof and
Article 5 hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes, the Obligors may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or Section 8.03 hereof to the outstanding Notes:
(a) The Obligors shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with the
provisions of this Article 8 applicable to it), in trust, for purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the holders of the Notes, (i)
cash in U.S. dollars, (ii) non-callable Government Securities, or (iii)
a combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants selected by the Obligors, to pay the principal of, premium
and Liquidated Damages, if any, and interest on the outstanding Notes,
on the stated maturity or
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on the applicable optional redemption date, as the case may be, of such
principal or installment of principal of, premium, if any, or interest
on or Liquidated Damages with respect to the outstanding Notes;
(b) In the case of Legal Defeasance, the Obligors shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Obligors
have received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the Issue Date, 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 of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
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 Legal Defeasance had not occurred;
(c) In the case of Covenant Defeasance, the Obligors shall
have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the holders
of the outstanding Notes 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;
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) The Obligors shall have delivered to the Trustee an
Opinion of Counsel to the effect that after the 91st day (or such other
applicable date) following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) Each Obligor shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Obligors with the intent of preferring the holders of Notes over the
other creditors of either Obligor with the intent of defeating,
hindering, delaying or defrauding creditors of either Obligor or
others; and
(h) Each Obligor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant
to Section 8.04 hereof in respect of the outstanding Notes shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including an Obligor acting as Paying Agent) as the Trustee may
determine, to the holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
and Government Securities (including any proceeds thereof) need not be
segregated from other funds except to the extent required by law.
The Obligors shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to Section 8.04 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Obligors from time to time upon the request
of the Obligors any money or Government Securities held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO THE OBLIGORS
Any money deposited with the Trustee or any Paying Agent, or then
held by the Obligors, in trust for the payment of the principal of, premium, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and payable shall be paid to the
Obligors on its written request or (if then held by the Obligors) shall be
discharged from such trust; and the holder of such Note shall thereafter, as a
creditor, look only to the Obligors for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Obligors as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Obligors cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Obligors.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
Dollars or Government Securities in accordance with Section 8.02 or 8.03 hereof,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
69
application, then the Obligors' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Obligor makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Obligor shall be subrogated to the rights
of the holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 hereof, the Obligors and the Trustee may
amend or supplement this Indenture or the Notes without the consent of any
holder of Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of an Obligors' obligations to
holders of the Notes in the case of a merger or consolidation;
(d) to make any change that would provide any additional rights or
benefits to the holders of the Notes or that does not, in the
opinion of the Board of Directors of the Company, adversely
affect the legal rights under this Indenture of any such holder;
or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust
Indenture Act.
Upon the request of the Obligors accompanied by a resolution of the
Board of Directors of each Obligor authorizing the execution of any such amended
or supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Obligors in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture which affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
The Obligors and the Trustee may amend or supplement this Indenture
or the Notes or any amended or supplemental Indenture with the written consent
of the holders of at least a majority in aggregate principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for the Notes), and any existing Default and its consequences
or compliance with any provision of this Indenture or the Notes may be waived
with the consent of the holders
70
of a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for the
Notes).
Upon the request of the Obligors accompanied by a resolution of the
Board of Directors of each Obligors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Obligors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Obligors shall mail to the holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Obligors to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Obligors with
any provision of this Indenture or the Notes. However, without the consent of
each holder affected, an amendment or waiver may not (with respect to any Note
held by a non-consenting holder of Notes):
(i) reduce the principal amount of Notes whose holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of
the Notes (other than Sections 3.09 and 4.15 hereof);
(iii) reduce the rate of or change the time for payment of interest
on any Notes;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes
(except a rescission of acceleration of the Notes by the
holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted
from such acceleration);
(v) make any Note payable in money other than that stated in the
Notes;
(vi) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of, premium, if any, or
interest on the Notes;
(vii) waive a redemption payment with respect to any Note (other
than a payment required by Sections 3.09 or 4.15 hereof);
71
(viii) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, at any time prior to the occurrence of a Change
of Control or the accumulation by the Company of Excess Proceeds in excess of
$10.0 million, the covenants described under Sections 3.09 and 4.15 hereof, as
applicable, may be altered and any payment which may be required to be paid
pursuant to these covenants may be waived by the holders of at least a majority
of the principal amount of the Notes then outstanding, including consents
obtained in connection with a tender offer or exchange offer for Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a holder of a Note is a continuing consent by the holder of a Note and
every subsequent holder of a Note or portion of a Note that evidences the same
debt as the consenting holder's Note, even if notation of the consent is not
made on any Note. However, any such holder of a Note or subsequent holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every holder of a Note.
