Exhibit 4.14
RHYTHMS NETCONNECTIONS INC., as Issuer,
and
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
INDENTURE
Dated as of April 23, 1999
$325,000,000 principal amount
12 3/4% Senior Notes due 2009, Series A
12 3/4% Senior Notes due 2009, Series B
Reconciliation and tie between Trust Indenture Act of 1939,
as amended, and Indenture, dated as of April 23, 1999
Trust Indenture Indenture
Act Section Section
----------- -------
ss. 310 (a) (1) .................................. 6.09
(a) (2) .................................. 6.09
(a) (3) .................................. Not Applicable
(a) (4) .................................. 6.05
(b) .................................. 6.05, 6.08
6.10
ss.311 (a) .................................. 6.07
(b) .................................. 6.07
(c) .................................. Not Applicable
ss.312 (a) .................................. 3.05, 7.01
(b) .................................. 7.02
(c) .................................. 7.02
ss.313 (a) .................................. 7.03
(b) .................................. 7.03
(c) .................................. 7.03
(d) .................................. 7.03
ss.314 (a) .................................. 10.09
(b) .................................. 10.24
(c) (1).................................... 1.04, 4.04(10), 10.21,
12.01
(c) (2).................................... 1.04, 4.04(10), 10.21,
12.01
(c) (3).................................... Not Applicable
(d) .................................. 10.24
(e) .................................. 1.04
ss.315 (a) .................................. 6.01(a)
(b) .................................. 6.02
(c) .................................. 6.01(b)
(d) .................................. 6.01(c)
(e) .................................. 5.14
ss.316 (a) (last sentence)........................ 3.14
(a) (1) (A)................................ 5.12
(a) (1) (B)................................ 5.13
(a) (2) .................................. Not Applicable
(b) .................................. 5.08
(c) .................................. Not Applicable
ss.317 (a) (1).................................... 5.03
(a) (2).................................... 5.04
(b) .................................. 10.03
ss.318 (a) .................................. 1.08
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE ONE. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. 1
Section 1.02. Other Definitions. 18
Section 1.03. Rules of Construction. 19
Section 1.04. Form of Documents Delivered to Trustee. 19
Section 1.05. Acts of Holders. 20
Section 1.06. Notices, etc., to the Trustee and the Company. 20
Section 1.07. Notice to Holders; Waiver. 21
Section 1.08. Conflict with Trust Indenture Act. 21
Section 1.09. Effect of Headings and Table of Contents. 21
Section 1.10. Successors and Assigns. 21
Section 1.11. Separability Clause. 21
Section 1.12. Benefits of Indenture. 22
Section 1.13. GOVERNING LAW. 22
Section 1.14. No Recourse Against Others. 22
Section 1.15. Independence of Covenants. 22
Section 1.16. Exhibits and Schedules. 22
Section 1.17. Counterparts. 22
Section 1.18. Duplicate Originals. 22
ARTICLE TWO. FORM OF NOTES
Section 2.01. Form and Dating. 22
ARTICLE THREE. THE NOTES
Section 3.01. Title and Terms. 23
Section 3.02. Registrar and Paying Agent. 23
Section 3.03. Execution and Authentication. 24
Section 3.04. Temporary Notes. 25
Section 3.05. Transfer and Exchange. 25
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes. 26
Section 3.07. Payment of Interest; Interest Rights Preserved. 27
Section 3.08. Persons Deemed Owners. 27
Section 3.09. Cancellation. 28
Section 3.10. Computation of Interest. 28
Section 3.11. Legal Holidays. 28
Section 3.12. CUSIP and CINS Numbers. 28
Section 3.13. Paying Agent To Hold Money in Trust. 28
Section 3.14. [Intentionally Omitted]. 29
Section 3.15. Deposits of Monies. 29
Section 3.16. Book-Entry Provisions for Global Notes. 29
Section 3.17. Special Transfer Provisions. 30
ARTICLE FOUR. DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance or Covenant
Defeasance. 32
Section 4.02. Defeasance and Discharge. 33
Section 4.03. Covenant Defeasance. 33
Section 4.04. Conditions to Defeasance or Covenant Defeasance. 33
Section 4.05. Deposited Money and Government Securities To Be Held in
Trust; Other Miscellaneous Provisions 35
Section 4.06. Reinstatement. 35
ARTICLE FIVE. REMEDIES
Section 5.01. Events of Default. 36
ii
Section 5.02. Acceleration of Maturity, Rescission and Annulment. 37
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. 37
Section 5.04. Trustee May File Proofs of Claims. 38
Section 5.05. Trustee May Enforce Claims Without Possession of Notes. 39
Section 5.06. Application of Money Collected. 39
Section 5.07. Limitation on Suits. 39
Section 5.08. Unconditional Right of Holders To Receive Principal,
Premium and Interest 40
Section 5.09. Restoration of Rights and Remedies. 40
Section 5.10. Rights and Remedies Cumulative. 40
Section 5.11. Delay or Omission Not Waiver. 40
Section 5.12. Control by Majority. 40
Section 5.13. Waiver of Past Defaults. 41
Section 5.14. Undertaking for Costs. 41
Section 5.15. Waiver of Stay, Extension or Usury Laws. 41
ARTICLE SIX. THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities. 42
Section 6.02. Notice of Defaults. 42
Section 6.03. Certain Rights of Trustee. 42
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
Notes or Application of Proceeds Thereof 43
Section 6.05. Trustee and Agents May Hold Notes; Collections; Etc. 44
Section 6.06. Money Held in Trust. 44
Section 6.07. Compensation and Indemnification of Trustee and Its
Prior Claim. 44
Section 6.08. Conflicting Interests. 44
Section 6.09. Corporate Trustee Required; Eligibility. 45
Section 6.10. Resignation and Removal; Appointment of Successor
Trustee. 45
Section 6.11. Acceptance of Appointment by Successor. 46
Section 6.12. Merger, Conversion, Amalgamation, Consolidation or
Succession to Business 47
ARTICLE SEVEN. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish Trustee
Names and Addresses of Holders 47
Section 7.02. Communications of Holders. 47
Section 7.03. Reports by Trustee. 48
ARTICLE EIGHT. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
Section 8.01. Company May Consolidate, etc., Only on Certain Terms. 48
Section 8.02. Successor Substituted. 48
ARTICLE NINE. SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements and Waivers Without
Consent of Holders 49
Section 9.02. Supplemental Indentures, Agreements and Waivers with
Consent of Holders 50
Section 9.03. Execution of Supplemental Indentures, Agreements and
Waivers. 51
Section 9.04. Effect of Supplemental Indentures. 51
Section 9.05. Conformity with Trust Indenture Act. 51
Section 9.06. Reference in Notes to Supplemental Indentures. 51
Section 9.07. Record Date. 51
Section 9.08. Revocation and Effect of Consents. 52
ARTICLE TEN. COVENANTS
Section 10.01. Payment of Principal, Premium and Interest. 52
Section 10.02. Maintenance of Office or Agency. 52
Section 10.03. Money for Note Payments To Be Held in Trust. 52
Section 10.04. Corporate Existence. 53
Section 10.05. Payment of Taxes and Other Claims. 54
Section 10.06. Maintenance of Properties. 54
iii
Section 10.07. Insurance. 54
Section 10.08. Books and Records. 54
Section 10.09. Provision of Commission Reports. 54
Section 10.10. Change of Control. 55
Section 10.11. Limitation on Additional Indebtedness. 57
Section 10.12. Statement by Officers as to Default. 57
Section 10.13. Limitation on Restricted Payments. 58
Section 10.14. Limitation on Transactions with Affiliates. 60
Section 10.15. Disposition of Proceeds of Asset Sales 60
Section 10.16. Limitation on Liens Securing Certain Indebtedness. 63
Section 10.17. Limitation on Status as Investment Company. 63
Section 10.18. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries 64
Section 10.19. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries 64
Section 10.20. Limitation on Designations of Unrestricted Subsidiaries 65
Section 10.21. Compliance Certificates and Opinions. 65
Section 10.22. Limitation on Issuances of Guarantees by Restricted
Subsidiaries 66
Section 10.23. Registration Rights 66
Section 10.24. Security. 67
Section 10.25. Business Activities. 69
Section 10.26. Limitation on Sale/Leaseback Transactions. 69
ARTICLE ELEVEN. SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture. 69
Section 11.02. Application of Trust Money. 70
ARTICLE TWELVE. REDEMPTION
Section 12.01. Notices to the Trustee. 70
Section 12.02. Selection of Notes To Be Redeemed. 70
Section 12.03. Notice of Redemption. 71
Section 12.04. Effect of Notice of Redemption. 71
Section 12.05. Deposit of Redemption Price. 71
Section 12.06. Notes Redeemed or Purchased in Part. 72
EXHIBIT A-1 - Form of Rhythms NetConnections Inc. 12 3/4% Senior Notes due
2009, Series A
EXHIBIT A-2 - Form of Rhythms NetConnections Inc. 12 3/4% Senior Notes due
2009, Series B
EXHIBIT B - Form of Supplemental Indenture
EXHIBIT C - Form of Legend for Book-Entry Securities
EXHIBIT D - Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors
EXHIBIT E - Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S
SCHEDULE A - Existing and Committed Indebtedness
iv
INDENTURE
INDENTURE (this "Indenture"), dated as of April 23, 1999, between
RHYTHMS NETCONNECTIONS INC., a corporation incorporated under the laws of the
State of Delaware, as issuer (the "Company"), and STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association, as trustee (the
"Trustee").
RECITALS
The Company has duly authorized the creation of an issue of (i) 12
3/4% Senior Notes due 2009, Series A, and (ii) 12 3/4% Senior Notes due 2009,
Series B, to be issued in exchange for the 12 3/4% Senior Notes due 2009, Series
A, pursuant to the Registration Rights Agreement (as hereinafter defined)
(collectively, the "Notes"; such term to include the Initial Notes (as
hereinafter defined) and the Unrestricted Notes (as hereinafter defined), if
any, including the Exchange Notes (as hereinafter defined), if any, treated as a
single class of securities under this Indenture), of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary have been done to make the Notes, when executed
by the Company, and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of each of the Company and the Trustee in accordance with the terms
hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the Holders (as hereinafter defined) thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the Notes,
as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"1998 Notes" means the Company's 13 1/2% Senior Discount Notes due
2008.
"1998 Warrants" means the warrants issued in connection with the
Company's 1998 Notes.
"1998 Warrant Agreement" means the Warrant Agreement dated May 5,
1998, between the Company and State Street Bank and Trust Company of California,
N.A.
"Acquired Indebtedness" means Indebtedness of a Person (i) assumed
in connection with an Asset Acquisition from such Person or (ii) existing at the
time such Person is merged or consolidated with or into the Company or any
Restricted Subsidiary or becomes a Restricted Subsidiary, in each case not
incurred in connection with, or in anticipation of, such Asset Acquisition or
merger or consolidation or such Person becoming a Restricted Subsidiary;
provided that Indebtedness of such Person which is redeemed, defeased, retired
or otherwise repaid at the time of or immediately upon consummation of such
Asset Acquisition or the transactions by which such Person is merged or
consolidated with or into the Company or any Restricted Subsidiary or becomes a
Restricted Subsidiary shall not constitute Acquired Indebtedness.
"Affiliate" of any specified Person means (i) any other Person
which, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, the specified Person, (ii) any other
1
Person that owns, directly or indirectly, 10% or more of the specified Person's
Voting Stock or (iii) any executive officer or director of the specified Person;
provided that ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc. and its Affiliates shall not be
deemed to be Affiliates of the Company solely as a result of such entities
holding the 1998 Notes, the 1998 Warrants or the Company's Common Stock (or any
security which is convertible into or exchangeable for any of the foregoing).
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 "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary in any other Person, or any acquisition or purchase of
Capital Stock of any other Person by the Company or any Restricted Subsidiary,
in either case pursuant to which such Person shall (a) become a Restricted
Subsidiary or (b) shall be merged or consolidated with or into the Company or
any Restricted Subsidiary or (ii) any acquisition by the Company or any
Restricted Subsidiary of the assets of any Person which constitute substantially
all of an operating unit or line of business of such Person or which is
otherwise outside of the ordinary course of business.
"Asset Sale" means any direct or indirect sale, conveyance, transfer
or lease (that has the effect of a disposition and is not for security purposes)
or other disposition (that is not for security purposes) (including by way of a
Sale/Leaseback Transaction) to any Person other than the Company or a Restricted
Subsidiary, in one transaction or a series of related transactions, of (i) any
Capital Stock of any Restricted Subsidiary, (ii) any assets of the Company or
any Restricted Subsidiary which constitute substantially all of an operating
unit or line of business of the Company and the Restricted Subsidiaries or (iii)
any other property or asset of the Company or any Restricted Subsidiary outside
of the ordinary course of business. For the purposes of this definition, the
term "Asset Sale" shall not include (i) any disposition of properties and assets
of the Company that is governed under Article Eight hereof, (ii) sales of
property or equipment that have become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be, and (iii) for purposes of Section
10.15 hereof, (a) sales, conveyances, transfers, leases or other dispositions of
property or assets, whether in one transaction or a series of related
transactions occurring within one year, involving assets with a Fair Market
Value not in excess of $500,000 in any 12 month period and (b) any asset of the
Company or a Restricted Subsidiary that is the subject of a Sale/Leaseback
Transaction with a Person (other than the Company or an Affiliate of the
Company) made in accordance with Section 10.26 hereof and that was acquired by
the Company or such Restricted Subsidiary no more than 120 days prior to the
transfer to a third party in a Sale/Leaseback Transaction.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in the terms of the lease included in such Sale/Leaseback
Transaction) 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).
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years from such date to the
date or dates of each successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness multiplied by
(b) the amount of each such principal payment by (ii) the sum of all such
principal payments; provided that, in the case of any Capitalized Lease
Obligation, all calculations hereunder shall give effect to any applicable
options to renew in favor of the Company or any Restricted Subsidiary.
"Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code or any similar
federal, state or foreign law relating to bankruptcy, insolvency, receivership,
winding-up, liquidation, reorganization or relief of debtors.
2
"Bankruptcy Order" means any binding court order made in a
proceeding pursuant to or within the meaning of any Bankruptcy Law, containing
an adjudication of bankruptcy or insolvency, or providing for liquidation,
receivership, winding-up, dissolution or reorganization, or appointing a
Custodian of a debtor or of all or any substantial part of a debtor's property,
or providing for the staying, arrangement, adjustment or composition of
indebtedness or other relief of a debtor.
"Board" means the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to 85% of
the book value of the accounts, loans and other receivables (before giving
effect to any related allowances and reserves) as shown on the Company's most
recent consolidated balance sheet determined in accordance with GAAP not more
than 90 days past due.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York,
New York, or the city in which the Corporate Trust Office of the Trustee is
located, are authorized or obligated by law, regulation or executive order to
close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of, such Person's capital
stock, including Preferred Stock, whether outstanding on the Issue Date or
issued after the Issue Date, and any and all rights (other than any evidence of
Indebtedness), warrants or options exchangeable for or convertible into such
capital stock.
"Capitalized Lease Obligation" means any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
any property (whether real, personal or mixed, immovable or movable) that is
required to be classified and accounted for as a capitalized lease obligation
under GAAP, and for the purpose of this Indenture, the amount of such obligation
at any date shall be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness which
matures 365 days or less from the date of purchase or acquisition issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States Government is pledged in support thereof or such Indebtedness
constitutes a general obligation of such country); (ii) deposits, certificates
of deposit or acceptances with a maturity of 365 days or less of any financial
institution that is a member of the Federal Reserve System, in each case having
combined capital and surplus and undivided profits (or any similar capital
concept) of not less than $500.0 million and whose senior unsecured debt is
rated at least "A-l" by S&P or "P-l" by ▇▇▇▇▇'▇; (iii) commercial paper with a
maturity of 365 days or less issued by a corporation (other than an Affiliate of
the Company) organized under the laws of the United States or any State thereof
and rated at least "A-l" by S&P or "P-1" by ▇▇▇▇▇'▇; (iv) repurchase agreements
and reverse repurchase agreements relating to marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States Government maturing within 365 days from the date of acquisition; and (v)
money market funds in the United States which invest substantially all of their
assets in securities of the type described in any of the preceding clauses (i)
through (iv).
"Cedel" means Cedel Bank, Societe Anonyme.
3
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d) or
14(d) of the Exchange Act), excluding Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 or 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has or acquires the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of all Voting Stock of
the Company (except that the person or group shall not be deemed the "beneficial
owner" of shares tendered pursuant to a tender or exchange offer made by that
person or group or any of their Affiliates until the tendered shares are
accepted for purchase or exchange) or has, directly or indirectly, the right to
elect or designate a majority of the Board or (b) the Company consolidates with,
or merges with or into, another person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
person, or any person consolidates with, or merges with or into, the Company, in
any such event pursuant to a transaction in which the outstanding Voting Stock
of the Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the outstanding Voting Stock
of the Company is converted into or exchanged for (1) Voting Stock (other than
Disqualified Stock) of the surviving or transferee corporation or its parent
corporation and/or (2) cash, securities and other property in any amount which
could be paid by the Company as a Restricted Payment under this Indenture, (ii)
the "beneficial owners" (as so defined) of the Voting Stock of the Company
immediately before such transaction own, directly or indirectly, immediately
after such transaction, at least a majority of the voting power of all Voting
Stock of the surviving or transferee corporation or its parent corporation
immediately after such transaction, as applicable, or (iii) immediately after
such transaction, no "person" or "group" (as such terms are defined above),
excluding the Permitted Holders, is the "beneficial owner" (as defined above),
directly or indirectly, of more than 50% of the Voting Stock of such surviving
or transferee corporation or its parent corporation, as applicable, or has,
directly or indirectly, the right to elect or designate a majority of the board
of directors of the surviving or transferee corporation or its parent
corporation, as applicable, or (c) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board (together
with any new directors whose election by the Board or whose nomination for
election by the stockholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board then in
office. The good faith determination by the Board, based upon advice of outside
counsel, of the beneficial ownership of securities of the Company within the
meaning of Rules 13d-3 or 13d-5 under the Exchange Act shall be conclusive,
absent contrary controlling precedent or contrary written interpretation
published by the Commission. No inference shall be created that officers or
employees of the Company are acting as a "person" or "group" (as such terms are
used in Sections 13(d) or 14(d) of the Exchange Act) with the power to designate
a majority of the members of the Board solely because such officers or employees
constitute a majority of the members of the Board.
"Closing Time" has the meaning specified in the Purchase Agreement.
"Collateral Investments Account" means an account established in the
United States with the Trustee pursuant to the terms of the Pledge and Escrow
Agreement for the deposit of the Pledged Securities purchased by the Company
with a portion of the net proceeds from the sale of the Notes.
"Commission" means the United States Securities and Exchange
Commission, or any successor agency.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or rights in, or other equivalents (however
designated and whether voting and/or non-voting) of, such Person's common stock
and includes, without limitation, all series and classes of such common stock.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have replaced such
Person pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
4
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the Board,
its Vice-Chairman, its Chief Executive Officer, its President or a Vice
President, and by its Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and delivered to the Trustee.
"Consolidated Income Tax Expense" means, with respect to any period,
the provision for federal, state, local, foreign and other income taxes of the
Company and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period,
without duplication, the sum of (i) the interest expense of the Company and the
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net cost under Interest Rate Obligations (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and similar
transactions and (e) all capitalized interest and accrued interest, (ii) the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and the Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP, (iii) the portion of any rental obligation in respect of any
Sale/Leaseback Transaction allocable to interest expense (determined as if such
were treated as a Capital Lease Obligation), and (iv) the amount of dividends
and distributions in respect of Preferred Stock or Disqualified Stock paid by
the Restricted Subsidiaries to a Person other than the Company or a Restricted
Subsidiary or by the Company during such period.
"Consolidated Net Income" means, with respect to any period, the net
income (or loss) of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, adjusted, to the
extent included in calculating such consolidated net income (or loss), by
excluding, without duplication, (i) all extraordinary, unusual or nonrecurring
gains or losses and all gains or losses from sales or other dispositions of
assets (including Asset Sales) out of the ordinary course of business (net of
taxes, fees and expenses relating to the transaction giving rise thereto) for
such period, (ii) that portion of such net income (or loss) derived from or in
respect of Investments in Persons other than Restricted Subsidiaries, except to
the extent of any cash dividends actually received by the Company or any
Restricted Subsidiary (subject, in the case of any Restricted Subsidiary, to the
provisions of clause (vi) of this definition), (iii) any gain or loss, net of
taxes, realized upon the termination of any employee pension benefit plan during
such period, (iv) that portion of such net income (or loss) allocable to
minority interests in any Restricted Subsidiary for such period, (v) net income
(or loss) of any other Person combined with the Company or any Restricted
Subsidiary on a "pooling of interests" basis attributable to any period prior to
the date of combination and (vi) the net income of any Restricted Subsidiary for
such period to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
"Consolidated Net Worth" means, with respect to any Person, the
consolidated stockholders' or partners' equity of such Person reflected on the
most recent balance sheet of such Person, determined in accordance with GAAP,
less any amounts attributable to redeemable capital stock (as determined under
applicable accounting standards promulgated by the Commission) of such Person.
"Consolidated Operating Cash Flow" means, with respect to any
period, Consolidated Net Income for such period (a) increased (without
duplication), to the extent deducted in arriving at such Consolidated Net
Income, by the sum of (i) Consolidated Income Tax Expense for such period; (ii)
Consolidated Interest Expense for such period; and (iii) depreciation,
amortization and any other non-cash items for such period of the Company and the
Restricted Subsidiaries (other than any non-cash item which requires the accrual
of, or a reserve for, cash charges for any future period), including, without
limitation, amortization of capitalized debt issuance costs for such
5
period, all determined on a consolidated basis in accordance with GAAP, and (b)
decreased by any non-cash items (including non-recurring gains and non-recurring
items of income) to the extent they increased Consolidated Net Income for such
period (including any partial or complete reversal of reserves taken in a prior
period).
