EXHIBIT 4.1
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SECOND SUPPLEMENTAL INDENTURE
Dated as of March 28, 2002
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between
AVAYA INC.
and
THE BANK OF NEW YORK
as Trustee
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Supplemental to Indenture
Dated as of October 31, 2001
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Creating a series of Securities designated
11 1/8% Senior Secured Notes due 2009
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions..................................................2
SECTION 1.02 Other Definitions...........................................29
ARTICLE II
THE NOTES
SECTION 2.01 Title of the Notes..........................................29
SECTION 2.02 Amount......................................................29
SECTION 2.03 Stated Maturity.............................................29
SECTION 2.04 Interest....................................................29
SECTION 2.05 Forms; Denominations........................................29
SECTION 2.06 Transfer and Exchange.......................................31
SECTION 2.07 Registrar and Paying Agent..................................32
SECTION 2.08 Paying Agent to Hold Money and Notes in Trust...............32
SECTION 2.09 CUSIP Numbers...............................................33
ARTICLE III
AMENDMENT OF CERTAIN PROVISIONS
OF THE ORIGINAL INDENTURE
SECTION 3.01 Amendments Relating to the Notes............................33
ARTICLE IV
SECURITY
SECTION 4.01 Security. .................................................60
SECTION 4.02 Initial Security Period. .................................61
SECTION 4.03 Subsequent Security Periods.................................61
SECTION 4.05 Release of Collateral.......................................62
ARTICLE V
MISCELLANEOUS
i
EXHIBITS
Exhibit A Form of Note
Exhibit B Collateral Trust Agreement
Exhibit C Form of Intercreditor Agreement
Exhibit D Security Agreement
ii
SECOND SUPPLEMENTAL INDENTURE, dated as of the 28th day of March,
2002, between
AVAYA INC., a corporation duly organized and existing under the
laws of the State of Delaware, having its principal executive office located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and THE
BANK OF
NEW YORK, a banking corporation duly organized and existing under the
laws of the State of
New York, having its Corporate Trust Office located at ▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as Trustee (the "TRUSTEE").
R E C I T A L S
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of October 31, 2001 (the "ORIGINAL INDENTURE"
and, as amended by this
Second Supplemental Indenture, the "INDENTURE"),
providing for the issuance by the Company from time to time of its debentures,
notes or other evidences of indebtedness (herein called the "SECURITIES"),
unlimited as to principal amount, to bear such rates of interest, to mature at
such time or times, to be issued in one or more series and to have such other
provisions as shall be determined by the Company pursuant to the Original
Indenture;
WHEREAS, the Company, in the exercise of the power and authority
conferred upon and reserved to it under the provisions of the Original Indenture
and pursuant to appropriate resolutions of its board of directors, has duly
determined to make, execute and deliver to the Trustee this
Second Supplemental
Indenture to the Original Indenture in order to establish the form and terms of,
and to provide for the creation and issuance of, a new series of Securities
designated as its 11 1/8% Senior Secured Notes due 2009 (said series hereinafter
referred to as the "NOTES");
WHEREAS, the Notes will initially be secured by a security interest
in the Collateral granted to the Collateral Trustee, for the ratable benefit of
the Noteholders and the Senior Lenders and their affiliates, pursuant to the
terms of the Security Agreement and the Collateral Trust Agreement (each as
defined below), subject to the subordination of the security interest of the
Noteholders to the security interest of the Senior Lenders and their affiliates
as provided in the Intercreditor Agreement (as defined below);
WHEREAS, Section 9.01 of the Original Indenture provides that the
Company and the Trustee, at any time and from time to time, without the consent
of any Securityholder (as defined in the Original Indenture), may enter into an
indenture supplemental to the Original Indenture to, among other things (a)
establish the form or terms of Securities of any series as permitted by
Section 2.02 of the Original Indenture and (b) cure any ambiguity or to correct
or supplement any provision in the Original Indenture which may be defective or
inconsistent with any other provision in the Original Indenture, or to make any
other change that does not adversely affect the interests of any Holders of
Securities of any series then outstanding; and
WHEREAS, all things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or any authenticating
agent and issued upon the terms and subject to the conditions of this
Second
Supplemental Indenture and the Original Indenture against payment therefor, the
valid, binding and legal obligations of the
Company and to make this
Second Supplemental Indenture a valid, binding and
legal agreement of the Company have been done.
NOW, THEREFORE, in order to establish, as provided in the Original
Indenture, the form and substance of the Notes and the terms, provisions and
conditions thereof, and for and in consideration of the purchase and acceptance
of the Notes by the Holders thereof, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders, as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS. Each capitalized term that is used in the
Original Indenture and this
Second Supplemental Indenture but not defined herein
shall have the meaning specified in the Original Indenture. For all purposes of
the Original Indenture and this
Second Supplemental Indenture relating to the
series of Securities (consisting of Notes) created hereby, except as otherwise
expressly provided or unless the context otherwise requires, the terms used in
the Original Indenture and this
Second Supplemental Indenture have the meanings
assigned to them in this Article. To the extent any term is defined in both the
Original Indenture and this
Second Supplemental Indenture, except as otherwise
expressly provided or the context otherwise requires, the definition of such
term in this Second Supplemental Indenture shall amend, supercede and replace
the definition of such term in the Original Indenture for all purposes relating
to the series of Securities (consisting of the Notes) created hereby.
"ADDITIONAL ASSETS" means (1) any property, plant or equipment or
licenses or other intellectual property used in a Related Business; (2) all or
substantially all of the assets of a business that is a Related Business,
including, without limitation, inventory, receivables and working capital of
such business; (3) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary; or (4) Capital Stock constituting a minority
interest in any Person that at such time is a Restricted Subsidiary.
"AFFILIATE" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes Sections 4.08, 4.10 and 4.11 of the Original Indenture only,
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
5% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to purchase such Capital Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.
2
"AGENTS" means, collectively, Citibank, N.A., as agent for the
Senior Lenders under the Five-Year Competitive Advance and Revolving Credit
Facility Agreement, and its successors thereunder and Citibank, N.A., as agent
for the Senior Lenders under the 364-Day Competitive Advance and Revolving
Credit Facility Agreement, and its successors thereunder.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Global Note or beneficial interest therein, the rules
and procedures of the Depositary for such Note, in each case to the extent
applicable to such transaction and as in effect from time to time.
"ASSET DISPOSITION" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "DISPOSITION"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary); (ii) all or substantially all of the assets of any
division or line of business of the Company or any Restricted Subsidiary; or
(iii) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary
(other than, in the case of clauses (i), (ii) and (iii) above, (A) a disposition
by a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary, (B) for purposes of Section 4.10 of the
Original Indenture only, (x) a disposition that constitutes a Restricted Payment
permitted by Section 4.08 of the Original Indenture or a Permitted Investment
and (y) a disposition of all or substantially all the assets of the Company in
accordance with Section 4.06 of the Original Indenture, (C) sales, conveyances
and other transfers of receivables and related assets or any interest therein
pursuant to a Qualified Receivables Transaction, and (D) a disposition of assets
with a fair market value of less than $50,000,000).
"ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended); PROVIDED, HOWEVER, that if such Sale/Leaseback
Transaction results in a Capital Lease Obligation, the amount of Indebtedness
represented thereby will be determined in accordance with the definition of
"Capital Lease Obligation."
"AVERAGE LIFE" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of or redemption or similar payment
with respect to such Indebtedness multiplied by the amount of such payment by
(ii) the sum of all such payments.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or
any duly authorized committee thereof.
"BUSINESS DAY" means each day which is not a Legal Holiday.
3
"CAPITAL LEASE OBLIGATION" means an obligation that is required to
be classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty. For purposes of Section 4.02 of the Original Indenture, a Capital Lease
Obligation will be deemed to be secured by a Lien on the property being leased.
"CAPITAL STOCK" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"CASH EQUIVALENTS" means:
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or the government of
any Eligible Jurisdiction or issued by any agency thereof and
backed by the full faith and credit of such government, in each
case maturing within one year from the date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or
▇▇▇▇▇'▇;
(3) commercial paper and other securities maturing no more than one
year from the date of acquisition thereof and, at the time of
acquisition, having a rating of at lease A-2 from S&P or at least
P-2 from ▇▇▇▇▇'▇;
(4) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any
state thereof or the District of Columbia or any Eligible
Jurisdiction or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not
less than $100,000,000;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above
entered into with any bank meeting the qualifications specified in
clause (4) above; and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1)
through (5) above.
"CERTIFICATED NOTES" means Notes that are in the form of the Notes
attached hereto as Exhibit A-2.
4
"CHANGE OF CONTROL" means each of the following events: (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that for purposes of this clause (i) such person shall
be deemed to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 30% of the
total voting power of our Voting Stock; (ii) individuals who on the Issue Date
constituted the Board of Directors (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
Company's shareholders was approved by a vote of a majority of the Company's
directors then still in office who were either directors on the Issue Date or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in office;
(iii) the adoption of a plan relating to the Company's liquidation or
dissolution other than in connection with a merger, consolidation or asset sale
exempt from clause (iv) below by virtue of subclause (A) or (B) thereof; or (iv)
the merger or consolidation of the Company with or into another Person or the
merger of another Person with or into the Company, or the sale of all or
substantially all of the Company's assets (determined on a consolidated basis)
to another Person, other than a transaction following which (A) in the case of a
merger or consolidation transaction, Holders of securities that represented 100%
of the Voting Stock of the Company immediately prior to such transaction (or
other securities into which such securities are converted as part of such merger
or consolidation transaction) own directly or indirectly at least a majority of
the voting power of the Voting Stock of the surviving Person in such merger or
consolidation transaction immediately after such transaction and in
substantially the same proportion as before the transaction and (B) in the case
of a sale of assets transaction, the transferee Person becomes the obligor in
respect of the Notes and a Subsidiary of the transferor of such assets.
"COLLATERAL" means, from time to time, all property of each type
pledged to the Collateral Trustee by the Company and its subsidiaries, and in
which the Collateral Trustee has been granted a security interest, for the
purpose of securing the Company's obligations to the Senior Lenders and/or their
affiliates, whether pursuant to the Security Agreement or otherwise; PROVIDED,
HOWEVER, that, if at any time when the Noteholders shall be entitled to the
security provided in Section 4.01 of this Second Supplemental Indenture and
neither the Company nor its subsidiaries shall have provided security for the
Company's obligations owing to the Senior Lenders under the Credit Agreements,
Collateral shall mean all property of each type subject to the security interest
granted to the Collateral Trustee pursuant to the Security Agreement and
Collateral Trust Agreement, each as most recently in effect without giving
effect to any final release of such security interest in all or substantially
all of the property subject thereto, whether upon repayment of all obligations
to the Senior Lenders or their affiliates secured thereby or otherwise.
"COLLATERAL TRUST AGREEMENT" means the Collateral Trust Agreement
dated as of March 25, 2002 among the Company, the other grantors named therein
and the Collateral Trustee (a copy of which is attached hereto as Exhibit B), or
any other collateral trust agreement entered into by the Company and the
Collateral Trustee for the purpose of securing, among other obligations, the
Company's obligations owing to the Senior Lenders under the Credit Agreements.
5
"COLLATERAL TRUSTEE" means The Bank of
New York, as collateral
trustee under the Collateral Trust Agreement, or any other collateral trustee
selected by the Company to act as collateral trustee to accept the pledge and
assignment of, and the grant of the security interest in, the Collateral, as
security for the Company's obligations owing to the Senior Lenders pursuant to
the Credit Agreements and to the Noteholders pursuant to the terms of the Notes
and this Second Supplemental Indenture; such collateral trustee, if other than
The Bank of
New York or its successors, shall be a bank organized under the laws
of the United States of America or any state thereof or the District of
Columbia, or any U.S. branch of a foreign bank, in each case that regularly acts
as a collateral trustee for secured transactions of the type contemplated by the
terms of this Second Supplemental Indenture.
"COMPANY" means the party named as the "Company" in the first
paragraph of this Second Supplemental Indenture until a successor replaces it
pursuant to the applicable provisions of the Indenture and, thereafter, shall
mean such successor. The foregoing sentence shall likewise apply to any
subsequent such successor or successors.
"CONSOLIDATED COVERAGE RATIO" means (A) as of any date of
determination prior to December 31, 2002, the ratio of (x) the aggregate amount
of EBITDA for the period of the most recent two consecutive fiscal quarters
ending at least 45 days prior to the date of such determination to (y)
Consolidated Interest Expense for such two fiscal quarters; and (B) as of any
date of determination on or after December 31, 2002, the ratio of (x) the
aggregate amount of EBITDA for the period of the most recent four consecutive
fiscal quarters ending at least 45 days prior to the date of such determination
to (y) Consolidated Interest Expense for such four fiscal quarters; PROVIDED,
HOWEVER, that in the case of either (A) or (B):
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a PRO FORMA
basis to such Indebtedness as if such Indebtedness had been
Incurred on the first day of such period;
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period or if any Indebtedness is to be
repaid, repurchased, defeased or otherwise discharged (in each case
other than Indebtedness Incurred under any revolving credit
facility unless such Indebtedness has been permanently repaid and
has not been replaced) on the date of the transaction giving rise
to the need to calculate the Consolidated Coverage Ratio, EBITDA
and Consolidated Interest Expense for such period shall be
calculated on a PRO FORMA basis as if such discharge had occurred
on the first day of such period and as if the Company or such
Restricted Subsidiary has not earned the interest income actually
earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise
discharge such Indebtedness;
6
(3) if since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition, EBITDA for such
period shall be reduced by an amount equal to EBITDA (if positive)
directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal
to EBITDA (if negative), directly attributable thereto for such
period and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition
for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such
period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such
sale);
(4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment
in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, which constitutes all
or substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving PRO FORMA effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period; and
(5) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition, any Investment or
acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) above if made by the Company or a
Restricted Subsidiary during such period, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving
PRO FORMA effect thereto as if such Asset Disposition, 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 amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the PRO FORMA calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given PRO
FORMA effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"CONSOLIDATED CURRENT LIABILITIES" as of the date of determination
means the aggregate amount of liabilities of the Company and its consolidated
Restricted Subsidiaries
7
which may properly be classified as current liabilities (including taxes accrued
as estimated), on a consolidated basis, after eliminating (i) all intercompany
items between the Company and any Restricted Subsidiary and (ii) all current
maturities of long-term Indebtedness, all as determined in accordance with GAAP
consistently applied.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total
interest expense of the Company and its Restricted Subsidiaries on a
consolidated basis, plus, to the extent not included in such total interest
expense, and to the extent Incurred by the Company or its Restricted
Subsidiaries, without duplication:
(1) interest expense attributable to capital leases and the interest
expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expense;
(5) net payments pursuant to Hedging Obligations relating to
Indebtedness entered into in the ordinary course of business and
not for speculative purposes;
(6) Preferred Stock dividends in respect of all Preferred Stock held by
Persons other than the Company or a Restricted Subsidiary (other
than dividends paid solely in Capital Stock (other than
Disqualified Stock) of the Company); PROVIDED, HOWEVER, that such
dividends will be multiplied by a fraction the numerator of which
is one and the denominator of which is one minus the effective
combined tax rate of the issuer of such Preferred Stock (expressed
as a decimal) for such period (as estimated by the Chief Financial
Officer of the Company in good faith);
(7) interest Incurred in connection with Investments in discontinued
operations;
(8) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by (or secured by the assets
of) the Company or any Restricted Subsidiary; and
(9) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust.