The Obligors may fix a record date for determining which holders of
the Notes must consent to such amendment, supplement or waiver. If the Obligors
fix a record date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of holders of Notes furnished to the Trustee prior to such solicitation
pursuant to Section 2.05 hereof or (ii) such other date as the Obligors shall
designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Obligors in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of
72
the Trustee. An Obligor may not sign an amendment or supplemental Indenture
until its Board of Directors approves it. In signing or refusing to sign any
amendment or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.01 hereof) shall be fully protected in relying upon,
in addition to documents required by Section 10.04 hereof, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or supplemental indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it will be valid and binding upon the
Obligors in accordance with its terms.
73
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 10.02. NOTICES.
Any notice or communication by any Obligors or the Trustee to the
other is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to an Obligor:
MGC Communications, Inc.
Mpower Holding Corporation
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to the Trustee:
HSBC Bank USA
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Issuer Services
An Obligor or the Trustee, by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to holders of
Notes) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by over night air courier guaranteeing next day delivery.
Any notice or communication to a holder of a Note shall be mailed by
first class mail to its address shown on the register kept by the Registrar. Any
notice or communication shall also be so mailed
74
to any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a holder of a Note or any defect in
it shall not affect its sufficiency with respect to other holders of Notes.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If an Obligor mails a notice or communication to holders of Notes, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders of the Notes may communicate pursuant to TIA ss. 312(b) with
other holders of Notes with respect to their rights under this Indenture or the
Notes. The Obligors, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Obligors to the Trustee to
take any action under this Indenture, each Obligor shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall include:
(a) a statement that the Person 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;
(c) a statement that, in the opinion of such Person, 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
satisfied; and
75
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE.
The Trustee may make reasonable rules for action by or at a meeting
of holders of Notes. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of any
Obligor, as such, shall have any liability for any obligations of the Obligors
under the Notes or this Indenture or for any claim based on, in respect of, or
by reason of such obligations or their creation. Each holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the 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 Commission that such a waiver is against public policy.
SECTION 10.08. GOVERNING LAW.
The internal law of the State of New York shall govern and be used to
construe this Indenture and the Notes.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of the Obligors in this Indenture and the Notes shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. COUNTERPART ORIGINALS.
76
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
77
SIGNATURES
MGC COMMUNICATIONS, INC.
By:
-------------------------------------
Name:
Title:
MPOWER HOLDING CORPORATION
By:
-------------------------------------
Name:
Title:
HSBC BANK USA
Trustee
By:
-------------------------------------
Name:
Title:
EXHIBIT A
(Face of Note)
13% Senior Note due 2010
No. $_______________
CUSIP No.
MGC Communications, Inc.
and
Mpower Holding Corporation
jointly and severally, promise to pay to Cede & Co.
or its registered assigns,
the principal sum of $____________
on April 1, 2010.
Interest Payment Dates: April 1 and October 1, commencing October 1, 2000.
Record Dates: March 15 and September 15 (whether or not a Business Day).
Dated: ____________, ____ MGC COMMUNICATIONS, INC.
By:
---------------------------------
Title:
By:
---------------------------------
Title:
(SEAL)
Dated: ____________, ____ MPOWER HOLDING CORPORATION
By:
---------------------------------
Title:
By:
---------------------------------
Title:
(SEAL)
MGC COMMUNICATIONS, INC. MAY BE RELEASED OF ALL ITS OBLIGATIONS UNDER THIS
NOTE AND THE INDENTURE PURSUANT TO SECTION 5.03 OF THE INDENTURE.