"Corporate Trust Office" means the office of the Trustee at which at
any particular time the trust created by this Indenture shall be principally
administered, which office at the date of execution of this Indenture is located
at Library Tower, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Department, except for purposes of Sections
3.02 and 10.02 hereof. For purposes of such Sections, such office is located at
the office of State Street Bank and Trust Company, N.A., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Custodian" means any receiver, interim receiver, receiver and
manager, receiver-manager, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law or any other Person with like powers
whether appointed judicially or out of court and whether pursuant to an interim
or final appointment.
"Debt Securities" means any debt securities issued by the Company in
a public offering or in a private placement to institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act).
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Default Amount" means the principal amount of the Notes (and any
applicable premium thereon) and any accrued and unpaid interest thereon.
"Depository" means The Depository Trust Company, its nominees and
their respective successors until a successor Depositary shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Depositary" shall mean or include each Person who is then a Depositary
hereunder.
"Disinterested Director" means, with respect to any transaction or
series of related transactions, a member of the Board other than a director who
(i) has any material direct or indirect financial interest in or with respect to
such transaction or series of related transactions or (ii) is an employee or
officer of the Company or an Affiliate that is itself a party to such
transaction or series of transactions or an Affiliate of a party to such
transaction or series of related transactions.
"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), or upon the happening of any
event, matures or becomes mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or becomes exchangeable for Indebtedness at the option
of the holder thereof, or becomes redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the
Notes; provided that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the final maturity date
of the Notes will not constitute Disqualified Stock so long as the "asset sale"
or "change of control" provisions applicable to such Capital Stock are no more
favorable to the holders thereof than Sections 10.10 and 10.15 hereof and such
Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to Sections
10.10 and 10.15 hereof.
"Euroclear" means ▇▇▇▇▇▇ Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System.
6
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission thereunder.
"Exchange Notes" means the 12 3/4% Senior Notes due 2009, Series B,
of the Company, to be issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement.
"Exchange Offer" shall have the meaning specified in the
Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or property,
the price (after taking into account any liabilities relating to such asset or
property) that could be negotiated in an arms-length free market transaction,
for cash, between a willing seller and a willing buyer, neither of whom is under
pressure or compulsion to complete the transaction. Unless otherwise specified
in the Indenture, Fair Market Value shall be determined by the Board acting in
good faith and shall be evidenced by a Board Resolution.
"GAAP" means, as of any date of determination, generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, the Commission or in such other statements by such other entity
as may be approved by a significant segment of the accounting profession of the
United States, which are in effect as of such date of determination and which
are consistently applied for all applicable periods.
"Global Notes" means one or more Regulation S Global Notes and 144A
Global Notes.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which obligations
or guarantee the full faith and credit of the United States is pledged.
"Guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
obligation (A) to pay amounts drawn down by letters of credit, (B) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
obligation (whether arising by virtue of partnership arrangement, agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (C) entered into for
purposes of assuring in any other manner the obligee of such obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided 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.
"Holder" means a Person in whose name a Note is registered in the
Note Register.
"Indebtedness" means, with respect to any Person, without
duplication (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (i) every liability of such
Person, whether or not contingent, (A) for borrowed money, (B) evidenced by
notes, bonds, debenture or other similar instruments (whether or not
negotiable), (C) for reimbursement of amounts expended under letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (D) issued or assumed as the deferred purchase price of property or
services, (E) relating to a Capitalized Lease Obligation and all Attributable
Debt in respect of Sale/Leaseback Transactions of such Person and (F) in respect
of an Interest Rate Obligation of such Person; (ii) every liability of others of
the kind described in the preceding clause (i) which such Person has Guaranteed
or which is otherwise its legal liability; or (iii) every obligation secured by
a Lien (other than (x)
7
Permitted Liens of the types described in clauses (b), (d) or (e) of the
definition of Permitted Liens; provided that the obligations secured would not
constitute Indebtedness under clauses (i) or (ii) or (iii) of this definition,
and (y) Liens on Capital Stock or Indebtedness of any Unrestricted Subsidiary)
to which the property or assets of such Person are subject, whether or not the
obligations secured thereby shall have been assumed by or shall otherwise be
such Person's legal liability (the amount of such obligation being deemed to be
the lesser of the Fair Market Value of such property or asset or the amount of
the obligation so secured); (iv) all Disqualified Stock of such Person, valued
at the greater of its voluntary or involuntary maximum fixed repurchase or
redemption price (plus accrued and unpaid dividends to the date of
determination); and (v) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (i), (ii), (iii) or (iv). In
no event shall "Indebtedness" include trade payables and accrued liabilities
that are current liabilities incurred in the ordinary course of business,
excluding the current maturity of any obligation which would otherwise
constitute Indebtedness. For purposes of Section 10.11 and Section 10.13 hereof
and the definition of "Events of Default," in determining the principal amount
of any Indebtedness to be incurred by the Company or a Restricted Subsidiary or
which is outstanding at any date, (A) the principal amount of any Indebtedness
which provides that an amount less than the principal amount at maturity thereof
shall be due upon any declaration of acceleration thereof shall be the accreted
value thereof at the date of determination; (B) the principal amount of any
Indebtedness shall be reduced by any amount of cash, Government Securities or
Cash Equivalent collateral securing on a perfected basis, and dedicated for
disbursement to the payment of principal of or interest on, such Indebtedness;
and (C) 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 of any Guarantees at such date.
"Indebtedness to EBITDA Ratio" means, as at any date of
determination (the "Transaction Date"), the ratio of (i) Total Consolidated
Indebtedness as at the Transaction Date to (ii) two times the Consolidated
Operating Cash Flow for the two full fiscal quarters immediately preceding the
Transaction Date for which financial statements are available (such two full
fiscal quarter period being referred to herein as the "Measurement Period"). For
purposes of calculating Consolidated Operating Cash Flow for the relevant
Measurement Period prior to a Transaction Date, (A) any Person that is a
Restricted Subsidiary on the Transaction Date (or would become a Restricted
Subsidiary on such Transaction Date in connection with the transaction that
requires the calculation of such Consolidated Operating Cash Flow) shall be
deemed to have been a Restricted Subsidiary at all times during the Measurement
Period, (B) any Person that is not a Restricted Subsidiary on such Transaction
Date (or would cease to be a Restricted Subsidiary on such Transaction Date in
connection with the transaction that requires the calculation of Consolidated
Operating Cash Flow) will be deemed not to have been a Restricted Subsidiary at
any time during the Measurement Period, and (C) if the Company or any Restricted
Subsidiary shall have in any manner (x) acquired through an Asset Acquisition or
(y) disposed of (including by way of an Asset Sale or the termination or
discontinuance of activities constituting such operating business) any operating
business during such Measurement Period or after the end of such period and on
or prior to the Transaction Date, such calculation will be made on a pro forma
basis in accordance with GAAP as if, in the case of an Asset Acquisition, such
transaction had been consummated on the first day of the Measurement Period and,
in the case of an Asset Sale or other disposition, termination or discontinuance
of activities constituting such an operating business, such transaction had been
consummated prior to the first day of the Measurement Period; provided, however
that such pro forma adjustment shall not give effect to the operating cash flow
of any Person that would become a Restricted Subsidiary on the Transaction Date
in connection with the transaction that requires the calculation of Consolidated
Operating Cash Flow to the extent that such Person's net income would be
excluded from the calculation of Consolidated Net Income pursuant to clause (vi)
of the definition of Consolidated Net Income.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Notes, to pay principal of,
premium, if any, and interest on the Notes when due and payable, whether at
maturity, by acceleration, call for redemption or repurchase or otherwise, and
all other amounts due or to
8
become due under or in connection with this Indenture or the Notes and the
performance of all other obligations to the Trustee (including, but not limited
to, payment of all amounts due the Trustee under Section 6.07 hereof) and the
Holders of the Notes under this Indenture and the Notes, according to the terms
thereof.
"Independent Financial Advisor" means a United States investment
banking firm of national or regional standing in the United States (i) which
does not, and whose directors, officers and employees or Affiliates do not have,
a direct or indirect financial interest in the Company and (ii) which, in the
judgment of the Board, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Initial Notes" means the 12 3/4% Senior Notes due 2009, Series A,
of the Company.
"Initial Purchasers" means ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. and Chase Securities Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest" means, when used with respect to any Note, the amount of
all interest accruing on such Note, including all additional interest payable on
the Notes pursuant to the Registration Rights Agreement and all interest
accruing subsequent to the occurrence of any events specified in Sections
5.01(vii), (viii) and (ix) hereof or which would have accrued but for any such
event, whether or not such claims are allowable under applicable law.
"Interest Payment Date" means, when used with respect to any Note,
the Stated Maturity of an installment of cash interest on such Note, as set
forth in such Note.
"Interest Rate Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars, forward interest rate agreements and similar
agreements.
"Investment" means, with respect to any Person, any direct or
indirect advance, loan, account receivable (other than an account receivable
arising in the ordinary course of business), or other extension of credit
(including, without limitation, by means of any Guarantee) or any capital
contribution to (by means of transfers of cash or other property or assets to
others, payments for property or services for the account or use of others, or
otherwise), or any purchase or acquisition of capital stock, bonds, notes,
debentures or other securities or evidences of Indebtedness of any other Person.
The amount of any Investment shall be the original cost of such Investment, plus
the cost of all additions thereto, and minus the amount of any portion of such
Investment repaid to such Person in cash as a repayment of principal or a return
of capital, as the case may be, but without any other adjustments for increases
or decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment. In determining the amount of any Investment involving a
transfer of any property or assets other than cash, such property shall be
valued at its Fair Market Value at the time of transfer.
"Issue Date" means the original date of issuance of the Notes.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any property
of any kind whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction). A Person shall be deemed to own subject to a Lien
9
any property which such Person has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Marketable U.S. Securities" means (i) any Cash Equivalents or (ii)
any fund investing primarily in investments that are Cash Equivalents.
"Market Capitalization" of any Person means, as of any day of
determination, the product of (i) the average Closing Price of a share of such
Person's Common Stock over the 20 consecutive trading days immediately preceding
such date and (ii) the number of shares of such Common Stock issued and
outstanding on such date. "Closing Price" on any trading day with respect to the
per share price of any shares of Common Stock means the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if such shares of Common Stock are not listed
or admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on The Nasdaq National Market but such
Person is a "Foreign Issuer" (as defined in Rule 3b-4(b) under the Exchange Act)
and the principal securities exchange on which such shares are listed or
admitted to trading is a "designated offshore securities market" (as defined in
Rule 902(b) under the Securities Act), the average of the reported closing bid
and asked prices regular way on such principal exchange or, if such shares are
not listed or admitted to trading on any national securities exchange or quoted
on the Nasdaq National Market and such Person and any securities markets in
which such Person's Common Stock trades does not meet any of the foregoing such
requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for the purpose and is
reasonably acceptable to the Trustee.
"Maturity Date" means, with respect to any Note, the date specified
in such Note as the fixed date on which the principal of such Note is due and
payable.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. (and any successor).
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof received by the Company or any Restricted Subsidiary in the
form of cash (including assumed Indebtedness (other than Subordinated
Indebtedness) and other items deemed to be cash under the proviso to the first
sentence of Section 10.15 hereof) or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) net of (i)
brokerage commissions and other fees, costs and expenses (including fees and
expenses of legal counsel and investment bankers) related to such Asset Sale,
(ii) provisions for all taxes paid or payable as a result of such Asset Sale,
(iii) amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in or having a Lien on the
assets subject to the Asset Sale, (iv) with respect to Asset Sales by Restricted
Subsidiaries, the portion of such cash and Cash Equivalents attributable to any
Persons holding a minority interest in such Restricted Subsidiary and (v)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve required in accordance with GAAP against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Trustee.
"Non-U.S. Person" means any Person that is not a U.S. Person, as
such term is defined in Regulation S.
"Notes" shall have the meaning specified in the recitals of this
Indenture.
10
"Offering Memorandum" means the Offering Memorandum of the Company,
dated April 28, 1999, pursuant to which the Initial Notes were offered, and any
supplement thereto.
"Officer" means, with respect to the Company, the Chairman of the
Board, a Vice Chairman, the President, a Vice President, the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by the Chairman of the Board, a Vice Chairman, the President
or a Vice President, and by the Secretary, an Assistant Secretary, the Treasurer
or an Assistant Treasurer, of the Company and delivered to the Trustee.
"144A Global Note" means a permanent global note in registered form
representing the aggregate principal amount of Notes sold in reliance on Rule
144A.
"Opinion of Counsel" means a written opinion of legal counsel who
may be counsel for the Company, the Trustee or any Subsidiary Guarantor, as
applicable, and who shall be reasonably acceptable to the Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company or any Affiliate thereof) in trust or
set aside and segregated in trust by the Company or any Affiliate thereof (if
the Company or such Affiliate shall act as Paying Agent) for the Holders of such
Notes; provided, however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Notes with respect to which the Company has effected
defeasance or covenant defeasance as provided in Article Four, to the extent
provided in Sections 4.02 and 4.03 hereof; and
(iv) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser in whose
hands the Notes are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
aggregate principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company, any other obligor upon the Notes or any Affiliate of the Company or
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. The Company shall notify the Trustee, in writing, when it purchases
or otherwise acquires Notes, of the aggregate principal amount of such Notes so
purchased or otherwise acquired; provided that any failure on the part of the
Company to provide the aforesaid notice to the Trustee shall not constitute a
Default under this Indenture. Notes so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or such other obligor. If the Paying Agent
holds, in its capacity as such, on any Maturity Date or on any optional
redemption date money sufficient to pay all accrued interest and principal with
respect to such Notes payable on that date and is not prohibited from paying
such money to the
11
Holders thereof pursuant to the terms of this Indenture, then on and after that
date such Notes cease to be Outstanding and interest on them ceases to accrue.
Notes may also cease to be outstanding to the extent expressly provided in
Article Four.
"Permitted Business" means any of the following: (i) transmitting,
providing services relating to or developing network and software applications
for the transmission and management of voice, data, video or other information
through owned or leased wireline or wireless transmission facilities or over the
internet; (ii) creating, developing, constructing, installing, integrating,
repairing, maintaining or marketing communications-related systems, network
equipment and wireless and wireline transmission facilities, software and other
related products; and (iii) evaluating, owning, operating, participating in or
pursuing any other business that is primarily related to those identified in the
foregoing clauses (i) and (ii).
"Permitted Business Investments" means an Investment in any Person
the primary business of which consists of a Permitted Business.
"Permitted Credit Facility" means any senior secured or unsecured
commercial term loan and/or revolving credit facilities (including any letter of
credit subfacility) entered into principally with commercial banks and/or other
financial institutions.
"Permitted Holders" means Brentwood Venture Capital, Enterprise
Partners, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, The Sprout Group and ▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, and their respective Affiliates.
"Permitted Indebtedness" means the following Indebtedness (each of
which shall be given independent effect):
(a) Indebtedness under the Notes and the Indenture;
(b) Indebtedness (including Disqualified Stock) of the Company
and/or any Restricted Subsidiary outstanding, or committed but undrawn, on
the Issue Date and identified on Schedule A to this Indenture (including
any increase in the accreted value thereof after the Issue Date pursuant
to the terms of the instrument governing such Indebtedness as of the Issue
Date);
(c) (i) Indebtedness of any Restricted Subsidiary owed to and held
by the Company or a Wholly Owned Restricted Subsidiary and (ii)
Indebtedness of the Company, which is not secured by any Lien and is
subordinated to the Company's obligations with respect to the Notes, owed
to and held by any Restricted Subsidiary; provided that an incurrence of
Indebtedness shall be deemed to have occurred upon (x) any sale or other
disposition of any Indebtedness of the Company or a Restricted Subsidiary
referred to in this clause (c) to a Person other than the Company or a
Restricted Subsidiary, (y) any sale or other disposition of Capital Stock
of a Restricted Subsidiary which holds Indebtedness of the Company or
another Restricted Subsidiary such that such Restricted Subsidiary ceases
to be a Restricted Subsidiary or (z) the Designation of a Restricted
Subsidiary which holds Indebtedness of the Company or another Restricted
Subsidiary as an Unrestricted Subsidiary;
(d) Interest Rate Obligations of the Company and/or any Restricted
Subsidiary relating to Indebtedness of the Company and/or such Restricted
Subsidiary, as the case may be (which Indebtedness (i) bears interest at
fluctuating interest rates and (ii) is otherwise permitted to be incurred
under Section 10.11 hereof), but only to the extent that the notional
amount of such Interest Rate Obligations does not exceed the principal
amount of the Indebtedness (and/or Indebtedness subject to commitments) to
which such Interest Rate Obligations relate;
12
(e) Indebtedness of the Company and/or any Restricted Subsidiary in
respect of performance bonds of the Company or any Restricted Subsidiary
or surety bonds provided by the Company or any Restricted Subsidiary, in
each case incurred in the ordinary course of business;
(f) Indebtedness of the Company and/or any Restricted Subsidiary to
the extent it represents a replacement, renewal, refinancing or extension
(a "refinancing") of the Notes (during the periods for which redemption is
permitted under the terms of the Indenture) or other outstanding
Indebtedness of the Company and/or of any Restricted Subsidiary incurred
or outstanding pursuant to clause (a), (b), (g) or (h) of this definition
or the proviso in the first paragraph of Section 10.11 hereof; provided
that (i) no Restricted Subsidiary may incur Indebtedness to refinance
Indebtedness of the Company (except for Guarantees issued in accordance
with Section 10.22 hereof); (ii) if such Indebtedness being refinanced has
an Average Life to Stated Maturity equal to or longer than the Average
Life to Stated Maturity of the Notes, any such refinancing shall have an
Average Life to Stated Maturity longer than the Average Life to Stated
Maturity of the Notes and a final stated maturity for the payment of
principal thereof later than the final stated maturity of the Notes; (iii)
if such Indebtedness being refinanced has an Average Life to Stated
Maturity shorter than the Average Life to Stated Maturity of the Notes,
any such refinancing shall have an Average Life to Stated Maturity longer
than, and a final stated maturity later than, the Indebtedness being
refinanced; (iv) any such refinancing shall not exceed the sum of the
principal amount (or, if such Indebtedness provides for a lesser amount to
be due and payable upon a declaration of acceleration thereof, an amount
no greater than such lesser amount) of the Indebtedness being refinanced,
plus the amount of accrued and unpaid interest thereon, plus the amount of
any reasonably determined prepayment premium necessary to accomplish such
refinancing and such reasonable fees and expenses incurred in connection
therewith; (v) the Notes and Indebtedness that ranks pari passu with the
Notes may be refinanced only with Indebtedness that is made pari passu
with or subordinate in right of payment to the Notes, and Subordinated
Indebtedness may only be refinanced with Subordinated Indebtedness; and
(vi) the refinancing Indebtedness shall be incurred by the obligor of the
Indebtedness being refinanced or by the Company;
(g) Indebtedness of the Company such that, after giving effect to
the incurrence thereof, the total aggregate principal amount of
Indebtedness incurred under this clause (g) and any refinancings thereof
otherwise incurred in compliance with this Indenture would not exceed 250%
of Total Incremental Equity;
(h) Indebtedness of the Company or any Restricted Subsidiary
incurred under any Permitted Credit Facility, and any refinancings of the
foregoing otherwise incurred in compliance with this Indenture, in an
aggregate principal amount not to exceed the greater of $75 million or the
Borrowing Base determined as of the date such Indebtedness is incurred, at
any time outstanding;
(i) Indebtedness of the Company or any Restricted Subsidiary that is
Purchase Money Indebtedness;
(j) Indebtedness in respect of (i) letters of credit, bankers'
acceptances or other similar instruments or obligations, issued in
connection with liabilities incurred in the ordinary course of business or
(ii) surety, judgment, appeal, performance and other similar bonds,
instruments or obligations provided in the ordinary course of business;
and
(k) in addition to the items referred to in clauses (a) through (j)
above, Indebtedness of the Company having an aggregate principal amount
not to exceed $50 million at any time outstanding.
"Permitted Investments" means (a) any Investment in the Company or
in a Wholly Owned Restricted Subsidiary of the Company or in a Person as a
result of which such Person becomes a Wholly Owned Restricted Subsidiary; (b)
Investments constituting Permitted Business Investments, the sum of which does
not
13
exceed the greater of $40 million or 25% of the total stockholders' equity as
shown on the Company's most recent balance sheet determined in accordance with
GAAP, at any one time outstanding; (c) Cash Equivalents; (d) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (e) Interest
Rate Obligations incurred in compliance with Section 10.11 hereof; (f) loans and
advances to employees made in the ordinary course of business not to exceed
$500,000 in the aggregate at any one time outstanding; (g) bonds, notes,
debentures or other securities (other than Capital Stock of any Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary) received as a
result of Asset Sales permitted under Section 10.15 hereof; (h) any Investment
to the extent that the consideration therefor consists of Capital Stock (other
than Disqualified Stock) of the Company; and (i) the extension by the Company of
(x) trade credit to Subsidiaries of the Company represented by accounts
receivable, extended on usual and customary terms in the ordinary course of
business or (y) Guarantees of commitments for the purchase of goods or services
incurred in the ordinary course of business so long as such Guarantees, to the
extent constituting Indebtedness, are permitted to be incurred under Section
10.11 hereof.