"CONSOLIDATED NET INCOME" means, for any period, the net income of
the Company and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there
shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that:
8
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Person for
such period shall be included in such Consolidated Net Income
up to the aggregate amount of cash actually distributed by
such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause
(3) below); and
(B) the Company's equity in a net loss of any such Person for
such period shall be included in determining such
Consolidated Net Income;
PROVIDED that the Company's equity in the net income (loss) of any Person
in which the Company or a Restricted Subsidiary obtained a minority
equity interest in connection with an Asset Disposition consisting of all
or substantially all of the assets used in its Connectivity Solutions
business shall not be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company,
except that:
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Restricted Subsidiary during
such period to the Company or another Restricted Subsidiary
as a dividend or other distribution (subject, in the case of
a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining
such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other disposition
of any assets of the Company, its consolidated Subsidiaries or any
other Person (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the
ordinary course of business and any gain (but not loss) realized
upon the sale or other disposition of any Capital Stock of any
Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting principles.
9
Notwithstanding the foregoing, for the purposes Section 4.08 of the Original
Indenture only, there shall be excluded from Consolidated Net Income any
repurchases, repayments or redemptions of Investments, proceeds realized on the
sale of Investments or return of capital to the Company or a Restricted
Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or
returns increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (a)(3)(D) thereof.
"CONSOLIDATED NET TANGIBLE ASSETS" as of any date of determination,
means the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a consolidated balance
sheet of the Company and its consolidated Restricted Subsidiaries, determined on
a consolidated basis in accordance with GAAP, and after giving effect to
purchase accounting and after deducting therefrom Consolidated Current
Liabilities and, to the extent otherwise included, the amounts of:
(1) minority interests in consolidated Subsidiaries held by Persons
other than the Company or a Restricted Subsidiary;
(2) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors;
(3) any revaluation or other write-up in book value of assets
subsequent to the Issue Date as a result of a change in the method
of valuation in accordance with GAAP consistently applied;
(4) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental
expenses and other intangible items;
(5) treasury stock;
(6) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of
Capital Stock to the extent such obligation is not reflected in
Consolidated Current Liabilities; and
(7) Investments in and assets of Unrestricted Subsidiaries.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee
at which at any time its corporate trust business shall be administered, which
office at the date hereof is located at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration, or such other address
as the Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).
"CREDIT AGREEMENTS" means, collectively, the Five-Year Competitive
Advance and Revolving Credit Facility Agreement, together with the 364-Day
Competitive Advance and Revolving Credit Facility Agreement together with the
related documents thereto (including any
10
guarantee or security documents), as amended, extended, renewed, restated,
supplemented or otherwise modified (in whole or in part, and without limitation
as to amount, terms, conditions, covenants and other provisions) from time to
time (collectively, the "INITIAL CREDIT AGREEMENTS") and any debt facility,
credit facility or commercial paper facility, in each case with one or more
banks or other lenders, providing for revolving credit loans, term loan or
letters of credit, in each case, refunding, replacing or refinancing in whole or
in part the Initial Credit Agreements, together with the related documents, as
any such facility and related documents may be amended, extended, renewed,
restated, supplemented or otherwise modified (in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other provisions) from
time to time and any successor facility thereto similarly refunding, replacing
or refinancing any such facility.
"CURRENCY AGREEMENT" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement
(including, without limitation, swaps, caps, floors, collars and similar
arrangements) designed to protect such Person against fluctuations in currency
values.
"DEFAULT" or "DEFAULT" means any event which is, or after notice of
passage of time or both would be, an Event of Default.
"DEPOSITARY" means, with respect to the Notes issuable in whole or
in part in global form, DTC and any nominee thereof, until a successor shall
have been appointed and become such pursuant to the applicable provisions of the
Indenture, and thereafter "Depositary" shall mean or include such successor and
any nominee thereof.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the Holder) or upon
the happening of any event:
(1) matures or is mandatorily redeemable (other than redeemable only
for Capital Stock of such Person which is not itself Disqualified
Stock) pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the Holder for
Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence
of certain events or otherwise, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Notes; PROVIDED, HOWEVER, that any Capital Stock that would not constitute
Disqualified Stock because provisions thereof give Holders thereof the right to
require such Person to purchase or redeem such Capital Stock upon the occurrence
of an "asset sale" or "change of control" occurring prior to the first
anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if:
(1) the "asset sale" or "change of control" provisions applicable to
such Capital Stock are not more favorable to the Holders of such
Capital Stock than the terms applicable to the Notes as described
in Section 4.10 and Section 4.06 of the Original Indenture; and
11
(2) such requirement only becomes operative after compliance with such
terms applicable to the Notes, including the purchase of any Notes
tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption,
repayment or repurchase price will be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or
repurchased on any date on which the amount of such Disqualified Stock is to be
determined pursuant to this Indenture; PROVIDED, HOWEVER, that if such
Disqualified Stock could not be required to be redeemed, repaid or repurchased
at the time of such determination, the redemption, repayment or repurchase price
will be the book value of such Disqualified Stock as reflected in the most
recent financial statements of such Person.
"DTC" means The Depository Trust Company.
"EBITDA" for any period means the sum of Consolidated Net Income,
plus, without duplication, the following to the extent deducted in calculating
such Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation and amortization expense of the Company and its
consolidated Restricted Subsidiaries (excluding amortization
expense attributable to a prepaid operating activity item that was
paid in cash in a prior period);
(4) all other non-cash charges of the Company and its consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash
expenditures in any future period); and
(5) up to $163,000,000 of restructuring charges, including asset
impairment and other one time charges during such period to be
taken no later than the fourth quarter of fiscal year 2002 of the
Company;
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion,
including by reason of minority interest) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
12
"ELIGIBLE JURISDICTION" means any country in the European Union (as
it exists on the Issue Date) or Switzerland.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FIVE-YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT" means the Five-Year Competitive Advance and Revolving Credit Facility
Agreement dated as of September 25, 2000, among Lucent Technologies Inc. and the
Company, as borrowers, the lenders party thereto, Citibank, N.A., as Agent, The
Chase Manhattan Bank, Deutsche Bank AG
New York and Cayman Islands Branches and
Bank One, N.A., as co-syndication agents and co-arrangers, and Commerzbank AG,
as co-arranger, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as lead arranger, together with
the related documents thereto (including the loans thereunder, any guarantees
and security documents).
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in:
(1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards
Board;
(3) such other statements by such other entity as approved by a
significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including PRO FORMA financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
"GLOBAL NOTES" means Notes that are in the form of the Notes
attached hereto as Exhibit A.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any Person and
any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part);
13
PROVIDED, HOWEVER, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"HEDGING OBLIGATIONS" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"HOLDER" or "NOTEHOLDER" means a person in whose name a Note is
registered on the Registrar's books.
"INCUR" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Person at the time it becomes a Restricted Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. Solely for
purposes of determining compliance with Section 4.07 of the Original Indenture,
(1) amortization of debt discount or the accretion of principal with respect to
a non-interest bearing or other discount security and (2) the payment of
regularly scheduled interest in the form of additional Indebtedness of the same
instrument or the payment of regularly scheduled dividends on Capital Stock in
the form of additional Capital Stock of the same class and with the same terms
will not be deemed to be the Incurrence of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by Notes, debentures,
bonds or other similar instruments for the payment of which such
Person is responsible or liable, including, in each case, any
premium on such indebtedness to the extent such premium has become
due and payable;
(2) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such
Person and under synthetic, off-balance sheet or tax retention
leases;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of
such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising
in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in
clauses (1) through (3) above) entered into in the ordinary course
of business of such Person to the extent such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment
on the letter of credit);
14
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
of such Person or, with respect to any Preferred Stock of any
Subsidiary of such Person, the liquidation amount of such Preferred
Stock determined in accordance with the terms of the definition of
"Disqualified Stock" (but excluding, in each case, any accumulated
but not declared dividends);
(6) all obligations of the type referred to in clauses (1) through (5)
of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise,
including by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6)
of other Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets and the amount of
the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
Notwithstanding the foregoing, in connection with the purchase by the Company or
any Restricted Subsidiary of any business, the term "Indebtedness" will exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; PROVIDED,
HOWEVER, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; PROVIDED,
HOWEVER, that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness at any time will be the accreted value thereof at such time.
"INDENTURE" means the Original Indenture, as amended and
supplemented by this Second Supplemental Indenture and as further amended or
supplemented from time to time in accordance with the terms hereof, including
the provisions of the TIA that are deemed to be a part hereof.
"INDEPENDENT QUALIFIED PARTY" means an investment banking firm,
accounting firm or appraisal firm of national standing; PROVIDED, HOWEVER, that
such firm is not an Affiliate of the Company.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement in the
form attached hereto as Exhibit C hereto, to be entered into among the Agents
and the Trustee as of the Issue Date, or such other intercreditor agreement on
substantially identical terms entered into
15
among the Agents and the Trustee for the purpose setting forth the relative
rights of the Agents and the Trustee in respect of the Collateral.
"INTEREST PAYMENT DATE" means the Stated Maturity of an installment
of interest on the Notes.
"INTEREST RATE AGREEMENT" means in respect of a Person any interest
rate swap agreement, interest rate cap agreement or other financial agreement or
arrangement (including, without limitation, swaps, caps, floors, collars and
similar arrangements) designed to protect such Person against fluctuations in
interest rates.
"INVESTMENT" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. Except as otherwise provided for
herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value.
For purposes of the definition of "Unrestricted Subsidiary", the
definition of "Restricted Payment" and Section 4.08 of the Original Indenture,
(i) "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of any Subsidiary of the Company at the time that such Subsidiary is designated
an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (A) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (B) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation, and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"ISSUE DATE" of any Note means the date on which the Note was
originally issued or deemed issued as set forth on the face of the Note.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of
New York.
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"LIEN SUSPENSION PERIOD" means any period other than a Security
Period.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
16
"NET AVAILABLE CASH" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses Incurred, and all federal, state, provincial,
foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by
applicable law, be repaid out of the proceeds from such Asset
Disposition;
(3) all distributions and other payments required to be made to
minority interest Holders in Restricted Subsidiaries as a result of
such Asset Disposition by such Restricted Subsidiaries; and
(4) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted
Subsidiary after such Asset Disposition.
"NET CASH PROCEEDS", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
Incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"NOTES" means any of the Company's 11 1/8% Senior Secured Notes due
2009 created hereby.
"PERMITTED INVESTMENT" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary;
PROVIDED, HOWEVER, that either (x) the primary business of such
Restricted Subsidiary is a Related Business or (y) such Investment
is made in connection with a Qualified Receivables Transaction;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets
17
to, the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that
such Person's primary business is a Related Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms;
PROVIDED, HOWEVER, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such
Restricted Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company
or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment (including any minority
interest received in connection with an Asset Disposition)
represents the non-cash portion of the consideration received for
an Asset Disposition as permitted pursuant to Section 4.10 of the
Original Indenture;
(9) Hedging Obligations entered into in the ordinary course of business
and not for speculative purposes;
(10) any Person where such Investment was acquired by the Company or any
of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the
issuer of such other Investment or accounts receivable or (b) as a
result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in
default;
(11) Investments in an aggregate principal amount which, when taken
together with all other Investments under this clause (11), does
not exceed $75,000,000;
(12) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and
disputes with, customers and suppliers, in each case, in the
ordinary course of business; and
(13) warrants received from and minority equity Investments in,
customers of and vendors to the Company and its Restricted
Subsidiaries so long as no cash is
18
expended by the Company or any of its Restricted Subsidiaries to
purchase any of the foregoing.