A-1
Trustee's Certification of Authentication
This is one of the Notes referred to in the within-mentioned Indenture:
HSBC BANK USA,
as Trustee
By:
------------------------------------
(Authorized Signatory)
Additional provisions of this Note are set forth on the other
side of this Note.
A-2
(Back of Note)
13% Senior Note due 2010
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL SECURITY
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.1
"THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY HAS NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY OR
ANY INTEREST OR PARTICIPATION HEREIN MAY NOT BE OFFERED, 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, REGISTRATION.
THE HOLDER OF THE SECURITY BY ITS ACCEPTANCE HEREOF AGREES (A)
TO OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY
ONLY (1) TO THE COMPANY, (2) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (5) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT OR (6) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT TO
CLAUSE (5) OR (6), BASED ON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES
TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE
--------
1 Legend to be included only on Global Securities.
A-3
JURISDICTION AND (B) THAT IT WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
Capitalized terms used herein have the meanings assigned to them in
the Indenture (as defined below) unless otherwise indicated.
1. Interest. MGC Communications, Inc., a Nevada corporation ("MGC"),
and Mpower Holding Corporation, a Delaware corporation ("Mpower"), promise to
pay interest on the principal amount of this Note at the rate and in the manner
specified below. Interest will accrue at the rate of 13% per annum and will be
payable semi-annually, in arrears, on April 1 and October 1 of each year (each
an "Interest Payment Date"), commencing on October 1, 2000, or if any such day
is not a Business Day on the next succeeding Business Day to holders of record
of the Notes at the close of business on the immediately preceding March 15 and
September 15, whether or not a Business Day. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the Issue Date. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. To the extent lawful, the
Obligors shall pay interest on overdue principal at the then applicable interest
rate on the Notes; they shall pay interest on overdue installments of interest
(without regard to any applicable grace periods) at the same rate to the extent
lawful.
2. Method of Payment. The Obligors will pay interest on the Notes
(except defaulted interest) to the Persons who are registered holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date. Principal, premium, Liquidated Damages, if any, and
interest on the Notes will be payable by wire transfer of immediately available
funds to the account(s) specified by the holder thereof, or, if no such
account(s) are specified, by mailing a check to each such holder's registered
address.
3. Paying Agent and Registrar. Initially, the Trustee will act as
Paying Agent and Registrar. The Obligors may change any Paying Agent, Registrar
or co-registrar without prior notice to any holder of a Note. The Obligors may
act in any such capacity.
4. Indenture. The Obligors issued the Notes under an Indenture, dated
as of March 24, 2000 (the "Indenture"), between the MGC, Mpower 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, as amended (15
U.S. Code ▇▇.▇▇. 77aaa-77bbbb), as in effect on the date of the Indenture. The
Notes are subject to all such terms, and holders of Notes are referred to the
Indenture and such act for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes.
5. Release. MGC may, upon compliance with the conditions set forth in
the Indenture, elect to have all of its obligations under the Indenture and the
Notes automatically released and discharged without any action required on the
part of the holders of the Notes, at any time when (i) less than 33 1/3 % of the
aggregate principal amount of the Existing Notes originally issued are
outstanding and (ii) Mpower owns 100% of the issued and outstanding Equity
Interests of MGC and owns any outstanding debt securities convertible into or
exchangeable for Equity Interests of MGC.
A-4
6. Optional Redemption. The Notes will not be redeemable at the
Company's option prior to April 1, 2005. Thereafter, the Notes will be subject
to redemption at the option of the Company, in whole or in part at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 1 of the years indicated below:
Year Percentage
---- ----------
2005........................................ 106.500%
2006 ....................................... 104.330%
2007 ....................................... 102.166%
2008 and thereafter......................... 100.000%
Notwithstanding the provisions of Section 3.07(a) of the Indenture, in
the event of the sale by the Company prior to April 1, 2003 of its Capital Stock
(other than Disqualified Stock) in one or more Equity Offerings, up to a maximum
of 35% of the aggregate principal amount of the Notes originally issued,
including any Notes issued after the Issue Date under the Indenture, will, at
the option of the Company, be redeemable from the net cash proceeds of one or
more Equity Offerings (but only to the extent the proceeds of such Equity
Offering consist of cash or readily marketable cash equivalents) at a redemption
price equal to 113% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption date,
provided that at least 65% of the aggregate principal amount of the Notes
originally issued, including any Notes issued after the Issue Date under the
Indenture, remain outstanding immediately after the occurrence of such
redemption and that such redemption occurs within 90 days of the date of the
closing of such Equity Offering.