"Permitted Liens" means (a) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary or becomes a Restricted Subsidiary; provided that such
Liens were in existence prior to the contemplation of such merger, consolidation
or acquisition and do not secure any property or assets of the Company or any
Restricted Subsidiary other than the property or assets subject to the Liens
prior to such merger or consolidation or acquisition; (b) Liens imposed by law,
such as carriers', warehousemen's and mechanics' Liens and other similar Liens
arising in the ordinary course of business that secure payment of obligations
not more than 60 days past due or that are being contested in good faith and by
appropriate proceedings; (c) Liens existing on the Issue Date (including Liens
securing Indebtedness permitted under clause (b) of the definition of Permitted
Indebtedness); (d) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (e) easements, rights of
way, restrictions and other similar easements, licenses, restrictions on the use
of properties, or minor imperfections of title that, in the aggregate, are not
material in amount and do not in any case materially detract from the properties
subject thereto or interfere with the ordinary conduct of the business of the
Company or the Restricted Subsidiaries; (f) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (g) Liens securing
Indebtedness incurred under a Permitted Credit Facility; provided, however, that
the incurrence of such Indebtedness is permitted by Section 10.11 hereof; (h)
Liens to secure any refinancing of any Indebtedness secured by Liens permitted
by this Indenture, but only to the extent that such Liens do not extend to any
other property or assets (other than improvements thereto); (i) Liens to secure
the Notes and Liens created under this Indenture; (j) Liens securing Purchase
Money Indebtedness; (k) Liens on and pledges of Capital Stock of any
Unrestricted Subsidiary securing any Indebtedness of such Unrestricted
Subsidiary; (l) Liens securing reimbursement obligations with respect to letters
of credit that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof; (m) Liens to secure Capitalized
Lease Obligations permitted to be incurred under the Indenture; (n) Liens that
do not materially detract from the value of the property subject to such Liens,
that do not materially interfere with the ordinary conduct of the business of
the Company or any of its Restricted Subsidiaries, and that are made on
customary and usual terms applicable to similar assets; (o) pledges or deposits
by a Person under workmen'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 to which such
Person is a party, or deposits to secure public or statutory obligations of such
Person, or deposits or 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; (p) Liens customary in the industry
and incurred in the ordinary course of business securing Interest Rate
Obligations so long as the related Indebtedness is, and is permitted to be under
the Indenture, secured by a Lien on the same property securing such Interest
Rate Obligations; and (q) Liens held by the Company on the assets or property of
a Restricted Subsidiary of the Company to secure Indebtedness of such Restricted
Subsidiary owing to and held by the Company.
14
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pledge and Escrow Agreement" means the Pledge and Escrow Agreement,
dated as of the date hereof, among the Company and the Trustee, as escrow agent.
"Pledged Securities" means the securities purchased by the Company
with a portion of the net proceeds from the sale of the Notes to be deposited in
the Collateral Investments Account.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.06 hereof in exchange for a
mutilated Note or in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock whether now outstanding or issued
after the Issue Date, and including, without limitation, all classes and series
of preferred or preference stock of such Person.
"Private Placement Legend" shall mean the first paragraph of the
legend initially set forth in the Initial Notes in the form set forth on Exhibit
A-1.
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company for cash pursuant to an effective
registration statement filed under the Securities Act.
"Purchase Agreement" means the Purchase Agreement, dated as of April
16, 1999, by and among the Company and the Initial Purchasers, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Purchase Money Indebtedness" means Indebtedness of the Company or
any Restricted Subsidiary (including Acquired Indebtedness and Indebtedness
represented by Capitalized Lease Obligations, Attributable Debt in respect of
Sale/Leaseback Transactions, mortgage financings and purchase money
obligations), including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified or restated from time to time, incurred at any
time for the purpose of financing all or any part of the cost of the
development, construction, expansion, installation, acquisition, lease or
improvement by the Company or any Restricted Subsidiary of any Permitted
Business Assets or not less than 66 2/3 percent of the outstanding Voting Stock
of a Person that becomes a Restricted Subsidiary the assets of which consist
primarily of Permitted Business Assets.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A.
"Redemption Date" means, with respect to any Note to be redeemed,
the date fixed by the Company for such redemption pursuant to this Indenture and
the Notes.
"Redemption Price" means, with respect to any Note to be redeemed,
the price fixed for such redemption pursuant to the terms of this Indenture and
the Notes.
"refinancing" has the meaning set forth in clause (f) of the
definition of "Permitted Indebtedness."
15
"Registrable Securities" means Transfer Restricted Notes, as defined
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Notes Registration Rights
Agreement, dated as of April 23, 1999, between the Company and the Initial
Purchasers, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified in the
Notes.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" means a permanent global note in
registered form representing the aggregate principal amount of Notes sold in
reliance on Regulation S.
"Responsible Officer" means, with respect to the Trustee, any
officer in the Corporate Trust Office of the Trustee or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer of the Trustee to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity with
the particular subject.
"Restricted Note" means a Note that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Note.
"Restricted Payment" means any of the following: (i) the declaration
or payment of any dividend or any other distribution on any Capital Stock of the
Company or any Restricted Subsidiary or any other payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the Company
or any Restricted Subsidiary (other than any dividends, distributions or
payments made to the Company or any Restricted Subsidiary and dividends or
distributions payable solely in Capital Stock (other than Disqualified Stock) of
the Company or in options, warrants or other rights to purchase Capital Stock
(other than Disqualified Stock) of the Company); (ii) the purchase, redemption
or other acquisition or retirement for value of any Capital Stock of the Company
or any Restricted Subsidiary (other than any such Capital Stock owned by the
Company or a Restricted Subsidiary); (iii) the purchase, redemption, defeasance
or other acquisition or retirement for value, or the making of any principal
payment on, prior to any scheduled repayment, scheduled sinking fund payment or
scheduled maturity, of any Subordinated Indebtedness (other than any
Subordinated Indebtedness held by a Wholly Owned Restricted Subsidiary); or (iv)
the making by the Company or any Restricted Subsidiary of any Investment (other
than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated by the Board, by a Board Resolution delivered to the
Trustee, as an Unrestricted Subsidiary pursuant to and in compliance with
Section 10.20 hereof. Any such designation may be revoked by a Board Resolution
delivered to the Trustee, subject to the provisions of such covenant.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies (and any successor).
"Sale/Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or assets of such Person which
has been or is being sold or transferred by such Person after its acquisition
thereof or the completion
16
of construction or commencement of operations thereof to such lender or investor
or to any other Person to whom funds have been or are to be advanced by such
lender or investor on the security of such property or asset.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.
"Shelf Registration Statement" shall have the meaning specified in
the Registration Rights Agreement.
"Special Record Date" means, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 3.07 hereof.
"Stated Maturity" means, with respect to any Note or any installment
of interest thereon, the dates specified in such Note as the fixed date on which
the principal of such Note or such installment of interest is due and payable
and, when used with respect to any other Indebtedness, means the date specified
in the instrument governing such Indebtedness as the fixed date on which the
principal of such Indebtedness, or any installment of interest, is due and
payable.
"Strategic Equity Investor" means any Person that, as of the date of
determination, has a Market Capitalization or Consolidated Net Worth of at least
$2.0 billion and derives a substantial portion of its revenues from a business
related to the Permitted Business.
"Subordinated Indebtedness" means any Indebtedness of the Company
which is expressly subordinated in right of payment to any other Indebtedness of
the Company.
"Subsidiary" means, with respect to any Person, (a) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors shall at the time be owned,
directly or indirectly, by such Person, or (b) any other Person of which at
least a majority of voting interest is at the time, directly or indirectly,
owned by such Person.
"Subsidiary Guarantor" means each Restricted Subsidiary that becomes
a guarantor of the Notes pursuant to the provisions of Section 10.22 hereof, in
each case until it is released from its Subsidiary Guarantee pursuant to the
terms thereof.
"Total Consolidated Indebtedness" means, at any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
the Company and the Restricted Subsidiaries outstanding as of such date of
determination.
"Total Incremental Equity" means, at any time of determination, the
sum of, without duplication, (a) the aggregate net cash proceeds received by the
Company from capital contributions in respect of existing Capital Stock (other
than Disqualified Stock) or the issuance and sale of Capital Stock (other than
Disqualified Stock but including Capital Stock issued upon the conversion of
convertible Indebtedness or from the exercise of options, warrants or rights to
purchase Capital Stock (other than Disqualified Stock)) subsequent to May 5,
1998, other than to a Subsidiary of the Company, plus (b) 80 percent of the Fair
Market Value of property (other than cash and Cash Equivalents) received by the
Company after May 5, 1998 as a contribution of capital or from the sale of its
Capital Stock (other than Disqualified Stock) to a Person that is not a
Subsidiary of the Company, minus (c) any amounts included in clause (a) above to
the extent used to make a Restricted Payment pursuant to clauses (2) or
(3)(A)(x) of Section 10.13 hereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended, as in force at the date as of which this Indenture was
executed, except as provided in Section 9.05 hereof; provided, however, that
17
in the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Person shall have replaced such
Person pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Person.
"Unrestricted Notes" means one or more Notes that do not and are not
required to bear the Private Placement Legend in the form set forth in Exhibit
A, including, without limitation, the Exchange Notes.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 10.20 hereof. Any
such designation may be revoked by a Board Resolution delivered to the Trustee,
subject to the provisions of such covenant.
"Voting Stock" means, with respect to any Person, the Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors or other members of the governing body of such Person.
"voting power" means, with respect to the Capital Stock of any
Person, the relative voting power in any general election of directors or other
members of the governing body of such Person.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
of which 100% of the outstanding Capital Stock is owned by the Company or
another Wholly Owned Restricted Subsidiary. For the purposes of this definition,
any directors' qualifying shares or investments by foreign nationals mandated by
applicable law shall be disregarded in determining the ownership of a Restricted
Subsidiary.
Section 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Act" 1.05
"Additional Interest" 10.23
"Additional Interest Payment Date" 10.23
"Affiliate Transaction" 10.14
"Agent" 3.02
"Agent Members" 3.16
"Asset Sale Offer" 10.15
"Asset Sale Offer Purchase
Date" 10.15
"Assumed Indebtedness" 10.15
"assumed liabilities" 10.15
"Change of Control Date" 10.10
"Change of Control Offer" 10.10
"Change of Control Payment Date" 10.10
"covenant defeasance" 4.03
"Defaulted Interest" 3.07
"defeasance" 4.02
"Defeased Notes" 4.01
"Designation" 10.20
"Designation Amount" 10.20
"Event of Default" 5.01
18
Defined in
Term Section
---- -------
"incur" 10.11
"Investment Company Act" 4.04
"Note Amount" 10.15
"Note Pro Rate Share of Unutilized
Net Cash Proceeds" 10.15
"Note Register" 3.05
"Other Indebtedness" 10.15
"Paying Agent" 3.02
"Permitted Business Assets" 10.15
"Physical Notes" 2.01
"Registrar" 3.02
"Registration Default" 10.23
"Restricted Period" 3.17
"Revocation" 10.20
"Subsidiary Guarantee" 10.22
"surviving entity" 8.01
"Unutilized Net Cash Proceeds" 10.15
Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article (including terms referred to
in Section 1.02 hereof) have the meanings assigned to them in this Article, and
include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP as in effect on the Issue
Date;
(d) the words "herein" "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "$" or "dollars" refer to the lawful currency
of the United States of America; and
(f) the words "include," "included" and "including" as used herein
are deemed in each case to be followed by the phrase "without limitation."
Section 1.04. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
19
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an Officer or Officers of the Company, stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated, with
proper identification of each matter covered therein, and form one instrument.
Section 1.05. Acts of Holders.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution (as provided below in this
Section 1.05) of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01 hereof) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
The ownership of Notes shall be proved by the Note Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every future Holder
of the same Note or the Holder of every Note issued upon the transfer thereof or
in exchange therefor or in lieu thereof to the same extent as the original
Holder, in respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent, the Company or any other obligor upon the Notes in
reliance thereon, whether or not notation of such action is made upon such Note.
Section 1.06. Notices, etc., to the Trustee and the Company.
Any request, demand, authorization, direction, notice, consent,
waiver or other action of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed, in writing, to
or with the Trustee at: State Street Bank and Trust Company of California, N.A.,
Library Tower, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department (Rhythms NetConnections Inc. 12 3/4%
Senior Notes due 2009), or at any other address previously furnished in writing
to the Holders and the Company by the Trustee; or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise expressly provided herein) hereunder if
in writing and mailed, first-class postage prepaid, to the Company addressed to
it at Rhythms NetConnections Inc., 6933 South Revere Parkway, Englewood,
Colorado
20
80112, Attention: Chief Executive Officer, or at any other address previously
furnished in writing to the Trustee by the Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise expressly provided
herein) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.
Section 1.09. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its respective successors and assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Notes issued
pursuant hereto shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
21
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued pursuant hereto,
express or implied, shall give to any Person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.13. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND EACH SUBSIDIARY GUARANTEE, IF ANY,
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 1.14. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or such Subsidiary Guarantor under the Notes, any
Subsidiary Guarantee or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation.
Section 1.15. Independence of Covenants.
Except as otherwise expressly provided herein, all covenants and
agreements in this Indenture shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default if
such action is taken or condition exists.
Section 1.16. Exhibits and Schedules.
All exhibits and schedules attached hereto are by this reference
made a part hereof with the same effect as if herein set forth in full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of counterparts and by
telecopier, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 1.18. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
ARTICLE TWO
FORM OF NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication with
respect thereto shall be as required by Section 3.03 hereof.
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The definitive Notes shall be printed, typewritten, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its issuance and shall show the
date of its authentication.
Notes offered and sold in reliance on Rule 144A and Notes offered
and sold in reliance on Regulation S shall be issued initially in the form of
one or more Global Notes, substantially in the form set forth in Exhibit A-1,
deposited with the Trustee, as custodian for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided and shall
bear the legend set forth in Exhibit C. 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, as custodian for the Depository, as hereinafter
provided.
Notes issued in exchange for interests in a Global Note pursuant to
Section 3.17 hereof may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A-1 with respect
to the Initial Notes and Exhibit A-2 with respect to Exchange Notes (in each
case, the "Physical Notes").
The Notes shall have notated thereon evidence of each Subsidiary
Guarantee, if any, in the form set forth in Annex A to Exhibit B; provided,
however, that the failure of any Note to include such notation shall not affect
the validity or enforceability of such Subsidiary Guarantee or such Note against
any Subsidiary Guarantor.
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is limited to $325,000,000 in aggregate
principal amount of Notes, except for Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Section 3.03, 3.04, 3.05, 3.06, 9.06, 10.10 or 10.15 hereof or the
optional redemption provisions of the Notes.
The Stated Maturity of the principal of the Notes shall be April 15,
2009. Cash interest on the Notes shall accrue at the rate of 12 3/4% per annum
from April 23, 1999 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, payable semi-annually on April 15
and October 15, in each year, commencing on October 15, 1999, to the registered
Holders at the close of business on the April 1 or October 1, respectively,
immediately preceding such Interest Payment Dates, until the principal thereof
is paid or duly provided for.
At the election of the Company, the entire Indebtedness on the Notes
or certain of the Company's obligations and covenants and certain Events of
Default thereunder may be defeased as provided in Article Four.
Section 3.02. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented or surrendered for registration of transfer or for
exchange (the "Registrar"), an office or agency (which shall be located in the
Borough of Manhattan in The City of New York, State of New York) where Notes may
be presented or surrendered for payment (the "Paying Agent" or "Agent") and an
office or agency where notices and demands to or upon the
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Company in respect of the Notes and this Indenture may be served. The Registrar
and any co-Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" or "Agent" includes any
additional paying agent. The Company may act as its own Paying Agent. The
Company may change the Paying Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the Trust Indenture Act. The agreement shall implement the provisions of this
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, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 6.07 hereof.
The Company initially appoints the Trustee as the Registrar and
Paying Agent and agent for service of notices and demands in connection with the
Notes, until such time as the Trustee has resigned or a successor has been
appointed.
Section 3.03. Execution and Authentication.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A-1 hereto, and the Exchange Notes
and the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit A-2 hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
permitted or required by this Indenture. The Notes may have such letters,
numbers or other marks of identification and such notations, legends or
endorsements required by law, stock exchange rule, rule of the Depository or any
clearing agency or usage. The Company shall approve the form of the Notes and
any notation, legend or endorsement thereon. Each Note shall be dated the date
of issuance and shall show the date of its authentication.
The terms and provisions contained in the Notes annexed hereto as
Exhibit A-1 and Exhibit A-2 shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Two Officers, or an Officer and an Assistant Secretary, of the
Company shall sign, or one Officer of the Company shall sign, and one Officer or
an Assistant Secretary of the Company (each of whom shall, in each case, have
been duly authorized by all requisite corporate actions) shall attest to, the
Notes for the Company by manual or facsimile signature and may be imprinted or
otherwise reproduced.
An officer of a Subsidiary Guarantor (who shall have been duly
authorized by all requisite corporate actions) shall sign by manual or facsimile
signature, which may be imprinted or otherwise reproduced, a notation, in the
form of Annex A to Exhibit B, in respect of the Subsidiary Guarantee of such
Subsidiary Guarantor, on the Notes transferred and exchanged subsequent to the
issuance of such Subsidiary Guarantee for so long as it remains outstanding.
If an Officer or Assistant Secretary of the Company or an officer of
a Subsidiary Guarantor whose signature is on a Note or a notation, as the case
may be, was an officer or (in the case of the Company) Officer or Assistant
Secretary at the time of such execution but no longer holds that office or
position at the time the Trustee authenticates the Note, then the Note, the
Subsidiary Guarantee, if any, and any notation thereon shall nevertheless be
valid.
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A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature of such representative of the Trustee shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue
in an aggregate principal amount not to exceed $325,000,000 and (ii)
Unrestricted Notes from time to time only in exchange for a like principal
amount of Initial Notes, upon a written order of the Company in the form of an
Officers' Certificate of the Company. Each such written order shall specify the
amount of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes or Unrestricted Notes
and whether (subject to Section 2.01 and this Section 3.03) the Notes are to be
issued as Physical Notes or Global Notes and such other information as the
Trustee may reasonably request. The aggregate principal amount of Notes
Outstanding at any time may not exceed $325,000,000, except as provided in
Section 3.06 hereof.
Notwithstanding the foregoing, all Notes issued under this Indenture
shall vote and consent together on all matters (as to which any of such Notes
may vote or consent) as one class and no series of Notes will have the right to
vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless otherwise provided in
the appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
Section 3.04. Temporary Notes.
Until definitive Notes are prepared and ready for delivery, the
Company may execute and upon a Company Order the Trustee shall authenticate and
deliver temporary Notes. The Company Order shall specify the amount of temporary
Notes to be authenticated and the date on which the temporary Notes are to be
authenticated. Temporary Notes shall be substantially in the form of definitive
Notes, in any authorized denominations, but may have variations that the Company
reasonably considers appropriate for temporary Notes as conclusively evidenced
by the Company's execution of such temporary Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay but in no event later than the
date that the Exchange Offer is consummated. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 10.02 hereof, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of like tenor and
of authorized denominations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.
Section 3.05. Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 hereof being sometimes
referred to herein as the "Note Register") in which, subject to such reasonable
regulations as the Registrar may prescribe, the Company shall provide for the
registration of Notes and of transfers and exchanges of
25
Notes. The Trustee is hereby initially appointed Registrar for the purpose of
registering Notes and transfers of Notes as herein provided.
Subject to Sections 3.16 and 3.17, when Notes are presented to the
Registrar or a co-Registrar with a request from the Holder of such Notes to
register the transfer or exchange for an equal principal amount of Notes of
other authorized denominations, such Registrar or co-Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that every Note presented or surrendered
for registration of transfer or exchange shall be duly endorsed or be
accompanied by a written instrument of transfer or exchange in form satisfactory
to the Company and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. Whenever any Notes are so
presented for exchange, at the Registrar's or co-Registrar's written request,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Notes which the Holder making the exchange is entitled to receive, and each
Subsidiary Guarantor, if any, shall execute a notation on such Notes with
respect to its Subsidiary Guarantee. No service charge shall be made to the
Holder for any registration of transfer or exchange. The Company may require
from the Holder payment of a sum sufficient to cover any transfer taxes or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 10.10,
10.15 or 9.06 hereof (in which events the Company will be responsible for the
payment of all such taxes which arise solely as a result of the transfer or
exchange and do not depend on the tax status of the Holder). The Trustee shall
not be required to exchange or register the transfer of any Note for a period of
15 days immediately preceding the first mailing of notice of redemption of Notes
to be redeemed or of any Note selected, called or being called for redemption
except, in the case of any Note where public notice has been given that such
Note is to be redeemed in part, the portion thereof not to be redeemed.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company and each Subsidiary
Guarantor, if any, evidencing the same Indebtedness, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such registration
of transfer or exchange.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such beneficial interest, agree that transfers of beneficial
interests in such Global Notes may be effected only through a book-entry system
maintained by the Holder of such Global Note (or its agent), and that ownership
of a beneficial interest in the Note shall be required to be reflected in a
book-entry system.
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder
of a Note of any series claims that the Note has been lost, destroyed or stolen,
the Company and each Subsidiary Guarantor, if any, shall execute and upon a
Company Order, the Trustee shall authenticate and deliver a replacement Note of
like tenor and principal amount, bearing a number not contemporaneously
outstanding if the Holder of such Note furnishes to the Company, each Subsidiary
Guarantor, if any, and to the Trustee evidence reasonably acceptable to them of
the ownership and the destruction, loss or theft of such Note and an indemnity
bond shall be posted by such Holder, sufficient in the judgment of the Company
or the Trustee, as the case may be, to protect the Company, each Subsidiary
Guarantor, if any, the Trustee or any Agent from any loss that any of them may
suffer if such Note is replaced. The Company may charge such Holder for the
Company's expenses in replacing such Note (including (i) expenses of the Trustee
charged to the Company and (ii) any tax or other governmental charge that may be
imposed) and the Trustee may charge the Company for the Trustee's expenses in
replacing such Note.
Every replacement Note issued pursuant to this Section in lieu of
any destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company and each Subsidiary Guarantor, if any,
whether or not the destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the Regular Record Date; and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
provided in this subsection (a). Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company in writing of
such Special Record Date. In the name and at the expense of the Company, the
Trustee shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at its address as it appears in the Note Register, not less than
10 days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Notes (or their respective Predecessor Notes) are registered on such Special
Record Date and shall no longer be payable pursuant to the following subsection
(b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange or market on which the Notes may be listed, and upon such notice as may
be required by such exchange or market, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this subsection (b),
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Note is registered in the Note Register
as the owner of such Note for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 3.07 hereof) interest on such Note and
for all other purposes whatsoever, whether or not such
27
Note shall be overdue, and none of the Company, the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 3.09. Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company may at any time deliver
to the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Trustee. The Registrar, any
co-Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer or exchange, redemption or
payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation. No
Notes shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section 3.09, except as expressly permitted by this Indenture.
All canceled Notes held by the Trustee shall be destroyed and certification of
their destruction delivered to the Company unless by a Company Order the Company
shall direct that the canceled Notes be returned to it. The Trustee shall
provide the Company a list of all Notes that have been canceled from time to
time as requested by the Company.