"PERMITTED LIENS" means, with respect to any Person:
(1) Liens on the Collateral to secure (i) Indebtedness permitted under
the provisions described in Section 4.07(b)(1) of the Original
Indenture in an aggregate principal amount not to exceed
$825,000,000 and (ii) obligations other than for money borrowed
owed to any Senior Lender or its Affiliates;
(2) pledges or deposits by such Person under worker's compensation
laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other
than for the payment of Indebtedness) or leases or subleases to
which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which
such Person is a party, or deposits as security for contested taxes
or import duties or for the payment of rent, in each case Incurred
in the ordinary course of business;
(3) Liens imposed by law, such as carriers', warehousemen's,
materialman's, ▇▇▇▇▇▇▇'▇ and mechanics' Liens, in each case for
sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards
against such Person with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review and Liens
arising solely by virtue of any statutory or common law provision
relating to banker's Liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a
creditor depository institution; PROVIDED, HOWEVER, that (A) such
deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by the Company in excess
of those set forth by regulations promulgated by the Federal
Reserve Board and (B) such deposit account is not intended by the
Company or any Restricted Subsidiary to provide collateral to the
depository institution;
(4) Liens for taxes not yet subject to penalties for non-payment or
which are being contested in good faith by appropriate proceedings;
(5) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such
Person in the ordinary course of its business;
(6) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of
real property or Liens incidental to the conduct of the business of
such Person or to the ownership of its properties do not in the
aggregate materially impair their use in the operation of the
business of such Person;
19
(7) Liens securing Indebtedness Incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to,
property, plant or equipment of such Person; PROVIDED, HOWEVER,
that the Lien may not extend to any other property owned by such
Person or any of its Restricted Subsidiaries at the time the Lien
is Incurred (other than assets and property affixed or appurtenant
thereto), and the Indebtedness (other than any interest thereon)
secured by the Lien may not be Incurred more than 180 days after
the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the
property subject to the Lien;
(8) Liens existing on the Issue Date;
(9) Liens on property or shares of Capital Stock of another Person at
the time such other Person becomes a Subsidiary of such Person;
PROVIDED, HOWEVER, that the Liens may not extend to any other
property owned by such Person or any of its Restricted Subsidiaries
(other than assets and property affixed or appurtenant thereto);
(10) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by
means of a merger or consolidation with or into such Person or a
Subsidiary of such Person; PROVIDED, HOWEVER, that the Liens may
not extend to any other property owned by such Person or any of its
Restricted Subsidiaries (other than assets and property affixed or
appurtenant thereto);
(11) Liens securing Indebtedness or other obligations of a Subsidiary of
such Person owing to such Person or a Wholly Owned Subsidiary of
such Person;
(12) Liens securing Hedging Obligations entered into in the ordinary
course of business and not for speculative purposes, so long as
such Hedging Obligations relate to Indebtedness that is, and is
permitted to be under this Indenture, secured by a Lien on the same
property securing such Hedging Obligations;
(13) Liens on licenses or leases by the Company or any of its Restricted
Subsidiaries as licensor or lessor in the ordinary course of
business for patents, copyrights, trademarks, trade names and other
intellectual property;
(14) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and
its Restricted Subsidiaries, taken as a whole;
(15) any interest or title of a lessor in the property subject to any
Capital Lease Obligation or operating lease;
(16) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
20
(17) Liens on equipment of the Company or any Restricted Subsidiary
created in connection with synthetic leases with respect to such
equipment in an aggregate amount not to exceed $85,000,000;
(18) Liens created by or resulting from any litigation or legal
proceeding that is currently being contested in good faith by
appropriate proceedings;
(19) customary Liens for the fees, costs and expenses of Trustees and
escrow agents pursuant to any indenture, escrow agreement or
similar agreement establishing a trust or an escrow arrangement;
(20) governmental (federal, state or municipal) Liens arising out of
contracts for the purchase of products and deposits or pledges to
obtain the release of any such Liens;
(21) Liens pursuant to any merger agreements, stock purchase agreements,
asset sale agreements and similar agreements limiting the transfer
of properties and assets or distributions, provided that such Lien
is terminated upon consummation of the subject transaction;
(22) Liens Incurred in the ordinary course of business of the Company or
any Restricted Subsidiary of the Company with respect to
obligations that do not exceed $10,000,000 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 materially impair the use thereof in the operation of business
by the Company or such Restricted Subsidiary;
(23) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred
to in the foregoing clause (7), (8), (9) or (10); PROVIDED,
HOWEVER, that:
(A) such new Lien shall be limited to all or part of the same
property and assets that secured or, under the written
agreements pursuant to which the original Lien arose, could
secure the original Lien (plus improvements and accessions
to, such property or proceeds or distributions thereof); and
(B) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (x) the
outstanding principal amount or, if greater, committed amount
of the Indebtedness described under clause (7), (8), (9) or
(10) at the time the original Lien became a Permitted Lien
and (y) an amount necessary to pay any fees and expenses,
including premiums, related to such Refinancing, refunding,
extension, renewal or replacement;
(24) Liens on receivables Incurred in connection with a Qualified
Receivables Transaction; and
(25) Liens on the Collateral securing the Notes.
21
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clause (7), (9) or (10) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to Section 4.10 of the Original Indenture. For purposes of this
definition, the term "Indebtedness" shall be deemed to include interest on such
Indebtedness.
"PREFERRED STOCK", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"PRINCIPAL" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series
of transactions entered into by the Company or any of its Restricted
Subsidiaries in order to monetize or otherwise finance a pool (which may be
fixed or revolving) of receivables, leases or other financial assets (including,
without limitation, financing contracts) (in each case whether now or existing
or arising in the future), and which may include a grant of a security interest
in any such receivables, leases, other financial assets (whether now existing or
arising in the future) of the Company or any of its Restricted Subsidiaries, and
any assets related thereto, including all collateral securing such receivables,
leases, or other financial assets, all contracts and all guarantees or other
obligations in respect thereof, proceeds thereof and other assets that are
customarily transferred, or in respect of which security interests are
customarily granted, in connection with asset securitization transactions
involving receivables, leases, or other financial assets.
"RATING DEFICIENCY PERIOD" means any period beginning on (a) the
Issue Date or a date that the rating of the Notes falls below either (i) Baa3 by
Moody's or (ii) BBB- by S&P, as the case may be, and ending on (b) a Suspension
Date.
"REDEMPTION DATE" or "REDEMPTION DATE", when used with respect to
any Notes to be redeemed in whole or in part, means that date fixed for such
redemption by or pursuant to this Indenture.
"REDEMPTION PRICE" or "REDEMPTION PRICE", when used with respect to
any Notes to be redeemed in whole or in part, means the price (exclusive of
accrued interest, if any) at which it is to be redeemed pursuant to this
Indenture.
"REFINANCE" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred
22
in compliance with this Indenture, including Indebtedness that Refinances
Refinancing Indebtedness; PROVIDED, HOWEVER, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than
the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater
than the Average Life of the Indebtedness being Refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal amount (or
if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted
value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Indebtedness
being Refinanced;
PROVIDED FURTHER, HOWEVER, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"RELATED BUSINESS" means any business in which the Company or any
Restricted Subsidiary was engaged on the Issue Date and any business related,
ancillary or complementary to any business of the Company in which the Company
was engaged on the Issue Date.
"RESTRICTED PAYMENT" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock
(including any payment in connection with any merger or
consolidation involving such Person) or similar payment to the
direct or indirect Holders of its Capital Stock (other than
dividends or distributions payable solely in its Capital Stock
(other than Disqualified Stock) and dividends or distributions
payable solely to the Company or a Restricted Subsidiary, and other
than PRO RATA dividends or other distributions made by a Subsidiary
that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that
is an entity other than a corporation));
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company held by any Person or of
any Capital Stock of a Restricted Subsidiary held by any Affiliate
of the Company (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than
into Capital Stock of the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations of such Person (other than the purchase,
repurchase or other acquisition of Subordinated
23
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case
due within one year of the date of such purchase, repurchase or
other acquisition); or
(4) the making of any Investment (other than a Permitted Investment) in
any Person.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and its successors.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to
property owned by the Company or a Restricted Subsidiary on the Issue Date or
thereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or a Restricted Subsidiary leases such property or substantially similar
property from such Person.
"SECURITIES ACT" mean the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement dated as of
March 25, 2002 among the Company, the other grantors named therein and the
Collateral Trustee (a copy of which is attached hereto as Exhibit D), or any
other security agreement entered into by the Company, any subsidiaries of the
Company and the Collateral Trustee for the purpose of securing, among other
obligations, the Company's obligations owing to the Senior Lenders under the
Credit Agreements.
"SECURITY DOCUMENTS" means the Security Agreement, the Collateral
Trust Agreement and Intercreditor Agreement, and any and all other agreements or
instruments entered into pursuant to Section 4.03 of this Second Supplemental
Indenture for the purpose of securing on substantially the same terms as
provided in the Security Agreement and the Collateral Trust Agreement the
Company's obligations to the Holders of Notes in accordance with Section 4.01 of
this Second Supplemental Indenture.
"SECURITY PERIOD" means each period beginning on the Issue Date or
the date on which:
(a) the Company's corporate credit rating falls below BBB- by S&P or
the Company's long-term senior unsecured debt rating falls below Baa3 by
Moody's; AND
(b) less than $400 million of unsecured Indebtedness is outstanding or
available under the Credit Agreements OR any Indebtedness is secured
under any Credit Agreement,
and ending on the date that:
(i) all of the obligations of the Company owed to the Holders under the
Notes and the Indenture have been repaid in full; OR
24
(ii) the Company's corporate credit is rated at least BBB by S&P and the
Company's long-terms senior unsecured debt is rated at least Baa2 by
Moody's, and to the extent Company's corporate credit rating is rated BBB
by S&P or the Company's long-term senior unsecured debt is rated Baa2 by
Moody's, such rating shall not be accompanied by either (x) in the case
of S&P, a negative outlook, creditwatch negative or the equivalent
thereof or (y) in the case of Moody's, a negative outlook, a review for
possible downgrade or the equivalent thereof; OR
(iii) at least $400 million of unsecured Indebtedness is outstanding or
available under the Credit Agreements and no other Indebtedness is
secured under the Credit Agreements, provided that Avaya has entered into
such Credit Agreements with a syndicate of no less than two commercial
banking institutions for the primary purpose of obtaining bona fide
unsecured financing for working capital, acquisitions, or general
corporate purposes (which may include refinancing of existing
indebtedness), and not for the sole purpose of terminating the security
interest in the Collateral granted to the Collateral Trustee or the
Trustee for the benefit of the Holders;
and, in the case of clause (ii) and (iii) above, the Company shall have
delivered to the Trustee and the Collateral Trustee an Officers' Certificate
specifying the event giving rise to the end of such Security Period and stating
that all conditions precedent for the release of the security interest of the
Trustee or the Collateral Trustee, as the case may be, in the Collateral for the
benefit of the Holders of the Notes have been satisfied.
"SENIOR INDEBTEDNESS" means with respect to any Person:
(1) Indebtedness of such Person, whether outstanding on the Issue Date
or thereafter Incurred; and
(2) accrued and unpaid interest (including interest accruing on or
after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing
interest is allowed in such proceeding) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by Notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable;
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Notes;
PROVIDED, HOWEVER, that Senior Indebtedness shall not include:
(1) any obligation of such Person to any Subsidiary of such Person;
(2) any liability for federal, state, local or other taxes owed or
owing by such Person;
(3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);
25
(4) any Indebtedness of such Person (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any
respect to any other Indebtedness or other obligation of such
Person; or
(5) that portion of any Indebtedness which at the time of Incurrence is
Incurred in violation of this Indenture.
"SENIOR LENDERS" means the lenders party to the Credit Agreements.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations,
warranties, covenants and indemnities entered into by the Company or any of its
Restricted Subsidiaries that are reasonably customary in an accounts receivable
transaction.
"STATED MATURITY" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the Holder thereof upon the
happening of any contigency unless such contingency has occurred).
"SUBORDINATED OBLIGATION" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement to that effect.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
"SUBSIDIARY GUARANTOR" means any Subsidiary of the Company that
Guarantees payment of the Notes.
"SUSPENSION DATE" means the date that (1) the Notes are rated at
least BBB- by S&P and Baa3 by Moody's and, to the extent that such rating shall
be BBB- by S&P or Baa3 by Moody's, such rating is not accompanied by either (x)
in the case of S&P, a negative outlook, creditwatch negative or the equivalent
thereof or (y) in the case of Moody's, a negative outlook, a review for possible
downgrade or the equivalent thereof and (2) the Company delivers an Officers'
Certificate to the Trustee certifying that the Notes have achieved the ratings
described in clause (1) of this definition.
"SUSPENSION PERIOD" means any period other than a Rating Deficiency
Period.
"TEMPORARY CASH INVESTMENTS" means any of the following:
26
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any State
thereof or any foreign country recognized by the United States of
America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50,000,000 (or the
foreign currency equivalent thereof) and has outstanding debt which
is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market
fund sponsored by a registered broker dealer or mutual fund
distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in
clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the
laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or
higher) according to ▇▇▇▇▇'▇ Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group; and
(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America,
or by any political subdivision or taxing authority thereof, and
rated at least "A" by Standard & Poor's Ratings Group or "A" by
▇▇▇▇▇'▇ Investors Service, Inc.
"364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT" means the 364-Day Competitive Advance and Revolving Credit Facility
Agreement dated as of August 28, 2001, among the Company, as borrower, the
lenders party thereto, Citibank, N.A., as Agent, The Chase Manhattan Bank,
Deutsche Bank AG
New York Branch and Credit Suisse First Boston, as Co-Syndicate
Agents and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as lead arranger, together with the
related documents thereto (including the loans thereunder, any guarantees and
security documents).
"TIA" means the Trust Indenture Act of 1939 as in effect on the
date of this Indenture; PROVIDED, HOWEVER, that in the event the TIA is amended
after such date, TIA means, to the extent required by any such amendment, the
TIA as so amended.
"UNRESTRICTED SUBSIDIARY" means:
27
(1) any Unrestricted Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED, HOWEVER, that (1) no Subsidiary may be designated an
Unrestricted Subsidiary during a Suspension Period and (2) either (A) the
Subsidiary to be so designated has total assets of $10,000 or less or (B) if
such Subsidiary has assets greater than $10,000, such designation would be
permitted under Section 4.08 of the Original Indenture.
The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving
effect to such designation (A) the Company could Incur $1.00 of additional
Indebtedness under paragraph (a) of Section 4.07 of the Original Indenture and
(B) no Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the resolution of the Board of Directors giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"VOTING STOCK" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or Trustees thereof.
"WARBURG EQUITY TRANSACTIONS" means the transactions contemplated
by (i) the Stock Purchase Agreement and (ii) the Conversion and Exercise
Agreement, each dated March 10, 2002, between the Company, Warburg, ▇▇▇▇▇▇
Netherlands Equity Partners I., C.V., Warburg, ▇▇▇▇▇▇ Netherlands Equity
Partners II., C.V., Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners III, C.V. and
Warburg, ▇▇▇▇▇▇ Equity Partner, L.P.