7. Mandatory Redemption. Except as set forth in Sections 3.09 and
4.15 of the Indenture, the Company will not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.
8. Repurchase at Option of holder. (a) Upon the occurrence of a
Change of Control, the Company shall be required to make an offer to repurchase
on the Change of Control Payment Date all or any part (equal to $1,000 or an
integral multiple thereof) of the outstanding Notes at a purchase price equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
and Liquidated Damages, if any, thereon to the Change of Control Payment Date.
Holders of Notes that are subject to an offer to purchase will receive a Change
of Control Offer from the Company prior to any related Change of Control Payment
Date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
(b) The Company shall be required when the cumulative amount of
Excess Proceeds from Asset Sales exceeds $10.0 million to offer to purchase the
maximum principal amount of Notes and Pari Passu 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 principal amount of the Notes and 100% of the accreted value or
100% of the outstanding principal amount, as applicable, of the Pari Passu
Notes, plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures set forth in Section 3.09 of the Indenture. If the aggregate
principal amount of Notes and the accreted value and/or aggregate principal
amount, as the case may be, of the Pari Passu Notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis based upon their principal amount or
accreted value, as applicable (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof shall be purchased). Holders of Notes that are the
subject of an offer to
A-5
purchase will receive an Excess Proceeds Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
9. Notice of Redemption. Notice of redemption shall 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 its registered
address. Notes may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a holder of Notes are to be redeemed. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount to be redeemed. On and
after the redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
10. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a holder of
a Note, among other things, to furnish appropriate endorsements and transfer
documents and the Obligors may require a holder of a Note to pay any taxes and
fees required by law or permitted by the Indenture. Neither the Obligors nor the
Registrar need exchange or register the transfer of any Note or portion of a
Note selected for redemption. Also, neither the Obligors nor the Registrar need
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed.
11. Persons Deemed Owners. Prior to due presentment to the Trustee
for registration of the transfer of this Note, the Trustee, any Agent and the
Obligors shall deem and treat the Person in whose name this Note is registered
as its absolute owner for the purpose of receiving payment of principal of,
premium, Liquidated Damages, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent nor the Obligors shall be affected by notice to the contrary.
The registered holder of a Note shall be treated as its owner for all purposes.
12. Amendments, Supplement and Waivers. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
holders of at least a majority in the principal amount of the then outstanding
Notes (including consents obtained in connection with a tender offer or exchange
offer for Notes). Without the consent of any holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency; to provide for uncertificated Notes in addition to or in place of
certificated Notes; to provide for the assumption of an Obligor's obligations to
holders of the Notes in case of a merger or consolidation; to make any change
that would provide any additional rights or benefits to the holders of the Notes
or that does not, in the opinion of the Board of Directors of the Company,
adversely affect the legal rights under the Indenture of any such holder; or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act. However,
without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes) reduce the
principal amount of Notes whose holders must consent to an amendment, supplement
or waiver; reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes; reduce the
rate of or change the time for payment of interest on any Notes; waive a Default
or Event of Default in the payment of principal of or premium, if any, or
interest on the Notes (except a rescission of acceleration of the Notes by the
holders of at least a majority in aggregate principal amount of the Notes and a
waiver of the payment default that resulted from such acceleration); make any
Note payable in money
A-6
other than that stated in the Notes; make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of, premium, if any, or interest on the Notes;
waive a redemption payment with respect to any Note; make any change in the
foregoing amendment and waiver provisions. Notwithstanding the foregoing, at any
time prior to the occurrence of a Change of Control or the accumulation by the
Company of Excess Proceeds in excess of $10.0 million, the covenants described
under Sections 3.09 and 4.15 hereof, as applicable, may be altered and any
payment which may be required to be paid pursuant to these covenants may be
waived by the holders of at least a majority of the principal amount of the
Notes then outstanding, including consents obtained in connection with a tender
offer or exchange offer for Notes.