Section 3.10. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months and, in the case of a partial month, the actual
number of days elapsed.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated Maturity of any Note
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal, premium, if any, or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date,
Redemption Date, date established for the payment of Defaulted Interest or at
the Stated Maturity, as the case may be. In such event, no interest shall accrue
with respect to such payment for the period from and after such Interest Payment
Date, Redemption Date, date established for the payment of Defaulted Interest or
Stated Maturity, as the case may be, to the next succeeding Business Day and,
with respect to any Interest Payment Date, interest for the period from and
after such Interest Payment Date shall accrue with respect to the next
succeeding Interest Payment Date.
Section 3.12. CUSIP and CINS Numbers.
The Company in issuing the Notes may use "CUSIP" and "CINS" numbers
(if then generally in use), and, if so, the Trustee shall use the CUSIP or CINS
numbers, as the case may be, in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP or CINS
number, as the case may be, printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee in writing of any change in
the CUSIP or CINS number of any series of Notes.
Section 3.13. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the Holders
or the Trustee all money held by the Paying Agent for the payment of principal
of, premium, if any, or interest on the Notes, and shall notify the Trustee of
any default by the Company in making any such payment. Money held in trust by
the Paying Agent need
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not be segregated except as required by law, and in no event shall the Paying
Agent be liable for any interest on any money received by it hereunder. The
Company at any time may require the Paying Agent to pay all money held by it to
the Trustee and account for any funds disbursed, and the Trustee may at any time
during the continuance of any Event of Default, upon a Company Order to the
Paying Agent, require such Paying Agent to pay forthwith all money so held by it
to the Trustee and to account for any funds disbursed. Upon making such payment,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
Section 3.14. [Intentionally Omitted].
Section 3.15. Deposits of Monies.
Prior to 11:00 a.m. New York City time on each Interest Payment
Date, maturity date, Redemption Date, Change of Control Payment Date, date for
the payment of Defaulted Interest and Asset Sale Offer Purchase Date, the
Company shall have deposited with the Paying Agent in immediately available
funds money sufficient to make cash payments, if any, due on such Interest
Payment Date, maturity date, Redemption Date, Change of Control Payment Date,
date for the payment of Defaulted Interest or Asset Sale Offer Purchase Date, as
the case may be, in a timely manner which permits the Paying Agent to remit
payment to the Holders on such Interest Payment Date, maturity date, Redemption
Date, Change of Control Payment Date, date for the payment of Defaulted Interest
or Asset Sale Offer Purchase Date, as the case may be.
Section 3.16. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in the name
of the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the 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 Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Sections 3.03 and 3.17 hereof. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Notes if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for any Global
Note, or that it will cease to be a "Clearing Agency" under the Exchange Act,
and in either case a successor Depository is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar or co-Registrar has received a written request from
the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b) of this Section 3.16, the Registrar or co-Registrar shall (if one
or more Physical Notes are to be issued) reflect on its books and records the
date and a decrease in the principal amount of the Global Note in an amount
equal to the principal amount of the beneficial interest in the Global Note to
be transferred, and the Company shall execute, and upon receipt of a Company
Order the Trustee shall authenticate and deliver, one or more Physical Notes of
like tenor and principal amount of authorized
29
denominations, and each Subsidiary Guarantor, if any, shall execute a notation
thereon in respect of its Subsidiary Guarantee.
(d) In connection with the transfer of Global Notes as an entirety
to beneficial owners pursuant to paragraph (b) of this Section 3.16, the Global
Notes shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and upon receipt of a Company Order the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Notes, an equal aggregate
principal amount of Physical Notes of like tenor of authorized denominations,
and each Subsidiary Guarantor, if any, shall execute a notation thereon in
respect of its Subsidiary Guarantee.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to subparagraph (b), (c) or
(d) of this Section 3.16 shall, except as otherwise provided by Section 3.17
hereof, bear the Private Placement Legend.
(f) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
Section 3.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following additional provisions shall apply with respect to the registration of
any proposed transfer of an Initial Note to any Institutional Accredited
Investor which is not a QIB:
(i) the Registrar or co-Registrar shall register the transfer of any
Initial Note, whether or not such Note bears the Private Placement Legend, if
(x) the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the Company has
held any beneficial interest in such Note, or portion thereof, at any time on or
prior to the second anniversary of the Issue Date and such transfer can
otherwise be lawfully made under the Securities Act without registering such
Initial Notes thereunder or (y) the proposed transferee has delivered to the
Registrar or co-Registrar a certificate substantially in the form of Exhibit D
hereto and any legal opinions and certifications required thereby;
(ii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar or
co-Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's or co-Registrar's procedures and (y) the
appropriate certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the Registrar or
co-Registrar shall register the transfer and reflect on its books and records
the date and a decrease in the principal amount of the Global Note from which
such interests are to be transferred in an amount equal to the principal amount
of the Notes to be transferred and the Company shall execute, each Subsidiary
Guarantor, if any, shall execute a notation on and, upon a Company Order, the
Trustee shall authenticate Physical Notes in a principal amount equal to the
principal amount of the Global Note to be transferred.
(b) Transfers to Non-U.S. Persons. The following additional
provisions shall apply with respect to the registration of any proposed transfer
of an Initial Note to any Non-U.S. Person:
(i) the Registrar or co-Registrar shall register the transfer of any
Initial Note, whether or not such Note bears the Private Placement Legend, if
(x) the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the Company has
held any beneficial interest in such Note, or portion thereof, at any time on or
prior to the second anniversary of the Issue Date and such transfer can
otherwise be lawfully made under the Securities Act without registering such
Initial Notes thereunder or
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(y) the proposed transferor has delivered to the Registrar or co-Registrar a
certificate substantially in the form of Exhibit E hereto;
(ii) if the proposed transferee is an Agent Member and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Regulation S Global Note, upon receipt by the
Registrar or co-Registrar of (x) written instructions given in accordance with
the Depository's and the Registrar's or co-Registrar's procedures and (y) the
appropriate certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the Registrar or
co-Registrar shall register the transfer and reflect on its books and records
the date and an increase in the principal amount of the Regulation S Global Note
in an amount equal to the principal amount of Physical Notes to be transferred,
and the Trustee shall cancel the Physical Notes so transferred;
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in the 144A Global Note, upon receipt by the Registrar or
co-Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's or co-Registrar's procedures and (y) the
appropriate certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the Registrar or
co-Registrar shall register the transfer and reflect on its books and records
the date and (A) a decrease in the principal amount of the 144A Global Note from
which such interests are to be transferred in an amount equal to the principal
amount of the Notes to be transferred and (B) an increase in the principal
amount of the Regulation S Global Note in an amount equal to the principal
amount of the 144A Global Note to be transferred; and
(iv) until the 41st day after the Issue Date (the "Restricted
Period"), an owner of a beneficial interest in the Regulation S Global Note may
not transfer such interest to a transferee that is a U.S. Person or for the
account or benefit of a U.S. Person within the meaning of Rule 902(k) of the
Securities Act. During the Restricted Period, all beneficial interests in the
Regulation S Global Note shall be transferred only through Cedel or Euroclear,
either directly if the transferor and transferee are participants in such
systems, or indirectly through organizations that are participants.
(c) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Note to a QIB
(excluding Non-U.S. Persons):
(i) the Registrar or co-Registrar shall register the transfer of any
Initial Note, whether or not such Note bears the Private Placement Legend, if
(x) the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the Company has
held any beneficial interest in such Note, or portion thereof, at any time on or
prior to the second anniversary of the Issue Date and such transfer can
otherwise be lawfully made under the Securities Act without registering such
Initial Note thereunder or (y) such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar or co-Registrar in writing,
that the sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of Note
stating, or has otherwise advised the Company and the Registrar or co-Registrar
in writing, that it is purchasing the Note for its own account or an account
with respect to which it exercises sole investment discretion and that it and
any such account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A;
(ii) if the proposed transferee is an Agent Member and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the 144A Global Note, upon receipt by the Registrar
or co-Registrar of written instructions given in accordance with the
Depository's and the Registrar's or co-Registrar's procedures, the Registrar or
co-Registrar shall register the transfer and reflect on its book and records the
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date and an increase in the principal amount of the 144A Global Note in an
amount equal to the principal amount of Physical Notes to be transferred, and
the Trustee shall cancel the Physical Note so transferred; and
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in the Regulation S Global Note following the expiration of
the Restricted Period, upon receipt by the Registrar or co-Registrar of written
instructions given in accordance with the Depository's and the Registrar's or
co-Registrar's procedures, the Registrar or co-Registrar shall register the
transfer and reflect on its books and records the date and (A) a decrease in the
principal amount of the Regulation S Global Note in an amount equal to the
principal amount of the Notes to be transferred and (B) an increase in the
principal amount of the 144A Global Note in an amount equal to the principal
amount of the Regulation S Global Note to be transferred.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Notes that do not bear the Private
Placement Legend. Upon the registration of transfer, exchange or replacement of
Notes bearing the Private Placement Legend, the Registrar or co-Registrar shall
deliver only Notes that bear the Private Placement Legend unless (i) the
circumstances contemplated by paragraph (a)(i)(x) of this Section 3.17 exist,
(ii) there is delivered to the Registrar or co-Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act or (iii)
such Note has been sold pursuant to an effective registration statement under
the Securities Act.
(e) Other Transfers. If a Holder proposes to transfer a Note
constituting a Restricted Note pursuant to any exemption from the registration
requirements of the Securities Act other than as provided for by Section
3.17(a), (b) and (c) hereof, the Registrar or co-Registrar shall only register
such transfer or exchange if such transferor delivers an Opinion of Counsel
satisfactory to the Company and the Registrar or co-Registrar that such transfer
is in compliance with the Securities Act and the terms of this Indenture;
provided, however, that the Company may, based upon the opinion of its counsel,
instruct the Registrar or co-Registrar by a Company Order not to register such
transfer in any case where the proposed transferee is not a QIB, Non-U.S. Person
or Institutional Accredited Investor.
(f) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar and each co-Registrar shall retain copies of all
letters, notices and other written communications received pursuant to Section
3.16 hereof or this Section 3.17. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable prior written notice to the
Registrar or co-Registrar.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time,
with respect to the Notes, elect to have either Section 4.02 or Section 4.03
hereof be applied to all of the Outstanding Notes (the "Defeased Notes"), upon
compliance with the conditions set forth below in this Article Four.
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Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 hereof of the option
applicable to the Defeased Notes pursuant to this Section 4.02, the Company
shall be deemed to have been discharged from its obligations with respect to the
Defeased Notes on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Defeased Notes, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 4.05 and the other Sections of
this Indenture referred to in (a) and (b) below, and to have satisfied all its
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company and upon Company
Request, shall execute proper instruments acknowledging the same), except for
the following, which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of Defeased Notes to receive, solely from
the trust fund described in Section 4.04 hereof and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, (b) the Company's obligations
with respect to such Defeased Notes under Sections 3.04, 3.05, 3.06, 10.02 and
10.03 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including, without limitation, the Trustee's rights under
Section 6.07 hereof, and (d) this Article Four. Subject to compliance with this
Article Four, the Company may exercise its option applicable to this Section
4.02 notwithstanding the prior exercise of its option applicable to Section 4.03
hereof with respect to the Notes.
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 hereof of the option
applicable to the Defeased Notes pursuant to this Section 4.03, the Company
shall be released from its obligations under any covenant or provision contained
in Sections 10.06 through 10.22, 10.25 and 10.26 hereof and the provisions of
Article Eight shall not apply, with respect to the Defeased Notes, on and after
the date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Defeased Notes shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the Defeased Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Sections or Article, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference in
any such Section or Article to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 5.01(iii) or (iv) hereof, but, except as specified
above, the remainder of this Indenture and such Defeased Notes shall be
unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 4.02 or Section 4.03 hereof to the Defeased Notes:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.09 hereof who shall agree to comply with the provisions of
this Article Four applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Notes,
(a) cash (in United States dollars) in an amount, or (b) Government
Securities (denominated in United States dollars) which through the
scheduled payment of principal, premium, if any, and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (c) a
combination thereof, in any such case, sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification
33
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
the principal of, premium, if any, and interest on the Defeased Notes at
the Stated Maturity of such principal or installment of principal,
premium, if any, or interest; provided, however, that the Trustee shall
have been irrevocably instructed to apply such cash or the proceeds of
such Government Securities to said payments with respect to the Notes;
(2) No Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default with respect to
this Indenture resulting from the incurrence of Indebtedness all or a
portion of which will be used to defease the Notes concurrently with such
incurrence) or, insofar as Section 5.01(vii), (viii) or (ix) hereof is
concerned, at any time during the period ending on the ninety-first day
after the date of such deposit;
(3) Neither the Company nor any Subsidiary of the Company is an
"insolvent person" within the meaning of any applicable Bankruptcy Law on
the date of such deposit or at any time during the period ending on the
ninety-first day after the date of such deposit;
(4) Such defeasance or covenant defeasance shall not cause the
Trustee for the Notes to have a conflicting interest in violation of
Section 6.08 hereof and for purposes of the Trust Indenture Act with
respect to any securities of the Company;
(5) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture
(other than as permitted by clause (2) above) or any other material
agreement or instrument to which the Company is a party or by which it is
bound;
(6) In the case of an election under Section 4.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel stating
that (x) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or (y) since the date hereof, there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred;
(7) In the case of an election under Section 4.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders of the Outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
(8) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, immediately following the ninety-first day
after the deposit, the trust funds established pursuant to this Article
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally under any applicable U.S. Federal or state law;
(9) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election applicable to Section 4.02 or 4.03 hereof was not made by the
Company with the intent of preferring the Holders over the other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others;
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (i) all
conditions precedent (other than conditions requiring the passage of
34
time) provided for relating to either the defeasance under Section 4.02 or
the covenant defeasance under Section 4.03 (as the case may be) have been
complied with as contemplated by this Section 4.04 and (ii) if any other
Indebtedness of the Company shall then be outstanding or committed, such
defeasance or covenant defeasance will not violate the provisions of the
agreements or instruments evidencing such Indebtedness; and
(11) Such defeasance or covenant defeasance shall not result in a
trust arising from such deposit constituting an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
Opinions required to be delivered under this Section may have such
qualifications as are customary for opinions of the type required and reasonably
acceptable to the Trustee.
Section 4.05. Deposited Money and Government Securities To Be Held
in Trust; Other Miscellaneous Provisions
Subject to the last paragraph of Section 10.03, all money and
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
4.05, the "Trustee") pursuant to Section 4.04 in respect of the Defeased Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (other than the Company) as the Trustee may determine,
to the Holders of such Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee and hold it harmless
against any tax, fee or other charge imposed on or assessed against the
Government Securities deposited pursuant to Section 4.04 or the principal,
premium, if any, and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of the
Defeased Notes.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Securities held by it as provided in Section
4.04 which, in the opinion of an internationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
Section 4.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 4.02 or 4.03 hereof, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the obligations of the Company under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section
4.02 or 4.03 hereof, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money and Government Securities in
accordance with Section 4.02 or 4.03 hereof, as the case may be; provided,
however, that if the Company makes any payment of principal, premium, if any, or
interest on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money and Government Securities held by the Trustee or Paying
Agent.
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of interest on the Notes when it becomes
due and payable and, with respect to any installment of interest after the
first six scheduled interest payments, continuance of such default for a
period of 30 days or more, and, with respect to any of the first six
scheduled interest payments, continuance of such default for a period of
five days or more; or
(ii) default in the payment of the principal of, or premium, if any,
on the Notes when due at maturity, upon redemption or otherwise; or
(iii) default in the performance, or breach, of any covenant
described under Section 10.10, Section 10.15 or Article Eight; or
(iv) default in the performance, or breach, of any covenant in the
Notes, this Indenture (other than defaults specified in clause (i), (ii)
or (iii) above), and continuance of such default or breach for a period of
30 days or more after written notice to the Company by the Trustee or to
the Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the outstanding Notes (in each case, when such notice
is deemed given in accordance with this Indenture); or
(v) (a) failure to pay, following any applicable grace period, any
installment of principal due (whether at maturity or otherwise) under one
or more classes or issues of Indebtedness in an aggregate principal amount
of $7.5 million or more under which the Company or any Restricted
Subsidiary is obligated or (b) failure by the Company or any Restricted
Subsidiary to perform any other term, covenant, condition or provision of
one or more classes or issues of Indebtedness in an aggregate principal
amount of $7.5 million or more under which the Company or such Restricted
Subsidiary is obligated and, in the case of this clause (b), such failure
results in an acceleration of the maturity thereof; or
(vi) one or more judgments, orders or decrees for the payment of
money of $7.5 million or more, either individually or in the aggregate,
shall be entered against the Company or any Restricted Subsidiary or any
of their respective properties and shall not be discharged and there shall
have been a period of 60 consecutive days or more during which a stay of
enforcement of such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect; or
(vii) the Company or any Restricted Subsidiary pursuant to or under
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of a Bankruptcy Order in an
involuntary case or proceeding or the commencement of any case
against it;
36
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
(E) files an answer or consent seeking reorganization or
relief;
(F) shall admit in writing its inability to pay its debts
generally; or
(G) consents to the filing of a petition in bankruptcy; or
(viii) a court of competent jurisdiction in any involuntary case or
proceeding enters a Bankruptcy Order against the Company or any Restricted
Subsidiary, and such Bankruptcy Order remains unstayed and in effect for
60 consecutive days; or
(ix) a Custodian shall be appointed out of court with respect to the
Company or any Restricted Subsidiary with respect to all or any
substantial part of the assets or properties of the Company or any
Restricted Subsidiary; or
(x) this Indenture or the Registration Rights Agreement ceases to be
in force and effect in all material respects (other than with respect to
the invalidity or alleged invalidity of any provision in the Registration
Rights Agreement regarding indemnification for matters arising under the
federal securities laws) or is declared null and void or the Company
denies that it has any further obligation or liability thereunder or gives
notice to that effect (other than by reason of termination or release in
accordance with the terms thereof).
Section 5.02. Acceleration of Maturity, Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
clause (vi), (vii), or (viii) of Section 5.01 hereof with respect to the Company
or any Restricted Subsidiary) occurs and is continuing, then the Trustee or the
holders of at least 25% in principal amount of the then Outstanding Notes may,
by written notice, and the Trustee upon the request of the holders of not less
than 25% in principal amount of the then Outstanding Notes shall, declare the
Default Amount of all Outstanding Notes to be immediately due and payable and
upon any such declaration such amount shall become immediately due and payable.
If an Event of Default specified in clause (vi), (vii), or (viii) above with
respect to the Company or any Restricted Subsidiary occurs and is continuing,
then the Default Amount of all outstanding Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any holder.
After a declaration of acceleration, the holders of a majority in
aggregate principal amount of the then Outstanding Notes may, by notice to the
Trustee, rescind such declaration of acceleration if all existing Events of
Default, other than nonpayment of the Default Amount of the Notes that has
become due solely as a result of such acceleration, have been cured or waived
and if the rescission of acceleration would not conflict with any judgment or
decree.
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that, if an Event of Default specified in
Section 5.01(i) or 5.01(ii) shall have occurred and be continuing, then the
Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of
the Holders of such Notes, the whole amount then due and payable on such Notes
for principal, premium, if any, and interest, with interest upon the overdue
principal, premium, if any, and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of interest, at the rate
then borne by the Notes;
37
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may, but is not
obligated under this paragraph to, institute a judicial proceeding for the
collection of the sums so due and unpaid and may, but is not obligated under
this paragraph to, prosecute such proceeding to judgment or final decree, and
may, but is not obligated under this paragraph to, enforce the same against the
Company, any Subsidiary Guarantor or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company, any Subsidiary Guarantor or any other
obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion, but is not obligated under this paragraph to, (i) proceed to
protect and enforce its rights and the rights of the Holders under this
Indenture by such appropriate private or judicial proceedings as the Trustee
shall deem most effectual to protect and enforce such rights, whether for the
specific enforcement of any covenant or agreement contained in this Indenture or
in aid of the exercise of any power granted herein or (ii) proceed to protect
and enforce any other proper remedy. No recovery of any such judgment upon any
property of the Company shall affect or impair any rights, powers or remedies of
the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company, any Subsidiary Guarantor or
any other obligor upon the Notes or the property of the Company, any Subsidiary
Guarantor or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal 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 on the Company or any Subsidiary Guarantor for the
payment of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest 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 the reasonable
compensation, fees, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any Custodian, in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the Trustee any amount
due it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, 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 Holder in any such proceeding.
38
Section 5.05. Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name and
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, fees, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium, if
any, or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest;
Third: to Holders for principal and premium, if any, amounts owing
under the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
premium, if any; and
Fourth: the balance, if any, to the Company or any other obligor on
the Notes, as their interests may appear, or as a court of competent
jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
5.06.
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal amount
of the then Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request which is satisfactory to the Trustee;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
39
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the then Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Note or any Subsidiary Guarantee to affect, disturb or
prejudice the rights of any other Holders, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture, any Note or any Subsidiary Guarantee, except in the manner provided
in this Indenture and for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To Receive Principal,
Premium and Interest
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
cash payment of the principal of, premium, if any, and (subject to Section 3.07
hereof) interest on such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the respective Redemption Date) and
to institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Note and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case the
Company, each Subsidiary Guarantor, if any, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as provided in Section 3.06, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Majority.
The Holders of a majority in aggregate principal amount of the then
Outstanding Notes 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, provided, however, that:
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(a) such direction shall not be in conflict with any rule of law or
with this Indenture or any Note or expose the Trustee to personal liability;
(b) such direction shall not be unduly prejudicial to the rights of
another Holder; and
(c) the Trustee may take any other action deemed proper by the
Trustee, in its discretion, which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the then Outstanding Notes by notice to the Trustee may on behalf of
the Holders of all the Notes waive any past Default or Event of Default
hereunder and its consequences, except a Default or Event of Default
(a) in the payment of the principal of, premium, if any, or interest
on any Note, or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected thereby.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by
his 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,
suffered 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,
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 5.14 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the then
Outstanding Notes, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of, premium, if any, or interest on any Note on
or after the respective Stated Maturities expressed in such Note (or, in the
case of redemption, on or after the respective Redemption Dates).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury or other law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or any portion of
the principal of, premium, if any, or interest on the Notes contemplated herein
or in the Notes or which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants 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.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and the TIA, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates (including Officers'
Certificates) or opinions (including Opinions of Counsel) furnished to the
Trustee and conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture.