"WARBURG TRANSACTIONS" means the transactions contemplated by (i)
the Warburg Equity Transactions, (ii) the Preferred Stock and Warrant Purchase
Agreement, dated as of August 8, 2000, by and among the Company, Warburg, ▇▇▇▇▇▇
Equity Partners, L.P. and the other purchasers party thereto, including the
terms of the Series B convertible participating preferred stock and warrants
issued pursuant thereto and (iii) any amendment of the terms of the Series B
convertible participating preferred stock or exchange or equity interests for
shares of Series B convertible participating preferred stock, in each case, to
the extent permitted under the Credit Agreements.
"WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or one or more Wholly Owned Subsidiaries.
28
SECTION 1.02 OTHER DEFINITIONS.
Defined in
Term Section
---- -------
"Agent Members"...........................................2.08(b)
"Change of Control Purchase Date".........................4.06
"Change of Control Purchase Notice".......................4.06
"Change of Control Purchase Price"........................4.06
"Events of Default".......................................3.01(c)
"Excess Proceeds Offer"...................................4.10(b)
"Initial Lien"............................................3.01(b)
"Notice of Default".......................................3.01(c)
"Offer Amount"............................................4.10(c)(2)
"Offer Period"............................................4.10(c)(2)
"Paying Agent"............................................2.06
"Registrar"...............................................2.06
"Successor Company".......................................5.01
ARTICLE II
THE NOTES
SECTION 2.01 TITLE OF THE NOTES. The Notes shall be known and
designated as the 11 1/8% Senior Secured Notes due 2009 of the Company.
SECTION 2.02 AMOUNT. The aggregate principal amount of Notes that
may be authenticated and delivered under this Second Supplemental Indenture is
unlimited. The Company has initially authorized the execution and delivery of
$440,000,000 of Notes under this Second Supplemental Indenture. Subject to
Article IV of this Second Supplemental Indenture and applicable law, the Company
may issue additional Notes under the Second Supplemental Indenture. The Notes
issued on the original Issue Date and any other Notes subsequently issued shall
be treated as a single class of Securities for all purposes under the Indenture.
SECTION 2.03 STATED MATURITY. The Stated Maturity of the Notes
shall be April 1, 2009.
SECTION 2.04 INTEREST. Interest on the Notes shall be payable in
the amount, on the Interest Payment Dates and in the manner provided for in the
form of the Notes attached hereto as Exhibit A. The Company shall pay interest
on overdue principal at 1% per annum in excess of the stated rate of interest
and will pay interest on overdue installments of interest at such higher rate to
the extent lawful.
SECTION 2.05 FORMS; DENOMINATIONS. The Notes shall be Registered
Securities. The Notes shall be issued only in denominations of $1,000 principal
amount and any
29
integral multiple in excess thereof. The Notes shall be in substantially the
form attached hereto as Exhibit A.
(a) GLOBAL NOTES. (i) Notes shall be issued initially in the form
of one or more Global Notes in definitive fully registered form without interest
coupons, deposited on behalf of the subscribers for the Notes represented
thereby with The Bank of
New York, at its Corporate Trust Office, as custodian
for the Depositary and registered in the name of DTC or a nominee thereof, duly
executed by the Company and authenticated by the Trustee as provided in the
Indenture. The aggregate principal amount of the Global Notes may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depositary as hereinafter provided.
Each Global Note 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 redemptions.
Any adjustment of the aggregate principal amount of a Global Note
to reflect the amount of any increase or decrease in the principal amount of
outstanding Notes represented thereby shall be made by the Trustee pursuant to a
Company Order delivered pursuant to Section 2.03 of the Original Indenture or
Section 2.11 of the Original Indenture, and shall be made on the records of the
Trustee and the Depositary.
(ii) BOOK-ENTRY PROVISIONS. This Section 2.05(a)(ii) shall apply
only to Global Notes. The Company shall execute and the Trustee shall, in
accordance with this Section 2.05(a)(ii) and Sections 2.03 and 2.11 of the
Original Indenture, authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depositary, (b) shall be
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instructions and (c) shall bear legends substantially to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS, IN
WHOLE BUT NOT IN PART, TO NOMINEES OF THE
30
DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE II OF THE SUPPLEMENTAL INDENTURE
REFERRED TO ON THE REVERSE HEREOF."
(b) CERTIFICATED NOTES. Except as otherwise set forth in this
Second Supplemental Indenture, owners of beneficial interests in Global Notes
will not be entitled to receive physical delivery of Certificated Notes.
SECTION 2.06 TRANSFER AND EXCHANGE. (i) Notwithstanding any other
provisions of the Indenture or the Notes, a Global Note shall not be exchanged
in whole or in part for a Note registered in the name of any Person other than
the Depositary or one or more nominees thereof, PROVIDED that a Global Note may
be exchanged for Notes registered in the names of any person designated by the
Depositary in the event that (A) the Depositary has notified the Company that it
is unwilling or unable to continue as depositary for such Global Note or the
Depositary has ceased to be a "clearing agency" registered under the Exchange
Act, and a successor Depositary is not appointed by the Company within 90 days,
(B) an Event of Default has occurred and is continuing with respect to the Notes
or (C) the Company executes and delivers a Company Order to the effect that the
Global Note shall be exchangeable. Any Global Note exchanged pursuant to clause
(A) above shall be so exchanged in whole and not in part, and any Global Note
exchanged pursuant to clause (B) above may be exchanged in whole or from time to
time in part as directed by the Depositary.
(ii) Notes issued in exchange for a Global Note or any portion
thereof shall be issued in definitive, fully registered form, without interest
coupons, shall have an aggregate principal amount equal to that of such Global
Note or portion thereof to be so exchanged and shall be registered in such names
and be in such authorized denominations as the Depositary shall designate. Any
Global Note to be exchanged in whole shall be surrendered by the Depositary to
the Trustee, as Registrar. With regard to any Global Note to be exchanged in
part, either such Global Note shall be so surrendered for exchange or, if the
Trustee is acting as custodian for the Depositary or its nominee with respect to
such Global Note, the principal amount thereof shall be reduced, by an amount
equal to the portion thereof to be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. Upon any such surrender or
adjustment, the Trustee shall authenticate and deliver the Note issuable on such
exchange to or upon the order of the Depositary or an authorized representative
thereof.
(iii) Subject to the provisions of clause (v) below, the registered
Holder may grant proxies and otherwise authorize any Person, including Agent
Members (as defined below) and persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under the
Indenture or the Notes.
(iv) In the event of the occurrence of any of the events specified
in clause (i) above, the Company will promptly make available to the Trustee a
reasonable supply of Certificated Notes.
31
(v) Neither any members of, or participants in, the Depositary
(collectively, the "AGENT MEMBERS") nor any other Persons on whose behalf Agent
Members may act shall have any rights under the Indenture with respect to any
Global Note registered in the name of the Depositary or any nominee thereof, or
under any such Global Note, and the Depositary or such nominee, as the case may
be, may be treated by the Company, the Trustee and any agent of the Company or
the Trustee as the absolute owner and Holder of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or such nominee, as the case may be, or impair, as between the
Depositary, its Agent Members and any other Person on whose behalf an Agent
Member may act, the operation of customary practices of such Persons governing
the exercise of the rights of a Holder of any Note.
SECTION 2.07 REGISTRAR AND PAYING AGENT. The Company 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 purchase or payment ("PAYING AGENT"). The Registrar shall keep a register of
the Notes and of their registration of transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term Paying Agent includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar or co-registrar or Paying Agent (other than the Trustee). The
agency agreement shall implement the provisions of the Indenture that relate to
such agent. The Company shall notify the Trustee of the name and address of any
such agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefore pursuant to Section 7.07 of the Original Indenture. The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar
or co-registrar.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Notes.
SECTION 2.08 PAYING AGENT TO HOLD MONEY AND NOTES IN TRUST. Except
as otherwise provided herein, by no later than 10:00 a.m. (
New York City time)
on or prior to each due date of payments in respect of any Notes, the Company
shall deposit with the Paying Agent a sum of money (in immediately available
funds if deposited on the due date) sufficient to make such payments when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Noteholder or the Trustee all money held by the Paying Agent for the
making of payments in respect of the Notes and shall notify the Trustee of any
default by the Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money so held in trust.
If the Company, a Subsidiary or an Affiliate of either of them acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee and to account for any funds disbursed by
it. Upon doing so, the Paying Agent shall have no further liability for the
money.
32
SECTION 2.09 CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption or repurchases as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on other identification numbers
printed on the Notes, and any such redemption or repurchase shall not be
affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE III
AMENDMENT OF CERTAIN PROVISIONS
OF THE ORIGINAL INDENTURE
SECTION 3.01 AMENDMENTS RELATING TO THE NOTES. The Original
Indenture is hereby amended, solely with respect to the Notes (and not with
respect to any other series of Securities that may be issued under the Original
Indenture), as follows:
(a) Article 3 of the Original Indenture is hereby amended by
replacing it in its entirety with the following:
"ARTICLE 3
REDEMPTION OF NOTES
SECTION 3.01 RIGHT TO REDEEM; OPTIONAL REDEMPTION.
On after April 1, 2006, the Company may redeem the Notes, in whole or
from time to time in part, upon not less than 30 nor more than 60 days' notice
at the Redemption Prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on April 1
of the following years:
Year Percentage
---- ----------
2006...................................................105.563%
2007...................................................102.781%
2008...................................................100.000%
In addition, before April 1, 2005, the Company may at its option,
from time to time, redeem Notes in an aggregate principal amount not to exceed
35% of the aggregate principal amount of the Notes originally issued at a
redemption price (expressed as a percentage of principal amount) of 111.125%,
plus accrued and unpaid interest to the Redemption Date, with the net cash
proceeds from one or more sales of the Company's Capital Stock (other than
Disqualified Stock); provided that (1) at least 65% of the aggregate principal
amount of the Notes originally issued remains outstanding immediately after the
occurrence of each such
33
redemption (other than the Notes held, directly or indirectly, by us or our
Affiliates); and (2) each such redemption occurs within the 60 day period
immediately succeeding the date of the sale of such Capital Stock.
The Company will give notice of any redemption as provided in
Section 3.03. If less than all of the Notes are to be redeemed, selection of the
Notes for redemption will be made by the Trustee on a pro rata or by lot or by
such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate. The Company may not redeem any Notes except in integral
multiples of $1,000.
SECTION 3.02 ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election
of the Company to redeem any Notes pursuant to Section 3.01 shall be evidenced
by a resolution of the Board of Directors. In case of any redemption at the
election of the Company, the Company shall, not more than 60 nor less than 30
days immediately preceding the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the aggregate principal amount of Notes to be redeemed.
SECTION 3.03 NOTICE OF REDEMPTION. Not more than 60 days nor less
than 30 days immediately preceding a Redemption Date, the Company shall mail a
notice of redemption by first-class mail, postage prepaid, to each Holder of
Notes to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(5) that, unless the Company defaults in making payment of such
Redemption Price and interest, if any, on Notes called for
redemption will cease to accrue on and after the Redemption Date;
(6) that the conditions precedent to such redemption have
occurred;
(7) the CUSIP number of the Notes; and
(8) any other relevant information.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; PROVIDED that the
Company makes such request at least three Business Days prior to the date such
notice of redemption must be mailed.
If any Note is to be redeemed in part only, the notice of the
redemption relating to the Note will state the portion of the principal amount
to be redeemed. A new Note in an
34
aggregate principal amount equal to the unredeemed portion thereof will be
issued upon cancellation of the original Note.
SECTION 3.04 DEPOSIT OF REDEMPTION PRICE. Prior to any Redemption
Date, the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary or an Affiliate of either of them is acting as the Paying Agent,
shall segregate and hold in trust as provided in Section 2.06 of the Original
Indenture) money sufficient to pay the related Redemption Price of, and (except
if such Redemption Date shall be an Interest Payment Date) accrued interest on,
all Notes to be redeemed on that date other than Notes or portions of Notes
called for redemption which on or prior thereto have been delivered by the
Company to the Trustee for cancellation. If such money is then held by the
Company in trust and is not required for such purpose, it shall be discharged
from such trust.
SECTION 3.05 NOTES PAYABLE ON REDEMPTION DATE. If notice of
redemption has been given in the manner set forth in Section 3.03, the Notes
called for redemption become due and payable on the Redemption Date specified in
such notice and upon presentation and surrender of the Notes to the Paying
Agent, such Notes shall be paid and redeemed by the Company at the Redemption
Price stated in the notice together with accrued interest (subject to the right
of the Holders of record on the relevant Record Date to receive interest on an
Interest Payment Date that is on or prior to the Redemption Date). From and
after the Redemption Date, if monies for the redemption of Notes called for
redemption shall have been made available at the office of the Paying Agent, for
redemption on the Redemption Date, the Notes called for redemption shall cease
to bear interest, and the only right of the Holders of such Notes shall be to
receive payment of the Redemption Price together with accrued interest (subject
to the right of Holders of record on the relevant Record Date to receive
interest on an interest payment date that is on or prior to the Redemption Date)
to the Redemption Date as aforesaid. If monies for the redemption of the Notes
are not made available for payment until after the Redemption Date, the Notes
called for redemption shall not cease to bear interest until such monies have
been so made available.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Note."
(b) Article 4 of the Original Indenture is hereby amended by
replacing it in its entirety with the following:
"ARTICLE 4
COVENANTS
The Company will comply at all times with the covenants described
in Sections 4.01 through 4.06 and Sections 4.13 through 4.16 (other than in the
event of a discharge and defeasance). In addition, during a Rating Deficiency
Period (other than in the event of a discharge and defeasance), the Company will
comply with the covenants described in Sections 4.07 through 4.12.
35
Section 4.01 PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM. The
Company will duly and punctually pay the principal, interest, and premium, if
any, on the Notes in accordance with the terms of the Notes and this Indenture.