13. Defaults and Remedies. Events of Default include: default for 30
days in the payment when due of interest on or Liquidated Damages, if any, with
respect to the Notes; default in payment when due of principal or premium, if
any, on the Notes at maturity, upon redemption or otherwise; failure by the
Company to perform or comply with the provisions described under Sections 4.07,
4.09, 4.10, 4.15 or 5.01 of the Indenture; failure by any Obligor for 30 days
after notice from the Trustee or the holders of at least 25% of the principal
amount of the Notes then outstanding to comply with its other agreements in the
Indenture or the Notes; default under any mortgage, indenture 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 the 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 Issue Date, which default (x) is caused by a Payment
Default, and the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness of the Company or any
Significant Subsidiary under which there has been a Payment Default or the
maturity of which has been accelerated as provided in clause (y), aggregates
$5.0 million or more or (y) results in the acceleration (which acceleration has
not been rescinded) of such Indebtedness prior to its express maturity and the
principal amount of any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or more;
failure by the Company or any of its Significant Subsidiaries to pay final
judgments (other than any judgment as to which a reputable insurance company has
accepted full liability in writing) aggregating in excess of $5.0 million which
judgments are not paid, discharged or stayed within 45 days after their entry;
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries. If any Event of Default occurs and is continuing,
the Trustee or the holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon such declaration, the principal of, premium, if any, and accrued and unpaid
interest and Liquidated Damages, if any, on the Notes shall be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries, the foregoing amount shall ipso
facto become due and payable without further action or notice. Holders of the
Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. The holders of a majority in aggregate principal amount of the Notes
then outstanding, by notice to the Trustee, may on behalf of the holders of all
of the Notes, waive any existing Default or Event of Default and its
consequences under the Indenture, except a continuing Default or Event of
Default in the payment of interest or Liquidated Damages or premium on, or the
principal of, the Notes.
14. Trustee Dealings with the Company. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for an Obligor or its Affiliates, and may
otherwise deal with an Obligor or its Affiliates, as if it were not Trustee;
however, if the Trustee acquires any conflicting interest, it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as Trustee or resign.
A-7
15. No Personal Liabilities of Directors, Officers, Employees and
Stockholders. No director, officer, employee, incorporator or stockholder of any
Obligor, as such, shall have any liability for any obligations of the Obligors
under the Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of the 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.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of
a holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to holders of Notes under the Indenture,
holders of Transfer Restricted Securities shall have all the rights set forth in
the Registration Rights Agreement.
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligors have
caused CUSIP numbers to be printed on the Notes and have directed the Trustee to
use CUSIP numbers in notices of redemption or exchange as a convenience to
holders of Notes. 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.
A-8
The Obligors will furnish to any holder of a Note upon written
request and without charge a copy of the Indenture. Request may be made to:
MGC Communications, Inc.
Mpower Holding Corporation
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Attention: General Counsel
A-9
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
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
face of this Note)
Signature Guarantee.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Company pursuant to Section 3.09 or Section 4.15 of the Indenture check the
appropriate box:
|_| Section 3.09 |_| Section 4.15
If you want to have only part of the Note purchased by the Company
pursuant to Section 3.09 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$________________
Date:____________
Your Signature:______________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY
The following exchanges of a part of this Global Security have
been made:
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Security this Global Security (or increase) Custodian
---------------------- ------------------------ ------------------------ ------------------------ ---------------------
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
MGC Communications, Inc.
Mpower Holding Corporation
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Attention: General Counsel
HSBC Bank USA
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Attention: Issuer Services
Re: 13% Senior Notes due 2010
-------------------------
Reference is hereby made to the Indenture, dated as of March 24, 2000
(the "Indenture"), between MGC Communications, Inc., as issuer ("MGC"), Mpower
Holding Corporation, as issuer ("Mpower"), and HSBC Bank USA, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ (the "Transfer"), to __________ (the
"Transferee"), as further specified in Annex A hereto. In connection with the
Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of Book-Entry Interests in the
Global Security or Certificated Securities Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the Book-Entry
Interests or Certificated Securities are being transferred to a Person that the
Transferor reasonably believes is purchasing the Book- Entry Interests or
Certificated Securities for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred Book-Entry Interest
or Certificated Security will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Global Security and/or
the Certificated Security and in the Indenture and the Securities Act.