(b) During the continuance of an Event of Default, the Trustee is
required to exercise such rights and powers vested in it under this Indenture
and use the same degree of care and skill in its exercise thereof as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
Section 6.02. Notice of Defaults.
Within 30 days after the occurrence of any Default, the Trustee
shall transmit by mail to all Holders, as their names and addresses appear in
the Note Register, notice of such Default hereunder known to the Trustee, unless
such Default shall have been cured or waived; provided, however, that, except in
the case of a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on any Note or in respect of Article Eight hereof,
the Trustee shall be protected in withholding such notice if and so long as a
trust committee of Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of Section 315 of
the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
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debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) the Trustee may request that any request or direction of the
Company mentioned herein be sufficiently evidenced by a Company Request or
Company Order and that any resolution of the Board be sufficiently evidenced by
a Board Resolution thereof;
(c) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon in accordance with such advice
or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by the Trustee in compliance
with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of its own negligence;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, other evidence of
indebtedness or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Notes then Outstanding; provided, however, that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such investigation shall be paid by the Company or,
if paid by the Trustee or any predecessor Trustee, shall be repaid by the
Company upon demand; provided, further, the Trustee in its discretion may make
such further inquiry or investigation into such facts or matters as it may deem
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) except with respect to Section 10.01, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article Ten.
In addition, the Trustee shall not be deemed to have knowledge of any Default or
Event of Default hereunder or any default or event of default under the Pledge
and Escrow Agreement except (i) any Event of Default occurring pursuant to
Sections 5.01(i), 5.01(ii) or 10.01 or (ii) any Default or Event of Default of
which a Responsible Officer shall have received written notification or obtained
actual knowledge.
Section 6.04. Trustee Not Responsible for Recitals, Dispositions
of Notes or Application of Proceeds Thereof
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness.
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The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements to be made by it in
any Statement of Eligibility and Qualification on Form T-1 supplied to the
Company will be true and accurate subject to the qualifications set forth
therein. The Trustee shall not be accountable for the use or application by the
Company of Notes or the proceeds thereof.
Section 6.05. Trustee and Agents May Hold Notes; Collections; Etc.
The Trustee, any Paying Agent, Registrar or co-Registrar or any
other agent of the Company, in its individual or any other capacity, may become
the owner or pledgee of Notes, with the same rights it would have if it were not
the Trustee, Paying Agent, Registrar or co-Registrar or such other agent and,
subject to Section 6.08 hereof and Sections 310 and 311 of the Trust Indenture
Act, may otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee, Paying Agent, Registrar or co-Registrar or such other agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required herein
or by law. The Trustee shall not be under any liability for interest on any
moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its
Prior Claim.
The Company covenants and agrees: (a) to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation for
all services rendered by it hereunder (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); (b) to reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, fees, disbursements and advances incurred
or made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation, fees, and the expenses and
disbursements of its counsel and of all agents and other Persons not regularly
in its employ), except any such expense, disbursement or advance as may arise
from its negligence or bad faith; and (c) to indemnify the Trustee and each
predecessor Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder, including enforcement of this Section
6.07. The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, fees, disbursements and
advances shall constitute an additional obligation hereunder and shall survive
the satisfaction and discharge of this Indenture. To secure the obligations of
the Company to the Trustee under this Section 6.07, the Trustee shall have a
prior Lien upon all property and funds held or collected by the Trustee as such,
except funds and property paid by the Company and held in trust for the benefit
of the Holders of particular Notes.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the provisions of
Section 310(b) of the Trust Indenture Act.
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Section 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Act Sections 310(a)(1) and (2)
and which shall have (or, in the case of a Trustee that is an Affiliate of a
bank holding company, its Affiliated bank holding company shall have) a combined
capital and surplus of at least $25,000,000 and a corporate trust office or
agency in the Borough of Manhattan in The City of New York, State of New York.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of any Federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 6.10. Resignation and Removal; Appointment of Successor
Trustee.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter appointed,
may at any time resign by giving written notice thereof to the Company at least
20 Business Days prior to the date of such proposed resignation. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument executed by authority of the Board, a copy of
which shall be delivered to the resigning Trustee and a copy to the successor
Trustee. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 20 Business Days after the giving of such
notice of resignation, the resigning Trustee may, or (if an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 Business Days after the giving of such notice of resignation) any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper, appoint a
successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in aggregate principal amount of the then Outstanding Notes,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Section
310(b) of the Trust Indenture Act in accordance with Section 6.08 hereof
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 hereof
and shall fail to resign after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Note for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 5.14, the Holder of any Note who has been a bona fide
Holder of a Note for at least six months may, on behalf of himself and
45
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the then Outstanding
Notes delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment, become
the successor Trustee and supersede the successor Trustee appointed by the
Company. If no successor Trustee shall have been so appointed by the Company or
the Holders of the Notes and accepted appointment in the manner hereinafter
provided, the Holder of any Note who has been a bona fide Holder for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, or the resigning Trustee may, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Notes as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor Trustee, upon payment of amounts due it pursuant to Section 6.07,
such retiring Trustee shall duly assign, transfer and deliver to the successor
Trustee all moneys and property at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers, duties and obligations of the retiring Trustee. Upon request of
any such successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee
all such rights and powers. Any Trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the provisions of Section
6.07.
No successor Trustee with respect to the Notes shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article.
Upon acceptance of appointment by any successor Trustee as provided
in this Section 6.11, the successor shall give notice thereof to the Holders of
the Notes, by mailing such notice to such Holders at their addresses as they
shall appear on the Note Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.10. If the Company fails to give such notice within 10 days after acceptance
of appointment by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
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Section 6.12. Merger, Conversion, Amalgamation, Consolidation or
Succession to Business
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or amalgamated, or any corporation resulting
from any merger, conversion, amalgamation or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided such corporation shall be eligible under this Article
Six to serve as Trustee hereunder.
In case at the time such successor to the Trustee under this Section
6.12 shall succeed to the trusts created by this Indenture any of the Notes
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that time any of the
Notes shall not have been authenticated, any successor to the Trustee under this
Section 6.12 may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have been
authenticated.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish
Trustee Names and Addresses of Holders
(a) The Trustee shall preserve the names and addresses of the
Holders and otherwise comply with TIA Section 312(a). If the Trustee is not the
Registrar or co-Registrar, the Company shall furnish or cause the Registrar or
co-Registrar to furnish to the Trustee before each Interest Payment Date, and at
such other times as the Trustee may reasonably request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Holders. Neither the Company nor the Trustee shall be under
any responsibility with regard to the accuracy of such list.
(b) The Company will furnish or cause to be furnished to the
Trustee:
(i) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request,
a list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Registrar or
co-Registrar, no such list need be furnished pursuant to this Subsection
7.01(b).
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with respect to their
rights under this Indenture or under the Notes pursuant to Section 312(b) of the
Trust Indenture Act. The Company and the Trustee and any and all other Persons
benefited by this Indenture shall have the protection afforded by Section 312(c)
of the Trust Indenture Act.
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Section 7.03. Reports by Trustee.
Within 60 days after April 15th of each year commencing with the
first April 15th following the date of this Indenture, the Trustee shall mail to
all Holders, as their names and addresses appear in the Note Register, a brief
report dated as of such April 15th, in accordance with and to the extent
required under Section 313 of the Trust Indenture Act. At the time of its
mailing to Holders, a copy of each such report shall be filed by the Trustee
with the Company, the Commission and, if required by the rules of any such stock
exchange or market, with each stock exchange or market on which the Notes are
listed. The Company shall notify the Trustee when the Notes are listed on any
stock exchange or market.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
Section 8.01. Company May Consolidate, etc., Only on Certain Terms.
The Company will not (i) consolidate or combine with or merge with
or into or, directly or indirectly, sell, assign, convey, lease, transfer or
otherwise dispose of all or substantially all of its properties and assets to
any Person or Persons in a single transaction or through a series of
transactions, or (ii) permit any of the Restricted Subsidiaries to enter into
any such transaction or series of transactions if it would result in the
disposition of all or substantially all of the properties or assets of the
Company and the Restricted Subsidiaries on a consolidated basis, unless, in the
case of either (i) or (ii), (a) the Company shall be the continuing Person or,
if the Company is not the continuing Person, the resulting, surviving or
transferee Person (the "surviving entity") shall be a company organized and
existing under the laws of the United States or any State or territory thereof;
(b) the surviving entity (if other than the Company) shall expressly assume all
of the obligations of the Company under the Notes and this Indenture, and shall
execute a supplemental indenture to effect such assumption which supplemental
indenture shall be delivered to the Trustee and shall be in form and substance
reasonably satisfactory to the Trustee; (c) immediately after giving effect to
such transaction or series of transactions on a pro forma basis (including,
without limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
(I) the Company or the surviving entity (assuming such surviving entity's
assumption of the Company's obligations under the Notes and this Indenture), as
the case may be, would be able to incur $1.00 of Indebtedness (other than
Permitted Indebtedness) under the proviso of Section 10.11, and (II) the Company
or the surviving entity, as the case may be, would have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction or series of transactions; (d) immediately after
giving effect to such transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions), no Default shall have occurred and be continuing; and (e) the
Company or the surviving entity, as the case may be, shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel stating that such
transaction or series of transactions, and, if a supplemental indenture is
required in connection with such transaction or series of transactions to
effectuate such assumption, such supplemental indenture, complies with this
covenant and that all conditions precedent in this Indenture relating to the
transaction or series of transactions have been satisfied.
Section 8.02. Successor Substituted.
Upon any consolidation or merger or any sale, assignment,
conveyance, lease, transfer or other disposition of all or substantially all of
the assets of the Company in accordance with the foregoing in which the Company
or the Restricted Subsidiary, as the case may be, is not the continuing
corporation, then the successor corporation formed by such a consolidation or
into which the Company or such Restricted Subsidiary is merged or to which such
transfer is made, will succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Restricted Subsidiary, as the case
may be, under this Indenture and the Notes with the same
48
effect as if such successor corporation had been named as the Company or such
Restricted Subsidiary therein; and thereafter, except in the case of (i) any
lease or (ii) any sale, assignment, conveyance, transfer, lease or other
disposition to a Restricted Subsidiary of the Company, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Notes.
For all purposes of this Indenture (including the provisions of this
Article Eight and Sections 10.11, 10.13 and 10.16 hereof) and the Notes,
Subsidiaries of any surviving entity will, upon such transaction or series of
related transactions, become Restricted Subsidiaries or Unrestricted
Subsidiaries as provided pursuant to Section 10.20 hereof, and all Indebtedness,
and all Liens on property or assets, of the surviving entity and the Restricted
Subsidiaries (except Indebtedness, or Liens on property or assets, of the
Company and the Restricted Subsidiaries in existence immediately prior to such
transaction or series of related transactions) shall be deemed to have been
incurred upon such transaction or series of related transactions.
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements and Waivers
Without Consent of Holders
Without the consent of any Holders, the Company and any Subsidiary
Guarantor, when authorized by a Board Resolution, and the Trustee, together, at
any time and from time to time, may amend, waive, modify or supplement this
Indenture or the Notes for any of the following purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company in the
Notes and this Indenture;
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company in
the Notes or this Indenture;
(c) to cure any ambiguity, or to correct or supplement any provision
in this Indenture or in the Notes which may be defective or inconsistent with
any other provision herein or to make any other provisions with respect to
matters or questions arising under this Indenture or the Notes; provided,
however, that, in each case, such provisions shall not adversely affect the
legal rights of the Holders;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by Section 9.05 hereof or otherwise;
(e) to evidence and provide the acceptance of the appointment of a
successor Trustee hereunder;
(f) to mortgage, pledge, hypothecate or grant a security interest in
any property or assets in favor of the Trustee for the benefit of the Holders as
security for the payment and performance of the Indenture Obligations;
(g) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will be
modified or eliminated, as appropriate), and which will be treated together with
any outstanding Initial Notes, as a single issue of securities;
49
(h) to add or release a Subsidiary Guarantor in compliance with the
provisions of Section 10.22 hereof; or
(i) to make any other change that does not adversely affect in any
material respect the legal rights of any Holder;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such change, agreement or waiver complies with the
provisions of this Section 9.01.
Section 9.02. Supplemental Indentures, Agreements and Waivers with
Consent of Holders
With the written consent of the Holders of not less than a majority
in aggregate principal amount of the Outstanding Notes delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, together
with the Trustee, may amend, waive, modify or supplement any other provision of
this Indenture or the Notes; provided, however, that no such amendment, waiver,
modification or supplement may, without the written consent of the Holder of
each Outstanding Note affected thereby:
(i) reduce the principal amount of, change the fixed maturity of, or
alter the redemption provisions of, the Notes,
(ii) change the currency in which any Notes or amounts owing thereon
is payable,
(iii) reduce the percentage of the aggregate principal amount
Outstanding of Notes which must consent to an amendment, supplement or
waiver or consent to take any action under this Indenture or the Notes,
(iv) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes,
(v) waive a Default in payment with respect to the Notes, other than
a waiver consisting of the rescission of any declaration of acceleration
with respect to the Notes effected in compliance with Section 5.02,
(vi) reduce the rate or change the time for payment of interest on
the Notes,
(vii) following the occurrence of a Change of Control or an Asset
Sale, alter the Company's obligation to purchase the Notes in accordance
with this Indenture or waive any Default in the performance thereof, or
(viii) affect the ranking of the Notes in a manner adverse to the
Holders of the Notes.
Upon the written request of the Company accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture or other
agreement, instrument or waiver, and upon the filing with the Trustee of
evidence of the consent of Holders as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture or other agreement,
instrument or waiver.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture or other
agreement, instrument or waiver, but it shall be sufficient if such Act shall
approve the substance thereof.
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Section 9.03. Execution of Supplemental Indentures, Agreements and
Waivers.
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.01 hereof) shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate from each obligor under the Notes entering into such
supplemental indenture, agreement, instrument or waiver, each stating that the
execution of such supplemental indenture, agreement, instrument or waiver (a) is
authorized or permitted by this Indenture and (b) does not violate the
provisions of any agreement or instrument evidencing any other Indebtedness of
the Company or any other Subsidiary of the Company. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture, agreement,
instrument or waiver which affects the Trustee's own rights, duties or
immunities under this Indenture, the Notes or otherwise.
Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
Nine, this Indenture and/or the Notes, if applicable, shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture and/or the Notes, if applicable, as the case may be, for all purposes;
and every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article, may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Board, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee upon a Company Order in
exchange for Outstanding Notes.
In addition, Notes authenticated and delivered after the execution
of any supplemental indenture in compliance with Section 10.22 and this Article
shall, if required by the Trustee, bear a notation substantially in the form
annexed hereto as Annex A to Exhibit B, and new Notes bearing such notation
shall be prepared and executed by the Company, with such notation executed by
the Subsidiary Guarantors, if any . The Trustee, upon a Company Order, shall
thereafter authenticate and deliver such Notes in exchange for Outstanding
Notes.
Section 9.07. Record Date.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
supplemental indenture, agreement or instrument or any waiver, and shall
promptly notify the Trustee of any such record date. If a record date is fixed
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to consent to such
supplemental indenture, agreement or instrument or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
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Section 9.08. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if a notation of the consent is not made on any
Note. However, any such Holder, or subsequent Holder, may revoke the consent as
to his Note or portion of a Note if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. An
amendment or waiver shall become effective in accordance with its terms and
thereafter bind every Holder.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of, premium,
if any, and interest on the Notes in accordance with the terms of the Notes,
this Indenture and the Registration Rights Agreement.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal, premium or interest payments hereunder.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan in The City of
New York, State of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The office of State
Street Bank and Trust Company, N.A., an Affiliate of the Trustee, at its
Corporate Trust Office will be such office or agency of the Company, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company will give prompt written notice to the Trustee of
any change in the location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York, State of New York)
where the Notes may be presented or surrendered for any or all such purposes,
and may from time to time rescind such designation; provided, however, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New York, State of New
York for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and any change in the location of
any such other office or agency.
Section 10.03. Money for Note Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of, premium, if any, or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Holders entitled thereto a sum sufficient to pay the principal, premium, if any,
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
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If the Company is not acting as Paying Agent, the Company will, on
or before each due date of the principal of, premium, if any, or interest on,
any Notes, deposit with a Paying Agent a sum in same day funds sufficient to pay
the principal, premium, if any, or interest so becoming due, such sum to be held
in trust for the benefit of the Holders entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent will agree with the Trustee, subject to
the provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Notes in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal of,
premium, if any, or interest on the Notes;
(c) at any time during the continuance of any such payment Default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and liabilities of
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent will be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company upon receipt of a Company Request therefor, or (if then held by
the Company) will be discharged from such trust; and the Holder of such Note
will thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, at the option of the Company
in the New York Times or the Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Company.
Section 10.04. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory), licenses and franchises of the
Company and each of the Restricted Subsidiaries; provided, however, that the
Company will not be required to preserve any such right, license or franchise if
the Board shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and the Restricted Subsidiaries as
a whole and that the loss thereof is not adverse in any material respect to the
Holders; provided, further, that the foregoing will not prohibit a
53
sale, transfer or conveyance of a Restricted Subsidiary of the Company or any of
its assets in compliance with the terms of this Indenture.
Section 10.05. 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 (i) upon the Company or any of the
Restricted Subsidiaries or (ii) upon the income, profits or property of the
Company or any of the Restricted Subsidiaries and (b) all material lawful claims
for labor, materials and supplies, which, if unpaid, could reasonably be
expected to become a Lien upon the property of the Company or any of the
Restricted Subsidiaries; provided, however, that the Company will not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (x) whose amount, applicability or validity is being
contested in good faith by appropriate proceedings properly instituted and
diligently conducted or (y) if the failure to so pay, discharge or cause to be
paid or discharged could not reasonably be expected to have a Material Adverse
Effect (as such term is defined in the Purchase Agreement).
Section 10.06. Maintenance of Properties.
The Company will cause all material properties owned by the Company
or any of the Restricted Subsidiaries that are used or held for use in the
conduct of their respective businesses to be maintained and kept in good
condition, repair and working order (subject to ordinary wear and tear) 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 10.06 will prevent the Company
from discontinuing the 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 of the Restricted Subsidiaries and is not
disadvantageous in any material respect to the Holders.
Section 10.07. Insurance.
The Company will at all times keep all of its and the Restricted
Subsidiaries' properties which are of an insurable nature insured with insurers
(including appropriate self-insurance), believed by the Company in good faith to
be financially sound and responsible, against loss or damage to the extent that,
in the good faith judgment of the Board, property of similar character is
usually and customarily so insured by corporations similarly situated and owning
like properties.
Section 10.08. Books and Records.
The Company will keep proper books of record and account, in which
full and correct entries will be made of all financial transactions and the
assets and business of the Company and each Restricted Subsidiary of the Company
in compliance with GAAP.
Section 10.09. Provision of Commission Reports.
Whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act or any successor provision of law, the Company shall furnish
without cost to each Holder, and file with the Trustee, (i) within 135 days
after the end of each fiscal year of the Company, financial information with
respect to the Company that would be required to be contained in an Annual
Report on Form 10-K for such year filed by the Company with the Commission
(whether or not the Company is then required to file such Form with the
Commission), including (x) audited financial statements of the Company,
including the report of the Company's independent auditors thereon, and (y) a
discussion of the Company's financial condition and results of operations that
complies with Item
54
303 of Regulation S-K of the Commission, (ii) within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of the Company,
financial information with respect to the Company that would be required to be
contained in a Quarterly Report on Form 10-Q filed by the Company with the
Commission (whether or not the Company is then required to file such Form with
the Commission), including a discussion of the Company's financial condition and
results of operations that complies with Item 303 of Regulation S-K of the
Commission and (iii) on a timely basis, any information concerning the Company
or any Restricted Subsidiary required to be contained in a Current Report on
Form 8-K (whether or not the Company is then required to file such Form with the
Commission), and, unless such information is included or incorporated in a Form
10-K, Form 10-Q or Form 8-K filed by the Company with the Commission, the
Company shall file a copy of all such information described in clauses (i), (ii)
and (iii) above with the Commission (if permitted by Commission practice and
applicable law and regulations).
For so long as any Notes remain Outstanding, the Company shall
furnish to securities analysts and prospective investors, upon their request,
information of the type required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act, and, to any beneficial holder of Notes, if not
obtainable from the Commission, information of the type that would be filed with
the Commission pursuant to the foregoing provisions, upon the request of any
such Holder.
Delivery of the foregoing 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 the Trustee of any information
contained therein or determinable from 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).
The Company will also comply with the other provisions of Section
314(a) of the Trust Indenture Act.
Section 10.10. Change of Control.
Upon the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall make an offer
to purchase (the "Change of Control Offer"), on a Business Day (the "Change of
Control Payment Date") not later than 60 days following the Change of Control
Date, all Notes then outstanding at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to,
such Change of Control Payment Date. Notice of a Change of Control Offer shall
be mailed to holders of Notes not less than 30 days nor more than 60 days before
the Change of Control Payment Date.