Section 4.02 LIMITATION ON LIENS. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, (a) during any
Security Period, Incur or permit to exist any Lien of any nature whatsoever,
other than Permitted Liens, on any of its properties (including Capital Stock of
a Restricted Subsidiary), whether owned at the Issue Date or thereafter
acquired, securing any Indebtedness; and (b) during any Lien Suspension Period,
Incur or permit to exist any Lien (the "Initial Lien") of any nature whatsoever,
other than Permitted Liens, on any of its properties (including Capital Stock of
a Restricted Subsidiary) whether owned on the Issue date or thereafter acquired,
securing any Indebtedness without effectively providing that the Notes shall be
secured equally and ratably with (or prior to) the obligations so secured for so
long as such obligations are so secured; PROVIDED, HOWEVER, that the Company
will, at any time, be entitled to Incur other Liens to secure Indebtedness as
long as the amount of outstanding Indebtedness secured by Liens Incurred
pursuant to this proviso and the amount of all outstanding Attributable Debt
with respect to Sale/Leaseback Transactions (other than synthetic leases
constituting Sale/Leaseback Transactions in an aggregate principal amount not to
exceed $85,000,000 at any one time outstanding) does not exceed, in the
aggregate, 12.5% of Consolidated Net Tangible Assets, as of the date that such
Lien is Incurred, as determined as of the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Incurrence.
Any Lien created for the benefit of the Holders of the Notes
pursuant to clause (b) of the preceding paragraph shall provide by its terms
that such Lien shall be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien.
SECTION 4.03 LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any property unless:
(1) after giving effect to the Sale/Leaseback Transaction, the amount
of all outstanding Attributable Debt with respect to Sale/Leaseback
Transactions and the amount of all outstanding Indebtedness secured
by Liens permitted to be Incurred pursuant to Section 4.02(a) does
not exceed, in the aggregate, 12.5% of Consolidated Net Tangible
Assets, as determined as of the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such
Sale/Leaseback Transaction;
(2) the net proceeds received by the Company or any Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are
at least equal to the fair value of such property; and
(3) within 180 days after the Sale/Leaseback Transaction, the Company
applies the proceeds of such transaction to prepay, repay, redeem
or purchase Senior Indebtedness of the Company or any of its
Restricted Subsidiaries or to acquire Additional Assets;
36
PROVIDED, HOWEVER, that the foregoing provision shall not apply to any synthetic
leases constituting Sale/Leaseback Transactions in an aggregate amount not to
exceed $85,000,000 at any one time outstanding.
SECTION 4.04 AMENDMENT OF SECURITY DOCUMENTS. Upon the execution of
the Security Documents, the Company will not modify, or supplement, or permit or
consent to any amendment, modification or supplement of, the Security Documents
in any way that would be adverse to Holders in any material respect except (i)
in accordance with the terms of the Intercreditor Agreement or (ii) with the
written consent of Holders of a majority of the principal amount of the Notes
then outstanding.
SECTION 4.05 REPORTS TO HOLDERS. Whether or not the Company is
required to file reports with the SEC, so long as any Notes are outstanding, the
Company will file with the SEC:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports,
in each case within the time periods specified in the Commission's rules
and regulations.
If the SEC does not permit the filings described above, the Company will
provide the Trustee with an annual and interim reports and other information
within the same time periods that would be applicable if the Company were
required and permitted to file those reports with the SEC. We will also instruct
the Trustee to mail those reports and other information to Holders at their
addresses set forth on the security register.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.06 CHANGE OF CONTROL. (a) Upon the occurrence of a Change
of Control, each Holder will have the right to require that the Company
repurchase such Holder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant Interest Payment Date) (the "CHANGE
OF CONTROL PURCHASE PRICE").
(b) Within 30 days following any Change of Control, the Company
will mail a notice to each Holder with a copy to the Trustee stating (i) that a
Change of Control has occurred and that such Holder has the right to require the
Company to purchase such Holder's
37
Notes at a purchase price in cash equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive interest
on the relevant Interest Payment Date); (ii) the circumstances and relevant
facts regarding such Change of Control (including information with respect to
pro forma historical income, cash flow and capitalization, in each case after
giving effect to such Change of Control); (iii) the purchase date (which shall
be no earlier than 30 days nor later than 60 days from the date such notice is
mailed) (the "CHANGE OF CONTROL PURCHASE DATE"); and (iv) the instructions, as
determined by the Company, consistent with this Section 4.06, that a Holder must
follow in order to have its Notes purchased.
(c) Holders electing to have the Notes repurchased will be
required to surrender their Notes, with an appropriate form duly completed, to
the Company at the address specified in the notice at least 10 Business Days
prior to the Change of Control Purchase Date. Holders will be entitled to
withdraw their election if the Trustee or the Company receives not later than
three Business Days prior to the Change of Control Purchase Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes which was delivered for purchase by the Holder and a statement
that such Holder is withdrawing its election to have such Notes repurchased.
(d) On the Change of Control Purchase Date, all Notes,
repurchased by the Company under this Section shall be delivered to the Trustee
for cancellation, and the Company shall pay the repurchase price plus accrued
and unpaid interest to the Holders entitled thereto. Upon surrender of a Note
that is repurchased under this Section in part, the Company shall execute and
the Trustee shall authenticate for the Holder thereof (at the Company's expense)
a new Note having the principal amount equal to the principal amount of the Note
surrendered less the portion of the principal amount of the Note repurchased.
(e) The Company shall not be required to comply with this
Section 4.06 if a third party mails a written notice of Change of Control in the
manner, at the times and otherwise in compliance with this Section 4.06 and
repurchases all Notes delivered for repurchase and not withdrawn.
(f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.06, we will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached our obligations under this Section 4.06 by virtue of our
compliance with such securities laws or regulations. .
SECTION 4.07 LIMITATION ON INDEBTEDNESS. (a) the Company will not,
and will not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness; PROVIDED, HOWEVER, that the Company and its Restricted
Subsidiaries will be entitled to Incur Indebtedness if, on the date of such
Incurrence and after giving effect thereto on a PRO FORMA basis, no Default has
occurred and is continuing and the Consolidated Coverage Ratio exceeds 2.25 to
1.
38
(b) Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries will be entitled to Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred by the Company and its Restricted
Subsidiaries pursuant to the Credit Agreements; PROVIDED, HOWEVER,
that, after giving effect to any such Incurrence, the aggregate
principal amount of all Indebtedness Incurred under this clause (1)
and then outstanding does not exceed $825,000,000 less the amount
of any Indebtedness Incurred pursuant to clause (13) of this
paragraph (b);
(2) Indebtedness owed to and held by the Company or a Restricted
Subsidiary; PROVIDED, HOWEVER, that (A) any subsequent issuance or
transfer of any Capital Stock which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the obligor thereon and (B)
if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full
in cash of all obligations with respect to the Notes;
(3) the Notes;
(4) Indebtedness outstanding on the Issue Date (other than Indebtedness
described in (1), (2) or (3) above) or Incurred during a Suspension
Period;
(5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on
or prior to the date on which such Subsidiary was acquired by the
Company (other than Indebtedness Incurred in connection with, or to
provide all or any portion of the funds or credit support utilized
to consummate, the transaction or series of related transactions
pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Company); PROVIDED, HOWEVER, that on the date of
such acquisition and after giving PRO FORMA effect thereto, the
Company would have been able to Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) above;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) above or pursuant to clause (3), (4) or
(5) above or this clause (6); PROVIDED, HOWEVER, that to the extent
such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness of a Subsidiary, such Refinancing Indebtedness shall
be Incurred only by such Subsidiary or the Company;
(7) Indebtedness of the Company or any of its Restricted Subsidiaries
attributable to Capital Lease Obligations, or Incurred to finance
the acquisition, construction or improvement of any fixed or
capital assets, including any Indebtedness assumed in connection
with the acquisition of any such assets, in an aggregate principal
amount which, when taken together with all other Indebtedness of
the Company or any of its Restricted Subsidiaries incurred pursuant
to this clause (7) and then outstanding, does not exceed 5% of
Consolidated Net Tangible Assets;
39
(8) Hedging Obligations entered into in the ordinary course of business
and not for speculative purposes;
(9) obligations in respect of tender, performance, government contract,
bid and surety or appeal bonds and standby letters of credit and
warranty and contractual obligations of like nature or documentary
letters of credit or completion guarantees provided by the Company
or any Restricted Subsidiary in the ordinary course of business;
(10) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; PROVIDED,
HOWEVER, that such Indebtedness is extinguished within five
Business Days of its Incurrence;
(11) Indebtedness Incurred in a Qualified Receivables Transaction that
is non-recourse to the Company or any Restricted Subsidiary (except
for Standard Securitization Undertakings or a Restricted Subsidiary
whose principal assets are the receivables, leases or other assets
that are the subject of the Qualified Receivables Transaction);
(12) Indebtedness of the Company or of any of its Restricted
Subsidiaries in an aggregate principal amount which, when taken
together with all other Indebtedness of the Company and its
Restricted Subsidiaries outstanding on the date of such Incurrence
(other than Indebtedness permitted by clauses (1) through (11)
above or (a) above), does not exceed $75,000,000; and
(13) Indebtedness of the Company or any of its Restricted Subsidiaries
in an aggregate principal amount at any one time outstanding not to
exceed $200,000,000 secured by a mortgage on any real property of
the Company or such Restricted Subsidiary.
(c) Notwithstanding the foregoing, the Company will not Incur any
Indebtedness pursuant to (b) above if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such Indebtedness
shall be subordinated to the Notes to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with this covenant,
(1) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described above, the Company, in its sole
discretion, will classify such item of Indebtedness at the time of Incurrence
and only be required to include the amount and type of such Indebtedness in one
of the above clauses and (2) the Company will be entitled to divide and
classify, and at any time, redivide and reclassify, an item of Indebtedness in
more than one of the types of Indebtedness described above.
(e) The Company will not, directly or indirectly, Incur any
Indebtedness that is subordinated in right of payment to any Indebtedness of the
Company unless such Indebtedness is subordinated in right of payment to the
Notes to the same extent.
40
(f) Notwithstanding the foregoing, Avaya Technology Corp will not,
directly or indirectly Incur, nor will the Company, directly or indirectly,
cause Avaya Technology Corp. to Incur, any Indebtedness so long as the Notes are
secured.
SECTION 4.08 LIMITATION ON RESTRICTED PAYMENTS. (a) The Company
will not, and will not permit any Restricted Subsidiary, directly or indirectly,
to make a Restricted Payment if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company is not entitled to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.07(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of
(without duplication):
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter
during which the Issue Date occurs to the end of the most
recent fiscal quarter ending at least 45 days prior to the
date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of
such deficit); PLUS
(B) 100% of the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of its Capital Stock (other
than Disqualified Stock) subsequent to the Issue Date (other
than an issuance or sale to a Subsidiary of the Company and
other than (i) the Warburg Equity Transactions and (ii) an
issuance or sale to an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries
for the benefit of their employees) and 100% of any cash
capital contribution received by the Company from its
shareholders subsequent to the Issue Date; PLUS
(C) the amount by which Indebtedness of the Company is reduced on
the Company's balance sheet upon the conversion or exchange
(other than by a Subsidiary of the Company or pursuant to the
Warburg Equity Transactions) subsequent to the Issue Date of
any Indebtedness of the Company convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the
Company (less the amount of any cash, or the fair value of
any other property, distributed by the Company upon such
conversion or exchange); PLUS
(D) an amount equal to the sum of (x) the net reduction in the
Investments (other than Permitted Investments) made by the
Company or any Restricted Subsidiary in any Person resulting
from repurchases, repayments or redemptions of such
Investments by such Person, proceeds realized on the sale of
such Investment and proceeds representing the return of
capital (excluding dividends and distributions), in each case
received by the
41
Company or any Restricted Subsidiary, and (y) to the extent
such Person is an Unrestricted Subsidiary, the portion
(proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of
such Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; PROVIDED,
HOWEVER, that the foregoing sum shall not exceed, in the case
of any such Person or Unrestricted Subsidiary, the amount of
Investments (excluding Permitted Investments) previously made
(and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person or Unrestricted
Subsidiary; PLUS
(E) $25,000,000.
(b) The preceding provisions will not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of the
substantially concurrent sale of, or made by exchange for, Capital
Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their
employees) or a substantially concurrent cash capital contribution
received by the Company from its shareholders; PROVIDED, HOWEVER,
that (A) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale or such cash capital contribution (to
the extent so used for such Restricted Payment) shall be excluded
from the calculation of amounts under clause (3)(B) of paragraph
(a) above;
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations
made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Obligations which are permitted to
be Incurred pursuant to Section 4.07; PROVIDED, HOWEVER, that such
purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value shall be excluded in the calculation of the
amount of Restricted Payments;
(3) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividend would have complied
with this covenant; PROVIDED, HOWEVER, that at the time of payment
of such dividend, no other Default shall have occurred and be
continuing (or result therefrom); PROVIDED FURTHER, HOWEVER, that
such dividend shall be included in the calculation of the amount of
Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the
Company or any of its Subsidiaries from employees, former
employees, directors or former directors of the Company or any of
its Subsidiaries (or permitted transferees of such employees,
former employees, directors or former directors), pursuant to the
terms of the agreements (including employment agreements) or plans
(or amendments thereto) approved
42
by the Board of Directors under which such individuals purchase or
sell or are granted the option to purchase or sell, shares of such
Capital Stock; PROVIDED, HOWEVER, that the aggregate amount of such
repurchases and other acquisitions shall not exceed $10,000,000 in
any calendar year; PROVIDED, HOWEVER, that such repurchase or other
acquisition shall be included in the calculation of the amount of
Restricted Payments; or
(5) payments to Holders of Capital Stock (or to the Holders of
Indebtedness or Disqualified Capital Stock that is convertible into
or exchangeable for Capital Stock upon such conversion or exchange)
in lieu of the issuance of fractional shares; PROVIDED, HOWEVER,
that such payments shall be included in the calculation of the
amount of Restricted Payments.
(c) For purposes of calculating the amount of Restricted Payments
allowable under clause (a)(3) of this Section 4.08 covenant, any payment made by
the Company or a Restricted Subsidiary since the Issue Date that meets the
definition of a Restricted Payment will be considered a Restricted Payment
notwithstanding the fact that such payment was made in a period other than a
Rating Deficiency Period.