2. |_| Check and complete if Transferee will take delivery of Book-Entry
Interests in the Global Security or Certificated Securities pursuant to any
provision of the Securities Act other than Rule 144A. The Transfer is being
effected in compliance with the transfer restrictions applicable to Book-Entry
Interests in the Restricted Global Security and Restricted Certificated
Securities and pursuant to and in
accordance with the Securities Act and any applicable blue sky securities laws
of any State of the United States, and accordingly the Transferor hereby further
certifies that (check one):
(a) |_| such Transfer is being effected to the Company or a subsidiary
thereof,
or
(b) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
(c) |_| such Transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A, and the
Transferor hereby further certifies that the Transfer complies with the transfer
restrictions applicable to Book-Entry Interests in a Restricted Global Security
or Restricted Certificated Securities and the requirements of the exemption
claimed, which certification is supported by (1) if the transfer is being made
to an Institutional Accredited Investor and effected pursuant to an exemption
from the registration requirements of the Securities Act other than Rule 144A
under the Securities Act, Rule 144 under the Securities Act or Rule 904 under
the Securities Act, a certificate executed by the Transferee in the form of
Exhibit D to the Indenture and (2) an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that (1) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
Book-Entry Interest or Certificated Security will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Security and/or the Restricted Certificated Securities and in the
Indenture and the Securities Act.
3. |_| Check if Transferee will take delivery of Book-Entry Interests in the
Unrestricted Global Security or in Certificated Securities that do not bear the
Private Placement Legend. (i) The Transfer is being effected pursuant to and in
compliance with an exemption from the registration requirements of the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred Book-Entry Interests or
Certificated Securities will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Security or Restricted Certificated Securities bearing the Private Placement
Legend and in the Indenture.
This certificate and the statements contained herein are made for
your benefit.
____________________
[NAME OF TRANSFEROR]
By:_________________
Name:
Title:
Dated: __________________, ___
B-2
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| Book-Entry Interests in the Global Security:
(i) |_| 144A Global Security (CUSIP _________), or
(ii) |_| Regulation S Global Security (CUSIP ________), or
(ii) |_| IAI Global Security (CUSIP ________); or
(b) |_| Restricted Certificated Securities.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| Book-Entry Interests in the:
(i) |_| 144A Global Security (CUSIP _________), or
(ii) |_| Regulation S Global Security (CUSIP________), or
(iii) |_| IAI Global Security (CUSIP ________); or
(iv) |_| Unrestricted Global Security (CUSIP ________); or
(b) |_| Restricted Certificated Securities; or
(c) |_| Certificated Securities that do not bear the Private Placement
Legend,
in accordance with the terms of the Indenture.
B-3
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
MGC Communications, Inc.