Notice of a Change of Control Offer shall be mailed by the Company
to the Holders at their last registered addresses with a copy to the Trustee and
the Paying Agent. The Change of Control Offer shall remain open from the time of
mailing for at least 20 Business Days and until 5:00 p.m., New York City time,
on the Change of Control Payment Date. The notice, which shall govern the terms
of the Change of Control Offer, shall include such disclosures as are required
by law and shall state:
(a) that the Change of Control Offer is being made pursuant to this
Section 10.10 and that all Notes validly tendered into the Change of Control
Offer and not withdrawn will be accepted for payment;
(b) the purchase price (including the amount of accrued interest, if
any) for each Note, the Change of Control Payment Date and the date on which the
Change of Control Offer expires;
(c) that any Note not tendered for payment will remain Outstanding
and continue to accrue interest in accordance with the terms thereof;
55
(d) that, unless the Company shall default in the payment of the
purchase price, any Note accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control Payment Date;
(e) that Holders electing to have Notes purchased pursuant to a
Change of Control Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York City
time, on the Change of Control Payment Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee and the Paying
Agent;
(f) that a Holder that tenders a Note pursuant to a Change of
Control Offer will be entitled to withdraw such Note if the Paying Agent
receives, not later than 5:00 p.m., New York City time, on the Change of Control
Payment Date, a facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Note the Holder tendered for purchase, the Note
certificate number (if any) and a statement that such Holder is withdrawing his
election to have such Note purchased;
(g) that a Holder may tender all or any portion of a Note owned by
such Holder pursuant to the Change of Control Offer, subject to the requirement
that any portion of a Note tendered must be tendered in an integral multiple of
$1,000 in principal amount, and that any Holder that tenders a portion of a Note
will be issued a Note of like tenor equal in principal amount to the portion of
the Note not tendered;
(h) the instructions that Holders must follow in order to tender
their Notes; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the Commission
pursuant to the Exchange Act (or, if the Company is not required to file any
such reports with the Commission at that time, the comparable information
prepared pursuant to Section 10.09), a description of material developments in
the Company's business and such other information concerning the circumstances
and relevant facts regarding such Change of Control and Change of Control Offer
(including, without limitation, pro forma financial information giving effect to
such Change of Control) as would, in the good faith judgment of the Company, be
material to a Holder in connection with the decision of such Holder as to
whether or not it should tender Notes pursuant to the Change of Control Offer.
On the Change of Control Payment Date, the Company shall (i) accept
for payment all Notes, or portions thereof, validly tendered and not withdrawn
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
money, in immediately available funds, sufficient to pay the purchase price of
all Notes, or portions thereof, so tendered and accepted and (iii) deliver to
the Trustee the Notes so accepted together with an Officers' Certificate setting
forth the registered numbers of such Notes. The Paying Agent shall, with the
funds so deposited with it by the Company, promptly mail or deliver to each
Holder that validly tendered and did not withdraw Notes, or any portion thereof,
an amount equal to the purchase price for the portion so tendered, and the
Trustee shall promptly authenticate and mail or deliver to such Holder a new
Note of like tenor equal in principal amount to that portion, if any, of any
Note surrendered by such Holder but not tendered pursuant to the Change of
Control Offer. The Company will publicly announce or otherwise notify the
Holders of the results of the Change of Control Offer as soon as practicable
following the Change of Control Payment Date. The Company shall not be required
to make a Change of Control Offer following a Change of Control if a third party
makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements applicable to a Change of Control Offer
otherwise required to be made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
If the Company is required to make a Change of Control Offer, the
Company (or any such third party) shall comply with all applicable tender offer
laws and regulations, including, to the extent applicable, Section 14(e) and
Rule 14e-1 under the Exchange Act, and any other applicable securities laws and
regulations. To the extent that the provisions of any such securities laws or
regulations conflict with the provisions of this Section
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10.10, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 10.10 solely by virtue of such compliance.
Section 10.11. Limitation on Additional Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume, issue, Guarantee or in any
manner become directly or indirectly liable for or with respect to, contingently
or otherwise, the payment of (collectively, to "incur") any Indebtedness
(including any Acquired Indebtedness), except for Permitted Indebtedness
(including Acquired Indebtedness to the extent it would constitute Permitted
Indebtedness); provided, that (i) the Company will be permitted to incur
Indebtedness (including Acquired Indebtedness) and (ii) a Restricted Subsidiary
will be permitted to incur Acquired Indebtedness, if, in either case, after
giving pro forma effect to such incurrence (including the application of the net
proceeds therefrom), the Indebtedness to EBITDA Ratio would be less than or
equal to 6 to 1.
Indebtedness of any Person or any of its Subsidiaries existing at
the time such Person becomes a Restricted Subsidiary (or is merged into or
consolidated with the Company or any Restricted Subsidiary), whether or not such
Indebtedness was incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary (or being merged into or consolidated
with the Company or any Restricted Subsidiary) shall be deemed incurred at the
time such Person becomes a Restricted Subsidiary or merges into or consolidates
with the Company or any Restricted Subsidiary.
For purposes of determining compliance with this Section 10.11, in
the event that an item of Indebtedness may be incurred by meeting the criteria
of one or more items of Permitted Indebtedness, the Company may, in its sole
discretion, classify and divide such item of Indebtedness among more than one of
such items of Permitted Indebtedness.
Accrual of interest, accretion or amortization of original issue
discount and reductions in any collateral described in clause (B) of the
definition of "Indebtedness" by reason of payments of interest on the
Indebtedness secured by such collateral will not be deemed to be an incurrence
of Indebtedness for purposes of this Section 10.11.
Section 10.12. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, a written
statement signed by the chairman or the chief executive officer and by the
principal financial officer or principal accounting officer of the Company,
stating (i) that a review of the activities of the Company during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and (ii) that, to the knowledge
of each Officer signing such certificate, the Company has kept, observed,
performed and fulfilled in all material respects each and every covenant and
condition contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions, conditions and covenants hereof
(or, if a Default shall have occurred, describing all such Defaults of which
such Officers have knowledge, their status and what action the Company is taking
or proposes to take with respect thereto). When any Default under this Indenture
has occurred and is continuing, or if the Trustee or any Holder or the trustee
for or the holder of any other evidence of Indebtedness of the Company or any
Restricted Subsidiary gives any notice or takes any other action with respect to
a claimed Default (other than with respect to Indebtedness (other than
Indebtedness evidenced by the Notes) in the principal amount of less than $5
million), the Company will promptly notify the Trustee of such Default, notice
or action and will deliver to the Trustee by registered or certified mail or by
telegram, or facsimile transmission followed by hard copy by registered or
certified mail an Officers' Certificate specifying such event, notice or other
action within five Business Days after the Company becomes aware of such
occurrence and what action the Company is taking or proposes to take with
respect thereto.
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Section 10.13. Limitation on Restricted Payments.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, make, directly or indirectly, any Restricted Payment unless:
(i) no Default shall have occurred and be continuing at the time of
or upon giving effect to such Restricted Payment;
(ii) immediately after giving effect to such Restricted Payment, the
Company would be able to incur $1.00 of Indebtedness under the proviso of
Section 10.11 hereof; and
(iii) immediately after giving effect to such Restricted Payment,
the aggregate amount of all Restricted Payments declared or made on or
after the Issue Date does not exceed an amount equal to the sum of,
without duplication, (a) 50% of Consolidated Net Income accrued on a
cumulative basis during the period beginning on the first day of the first
fiscal quarter immediately subsequent to the Issue Date and ending on the
last day of the fiscal quarter of the Company immediately preceding the
date of such proposed Restricted Payment (or, if such cumulative
Consolidated Net Income of the Company for such period is a deficit, minus
100% of such deficit) for which financial statements are available, in any
event determined by excluding income resulting from transfers of assets by
the Company or a Restricted Subsidiary to an Unrestricted Subsidiary, plus
(b) the aggregate net cash proceeds received by the Company either (x) as
capital contributions to the Company after May 5, 1998 or (y) from the
issuance and sale of its Capital Stock (other than Disqualified Stock) or
options, warrants or other rights to acquire its Capital Stock (other than
Disqualified Stock), in each case on or after May 5, 1998 to a Person who
is not a Subsidiary of the Company, plus (c) the aggregate net proceeds
received by the Company from the issuance (other than to a Subsidiary of
the Company) on or after May 5, 1998 of its Capital Stock (other than
Disqualified Stock) upon the conversion of, or in exchange for,
Indebtedness of the Company or upon the exercise of options, warrants or
other rights of the Company, plus (d) in the case of the disposition or
repayment (in whole or in part) of any Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to the
lesser of the return of capital with respect to the applicable portion of
such Investment and the cost of the applicable portion of such Investment,
in either case, less the cost of the disposition of such Investment, plus
(e) in the case of any Revocation with respect to a Subsidiary of the
Company that was made subject to a Designation after the Issue Date, an
amount equal to the lesser of the Designation Amount with respect to such
Subsidiary or the Fair Market Value of the Investment of the Company and
the Restricted Subsidiaries in such Subsidiary at the time of Revocation.
For purposes of the preceding clauses (b) (y) and (c), as applicable, (A)
the value of the aggregate net proceeds received by the Company upon the
issuance of Capital Stock either upon the conversion of convertible
Indebtedness or in exchange for outstanding Indebtedness or upon the
exercise of options, warrants or rights will be the net cash proceeds
received upon the issuance of such Indebtedness, options, warrants or
rights plus the incremental amount received, if any, by the Company upon
the conversion, exchange or exercise thereof, (B) there shall be excluded
in all cases any issuance and sale of Capital Stock financed, directly or
indirectly, using funds (I) borrowed from the Company or any Subsidiary
until and to the extent such borrowing is repaid or (II) contributed,
extended, Guaranteed or advanced by the Company or any Subsidiary
(including, without limitation, direct contributions by the Company in
respect of any employee stock ownership or benefit plan) and (C) there
shall be excluded in all cases any issuance and sale of Capital Stock in
one or more Public Equity Offerings or to Strategic Equity Investors to
the extent the net cash proceeds are used, prior to April 15, 2002, to
redeem Notes as permitted under the optional redemption provisions of the
Notes. The Company may not redeem Notes pursuant to the optional
redemption provisions of the Notes referred to in the immediately
preceding sentence from net cash proceeds received by the Company from the
issuance on or after the Issue Date of its Capital Stock if such net cash
proceeds have ever been included in a determination of the amount of
Restricted Payments that
58
may be made by the Company pursuant to this Section 10.13, unless the
Company would have been able to make such Restricted Payment without
including such net cash proceeds in such determination.
For purposes of determining the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its Fair Market Value.
The provisions of this Section 10.13 shall not prohibit the
following (each of which shall be given independent effect):
(1) the payment of any dividend or other distribution within 60 days
after the date of declaration thereof if at such date of declaration such
payment would be permitted by the provisions of this Indenture;
(2) the purchase, redemption, retirement or other acquisition of any
shares of Capital Stock of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent issue and sale (other than to a
Subsidiary of the Company) of, shares of Capital Stock of the Company (other
than Disqualified Stock); provided that any such net cash proceeds are excluded
from clause (iii)(b) above;
(3) so long as no Default shall have occurred and be continuing, the
purchase, redemption, retirement, defeasance or other acquisition of
Subordinated Indebtedness (A) made by exchange for, or out of the net cash
proceeds of, a substantially concurrent issue and sale (other than to a
Subsidiary of the Company) of (x) Capital Stock (other than Disqualified Stock)
of the Company, provided that any such net cash proceeds are excluded from
clause (iii) (b) above; or (y) other Subordinated Indebtedness to the extent
that (I) its stated maturity for the payment of principal thereof is not prior
to the 91st day after the final Stated Maturity of the Notes, (II) its principal
amount does not exceed the principal amount (or, if such Subordinated
Indebtedness being refinanced provides for an amount less than the principal
amount thereof to be due and payable upon an acceleration thereof, such lesser
amount) of the Subordinated Indebtedness being refinanced, plus any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Subordinated Indebtedness being refinanced, plus the amount of expenses of
the Company incurred in connection with such refinancing, and (III) such new
Subordinated Indebtedness is subordinated to the Notes to the same extent as the
Subordinated Indebtedness being refinanced, or (B) with Unutilized Cash Proceeds
remaining after completion of an Asset Sale pursuant to the fifth paragraph of
Section 10.15 hereof;
(4) so long as no Default shall have occurred and be continuing,
purchases or redemptions of Capital Stock (including cash settlements of stock
options) held by employees, officers or directors upon or following termination
(whether by reason of death, disability or otherwise) of their employment with
the Company or one of its Subsidiaries; provided that payments shall not exceed
$500,000 in any fiscal year in the aggregate;
(5) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in contemplation of merger, consolidation or
transfer of assets that complies with the provisions of the Indenture relating
to mergers, consolidations or transfers of substantially all of the assets of
the Company;
(6) any purchase of any fractional share of Common Stock of the
Company in connection with an exercise of the 1998 Warrants and any repurchase
of 1998 Warrants pursuant to a Repurchase Offer (as defined in the 1998 Warrant
Agreement); and
(7) Restricted Payments in addition to those otherwise permitted
pursuant to this Section 10.13 in an aggregate amount not to exceed $10.0
million.
In determining the amount of Restricted Payments permissible under
this Section 10.13, amounts expended pursuant to clauses (1), (4) and (7) above
shall be included, without duplication, as Restricted Payments.
59
Section 10.14. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit, cause or suffer any
Restricted Subsidiary to, directly or indirectly, conduct any business, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
loan, advance or Guarantee or engage in any other transaction (or series of
related transactions which are similar or part of a common plan) with or for the
benefit of any of their respective Affiliates or any beneficial owner of 10% or
more of the Common Stock of the Company or any officer or director of the
Company or any Subsidiary (each, an "Affiliate Transaction"), unless the terms
of the Affiliate Transaction are set forth in writing and are no less favorable
to the Company or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction with an unaffiliated third party. Each
Affiliate Transaction (or series of related Affiliate Transactions) involving
aggregate payments and/or other consideration having Fair Market Value (i) in
excess of $1 million shall be approved by a majority of the Board, such approval
to be evidenced by a Board Resolution stating that the Board has determined that
such transaction or transactions comply with the foregoing provisions, (ii) in
excess of $5 million shall further require the approval of a majority of the
Disinterested Directors and (iii) in excess of $10 million shall further require
that the Company obtain a written opinion from an Independent Financial Advisor
stating that the terms of such Affiliate Transaction (or series of related
Affiliate Transactions) are fair to the Company or the Restricted Subsidiary, as
the case may be, from a financial point of view; provided, that this clause
(iii) shall not apply to purchases of goods and/or services in the ordinary
course of the Company's business, and on terms no less favorable to the Company
than those customarily granted to purchasers of such goods and/or services, from
Paradyne Corporation or Xylan Corporation. For purposes of this Section 10.14,
any Affiliate Transaction approved by a majority of the Disinterested Directors
or as to which a written opinion has been obtained from an Independent Financial
Advisor, on the basis set forth in the preceding sentence, shall be deemed to be
on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than would be available in a comparable
transaction with an unaffiliated third party and, therefore, shall be permitted
under this Section 10.14.
Notwithstanding the foregoing, the restrictions set forth in this
Section 10.14 shall not apply to (i) transactions with or among, or solely for
the benefit of, the Company and/or any of the Restricted Subsidiaries, provided
that in any such case, no officer, director or beneficial owner of 10% or more
of any class of Capital Stock of the Company shall beneficially own any Capital
Stock of any such Restricted Subsidiary, (ii) transactions pursuant to
agreements and arrangements existing on the Issue Date and specified on a
schedule to the Indenture, (iii) any Restricted Payment made in compliance with
Section 10.13, (iv) the payment of reasonable and customary regular fees to
directors of the Company or any Restricted Subsidiary who are not employees of
the Company or any Restricted Subsidiary, (v) employment agreements, stock
option agreements and indemnification arrangements entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with industry practice, (vi) the granting and performance of
registration rights for securities of the Company, (vii) loans and advances to
officers, directors and employees of the Company or any Restricted Subsidiary
for travel, entertainment, moving and other relocation expenses, in each case
made in the ordinary course of business and consistent with industry practice,
and (viii) any Permitted Investment.
Section 10.15. Disposition of Proceeds of Asset Sales
The Company will not, and will not permit any Restricted Subsidiary
to, make any Asset Sale unless (a) the Company or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the shares or assets sold or otherwise
disposed of and (b) at least 75% of such consideration consists of cash or Cash
Equivalents; provided that the following shall be treated as cash for purposes
of this Section 10.15: (x) the amount of any Indebtedness (other than
Subordinated Indebtedness) of the Company or any Restricted Subsidiary that is
actually assumed by the transferee of assets disposed of in such Asset Sale
pursuant to an agreement that fully and unconditionally releases the Company or
such Restricted Subsidiary from further liability ("Assumed Indebtedness") and
(y) the amount of any notes or other obligations that within 30 days of receipt
are converted into cash (to the extent of the cash (after payment of any costs
of disposition)
60
so received). Notwithstanding the immediately preceding sentence, the Company
and its Restricted Subsidiaries may consummate an Asset Sale without complying
with clause (b) of the immediately preceding sentence if at least 75% of the
consideration for such Asset Sale consists of any combination of cash, Cash
Equivalents and Permitted Business Assets (or in Capital Stock of any Person
that will become a Restricted Subsidiary as a result of such investment if all
or substantially all of the properties and assets of such Person are Permitted
Business Assets); provided that any non-cash consideration (other than Permitted
Business Assets received by the Company or any of its Restricted Subsidiaries in
connection with such Asset Sale) that is converted into or sold or otherwise
disposed of for cash or Cash Equivalents within 365 days after such Asset Sale
and any Permitted Business Assets constituting cash or Cash Equivalents received
by the Company or any Restricted Subsidiary shall constitute Net Cash Proceeds
subject to the provisions of this Section 10.15. The Company or the applicable
Restricted Subsidiary, as the case may be, may (i) apply the Net Cash Proceeds
from such Asset Sale, within 365 days of the receipt thereof, to the permanent
reduction (whether by means of repayment, release pursuant to clause (x) of the
first sentence of this Section 10.15 or otherwise) of (A) Indebtedness of any
Restricted Subsidiary and/or (B) Indebtedness of the Company ranking senior to
or pari passu with the Notes, and, in each case, permanently reduce the amount
of the commitments thereunder by the amount of the Indebtedness so repaid,
and/or (ii) apply such Net Cash Proceeds, within 365 days of the receipt
thereof, to an investment in properties and assets (including leases of such
properties or assets) that will be used or are usable in the same or a related
line of business as that being conducted by the Company or any Restricted
Subsidiary at the time of such Asset Sale or such investment therein
(collectively, "Permitted Business Assets") (or in Capital Stock of any Person
that will become a Restricted Subsidiary as a result of such investment if all
or substantially all of the properties and assets of such Person are Permitted
Business Assets).
To the extent all or part of the Net Cash Proceeds of any Asset Sale
are not applied within 365 days of such Asset Sale as described in clause (i) or
(ii) of the preceding paragraph (such Net Cash Proceeds, the "Unutilized Net
Cash Proceeds"), the Company shall, within 20 Business Days after such 365th
day, make an offer to purchase (an "Asset Sale Offer") all outstanding Notes up
to a maximum principal amount (expressed as a multiple of $1,000) equal to the
Note Pro Rata Share of Unutilized Net Cash Proceeds, at a purchase price in cash
equal to 100% of the principal amount thereof, plus accrued and unpaid interest,
if any, to such purchase date; provided, however, that an Asset Sale Offer may
be deferred by the Company until there are Unutilized Net Cash Proceeds equal to
at least $5.0 million, at which time the entire amount of such Unutilized Net
Cash Proceeds (and not just the amount in excess of $5.0 million) shall be
applied as required pursuant to this paragraph and the next following paragraph.
If any other Indebtedness of the Company which ranks pari passu with
the Notes (the "Other Indebtedness"), including the 1998 Notes, requires that an
offer to repurchase such Indebtedness be made upon the consummation of an Asset
Sale, then the Company may apply the Unutilized Net Cash Proceeds otherwise
required to be applied to an Asset Sale Offer to offer to purchase such Other
Indebtedness and to an Asset Sale Offer so long as the amount of such Unutilized
Net Cash Proceeds applied to repurchase the Notes is not less than the Note Pro
Rata Share of Unutilized Net Cash Proceeds. Any offer to purchase such Other
Indebtedness shall be made at the same time as the Asset Sale Offer, and the
purchase date in respect of any such offer to purchase and the Asset Sale Offer
shall occur on the same day.
For purposes of this Section 10.15, "Note Pro Rata Share of
Unutilized Net Cash Proceeds" means the amount of the Unutilized Net Cash
Proceeds equal to the product of (x) the Unutilized Net Cash Proceeds and (y) a
fraction, the numerator of which is the aggregate principal amount of, and all
accrued interest thereon to the purchase date on, all Notes (or portions
thereof) validly tendered and not withdrawn pursuant to an Asset Sale Offer
related to such Unutilized Net Cash Proceeds (the "Note Amount") and the
denominator of which is the sum of the Note Amount and the lesser of (i) the
aggregate principal face amount, and all accrued interest thereon to the
purchase date, or (ii) the accreted value as of the purchase date of all Other
Indebtedness (or portions thereof) validly tendered and not withdrawn pursuant
to a concurrent offer to purchase such Other Indebtedness made at the time of
such Asset Sale Offer.
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Each Asset Sale Offer shall remain open for a period of 20 Business
Days or such longer period as may be required by law. To the extent that the
principal amount, plus accrued interest thereon, if any, to the payment date, of
Notes validly tendered and not withdrawn pursuant to an Asset Sale Offer is less
than the Unutilized Net Cash Proceeds or the Note Pro Rata Share of Unutilized
Net Cash Proceeds, as the case may be, the Company or any Restricted Subsidiary
may use such excess for general corporate purposes, including the repayment or
repurchase of Indebtedness. If the principal amount, plus accrued interest
thereon, if any, to the payment date, of Notes validly tendered and not
withdrawn by holders thereof exceeds the amount of Notes which can be purchased
with the Unutilized Net Cash Proceeds or the Note Pro Rata Share of Unutilized
Net Cash Proceeds, as the case may be, then the Notes to be purchased will be
selected on a pro rata basis. Upon completion of such Asset Sale Offer and offer
for any Other Indebtedness, the amount of Unutilized Net Cash Proceeds shall be
reset to zero.