SECTION 4.09 LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:
(1) with respect to clauses (a), (b) and (c):
(i) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(ii) any encumbrance or restriction pursuant to a definitive
written agreement entered into in good faith during any
Suspension Period;
(iii) any encumbrance or restriction contained in the terms of any
Indebtedness Incurred pursuant to Section 4.07(b)(1) or any
agreement pursuant to which such Indebtedness was issued if
(x) either (i) the encumbrance or restriction applies only
in the event of and during the continuance of a payment
default or a default with respect to a financial covenant
contained in such Indebtedness or agreement or (ii) the
Company determines at the time any such Indebtedness is
Incurred (and at the time of any modification of the terms
of any such encumbrance or restriction) that any such
encumbrance or restriction will not materially affect the
Company's ability to make principal or interest payments on
the Notes and (y) the encumbrance or restriction is not
materially more disadvantageous to the
43
Holders of the Notes than is customary in comparable
financings or agreements (as determined by the Company in
good faith);
(iv) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary on or
prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company) and outstanding
on such date;
(v) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to
an agreement referred to in clause (i), (ii) or (iii) of
clause (1) of this covenant or this clause (v) or contained
in any amendment to an agreement referred to in clause (i),
(ii) or (iii) of clause (1) of this covenant or this clause
(v); PROVIDED, HOWEVER, that the encumbrances and
restrictions with respect to such Restricted Subsidiary
contained in any such refinancing agreement or amendment are
no less favorable to the Noteholder than encumbrances and
restrictions with respect to such Restricted Subsidiary
contained in such predecessor agreements;
(vi) applicable law, rules, regulations and/or orders;
(vii) this Indenture and any Liens (including Permitted Liens)
permitted by this Indenture;
(viii) any encumbrance or restriction required under the terms of
the Credit Agreements or the Security Documents as in
existence on the Issue Date, or as may be amended after the
Issue Date, provided that any encumbrance or restriction as
so amended is not materially more disadvantageous to the
Holders of the Notes;
(ix) restrictions on cash or other deposits or net worth imposed
under contracts entered into the ordinary course of
business;
(x) any encumbrance or restriction existing under or by reason
of contractual requirements in connection with a Qualified
Receivables Transaction;
(xi) pursuant to any merger agreements, stock purchase
agreements, asset sale agreements and similar agreements
limiting the transfer of properties and assets or
distributions, provided that such restriction or encumbrance
is terminated upon consummation of the subject transaction;
and
(2) with respect to clause (c) only:
44
(i) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer
of the lease or the property leased thereunder;
(ii) restrictions contained in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages;
and
(iii) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary pending the closing of
such sale or disposition.
SECTION 4.10 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
(a) The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset
Disposition;
(2) at least 75% of the consideration thereof received by the Company
or such Restricted Subsidiary is in the form of cash or Cash
Equivalents or Additional Assets; PROVIDED that the Company will
not need to comply with this clause (2) with respect to an Asset
Disposition consisting of all or substantially all of the assets
used in its Connectivity Solutions business; and
(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)
(A) FIRST, to the extent the Company elects (or is required by
the terms of any Indebtedness), to prepay, repay, redeem or
purchase Senior Indebtedness of the Company or Indebtedness
(other than any Disqualified Stock) of a Wholly Owned
Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within one year from
the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
(B) SECOND, to the extent of the balance of such Net Available
Cash after application in accordance with clause (A), to the
extent the Company elects, to acquire Additional Assets
within one year from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; and
(C) THIRD, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A) and
(B), to make an offer to the Holders of the Notes (and to
Holders of other Senior Indebtedness of the Company
designated by the Company) to purchase Notes (and such other
45
Senior Indebtedness of the Company) pursuant to and subject
to the conditions contained in Section 4.07(b);
PROVIDED, HOWEVER, that in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A)
or (C) above, the Company or such Restricted Subsidiary shall
permanently retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in
an amount equal to the principal amount so prepaid, repaid or
purchased.
Notwithstanding the foregoing provisions of this Section 4.10(a),
the Company and the Restricted Subsidiaries will not be required to apply any
Net Available Cash in accordance with this covenant except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which is not
applied in accordance with this covenant exceeds $75,000,000. Pending
application of Net Available Cash pursuant to this covenant, such Net Available
Cash shall be invested in Temporary Cash Investments or applied to temporarily
reduce any short-term loans or any revolving credit Indebtedness, including,
without limitation, under the Credit Agreements, and such temporary reductions
shall not result in any permanent reduction in the availability under the
revolving portion of such credit facility.
For the purposes of this Section 4.10(a), the following are deemed
to be cash or Cash Equivalents:
(1) the assumption of Indebtedness of the Company or any Restricted
Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection
with such Asset Disposition; and
(2) securities received by the Company or any Restricted Subsidiary
from the transferee that are promptly converted by the Company or
such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Notes (and other Senior Indebtedness of the Company) pursuant to
Section 4.10(a)(3)(C) above, the Company will purchase Notes tendered pursuant
to an offer (the "EXCESS PROCEEDS OFFER") by the Company for the Notes (and such
other Senior Indebtedness) at a purchase price of 100% of their principal amount
(or, in the event such other Senior Indebtedness of the Company was issued with
significant original issue discount, 100% of the accreted value thereof) without
premium, plus accrued but unpaid interest (or, in respect of such other Senior
Indebtedness of the Company, such lesser price, if any, as may be provided for
by the terms of such Senior Indebtedness) in accordance with the procedures set
forth in Section 4.10(c), provided that the procedures for making an offer to
holders of other Senior Indebtedness will be as provided for by the terms of
such Senior Indebtedness. If the aggregate purchase price of the securities
tendered exceeds the Net Available Cash allotted to their purchase, the Company
will select the securities to be purchased on a PRO RATA basis but in round
denominations, which in the case of the Notes will be denominations of $1,000
principal amount or multiples thereof. the Company shall not be required to make
such an offer to purchase Notes (and other Senior Indebtedness of the Company)
pursuant to this Section 4.10(b) if the Net Available Cash available therefor is
less than $75,000,000 (which lesser amount shall be carried forward for purposes
of determining
46
whether such an offer is required with respect to the Net Available Cash from
any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within five days after the
last date by which the Company must have applied Net Available Cash pursuant to
Section 4.10(a)(3)(B), the Company shall be obligated to deliver to the Trustee
and send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have his Securities purchased by the Company either in whole
or in part (subject to prorationing as hereinafter described in the event the
Excess Proceeds Offer is oversubscribed) in integral multiples of $1,000 of
principal amount, at the applicable purchase price. The notice shall specify a
purchase date not less than 30 days nor more than 60 days after the date of such
notice and shall contain information concerning the business of the Company
which the Company in good faith believes will enable such Holders to make an
informed decision (which at a minimum will include (i) the most recently filed
Annual Report on Form 10-K (including audited consolidated financial statements)
of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q
and any Current Report on Form 8-K of the Company filed subsequent to such
Quarterly Report, other than Current Reports describing Asset Dispositions
otherwise described in the offering materials (or corresponding successor
reports), and (ii) if material, appropriate pro forma financial information) and
all instructions and materials necessary to tender Notes pursuant to the Excess
Proceeds Offer, together with the information contained in clause (2) below.
(2) Not later than the date upon which written notice of an
Excess Proceeds Offer is delivered to the Trustee as provided above, the Company
shall deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Excess Proceeds Offer (the "OFFER AMOUNT"), (ii) the allocation of the Net
Available Cash from the Asset Dispositions pursuant to which such Excess
Proceeds Offer is being made and (iii) the compliance of such allocation with
the provisions of Section 4.10(a). On such date, the Company shall also
irrevocably deposit with the Trustee or with the Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust) in
immediately available funds an amount equal to the Offer Amount to be held for
payment in accordance with the provisions of this Section 4.10. The amount so
deposited, at the option of, and pursuant to the specific written direction of,
the Company, may be invested in Temporary Cash Investments, the maturity date of
which is not later than the purchase date. The Company shall be entitled to any
interest or dividends accrued, earned or paid on such Temporary Cash
Investments. Upon the expiration of the period for which the Excess Proceeds
Offer remains open (the "OFFER PERIOD"), the Company shall deliver to the
Trustee for cancellation the Notes or portions thereof which have been properly
tendered to and are to be accepted by the Company. The Trustee shall, on the
purchase date, mail or deliver payment to each tendering Holder in the amount of
the purchase price. In the event that the aggregate purchase price of the Notes
and other Senior Indebtedness delivered by the Company to the Trustee is less
than the Offer Amount, the Trustee shall deliver the excess to the Company
promptly after the expiration of the Offer Period.
(3) Holders electing to have a Note purchased will be
required to surrender the Note, with an appropriate form duly completed, to the
Company at the address specified in the notice at least ten Business Days prior
to the purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than three Business Days prior to the
purchase date, a facsimile transmission or letter setting forth the name
47
of the Holder, the principal amount of the Note which was delivered for purchase
by the Holder and a statement that such Holder is withdrawing his election to
have such Note purchased. If at the expiration of the Offer Period the aggregate
principal amount of Notes surrendered by Holders exceeds the Offer Amount, the
Company shall select the Securities to be purchased on a pro rata basis (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 whose Securities are purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered.
(4) At the time the Company delivers Notes to the Trustee
which are to be accepted for purchase, the Company will also deliver an
Officers' Certificate stating that such Notes are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.10. A Note shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue of its compliance
with such securities laws or regulations.
(e) Notwithstanding the foregoing, the Company will be permitted
to consummate an Asset Disposition and will not be subject to the provisions of
this covenant if a definitive written sale agreement relating to such Asset
Disposition was entered into in good faith during a Suspension Period.
SECTION 4.11 LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company
will not, and will not permit any Restricted Subsidiary to, enter into or permit
to exist any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with, or for the benefit of, any Affiliate of the Company (an "AFFILIATE
TRANSACTION") unless:
(1) the terms of the Affiliate Transaction are no less favorable to the
Company or such Restricted Subsidiary than those that could be
obtained at the time of the Affiliate Transaction in arm's-length
dealings with a Person who is not an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of
$50,000,000, the terms of the Affiliate Transaction are set forth
in writing and a majority of the non-employee directors of the
Company disinterested with respect to such Affiliate Transaction
have determined in good faith that the criteria set forth in clause
(1) are satisfied and have approved the relevant Affiliate
Transaction as evidenced by a resolution of the Board of Directors;
and
48
(3) if such Affiliate Transaction involves an amount in excess of
$100,000,000, the Board of Directors shall also have received a
written opinion from an Independent Qualified Party to the effect
that such Affiliate Transaction is fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries or is
not less favorable to the Company and its Restricted Subsidiaries
than could reasonably be expected to be obtained at the time in an
arm's-length transaction with a Person who was not an Affiliate.
(b) The provisions of the preceding paragraph (a) will not
prohibit:
(1) any Investment or other Restricted Payment, in each case permitted
to be made pursuant to Section 4.08;
(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors;
(3) loans or advances to employees in the ordinary course of business
in accordance with the past practices of the Company or its
Restricted Subsidiaries, but in any event not to exceed $25,000,000
in the aggregate outstanding at any one time;
(4) the payment of reasonable fees to directors of the Company and its
Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries;
(5) any transaction with a Restricted Subsidiary or joint venture or
similar entity which would constitute an Affiliate Transaction
solely because the Company or a Restricted Subsidiary owns an
equity interest in or otherwise controls such Restricted
Subsidiary, joint venture or similar entity;
(6) the issuance or sale of any Capital Stock (other than Disqualified
Stock) of the Company;
(7) the Warburg Transactions (so long as any renegotiation or
amendments contemplated in connection with the Warburg Transactions
are not disadvantageous to Holders of Notes in any material
respect); and
(8) any transaction that constitutes a Qualified Receivables
Transaction, including any Investments made by the Company in a
Restricted Subsidiary or by a Restricted Subsidiary in the Company
in connection with such Qualified Receivables Transaction.
(c) Notwithstanding the foregoing, the Company and its Restricted subsidiaries
will not be required to comply with the provisions of clause (a)(2) and (a)(3)
above with respect to any agreements existing on the Issue Date between Lucent
Technologies Inc. and the Company or its Restricted Subsidiaries or with respect
to the renegotiation of any such agreements (so long as such renegotiation is
not disadvantageous to Holders of Notes in any material respect).
49
SECTION 4.12 LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED
SUBSIDIARIES. The Company will not permit any of its Restricted Subsidiaries,
directly or indirectly, to Guarantee the payment of any other Indebtedness of
the Company or any other Restricted Subsidiary unless (i) such Restricted
Subsidiary concurrently executes and delivers a supplemental indenture providing
for the Guarantee of the payment of the Notes by such Restricted Subsidiary,
which Guarantee shall be senior to or equal in right of payment with such
Subsidiary's Guarantee of or pledge to secure such other Indebtedness at least
to the same extent as the Notes are to such Indebtedness and (ii) such
Restricted Subsidiary waives and will not in any manner whatsoever claim or take
the benefit or advantage of, for so long as any Notes remain outstanding under
this Indenture, any rights of reimbursement, indemnity or subrogation or any
other rights against the Company as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee.
Any Guarantee of the Notes by a Restricted Subsidiary will provide
by its terms that it will be automatically and unconditionally released and
discharged (i) in connection with the sale (including by way of merger or
consolidation) of all of the Capital Stock of a Subsidiary Guarantor to a Person
that is not (either before or after giving effect to such transaction) a
Restricted Subsidiary of the Company, if the sale or other disposition of all
such Capital Stock of that Subsidiary Guarantor complies with Section 4.10, (ii)
if the Company properly designates any Restricted Subsidiary that is a
Subsidiary Guarantor as an Unrestricted Subsidiary, or (iii) upon the release or
discharge of the Guarantee which resulted in the creation of the Subsidiary
Guarantee, except a discharge or release by or as a result or payment under the
Guarantee.
SECTION 4.13 EXISTENCE. Subject to Article 5, the Company will do
or cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.14 MAINTENANCE OF PROPERTIES. The Company will cause all
properties material to the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 4.15 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (b) all lawful material claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, however, that the
50
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which a reserve is being maintained in accordance with GAAP.