Mpower Holding Corporation
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Attention: General Counsel
HSBC Bank USA
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Attention: Issuer Services
Re: 13% Senior Notes due 2010
-------------------------
(CUSIP ________)
Reference is hereby made to the Indenture, dated as of March
24, 2000 (the "Indenture"), between MGC Communications, Inc., as issuer ("MGC"),
Mpower Holding Corporation, as issuer ("Mpower"), and HSBC Bank USA, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
_________, (the "Holder") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ (the "Exchange"). In connection with the Exchange, the Holder
hereby certifies that:
1. Exchange of Restricted Certificated Securities or Restricted Book-Entry
Interests for Certificated Securities that do not bear the Private Placement
Legend or Unrestricted Book-Entry Interests
(a) |_| Check if Exchange is from Restricted Book-Entry Interest to
Unrestricted Book-Entry Interest. In connection with the Exchange of the
Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry Interests in
an equal principal amount, the Holder hereby certifies (i) the Unrestricted
Book-Entry Interests are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Security and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
Act"), (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Book-Entry Interests are being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b) |_| Check if Exchange is from Restricted Book-Entry Interest to
Certificated Securities that do not bear the Private Placement Legend. In
connection with the Exchange of the Holder's Restricted Book-Entry Interests for
Certificated Securities that do not bear the Private Placement Legend, the
Holder hereby certifies (i) the Certificated Securities are being acquired for
the Holder's own
C-1
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Security and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Certificated Securities are being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Certificated Securities to
Unrestricted Book-Entry Interests. In connection with the Holder's Exchange of
Restricted Certificated Securities for Unrestricted Book-Entry Interests, (i)
the Unrestricted Book-Entry Interests are being acquired for the Holder's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Certificated Securities
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(d) |_| Check if Exchange is from Restricted Certificated Securities to
Certificated Securities that do not bear the Private Placement Legend. In
connection with the Holder's Exchange of a Restricted Certificated Security for
Certificated Securities that do not bear the Private Placement Legend, the
Holder hereby certifies (i) the Certificated Securities that do not bear the
Private Placement Legend are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Certificated Securities and pursuant to
and in accordance with the Securities Act , (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Notes are
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
2. Exchange of Restricted Certificated Securities or Restricted Book-Entry
Interests for Restricted Certificated Securities or Restricted Book-Entry
Interests
(a) |_| Check if Exchange is from Restricted Book-Entry Interests to
Restricted Certificated Security. In connection with the Exchange of the
Holder's Restricted Book-Entry Interest for Restricted Certificated Securities
with an equal principal amount, (i) the Restricted Certificated Securities are
being acquired for the Holder's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Security and pursuant to and in accordance
with the Securities Act, and in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Restricted
Certificated Securities issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted
Certificated Securities and in the Indenture and the Securities Act.
(b) |_| Check if Exchange is from Restricted Certificated Securities to
Restricted Book-Entry Interests. In connection with the Exchange of the Holder's
Restricted Certificated Security for Restricted Book-Entry Interests in the
[CHECK ONE] o 144A Global Security, o Regulation S Global Security, o IAI Global
Security with an equal principal amount, (i) the Certificated Securities are
being acquired for the Holder's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Certificated Security and pursuant to and in
accordance with the Securities Act, and in compliance with any applicable blue
sky securities laws of any state of the United States. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Book-Entry
Interests issued will be subject to the restrictions on transfer
C-2
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Security and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made
for your benefit.
_________________________
[Insert Name of Holder]
By: _____________________
Name:
Title:
Dated: _________________, ____
C-3
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
MGC Communications, Inc.
Mpower Holding Corporation
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Attention: General Counsel
HSBC Bank USA
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Attention: Issuer Services
Re: 13% Senior Notes due 2010
-------------------------
Reference is hereby made to the Indenture, dated as of March
24, 2000 (the "Indenture"), between MGC Communications, Inc., as issuer ("MGC"),
Mpower Holding Corporation, as issuer ("Mpower"), and HSBC Bank USA, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A)(1) to a person who we reasonably
believe is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, (2) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (3)
outside the United States to a person that is not a U.S. person (as defined in
Rule 902 under the Securities Act) in a transaction meeting the requirements of
Rule 904 under the Securities Act, (4) to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) that, prior to such transfer, furnishes to you a signed letter
containing certain representations and agreements relating to the Notes, or (5)
in accordance with another exemption from the registration requirements of the
Securities Act (in the case of 2, 3, 4 or 5, based upon an opinion of counsel if
the Obligors or the Trustee so requests), (B) to the Obligors or (C) pursuant to
an effective registration statement and, in each case, in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction, and we
D-1
further agree to provide to any person purchasing the Certificated Securities or
interests therein from us in a transaction meeting the requirements of clauses
(A) through (C) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
any interests therein, we will be required to furnish to you and the Obligors
such certifications, legal opinions and other information as you and the
Obligors may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or interests therein acquired by us must
be effected through one of the Initial Purchasers.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or interests therein for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Obligors are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
____________________________________
[Insert Name of Accredited Investor]
By:_________________________________
Name:
Title:
Dated: _________________, ______
D-2