Notice of an Asset Sale Offer shall be mailed by the Company not
more than 20 Business Days after the obligation to make such Asset Sale Offer
arises to the Holders of Notes at their last registered addresses with a copy to
the Trustee and the Paying Agent. The Asset Sale Offer shall remain open from
the time of mailing for at least 20 Business Days and until 5:00 p.m., New York
City time, on the date fixed for purchase of Notes validly tendered and not
withdrawn, which date shall be not later than the 30th Business Day following
the mailing of such Asset Sale Offer (the "Asset Sale Offer Purchase Date"). The
notice, which shall govern the terms of the Asset Sale Offer, shall include such
disclosures as are required by law and shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
10.15 and that all Notes validly tendered into the Asset Sale Offer and
not withdrawn will be accepted for payment; provided, however, that if the
aggregate principal amount of Notes tendered in an Asset Sale Offer, plus
accrued interest, if any, thereon to the Asset Sale Offer Purchase Date of
such offer exceeds the aggregate amount of the Note Pro Rata Share of
Unutilized Net Cash Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $1,000
or multiples thereof shall be purchased);
(b) the purchase price (including the amount of accrued interest, if
any) for each Note, the Asset Sale Offer Purchase Date and the date on
which the Asset Sale Offer expires;
(c) that any Note not tendered for payment will remain Outstanding
and continue to accrue interest in accordance with the terms thereof;
(d) that, unless the Company shall default in the payment of the
purchase price, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale Offer Purchase
Date;
(e) that Holders electing to have Notes purchased pursuant to the
Asset Sale Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York
City time, on the Asset Sale Offer Purchase Date and must complete any
form letter of transmittal proposed by the Company and acceptable to the
Trustee and the Paying Agent;
(f) that a Holder of Notes will be entitled to withdraw its Notes
from the Asset Sale Offer if the Paying Agent receives, not later than
5:00 p.m., New York City time, on the Asset Sale Offer Purchase Date, a
facsimile transmission or letter setting forth the name of such Holder,
the principal amount of each Note such Holder delivered for purchase that
such Holder elects to withdraw, the Note certificate number (if any) and a
statement that such Holder is withdrawing his election to have such Notes
(or a specified portion thereof) purchased;
(g) that Holders whose Notes are purchased only in part will be
issued Notes of like tenor equal in principal amount to the unpurchased
portion of the Notes surrendered;
62
(h) the instructions that Holders must follow in order to validly
tender their Notes; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not
required to file any such reports with the Commission at that time, the
comparable information prepared pursuant to Section 10.09), a description
of material developments in the Company's business, and such other
information concerning the circumstances and relevant facts regarding such
Asset Sale (including, without limitation, pro forma financial information
giving effect to such Asset Sale) and Asset Sale Offer as would, in the
good faith judgment of the Company, be material to a Holder of Notes in
connection with the decision of such Holder as to whether or not it should
tender Notes pursuant to the Asset Sale Offer.
On the Asset Sale Offer Purchase Date, the Company shall (i) accept
for payment Notes or portions thereof validly tendered and not withdrawn
pursuant to the Asset Sale Offer, subject to pro ration under the circumstances
and in the manner described in clause (a) of the preceding paragraph, (ii)
deposit with the Paying Agent money, in immediately available funds, sufficient
to pay the purchase price of all Notes or portions thereof so accepted by the
Company and (iii) deliver to the Trustee the Notes so accepted (in whole or in
part) together with an Officers' Certificate setting forth the registered
numbers of such Notes. The Paying Agent shall, with the funds so deposited with
it by the Company, promptly mail or deliver to the Holders of Notes so accepted
payment in an amount equal to the purchase price therefor, and the Trustee shall
promptly authenticate and mail or deliver to such Holders new Notes of like
tenor equal in principal amount to the unpurchased portion of the Notes
surrendered in the Asset Sale Offer and not purchased by the Company. The
Company will publicly announce or otherwise notify the Holders of the results of
the Asset Sale Offer as promptly as practicable following the Asset Sale Offer
Purchase Date.
If the Company is required to make an Asset Sale Offer, the Company
shall comply with all applicable tender offer rules, including to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable securities laws and regulations. To the extent that the provisions of
any such securities laws or regulations conflict with the provisions of this
Section 10.15, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 10.15 solely by virtue of such compliance.
Section 10.16. Limitation on Liens Securing Certain Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary
to, create, incur, assume or suffer to exist any Liens of any kind against or
upon any of the property or assets of the Company or any Restricted Subsidiary,
whether now owned or hereafter acquired, or any proceeds therefrom, which secure
either (x) Subordinated Indebtedness, unless the Notes are secured by a Lien on
such property, assets or proceeds that is senior in priority to the Liens
securing such Subordinated Indebtedness, or (y) Indebtedness of (A) the Company
that is not Subordinated Indebtedness, or (B) any Restricted Subsidiary, unless
in each case the Notes are equally and ratably secured with the Liens securing
such other Indebtedness, except, in the case of clauses (x) and (y), for
Permitted Liens and for Liens to secure Debt Securities on cash representing the
proceeds of such Debt Securities or on Government Securities acquired with such
cash and pledged for the purpose of providing for the payment of principal of,
and/or interest on, such Debt Securities.
Section 10.17. Limitation on Status as Investment Company.
The Company will not, and will not permit any of its Subsidiaries or
Affiliates to, conduct its business in a fashion that would cause the Company to
be required to register as an "investment company" (as that term is defined in
the Investment Company Act), or otherwise become subject to regulation under the
Investment Company Act. For purposes of establishing the Company's compliance
with this provision, any exemption that is or
63
would become available under Section 3(c)(1) or Section 3(c)(7) of the
Investment Company Act will be disregarded.
Section 10.18. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries
The Company will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell any shares of Capital Stock
(or any options, warrants or other rights to purchase such Capital Stock) of a
Restricted Subsidiary, except (i) any sale or issuance of Capital Stock to the
Company or a Wholly Owned Restricted Subsidiary, (ii) any sale or issuance of
Common Stock to directors as director qualifying shares, but only to the extent
required under applicable law, (iii) any sale or other disposition of all, but
not less than all, of the issued and outstanding Capital Stock of any Restricted
Subsidiary owned by the Company and the Restricted Subsidiaries or (iv) any sale
or issuance of Capital Stock of a Restricted Subsidiary (other than pursuant to
clauses (i) or (ii)) if such Restricted Subsidiary would no longer be a
Restricted Subsidiary immediately after such transaction and any Investment in
such Person remaining after giving effect to such sale or issuance would have
been permitted to be made under Section 10.13 hereof, and, in the case of both
(iii) and (iv), in compliance with Section 10.15 hereof.
Section 10.19. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise enter into or cause to become
effective any encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any
other distributions on its Capital Stock or any other interest or participation
in, or measured by, its profits to the extent owned by the Company or any
Restricted Subsidiary, (b) pay any Indebtedness owed to the Company or any
Restricted Subsidiary, (c) make any Investment in the Company or any Restricted
Subsidiary or (d) transfer any of its properties or assets to the Company or to
any Restricted Subsidiary, except for (i) any encumbrance or restriction in
existence on the Issue Date, (ii) customary non-assignment provisions, (iii) any
encumbrances or restriction pertaining to an asset subject to a Lien to the
extent set forth in the security documentation governing such Lien, (iv) any
encumbrance or restriction applicable to a Restricted Subsidiary at the time
that it becomes a Restricted Subsidiary that is not created in contemplation
thereof, (v) any encumbrance or restriction existing under any agreement that
refinances or replaces an agreement containing a restriction permitted by clause
(iv) above; provided that the terms and conditions of any such encumbrance or
restriction are not materially less favorable to the holders of Notes than those
under or pursuant to the agreement being replaced or the agreement evidencing
the Indebtedness refinanced, (vi) any encumbrance or restriction imposed upon a
Restricted Subsidiary pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary or any Asset Sale to the extent limited to
the Capital Stock or assets in question, and (vii) any customary encumbrance or
restriction applicable to a Restricted Subsidiary that is contained in an
agreement or instrument governing or relating to Permitted Indebtedness
contained in any Debt Securities or Permitted Credit Facility; provided that the
terms and conditions of any such encumbrance or restriction contained in any
Debt Securities are no more restrictive than those contained in this Indenture;
provided, further, that (subject to customary net worth, leverage, invested
capital and other financial covenants and the absence of default under such
agreement or instrument) the provisions of such agreement or instrument permit
the payment of interest and principal and mandatory repurchases pursuant to the
terms of this Indenture and the Notes and other Indebtedness (other than
Subordinated Indebtedness) that is solely an obligation of the Company; and
provided, further, that such agreement or instrument may contain customary
covenants regarding the merger of or sale of all or any substantial part of the
assets of the Company or any Restricted Subsidiary, customary restrictions on
transactions with affiliates and customary subordination provisions governing
indebtedness owed to the Company or any Restricted Subsidiary.
64
Section 10.20. Limitation on Designations of Unrestricted
Subsidiaries
The Company will not designate any Subsidiary of the Company (other
than a newly created Subsidiary in which the Company has made an Investment of
$1,000 or less) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") unless:
(a) no Default shall have occurred and be continuing at the time of
or after giving effect to such Designation; and
(b) the Company would be permitted under this Indenture to make an
Investment at the time of such Designation (assuming the effectiveness of
such Designation) in an amount (the "Designation Amount") equal to the
Fair Market Value of the interest of the Company and its Restricted
Subsidiaries in such Subsidiary on such date.
In the event of any such Designation, the Company shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to Section
10.13 hereof for all purposes of this Indenture in an amount equal to the
Designation Amount. Neither the Company nor any Restricted Subsidiary shall at
any time (x) provide a Guarantee of, or similar credit support for, or subject
any of its properties or assets (other than the Capital Stock of any
Unrestricted Subsidiary) to the satisfaction of, any Indebtedness of any
Unrestricted Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness), (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be directly or indirectly
liable for any other Indebtedness which provides that the holder thereof may
(upon notice, lapse of time or both) declare a default thereon (or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity) upon the occurrence of a default with respect to any other
Indebtedness that is Indebtedness of an Unrestricted Subsidiary (including any
corresponding right to take enforcement action against such Unrestricted
Subsidiary), except in the case of clause (x) or (y) to the extent otherwise
permitted under this Indenture, including without limitation under Section 10.13
hereof.
The Company will not revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") unless:
(a) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions and Officers' Certificates delivered to the Trustee certifying
compliance with the foregoing provisions.
Section 10.21. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company, each
Subsidiary Guarantor, if any, and any other obligor on the Notes will furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenants compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with, and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such documents, certificates and/or opinions is specifically
required by any
65
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture will
include:
(i) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether such covenant or condition
has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 10.22. Limitation on Issuances of Guarantees by Restricted
Subsidiaries
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee the payment of any other Indebtedness of the Company
unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for the Guarantee of the
payment of the Notes by such Restricted Subsidiary (a "Subsidiary Guarantee"),
which Subsidiary Guarantee shall be senior to or pari passu with such Restricted
Subsidiary's Guarantee of such other Indebtedness; provided that this paragraph
shall not apply to any Guarantee of Indebtedness described in clause (h) of the
definition of "Permitted Indebtedness." Notwithstanding the foregoing, any such
Subsidiary Guarantee shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
stock in, or all or substantially all the assets of, such Restricted Subsidiary,
which sale, exchange or transfer is made in compliance with the applicable
provisions of the Indenture, (ii) the Designation of such Restricted Subsidiary
as an Unrestricted Subsidiary in compliance with Section 10.20 hereof or (iii)
the release of such Restricted Subsidiary from all of its obligations under all
of its Guarantees of Indebtedness of the Company. A form of such Subsidiary
Guarantee is set forth as Exhibit B hereto.
At the time of the delivery to the Trustee of a Subsidiary Guarantee
by a Restricted Subsidiary pursuant to this Section 10.22, such Restricted
Subsidiary shall also deliver to the Trustee an Opinion of Counsel and Officers'
Certificate to the effect that such Subsidiary Guarantee has been duly
authorized and executed by such Restricted Subsidiary and constitutes the legal,
valid, binding and enforceable obligations of such Restricted Subsidiary
(subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally).
Section 10.23. Registration Rights
(a) Simultaneously with the execution and delivery of this
Indenture, the Company shall enter into the Registration Rights Agreement.
(b) In the event that (a) the Exchange Offer Registration Statement
is not filed with the Commission on or prior to the 90th calendar day following
the Closing Time, (b) the Exchange Offer Registration Statement is not declared
effective on or prior to the 150th calendar day following the Closing Time, (c)
the Exchange Offer is not consummated on or prior to the 30th calendar day after
the date on which the Exchange Offer
66
Registration Statement is declared effective, (d) if required under the
Registration Rights Agreement, a Shelf Registration Statement with respect to
the Notes is not declared effective on or prior to the 60th calendar day
following the date on which the obligation to file such registration statement
arises or (e) the Exchange Offer Registration Statement or the Shelf
Registration Statement is declared effective but thereafter ceases to be
effective or usable except in accordance with Section 2(d)(iii) of the
Registration Rights Agreement (each such event referred to in clauses (a)
through (e) above, a "Registration Default"), then the Company shall pay as
liquidated damages interest ("Additional Interest") on the Restricted Notes as
to which the Registration Default exists. If a Registration Default exists with
respect to Restricted Notes, the Company will, with respect to the first 90-day
period (or portion thereof) while such Registration Default is continuing
immediately following the occurrence of such Registration Default, make cash
payments at a rate of 0.50% per annum multiplied by the principal amount of the
Restricted Notes as of the date such payment is required to be made. The rate of
such cash payment shall increase by an additional 0.50% per annum at the
beginning of each subsequent 90-day period (or portion thereof) while such
Registration Default is continuing until such Registration Default is cured, up
to a maximum rate of 1.5% per annum. Upon the cure of a Registration Default in
accordance with Section 2(e) of the Registration Rights Agreement, the accrual
of Additional Interest on the Restricted Notes with respect to such Registration
Default will cease.
Additional Interest shall be computed based on the actual number of
days elapsed in each 90-day period in which Additional Interest accrues on the
Notes.
The Company shall notify the Trustee within three Business Days
after the occurrence of each Registration Default. Additional Interest payable
with respect to any Restricted Note shall be due and payable on each April 15
and October 15 (each an "Additional Interest Payment Date") if Additional
Interest has accrued on such Restricted Note during the semi-annual period
immediately preceding such Additional Interest Payment Date, to the Person in
whose name such Restricted Note (or one or more Predecessor Notes) is registered
at the close of business on the April 1 or October 1, whether or not a Business
Day, next preceding such Additional Interest Payment Date. Each obligation to
pay Additional Interest shall be deemed to accrue from and including the day
following the occurrence of the applicable Registration Default. Additional
Interest shall be paid by depositing with the Trustee, in trust for the benefit
of the Holders of Notes, prior to 11:00 a.m. New York City time on the
applicable Additional Interest Payment Date, immediately available funds
sufficient to pay the Additional Interest then due.
Section 10.24. Security.
(a) At the Closing Time, the Company, using a portion of the
proceeds of the Notes, shall promptly deposit, or cause to be deposited, for the
equal and ratable benefit of the Holders of the Notes and the 1998 Notes, a
portfolio of securities initially consisting of Government Securities in such
amount and with such maturities as will be sufficient upon receipt of scheduled
interest and/or principal payments of such Pledged Securities, based on the
report of a nationally recognized firm of independent public accountants or a
nationally recognized investment banking firm, in either case selected by the
Company, to provide for payment in full of the first six scheduled interest
payments (excluding liquidated damages, if any) due on the outstanding Notes and
shall be held by the Trustee in the Collateral Investments Account pending
disposition pursuant to the Pledge and Escrow Agreement.
(b) Each Holder, by its acceptance of a Note, consents and agrees to
the terms of the Pledge and Escrow Agreement (including, without limitation, the
provisions providing for foreclosure and release of the Pledged Securities) as
the same may be in effect or may be amended from time to time in accordance with
its terms, and authorizes and directs the Trustee to enter into the Pledge and
Escrow Agreement and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company will do or cause to be done all
such acts and things as may be necessary or proper, as may be required by the
provisions of the Pledge and Escrow Agreement, to assure and confirm to the
Trustee the security interest in the Pledged Securities contemplated hereby
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and by the Pledge and Escrow Agreement, as from time to time constituted, so as
to render the same available for the security and benefit of this Indenture and
of the Notes and the 1998 Notes secured thereby, according to the intent and
purposes therein expressed. The Company shall take, or shall cause to be taken,
any and all actions reasonably required (and any action reasonably requested by
the Trustee) to cause the Pledge and Escrow Agreement to create and maintain, as
security for the obligations of the Company under this Indenture, the Notes and
the 1998 Notes, valid and enforceable first priority Liens in and on all the
Pledged Securities and on the other collateral described in the Pledge and
Escrow Agreement, in favor of the Trustee as trustee for the Notes and the 1998
Notes, superior to and prior to the rights of third Persons and subject to no
other Liens. The Trustee shall not be liable for the validity, sufficiency or
priority of the funds or Pledged Securities held under the Pledge and Escrow
Agreement or for the maintenance of the perfection of any funds or securities
held therein.
(c) The release of any Pledged Securities pursuant to the Pledge and
Escrow Agreement will not be deemed to impair the security under this Indenture
in contravention of the provisions hereof if and to the extent the Pledged
Securities are released pursuant to this Indenture and the Pledge and Escrow
Agreement. To the extent applicable, the Company shall cause TIA Section 314(d)
relating to the release of property or securities from the Lien and security
interest of the Pledge and Escrow Agreement and relating to the substitution
therefor of any property or securities to be subjected to the Lien and security
interest of the Pledge and Escrow Agreement to be complied with. Any certificate
or opinion required by TIA Section 314(d) may be made by an Officer of the
Company, except in cases where TIA Section 314(d) 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 Company.
(d) The Trustee, in its sole discretion and without the consent of
the Holders, may, and at the request of the Holders of at least 25% in aggregate
principal amount of Securities then outstanding and upon receipt of indemnity
satisfactory to it shall, on behalf of the Holders, take all actions it deems
necessary or appropriate in order to (i) enforce any of the terms of the Pledge
and Escrow Agreement and (ii) collect and receive any and all amounts payable in
respect of the obligations of the Issuers thereunder. The Trustee shall have
power to institute and to maintain such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders in the Pledged Securities (including power to institute and maintain
suits or proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders or of the Trustee).
(e) Promptly after the execution and delivery of this Indenture, and
on or before April 15th of each calendar year, commencing April 15, 2000, the
Company shall furnish to the Trustee an Opinion of Counsel stating that, in the
opinion of such counsel, either (i) such action has been taken with respect to
the recording, filing, rerecording and refiling of this Indenture and the Pledge
and Escrow Agreement as is necessary to create (in the case of the opinion
delivered in connection with the execution and delivery of this Indenture) or
maintain (in the case of each opinion delivered thereafter) the Lien of this
Indenture described in subsection (b) above on the Pledged Securities and on the
other collateral described in the Pledge and Escrow Agreement in existence as of
the date of such opinion and reciting the details of such action or (ii) as of
the date of such opinion, no such action is necessary to create (in the case of
the opinion delivered in connection with the execution and delivery of this
Indenture) or maintain (in the case of each opinion delivered thereafter) such
Lien. Such Opinion of Counsel shall also describe, subject to the assumptions,
qualifications and limitations set forth therein, the recording, filing,
rerecording and refiling of this Indenture and the Pledge and Escrow Agreement
that, in the opinion of such counsel as of the date of such opinion, is required
to maintain such Lien with respect to the Pledged Securities and on the other
collateral described in the Pledge and Escrow Agreement in existence as of the
date of such opinion until June 15 in the following calendar year.
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Section 10.25. Business Activities.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than the Permitted Business.
Section 10.26. Limitation on Sale/Leaseback Transactions.
The Company shall not, and shall not permit its Restricted
Subsidiaries to, directly or indirectly, enter into, assume, Guarantee or
otherwise become liable with respect to any Sale/Leaseback Transaction. However,
the Company or any Restricted Subsidiary may enter into any such transaction if
(i) the Company or such Restricted Subsidiary would be permitted under Sections
10.11 and 10.16 hereof to incur secured Indebtedness in an amount equal to the
Attributable Debt with respect to such transaction; (ii) the consideration
received by the Company or such Restricted Subsidiary from such transaction is
at least equal to the Fair Market Value of the property being transferred; and
(iii) to the extent that such transaction constitutes an Asset Sale, the Net
Cash Proceeds received by the Company or such Restricted Subsidiary from such
transaction are applied in accordance with Section 10.15 hereof.
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and will cease to be of further
effect (except as to surviving rights or registration of transfer or exchange of
Notes herein expressly provided for) as to all outstanding Notes and the
Trustee, on written demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when either
(a) all Notes theretofore authenticated and delivered (other than
(A) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.06 hereof and (B) Notes for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.03) have been
delivered to the Trustee for cancellation; or
(b) (i) all such Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee in trust an amount of
money in dollars sufficient to pay and discharge the entire Indebtedness
on such Notes not theretofore delivered to the Trustee for cancellation,
for the principal of, premium, if any, and interest to the date of such
deposit;
(ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(iii) the Company has delivered to the Trustee (A) irrevocable
instructions to apply the deposited money toward payment of the Notes at
the Stated Maturities and the Redemption Dates thereof, and (B) an
Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.07 and, if money
shall have been deposited with the Trustee pursuant to subclause
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(b)(ii) of this Section 11.01, the obligations of the Trustee under Section
11.02 and the last paragraph of Section 10.03, shall survive.
Section 11.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03,
all money deposited with the Trustee pursuant to Section 11.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal of, premium, if
any, on and interest on the Notes for whose payment such money has been
deposited with the Trustee.
ARTICLE TWELVE
REDEMPTION
Section 12.01. Notices to the Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 3 of the
reverse side of the Initial Notes or Paragraph 2 of the reverse side of the
Exchange Notes, it shall notify the Trustee of the Redemption Date, the
Redemption Price and the principal amount of Notes to be redeemed.
The Company shall notify the Trustee of any redemption at least 45
days before the Redemption Date (or such shorter time as may be acceptable to
the Trustee) by an Officers' Certificate, stating that such redemption will
comply with the provisions hereof and of the Notes; provided that, if both the
Notes and the 1998 Notes are to be redeemed simultaneously, any notice given in
compliance with the indenture governing the 1998 Notes shall be acceptable to
the Trustee.