SECTION 4.16 STATEMENT AS TO COMPLIANCE. The Company will deliver
to the Trustee annually, within 120 days after the close of each fiscal year, a
brief certificate from its principal executive officer, principal financial
officer, principal accounting officer or treasurer, as to his or her best
knowledge of the Company's compliance (without regard to periods of grace or
notice requirements) with all conditions and covenants of this Indenture." The
Company shall deliver to the Trustee, as soon as possible and in any event
within five business days after the Company becomes aware of the occurrence of
any Event of Default or an event which, with notice or lapse of time or both,
would constitute an Event of Default, an Officers' Certificate setting forth the
details of such Event of Default or default and the action which the Company
proposes to take with respect thereto.
(c) Article 5 of the Original Indenture is hereby amended by
replacing it in its entirety with the following:
"ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 MERGER AND CONSOLIDATION. The Company will not
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, directly or indirectly, all or
substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "SUCCESSOR
COMPANY") shall be a Person organized and existing under the laws
of the United States of America, any State thereof or the District
of Columbia and the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental thereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the Notes and this
Indenture;
(2) immediately after giving PRO FORMA effect to such transaction (and
treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction
as having been Incurred by such Successor Company or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) if the Company is obligated to comply with the covenants described
in Sections 4.07 through 4.12, immediately after giving PRO FORMA
effect to such transaction, the Successor Company either (a) would
be able to Incur an additional $1.00 of Indebtedness pursuant to
paragraph (a) of Section 4.07 or (b) would have a Consolidated
Coverage Ratio that is at least equal to that of the Company prior
to such transaction or series of transactions; and
51
(4) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture.
PROVIDED, HOWEVER, that clause (3) will not be applicable to (A) a Restricted
Subsidiary consolidating with, merging into or transferring all or part of its
properties and assets to the Company or (B) the Company merging with an
Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction.
SECTION 5.02 SUCCESSOR SUBSTITUTED. The Successor Company will be
the successor to the Company and shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, and the
predecessor Company, except in the case of a lease, shall be released from the
obligation to pay the principal, interest and premium, if any, on the Notes."
(d) Article 6 of the Original Indenture is hereby amended by
replacing it in its entirety with the following:
"ARTICLE 6
REMEDIES OF THE TRUSTEE AND NOTEHOLDER
ON EVENT OF DEFAULT
SECTION 6.01 EVENTS OF DEFAULT; ACCELERATION OF MATURITY; WAIVER OF
DEFAULT. In case one or more of the following Events of Default shall have
occurred and be continuing with respect to the Notes ("EVENTS OF DEFAULT"), that
is to say:
(1) the Company fails to pay interest due on the notes for 30
days;
(2) the Company fails to pay the principal of or premium on the
Notes when due at their Stated Maturity, upon redemption, upon required
repurchase, upon acceleration or otherwise;
(3) the Company fails to comply with Section 4.01 or Section 4.06
or, to the extent that the Company is required to comply with Sections
4.07 through 4.12, the Company fails to make or consummate an offer to
purchase in accordance with the provisions described under Section 4.10;
or
(4) the Company fails to comply with the provisions of any other
agreement or covenant in the Notes or the Indenture (other than the
agreements or covenants described in clauses (1), (2) and (3) above) for
90 days after written notice by the trustee or holders of at least 25% of
the principal amount of the notes outstanding;
(5) the Company or any Restricted Subsidiary defaults in the
payment of more than $100,000,000 of indebtedness at the maturity thereof
(after giving effect to any applicable grace period) or indebtedness of
more than $100,000,000 shall be accelerated, and such default and
acceleration shall not be cured or annulled within 30 days after
52
notice by the trustee or holders of at least 25% in aggregate principal
amount of the Notes outstanding;
(6) the Company fails to perfect the Liens created by the
Security Documents (other than in accordance with the terms of the
Security Documents) as provided in the Security Agreement;
(7) in the event that the Noteholders are entitled to the
security provided for in Article IV of the Second Supplemental Indenture,
(i) the Lien created by the Security Documents ceases to constitute a
valid and perfected Lien on, and security interest in, the Collateral
(other than in accordance with the terms of any Intercreditor Agreement
and this Indenture) in favor of the Trustee or any Collateral Trustee for
the benefit of the Noteholders, free and clear of all other Liens (other
than Permitted Liens), (ii) any of the relevant Security Documents shall
for whatever reason be terminated or cease to be in full force and effect
(other than in accordance with the terms of the Intercreditor Agreement
and this Supplemental Indenture) or (iii) the Company and its
subsidiaries shall not have entered into all necessary and applicable
Security Documents to which they are a party as required by Section
4.03(b) or (c) of the Second Supplemental Indenture, if, in any case,
such default continues for 10 days after notice, or the enforceability
thereof shall be contested by the Company;
(8) in the event that a Restricted Subsidiary of the Company
issues a Subsidiary Guarantee as may be required under Section 4.12, a
Subsidiary Guarantee ceases to be in full force and effect (other than in
accordance with the terms of the Indenture) and such default continues
for 10 days after notice, or a Subsidiary Guarantor denies or disaffirms
its obligations under its Subsidiary Guarantee;
(10) a court or governmental agency having jurisdiction in the
premises shall enter a decree or order for relief in respect of the
Company in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestration (or similar official) of the Company or for any substantial
part of its property or ordering the winding up or liquidation of its
affairs, and such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(11) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property or make any general assignment for the
benefit of creditors; or the Company shall admit in writing its inability
to pay its debts generally as they become due, or corporate action shall
be taken by the Company in furtherance of any of the aforesaid purposes;
then and in each and every such case (other than as described below), until the
principal of all of the Notes shall have become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
Notes then outstanding hereunder, by notice in writing
53
to the Company (and to the Trustee if given by Noteholders), may declare the
principal all of the Notes to be due and payable immediately, and upon any such
declaration, the same shall be immediately due and payable, provided that if an
Event of Default described in clause (10) or (11) above occurs, the principal
amount of all Notes then outstanding shall become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. This provision, however, is subject to the condition that if, at any
time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay, or shall deposit with the Trustee a sum sufficient to pay, all matured
installments of interest upon all of the Notes and the principal of any and all
of the Notes which shall have become due otherwise than by declaration, with
interest upon such principal and (to the extent that payment of such interest is
enforceable under applicable law) upon any such overdue amounts of interest at
the rate of 1% per annum in excess of the rate of interest specified in the
Notes, to the date of such payment or deposit, and such amount as shall be
sufficient to cover reasonable compensation to the Trustee, its agents and
counsel, and all other expenses and liabilities incurred, and all advances made,
by the Trustee except as a result of its negligence or bad faith, and if any and
all Defaults under this Indenture with respect to the Notes, other than the
nonpayment of principal of the Notes which shall have become due by declaration,
shall have been remedied -- then and in every such case the Holders of a
majority in aggregate principal amount of the Notes then outstanding by written
notice to the Company and to the Trustee may waive all defaults and rescind and
annul such declaration and its consequences; but no such waiver or rescission or
annulment shall extend to or shall affect any subsequent default or shall impair
any right consequent thereon. If an Event of Default described in clause (10) or
(11) above occurs, the principal amount of all Notes then outstanding shall
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the Holders shall be restored respectively to their
former positions and rights hereunder, and all rights, remedies and powers of
the Company, the Trustee and the Holders shall continue as though no such
proceedings had been taken.
SECTION 6.02 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY
PROVE DEBT. The Company covenants that (1) in case default shall be made in the
payment of interest of any of the Notes, as and when the same shall become due
and payable, and such default shall have continued for a period of 30 days, or
(2) in the case default shall be made in the payment of principal of any of the
Notes when the same shall have become due and payable, whether upon maturity or
redemption or upon declaration or otherwise -- then, upon demand of the Trustee,
the Company will pay to the Trustee, for the benefit of the Holders, the whole
amount that then shall have become due and payable on all Notes for principal
and premium, if any, and interest, with interest upon any such overdue principal
(and premium, if any) and (to the extent that payment of such interest is
enforceable under applicable law) upon any such overdue amounts of interest at
the rate of 1% per annum in excess of the rate of interest specified in the
Notes, and, in addition thereto, and, in addition thereto, such further amount
as shall be sufficient to cover
54
reasonable compensation to the Trustee, its agents and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee except
as a result of its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as Trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law or
in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceedings to judgment or final decree and may enforce any
such judgment or final decree against the Company or other obligor upon the
Notes and collect in the manner provided by law out of the property of the
Company or other obligor upon the Notes wherever situated the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings relative to the Company
or any other obligor upon the Notes under Title 11 of the United States Code or
any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or Trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or its property or such other obligor, or in
case of any other judicial proceedings relative to the Company or other obligor
upon the Notes, or to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal amount of any Notes
or the Redemption Price, Change of Control Purchase Price or purchase price with
respect to an Excess Proceeds Offer, if any, in respect of the Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 6.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, (a) to file and prove a claim or
claims for the whole amount of principal of the Notes, Redemption Price, Change
in Control Purchase Price, purchase price with respect to an Excess Proceeds
Offer, or interest on the Notes owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable compensation
to the Trustee, its agents and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Trustee except as a
result of its negligence or bad faith) and of the Noteholder allowed in any
judicial proceedings relative to the Company or other obligor upon the Notes, or
to the creditors or property of the Company or such other obligor, (b) unless
prohibited by applicable law and regulations, to vote on behalf of the Holders
in any election of a Trustee or a standby Trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency proceedings or
person performing similar functions in comparable proceedings, and (c) to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute all amounts received with respect to the claims of
the Noteholder and of the Trustee on their behalf and any receiver, assignee,
liquidator, custodian, Trustee or other similar official is hereby authorized by
each of the Noteholder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of payments directly to the Noteholder,
to pay the Trustee such amount as shall be sufficient to cover reasonable
compensation to the Trustee, its agents and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization,
55
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a Trustee in bankruptcy or similar person.
All rights of action and to assert claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof on any trial or other proceedings
relative thereto, and any such action or proceedings instituted by the Trustee
shall be brought in its own name as Trustee of an express trust, and any
recovery of judgment shall be for the ratable benefit of the Holders of the
Notes in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of Notes in respect to which such action was taken, and it shall not be
necessary to make any such Holders parties to any such proceedings.
In the case of a default hereunder the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture, or in aid of the exercise
of any power granted in this Indenture, or otherwise, and the Trustee may
enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 6.03 APPLICATION OF PROCEEDS. Any moneys collected by the
Trustee pursuant to Section 6.02 in respect of the Notes shall be applied in the
order following, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal (or premium, if any) or
interest on the Notes, Redemption Price, Change of Control Purchase Price or
purchase price with respect to an Excess Proceeds Offer, upon presentation of
the Notes in respect of which moneys have been collected and making a notation
thereon of the payment if only partially paid, and upon surrender thereof if
fully paid:
First: To the payment of costs and expenses of collection,
reasonable compensation to the Trustee, its agents and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee except
as a result of its negligence or bad faith;
Second: In the case the principal of the Notes in respect of which
moneys have been collected shall not have become due, to the payment of interest
on the Notes in default, in the order of the maturity of the installments of
such interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments of interest, at the rate
of 1% per annum in excess of the rate of interest specified in the Notes, such
payments to be made ratably to the persons entitled thereto;
Third: In case the principal of the Notes, Redemption Price, Change
of Control Purchase Price or purchase price with respect to an Excess Proceeds
Offer of the Notes in respect of which moneys have been collected shall have
become due by declaration or otherwise, to the
56
payment of the whole amount then owing and unpaid upon all of the Notes for
Principal and interest, at the rate of 1% per annum in excess of the rate of
interest specified in the Notes, Redemption Price, Change of Control Purchase
Price or purchase price with respect to an Excess Proceeds Offer, with interest
(to the extent that such interest has been collected by the Trustee) upon any
overdue amounts at the rate specified in paragraph 1 of the Notes, and in case
such moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Notes, then to the payment of such amounts ratably, without
preference or priority of any kind, according to such amounts due and payable on
the Notes; and
Fourth: To the Company.
SECTION 6.04 LIMITATION ON SUITS BY NOTEHOLDER. No Holder shall
have any right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Indenture, or for the
appointment of a receiver, Trustee, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of an Event of Default and unless also
the Holders of not less than twenty-five percent in aggregate Principal Amount
at Maturity of the Notes then outstanding shall have made written request upon
the Trustee to institute such action or proceedings in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have failed to institute any such action
or proceedings and no direction inconsistent with such written request shall
have been given to the Trustee pursuant to Section 6.06; it being understood and
intended and being expressly covenanted by the taker and Holder of every Note
with every other taker and Holder and the Trustee that no one or more Holders
shall have any right in any manner whatever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders. For the protection and enforcement of the provisions of this Section
6.04, each and every Noteholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
Notwithstanding any other provision in this Indenture or any
provision of the Notes, the right of any Holder to receive payment of principal
(or premium, if any) or interest on the Notes, Redemption Price, Change of
Control Purchase Price or purchase price with respect to an Excess Proceeds
Offer in respect of the Notes held by such Holder, on or after the respective
due dates expressed in the Notes or any Redemption Date, or to institute suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.05 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER OF DEFAULT. All powers and remedies given by this Article Six to the
Trustee or to the Holders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the Noteholder, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any Holder
57
of the Notes in exercising any right or power accruing upon any default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders.
SECTION 6.06 CONTROL BY HOLDERS; WAIVER OF DEFAULTS. The Holders of
a majority in aggregate principal amount of the Notes at the time outstanding
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Notes by this Indenture;
provided that such direction shall not be otherwise than in accordance with law
and the provisions of this Indenture and provided further that (subject to the
provisions of Section 7.01 of this Indenture) the Trustee shall have the right
to decline to follow any such direction if the Trustee, being advised by
counsel, shall determine that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Trustee shall determine that the action or proceedings so directed would
involve the Trustee in personal liability or if the Trustee in good faith shall
so determine that the actions or forbearances specified in or pursuant to such
direction would be unduly prejudicial to the interests of Holders so affected
not joining in the giving of said direction, it being understood that (subject
to Section 7.01 of this Indenture) the Trustee shall have no duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such
Holders. Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Holders. Prior to the
declaration of the maturity of the Notes as provided in Section 6.01, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the Holders of all the Notes waive any past default
hereunder with respect to such Notes and its consequences, except (1) an Event
of Default described in clause (1) or (2) of Section 6.01 or (2) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Noteholder affected. In the case of any such waiver, the
Company, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
SECTION 6.07 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY
COSTS. All parties to this Indenture agree, and each Holder of the Notes, by
such Holder's acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 6.07 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of Holders of the
Notes, holding in the aggregate more than ten percent in principal amount of the
Notes, or to any suit instituted by any Holder pursuant to the second paragraph
of Section 6.04.
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SECTION 6.08 WAIVER OF USURY, STAY OR EXTENSION LAWS. The Company
covenants that (to the extent that it may lawfully do so) it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefits or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company expressly waives (to the extent
that it may lawfully do so) all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted."
(e) Sections 9.01 and 9.02 of the Original Indenture are hereby
amended by replacing them in their entirety with the following:
"SECTION 9.01 WITHOUT CONSENT OF HOLDERS. The Company and the
Trustee may amend this Indenture or the Notes without the consent of any
Noteholder:
(1) to cure any ambiguity, defect or inconsistency; PROVIDED,
HOWEVER, that such amendment does not materially adversely affect
the rights of any Noteholder;
(2) to comply with Article 5 of the Original Indenture;
(3) to secure the Company's obligations under the Notes and this
Indenture;
(4) to add to the Company's covenants for the benefit of the
Noteholder or to surrender any right or power conferred upon the
Company;
(5) to make any change to comply with the TIA, or any amendment
thereto, or to comply with any requirement of the SEC in connection
with the qualification of the Indenture under the TIA, or as
necessary in connection with the registration of the Notes under
the Securities Act;
(6) to provide for uncertificated securities in addition to or in
place of certificated securities;
(7) to add guarantees with respect to the Notes; or
(8) to make any other change that does not materially adversely
affect the rights of any Noteholder.
SECTION 9.02 WITH CONSENT OF HOLDERS. With the written consent of
the Holders of at least a majority of the aggregate principal amount of the
Notes at the time outstanding, the Company and the Trustee may amend this
Indenture or the Notes. However, without the consent of each Noteholder
affected, an amendment to this Indenture or the Notes may not:
(1) change the maturity date;
(2) reduce the principal amount of the Notes;
59
(3) make any change that reduces the amount payable upon the
redemption or repayment of any Note or the time at which such
Note may be redeemed in accordance with the terms thereof and
this Indenture;
(4) reduce the interest rate;
(5) change the time of an interest payment;
(6) change the authorized currency;
(7) reduce the required percentage of the aggregate principal
amount of Notes then outstanding required for Noteholder
action;
(8) make any change in Sections 6.05 or 6.06 of the Indenture or
this Section 9.02, except to increase any percentage set
forth therein;
(9) make any change to impair the right to institute suit for the
enforcement of any payment with respect to the Notes; or
(10) make any change in the amendment provisions which require
each Noteholder's consent or in the waiver provisions.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment."
ARTICLE IV
SECURITY
SECTION 4.01 SECURITY. On or prior to the commencement of each
Security Period, the Company shall pledge, or cause to be pledged, to the
Collateral Trustee or the Trustee, as the case may be, for its benefit and for
the ratable benefit of the Holders of the Notes, and grant, or cause to be
granted, to the Collateral Trustee or the Trustee, as the case may be, for its
benefit and the ratable benefit of the Holders of the Notes, a security interest
in, the Collateral to secure the Company's obligations to pay the principal of,
and premium, if any, and interest on, the Notes in accordance with the terms of
the Notes and the Indenture and all other obligations of the Company thereunder.
To the extent that the Company shall have agreed to secure its obligations owing
to the Senior Lenders or their Affiliates as provided pursuant to clause (1) of
the definition of Permitted Liens, the rights of the Trustee with respect to the
Collateral shall be subordinated to the rights of the Agents with respect to the
Collateral to the extent set forth in the Intercreditor Agreement and the
Trustee shall execute and deliver the Intercreditor Agreement to effectuate such
subordination. Each Holder of Notes, by his acceptance thereof, authorizes and
expressly directs the Trustee to enter into the Intercreditor Agreement and to
take such other action as may be necessary or appropriate to effectuate the
subordination contemplated thereby. As among the Holders, the Collateral shall
be held for the
60
equal and ratable benefit of the Holders without preference, priority or
distinction of any thereof over any other.
SECTION 4.02 INITIAL SECURITY PERIOD. (a) On or prior to the Issue
Date, the Company (i) shall have entered into, and caused the appropriate
subsidiaries to have entered into, the Security Agreement and the Collateral
Trust Agreement and shall comply and be in compliance with the terms and
conditions thereof and (ii) shall deliver to the Trustee, if required, the
Opinion of Counsel contemplated by Section 314(b) of the TIA.
(b) Each Holder of Notes, by its acceptance thereof, agrees to
all of the terms and conditions of the Security Documents, and authorizes and
directs the Trustee and the Collateral Trustee to perform their respective
obligations and exercise their respective rights under the Security Documents in
accordance therewith; provided, however, that if any provisions of the Security
Documents limit, qualify or conflict with the duties imposed by the provisions
of the TIA, the TIA will control.
(c) In acting in its capacity as Collateral Trustee, The Bank of
New York shall not be (i) deemed to have breached its fiduciary duty as Trustee
to the Holders as a result of the performance of its duties as Collateral
Trustee to the extent that it acts in compliance with the terms and provisions
of the Security Documents and (ii) liable to the Holders for any action taken or
omitted in compliance with the terms and provisions of the Security Documents.
SECTION 4.03 SUBSEQUENT SECURITY PERIODS. (a) If a new Security
Period shall begin at any time after the Issue Date, the Company shall execute
and deliver such Security Documents as may be necessary to pledge and grant a
security interest in the Collateral for the benefit of the Holders of the Notes
as provided in Section 4.01 of this Second Supplemental Indenture.
(b) If at any time the Noteholders shall be entitled to the
security provided for in Section 4.01 of this Second Supplemental Indenture and
at such time the Company and/or any of its subsidiaries shall have provided or
be required to provide security for the Company's obligations owing to the
Senior Lenders under the Credit Agreements, the Company shall enter into, and
the Trustee and the Collateral Trustee are authorized and directed to enter
into, Security Documents substantially identical in form and substance to the
Security Documents contemplated by Section 4.02(a) of the Second Supplemental
Indenture. Sections 4.04 and 4.05 of the Second Supplemental Indenture shall
apply to the Security Documents to the same extent as such sections are
applicable to the original Security Documents contemplated by Section 4.02(a) of
the Second Supplemental Indenture and the Collateral subject thereto.
(c) If at any time the Noteholders shall be entitled to the
security provided for in Section 4.01 of this Second Supplemental Indenture and
at such time neither the Company nor any of its subsidiaries shall have provided
or be required to provide security for the Company's obligations owing to the
Senior Lenders or their Affiliates as provided pursuant to clause (1) of the
definition of Permitted Liens, the Company shall execute and deliver, and shall
cause the appropriate subsidiaries to execute and deliver, a security agreement
and such further instruments and documents as may be necessary, or that the
Trustee may request, in order to pledge and grant a security interest in the
Collateral to the Trustee for itself and for the ratable
61
benefit of the Holders of the Notes on substantially identical terms as provided
by the Security Documents contemplated by Section 4.02(a) of the Second
Supplemental Indenture, except that (i) such new Security Documents shall only
secure the Company's obligations under the Indenture, including, without
limitation, its olbigations to pay the principal of, and premium, if any, and
interest on, the Notes in accordance with the terms of the Notes and the
Indenture, and (ii) the security interest in respect of any asset constituting
part of the Collateral may be released so long as such asset is permitted to be
sold, transferred or otherwise disposed of pursuant to the terms of the
Indenture (including, but not limited to, Section 4.10 of the Original
Indenture, in respect of any Asset Disposition). The Company shall prepare and
deliver the security agreement (and such further instruments and documents) and
pay for all costs in connection with such preparation and shall deliver to the
Trustee an Officers' Certificate and Opinion of Counsel which shall contain the
statements required to be delivered pursuant to Section 10.05 of the Original
Indenture and further stating that the security agreement (and any such further
instruments and documents) conforms to the requirements of the Indenture and
that the assets constituting the Collateral thereunder include all assets that
are required to pledged as Collateral pursuant to the Indenture. The Trustee may
conclusively rely on, and shall be fully protected in relying upon, each such
Officers' Certificate and Opinion of Counsel and shall execute such security
agreement (and any such further instruments or documents) to effect the pledge
and the grant of the security interest contemplated by Section 4.01 of the
Second Supplemental Indenture upon receipt of such Opinion of Counsel.
Sections 4.04 and 4.05 of the Second Supplemental Indenture shall apply to such
security agreement (and any such further instruments and documents) to the same
extent as such sections are applicable to the original Security Documents
contemplated by Section 4.02(a) of the Second Supplemental Indenture and the
Collateral subject thereto.
SECTION 4.04 RECORDING. The Company will cause, at its own expense,
the Security Documents and this Indenture and all amendments or supplements
thereto to be registered, recorded and filed or re- recorded, re-filed and
renewed in such manner and in such place or places, if any, as may be required
by law in order fully to preserve and protect the security interest created
under the Security Documents and to effectuate and preserve the security therein
of the Holders and all rights of the Trustee as provided in the Security
Documents.
SECTION 4.05 RELEASE OF COLLATERAL. (a) The release of any
Collateral from the terms of this Indenture or the Security Documents
(including, but not limited to, the release of the Collateral solely as directed
by the Agent) shall not be deemed to impair the security under this Indenture
and the Security Documents in contravention of the provisions hereof and
thereof, if and to the extent the Collateral is released pursuant to this
Indenture or the Security Documents. In connection with any such release, the
Trustee shall comply with Section 313(b) of the TIA. To the extent applicable,
the Company shall cause Section 314(b) of the TIA, relating to initial and
annual Opinions of Counsel, and Section 314(d) of the TIA, relating to the
release of property or securities from the security interest of the Security
Documents and relating to the substitution therefor of any property or
securities to be subjected to the security interest of the Security Documents,
to be complied with. Any certificate or opinion required by Section 314(d) of
the TIA may be made by Officers of the Company except in cases where such
Section 314(d) of the TIA requires that such certificate or opinion be made by
an independent Person, which Person shall be an independent engineer, appraiser,
or other expert selected by the
62
Company (and approved by the Trustee) or selected by the Trustee in the exercise
of reasonable care.
(b) Notwithstanding the foregoing or the provisions of Section
314(d) of the TIA, until such time as notice is received by the Company from the
Trustee or the Collateral Trustee, the Company may, and may permit any of its
Restricted Subsidiaries to, (i) sell, assign, transfer, license or otherwise
dispose of obsolete Equipment (as defined in the Security Agreement) with a fair
market value not in excess of $1 million per year, (ii) collect, liquidate,
sell, factor or otherwise dispose of Receivables and Related Contracts (as
defined in the Security Agreement) except sales of Receivables in connection
with Qualified Receivables Transactions, (iii) sell Inventory (as defined in the
Security Agreement), (iv) sell financial assets from time to time credited to
the Company's deposit accounts, or (v) make cash payments or investments, in
each case that are not otherwise prohibited by, and are in accordance with, the
terms of this Indenture from deposit and other accounts of the Company, all
without release or consent by the Trustee or the Collateral Trustee; provided,
however, that the Company must deliver to the Trustee and the Collateral
Trustee, semiannually on October 15 and March 15, commencing on October 15,
2002, an Officers' Certificate stating that all such dispositions described in
clauses (i) through (v) during the immediately preceding six-month period were
in the ordinary course of the Company's business, and that all proceeds
therefrom were used by the Company in connection with its business or to make
cash payments or investments permitted by this Indenture. Notwithstanding the
foregoing, the Company shall be required to comply with all of the covenants of
Article 4 of the Indenture (to the extent those covenants are applicable) in
connection with any Asset Dispositions or Investments by the Company or any
Restricted Subsidiary.
(c) If the Company delivers to the Trustee a Company Order
directing the Trustee to instruct the Collateral Trustee to release assets
constituting part of the Collateral, which Company Order shall be accompanied by
a form of notice (a "COLLATERAL RELEASE NOTICE") addressed to the Collateral
Trustee that contains such instruction and specifies, among other things the
list of assets to be released, the Trustee shall execute the Collateral Release
Notice and deliver such notice to the Collateral Trustee no later than five
Business Days after receipt of (1) the certificates or opinions, if any,
required to be delivered to the Trustee pursuant to Section 314(d) of the TIA in
connection with the release of assets contemplated by the Collateral Release
Notice and (2) an Officers' Certificate and Opinion of Counsel which shall
contain the statements required to be delivered pursuant to Section 10.05 of the
Original Indenture and further stating that (x) no certificates or opinions are
required to be delivered to the Trustee pursuant to Section 314(d) of the TIA in
connection with the release of assets contemplated by the Collateral Release
Notice OR (y) that all certificates and opinions required to be delivered to the
Trustee pursuant to Section 314(d) of the TIA in connection with the release of
assets contemplated by the Collateral Release Notice have been delivered to the
Trustee and such certificates and opinions meet the requirements of Section
314(d) of the TIA. The Trustee may conclusively rely on, and shall be fully
protected in relying upon, the Officers' Certificate and Opinion Counsel
delivered pursuant to this Section 4.05(c).
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ARTICLE V
MISCELLANEOUS
The Trustee makes no undertaking or representations in respect of,
and shall not be responsible in any manner whatsoever for and in respect of, the
validity or sufficiency of this Second Supplemental Indenture or the proper
authorization or the due execution hereof by the Company or for or in respect of
the recitals and statements contained herein, all of which recitals and
statements are made solely by the Company.
Except as expressly amended hereby, the Original Indenture shall
continue in full force and effect in accordance with the provisions thereof and
the Original Indenture is in all respects hereby ratified and confirmed. This
Second Supplemental Indenture and all its provisions shall be deemed a part of
the Original Indenture in the manner and to the extent herein and therein
provided.
This Second Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York.
This Second Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
64
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Second Supplemental Indenture on behalf of the respective parties
hereto as of the date first above written.
AVAYA INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Senior Vice President,
Operations
THE BANK OF NEW YORK, as Trustee
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
EXHIBIT A
Form of Global Note
A-1