Section 12.02. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be redeemed at
any time, selection of such Notes for redemption will be made by the Trustee in
compliance with any applicable requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not then
listed on a national securities exchange (or if the Notes are so listed but the
exchange does not impose requirements with respect to the selection of debt
securities for redemption), by such method as the Trustee in its sole discretion
shall deem fair and appropriate; provided, however, that any redemption pursuant
to the provisions relating to redemptions from the proceeds of (a) one or more
Public Equity Offerings and/or (b) the sale of Capital Stock (other than
Disqualified Stock) to Strategic Equity Investors shall be made on a pro rata
basis or on as nearly a pro rata basis as practicable (subject to the
Depository's procedures). No Notes of a principal amount of $1,000 or less shall
be redeemed in part.
The Trustee shall promptly notify the Company and the Registrar and
each co-Registrar in writing of the Notes selected for redemption and, in the
case of any Notes selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
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Section 12.03. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed, at the address of such Holder
appearing in the Note Register maintained by the Registrar or co-Registrar.
All notices of redemption shall identify the Notes to be redeemed
and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) that, unless the Company defaults in paying the Redemption
Price, any Note called for redemption shall cease to accrue interest on
and after the Redemption Date, and the only remaining right of the Holders
of such Notes is to receive payment of the Redemption Price upon surrender
to the Paying Agent of the Notes redeemed;
(d) if any Note is to be redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of
such Note to be redeemed and that on and after the Redemption Date, upon
surrender for cancellation of such Note to the Paying Agent, a new Note or
Notes in the aggregate principal amount equal to the unredeemed portion
thereof will be issued without charge to the Holder;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price and the name and address of
the Paying Agent; and
(f) the CUSIP or CINS number, if any, relating to such Notes.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request given
with sufficient advance notice to permit the Trustee to adequately respond, by
the Trustee in the name and at the expense of the Company.
Section 12.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for redemption
become due and payable on the Redemption Date and at the Redemption Price. Upon
surrender to the Paying Agent, such Notes called for redemption shall be paid at
the Redemption Price (including accrued interest, if any, to the Redemption
Date), but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable on the relevant Interest Payment Dates to the
Holders of record at the close of business on the relevant Regular Record Dates
referred to in the Notes.
Section 12.05. Deposit of Redemption Price.
On or prior to 11:00 a.m. New York City time on any Redemption Date,
the Company shall deposit with the Paying Agent an amount of money in same day
funds sufficient to pay the Redemption Price of all the Notes or portions
thereof which are to be redeemed on that date (including any accrued interest to
the Redemption Date), other than Notes or portions thereof called for redemption
on that date which have been delivered by the Company to the Trustee for
cancellation.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price, any Note called
for redemption shall cease to accrue interest on and after the applicable
Redemption Date, whether or not such notes are presented for payment, and the
only remaining right of
71
the Holders of such Notes is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Notes. If any Note called for redemption
shall not be so paid upon surrender thereof for redemption, the principal,
premium, if any, and, to the extent lawful, accrued interest thereon shall,
until paid, bear interest from the Redemption Date at the rate provided in the
Notes.
Section 12.06. Notes Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Note which is to be redeemed
in part, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver to the Holder of such Note, without service charge, a
new Note or Notes, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to, and in exchange for, the unredeemed portion
of the principal amount of the Note so surrendered that is not redeemed.
72
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
RHYTHMS NETCONNECTIONS INC., as Issuer
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Assistant Vice President
-------------------------------------
73
EXHIBIT A-1
[FORM OF NOTE]
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE OR OTHER SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON,
IS NOT ACQUIRING THESE SECURITIES FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d), IF APPLICABLE, UNDER THE SECURITIES ACT (THE "RESALE RESTRICTION
TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO RHYTHMS
NETCONNECTIONS INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE
TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I)
PURSUANT TO CLAUSE (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
74
RHYTHMS NETCONNECTIONS INC.
GLOBAL NOTE
12 3/4% SENIOR NOTES DUE 2009, SERIES A
CUSIP No.___________ $ _________
REGISTERED No.
RHYTHMS NETCONNECTIONS INC., a corporation incorporated under the
laws of the State of Delaware (herein called the "Company," which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ___________, or registered assigns,
the principal sum of __________ Dollars ($__________) on April 15, 2009, at the
office or agency of the Company referred to below, and to pay interest thereon
on April 15 and October 15 (each an "Interest Payment Date"), of each year,
commencing on October 15, 1999, accruing from April 23, 1999 or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, at the rate of 12 3/4% per annum, until the principal hereof is paid or
duly provided for. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the Person in whose name this Note (or one or
more Predecessor Notes) is registered at the close of business on the April 1 or
October 1 (each a "Regular Record Date"), whether or not a Business Day, as the
case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the then applicable interest rate borne by the Notes, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such defaulted interest to be fixed by the Trustee,
notice of which shall be given to Holders of Notes not less than 10 days prior
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange or
market on which the Notes may be listed, and upon such notice as may be required
by such exchange or market, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in The City of New York, State of New York,
or at such other office or agency of the Company as may be maintained for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Note Register. However, payment by wire transfer of immediately
available funds to an account within the United States of America will be
required with respect to payments in respect of all Global Notes and to all
other holders which shall have provided written wire instructions to the Company
or Paying Agent by the record date preceding the payment date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under this Indenture, or be valid
or obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: __________ __, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12 3/4% Senior Notes due 2009, Series A, referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Authorized Signatory
76
[REVERSE OF NOTE]
1. Indenture. This Note is one of a duly authorized issue of Notes of the
Company designated as its 12 3/4% Senior Notes due 2009, Series A (herein called
the "Initial Notes"). The Notes are limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $325,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of April 23, 1999, by and between the Company and State Street Bank and Trust
Company of California, N.A., as trustee (herein called the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Notes, and of the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Notes include the Initial Notes and the Unrestricted Notes (including the
Exchange Notes referred to below), issued in exchange for the Initial Notes
pursuant to the Registration Rights Agreement. The Initial Notes and the
Unrestricted Notes, including the Exchange Notes, are treated as a single class
of securities under the Indenture.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of such terms.
No reference herein to the Indenture and no provisions of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
2. Registration Rights. The Holder of this Note is entitled to the
benefits of a Registration Rights Agreement, dated April 23, 1999, between the
Company and the Initial Purchasers (as amended from time to time, the
"Registration Rights Agreement"). Pursuant to the Registration Rights Agreement,
the Company is obligated to consummate an exchange offer pursuant to which the
Holders of Initial Notes shall have the right to exchange the Initial Notes for
12 3/4% Senior Notes due 2009, Series B, of the Company (herein called the
"Exchange Notes"), which will have been registered under the Securities Act, in
like principal amount and having identical terms as the Initial Notes (other
than as set forth in this paragraph). The Holders of Initial Notes shall be
entitled to receive, as liquidated damages, certain additional interest payments
in the event such exchange offer is not consummated within a specified period
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement and the Indenture.
3. Redemption. The Notes will be redeemable, at the option of the Company,
in whole or in part, on or after April 15, 2004 upon not less than 30 nor more
than 60 days' written notice at the redemption prices (expressed as percentages
of principal amount) set forth below, plus accrued and unpaid interest thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 15 of each of the years indicated below:
Year Percentage
---- ----------
2004............................... 106.375%
2005............................... 104.250%
2006............................... 102.125%
77
Year Percentage
---- ----------
2007 and thereafter................ 100.000%
In addition, at any time on or prior to April 15, 2002, the Company may,
other than in any circumstances resulting in a Change of Control, redeem, at its
option, up to a maximum of 35% of the originally-issued aggregate principal
amount of Notes at a redemption price (determined as of the applicable
redemption date) equal to 112.75% of the principal amount of the Notes so
redeemed plus accrued and unpaid interest, if any, and liquidated damages, if
any, with the net cash proceeds of (a) one or more Public Equity Offerings
and/or (b) the sale, subsequent to the Issue Date, of Capital Stock (other than
Disqualified Stock) in one or more transactions not constituting a Public Equity
Offering to Strategic Equity Investors, resulting in gross cash proceeds to the
Company of at least $25 million in the aggregate; provided that not less than
65% of the originally-issued aggregate principal amount of Notes is outstanding
immediately following such redemption. Any such redemption must be effected upon
not less than 30 nor more than 60 days' notice given within 30 days after the
consummation of a Public Equity Offering or sale to one or more Strategic Equity
Investors the net proceeds from which, together with any net proceeds from any
prior Public Equity Offerings or sales to Strategic Equity Investors, are to be
used to effect an optional redemption in accordance with this paragraph.
4. Offers to Purchase. Sections 10.10 and 10.15 of the Indenture provide
that upon the occurrence of a Change of Control and following certain Asset
Sales, and subject to certain conditions and limitations contained therein, the
Company shall make an offer to purchase all or a portion of the Notes at the
purchase prices and in accordance with the procedures set forth in the
Indenture.
5. Defaults and Remedies. If an Event of Default occurs and is continuing,
the Default Amount of all outstanding Notes may be declared due and payable in
the manner and with the effect provided in this Indenture.
6. Defeasance. The Indenture contains provisions (which provisions apply
to this Note) for defeasance at any time of (a) the entire indebtedness of the
Company on this Note and (b) certain restrictive covenants and related Defaults
and Events of Default, in each case upon compliance by the Company with certain
conditions set forth therein.
7. Amendments and Waivers. The Indenture permits, with certain exceptions
as provided therein, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past Defaults
under the Indenture and this Note and their consequences. Any such consent or
waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
8. Denominations, Transfer and Exchange. The Notes are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination, as requested
by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Note
Register, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of Manhattan
in The City of New York, State of New York, or at such other office or agency of
the Company as may be maintained for such purpose, duly endorsed by, or
78
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar duly executed by, the Holder hereof or
his attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
9. Persons Deemed Owners. Prior to and at the time of due presentment of
this Note for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Company, the Trustee nor any agent shall be affected
by notice to the contrary.
10. GOVERNING LAW. THE INDENTURE, THIS NOTE AND EACH SUBSIDIARY GUARANTEE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
11. Collateral. The Company has purchased and deposited with the Trustee
Pledged Securities in an amount sufficient to fund the first six scheduled
interest payments on the Notes. The Pledged Securities are pledged for the
ratable benefit of the Holders of the Notes and the holders of the 1998 Notes.
Once the first six scheduled interest payments are made, the Notes and the 1998
Notes will be unsecured.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture and the Registration Rights
Agreement unless the same is publicly available from the Commission. Requests
may be made to: Rhythms NetConnections Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: Secretary.
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
(Print or type assignee's name and address (including zip code) and social
security or tax ID number)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the date two years (or such shorter period of time as
permitted by Rule 144 under the Securities Act or any successor provision
thereunder) after the later of the original issuance date appearing on the face
of this Note (or any Predecessor Note) or the last date on which the Company or
any Affiliate of the Company was the owner of this Note (or any Predecessor
Note), the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer and that:
79
[Check One]
|_| (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act
provided by Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance
with (a) above and documents, including (i) a transferee
certificate substantially in the form of Exhibit D to
the Indenture in the case of a transfer to non-QIB
Accredited Investors or (ii) a transferor certificate
substantially in the form of Exhibit E to the Indenture
in the case of a transfer pursuant to Regulation S, are
being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked and, in the case of (b) above, if the
appropriate document is not attached or otherwise furnished to the Trustee, the
Trustee or Registrar or co-Registrar shall not be obligated to register this
Note in the name of any Person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth herein and in Sections
3.16 and 3.17 of the Indenture shall have been satisfied.
-------------------------------------------------------------------------------
Date: Your signature:
-------------------------------------------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
-------------------------------------------------------------------------------
By:
-------------------------------------------------------------------------------
NOTICE: To be executed by an
executive officer
-------------------------------------------------------------------------------
Signature Guarantee:
-------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A (including the information
specified in Rule 144A(d)(4)) or has determined not to request such information
and that it is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Dated: Name of
--------------- Purchaser:
NOTICE: To be executed by an executive officer
80
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 10.10 or 10.15 of the Indenture, check the appropriate box:
Section 10.10 |_| Section 10.15 |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 10.10 or 10.15 of the Indenture, state the percentage of
principal amount:
$_______ or ___%
-------------------------------------------------------------------------------
Date: Your signature:
-------------------------------------------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
-------------------------------------------------------------------------------
By:
-------------------------------------------------------------------------------
NOTICE: To be executed by an
executive officer
-------------------------------------------------------------------------------
Signature Guarantee:
-------------------------------------------------------------------------------
81
EXHIBIT A-2
RHYTHMS NETCONNECTIONS INC.
GLOBAL NOTE
12 3/4% SENIOR NOTES DUE 2009, SERIES B
CUSIP No. $
REGISTERED No.
RHYTHMS NETCONNECTIONS INC., a corporation incorporated under the
laws of the State of Delaware (herein called the "Company," which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _______, or registered assigns, the
principal sum of ________________________ ($_____________) on April 15, 2009, at
the office or agency of the Company referred to below, and to pay interest
thereon on April 15 and October 15 (each an "Interest Payment Date"), of each
year, commencing on October 15, 1999, accruing from April 23, 1999 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, at the rate of 12 3/4% per annum, until the principal hereof is
paid or duly provided for. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the Person in whose name this Note (or one or
more Predecessor Notes) is registered at the close of business on the April 1 or
October 1 (each a "Regular Record Date"), whether or not a Business Day, as the
case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the then applicable interest rate borne by the Notes, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such defaulted interest to be fixed by the Trustee,
notice of which shall be given to Holders of Notes not less than 10 days prior
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange or
market on which the Notes may be listed, and upon such notice as may be required
by such exchange or market, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in The City of New York, State of New York,
or at such other office or agency of the Company as may be maintained for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Note Register. However, payment by wire transfer of immediately
available funds to an account within the United States of America will be
required with respect to payments in respect of all Global Notes and to all
other holders which shall have provided written wire instructions to the Company
or Paying Agent by the record date preceding the payment date.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof.
82
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under this Indenture, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: RHYTHMS NETCONNECTIONS INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12 3/4% Senior Notes due 2009, Series B, referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Authorized Signatory
83
[REVERSE OF NOTE]
1. Indenture. This Note is one of a duly authorized issue of Notes of the
Company designated as its 12 3/4% Senior Notes due 2009, Series B (herein called
the "Exchange Notes"). The Notes are limited (except as otherwise provided in
the Indenture referred to below) in aggregate principal amount to $325,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of April 23, 1999, by and between the Company and State Street Bank and Trust
Company of California, N.A., as trustee (herein called the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Notes, and of the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Notes include the Initial Notes and the Unrestricted Notes (including the
Exchange Notes), issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement. The Initial Notes and the Unrestricted Notes,
including the Exchange Notes, are treated as a single class of securities under
the Indenture.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of such terms.
No reference herein to the Indenture and no provisions of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
2. Redemption. The Notes will be redeemable, at the option of the Company,
in whole or in part, on or after April 15, 2004 upon not less than 30 nor more
than 60 days' written notice at the redemption prices (expressed as percentages
of principal amount) set forth below, plus accrued and unpaid interest thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 15 of each of the years indicated below:
Year Percentage
---- ----------
2004............................... 106.375%
2005............................... 104.250%
2006............................... 102.125%
2007 and thereafter................ 100.000%
In addition, at any time on or prior to April 15, 2002, the Company may,
other than in any circumstances resulting in a Change of Control, redeem, at its
option, up to a maximum of 35% of the originally-issued aggregate principal
amount of Notes at a redemption price (determined as of the applicable
redemption date) equal to 112.75% of the principal amount of the Notes so
redeemed plus accrued and unpaid interest, if any, and liquidated damages, if
any, with the net cash proceeds of (a) one or more Public Equity Offerings
and/or (b) the sale, subsequent to the Issue Date, of Capital Stock (other than
Disqualified Stock) in one or more transactions not constituting a Public Equity
Offering
84
to Strategic Equity Investors, resulting in gross cash proceeds to the Company
of at least $25 million in the aggregate; provided that not less than 65% of the
originally-issued aggregate principal amount of Notes is outstanding immediately
following such redemption. Any such redemption must be effected upon not less
than 30 nor more than 60 days' notice given within 30 days after the
consummation of a Public Equity Offering or sale to one or more Strategic Equity
Investors the net proceeds from which, together with any net proceeds from any
prior Public Equity Offerings or sales to Strategic Equity Investors, are to be
used to effect an optional redemption in accordance with this paragraph.
3. Offers to Purchase. Sections 10.10 and 10.15 of the Indenture provide
that upon the occurrence of a Change of Control and following certain Asset
Sales, and subject to certain conditions and limitations contained therein, the
Company shall make an offer to purchase all or a portion of the Notes at the
purchase prices and in accordance with the procedures set forth in the
Indenture.
4. Defaults and Remedies. If an Event of Default occurs and is continuing,
the Default Amount of all outstanding Notes may be declared due and payable in
the manner and with the effect provided in this Indenture.
5. Defeasance. The Indenture contains provisions (which provisions apply
to this Note) for defeasance at any time of (a) the entire indebtedness of the
Company on this Note and (b) certain restrictive covenants and related Defaults
and Events of Default, in each case upon compliance by the Company with certain
conditions set forth therein.
6. Amendments and Waivers. The Indenture permits, with certain exceptions
as provided therein, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past Defaults
under the Indenture and this Note and their consequences. Any such consent or
waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
7. Denominations, Transfer and Exchange. The Notes are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination, as requested
by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Note
Register, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of Manhattan
in The City of New York, State of New York, or at such other office or agency of
the Company as may be maintained for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar duly executed by, the Holder hereof or
his attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
85
8. Persons Deemed Owners. Prior to and at the time of due presentment of
this Note for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Company, the Trustee nor any agent shall be affected
by notice to the contrary.
9. GOVERNING LAW. THE INDENTURE, THIS NOTE AND EACH SUBSIDIARY GUARANTEE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
10. Collateral. The Company has purchased and deposited with the Trustee
Pledged Securities in an amount sufficient to fund the first six scheduled
interest payments on the Notes. The Pledged Securities are pledged for the
ratable benefit of the Holders of the Notes and the holders of the 1998 Notes.
Once the first six scheduled interest payments are made, the Notes and the 1998
Notes will be unsecured.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture unless the same is publicly
available from the Commission. Requests may be made to: Rhythms NetConnections
Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention:
Secretary.
86
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
(Print or type assignee's name and address (including zip code) and social
security or tax ID number)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
87
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 10.10 or 10.15 of the Indenture, check the appropriate box:
Section 10.10 |_| Section 10.15 |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 10.10 or 10.15 of the Indenture, state the percentage of
principal amount:
$_______ or ___%
-------------------------------------------------------------------------------
Date: Your signature:
-------------------------------------------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
-------------------------------------------------------------------------------
By:
-------------------------------------------------------------------------------
NOTICE: To be executed by an
executive officer
-------------------------------------------------------------------------------
Signature Guarantee:
-------------------------------------------------------------------------------
88
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED
BY SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
________ __, _____ between _____________________ (the "Subsidiary Guarantor"), a
subsidiary of Rhythms NetConnections Inc. (or its successor), a company
incorporated under the laws of the State of Delaware (the "Company"), and State
Street Bank and Trust Company of California, N.A.,as trustee under the indenture
referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of April 23, 1999, providing for the
issuance of an aggregate principal amount of $325,000,000 of 12 3/4% Senior
Notes due 2009 (the "Notes");
WHEREAS, Section 10.22 of the Indenture provides that, under certain
circumstances, the Company is required to cause the Subsidiary Guarantor to
execute and deliver to the Trustee a Subsidiary Guarantee on the terms and
conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Indenture Provision Pursuant to Which Guarantee Is Given. This
Supplemental Indenture is being executed and delivered pursuant to Section 10.22
of the Indenture.
3. Agreements to Guarantee. The Subsidiary Guarantor hereby agrees as
follows:
(a) The Subsidiary Guarantor, jointly and severally with all other
Subsidiary Guarantors, if any, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, regardless of the validity and enforceability of the
Indenture, the Notes and the obligations of the Company under the Indenture and
the Notes, that:
(i) the principal of, premium, if any, on and interest on the Notes
shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue
principal of, premium, if any, and interest on the Notes, to the extent
lawful, and all other obligations of the Company to the Holders or the
Trustee thereunder shall be promptly paid in full, all in accordance with
the terms thereof; and
(ii) in case of any extension of time for payment or renewal of any
Notes or any of such other obligations, that the same shall be promptly
paid in full when due in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
89
(b) Notwithstanding the foregoing, in the event that this Subsidiary
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Subsidiary Guarantor under this Supplemental Indenture and its Subsidiary
Guarantee shall be limited to such amount as will not, after giving effect
thereto, and to all other liabilities of the Subsidiary Guarantor, result in
such amount constituting a fraudulent transfer or conveyance.
4. Execution and Delivery of Subsidiary Guarantees.
(a) To evidence its Subsidiary Guarantee set forth in this Supplemental
Indenture, the Subsidiary Guarantor hereby agrees that a notation of such
Subsidiary Guarantee substantially in the form of Annex A hereto shall be
endorsed by an officer of such Subsidiary Guarantor on each Note authenticated
and delivered by the Trustee after the date hereof.
(b) Notwithstanding the foregoing, the Subsidiary Guarantor hereby agrees
that its Subsidiary Guarantee set forth herein shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
(c) If an officer whose signature is on this Supplemental Indenture or on
the Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
(d) The delivery of the Note by the Trustee, after the authentication
thereof under the Indenture, shall constitute due delivery of the Subsidiary
Guarantee set forth in this Supplemental Indenture on behalf of the Subsidiary
Guarantor.
(e) The Subsidiary Guarantor hereby agrees that its obligations hereof
shall be unconditional, regardless of the validity, regularity or enforceability
of the Notes or the Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(f) The Subsidiary Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be
discharged except by complete performance of the obligations contained in the
Notes and the Indenture or pursuant to Section 5(b) of this Supplemental
Indenture.
(g) If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Supplemental Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then, and in every such case, subject to any
determination in such proceeding, the Subsidiary Guarantor, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereof and thereafter all rights and remedies of the Subsidiary Guarantor, the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
(h) The Subsidiary Guarantor hereby waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Subsidiary Guarantor as a result of any payment by such Subsidiary
Guarantor under its Subsidiary Guarantee. The Subsidiary Guarantor further
agrees that, as between the Subsidiary Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand:
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(i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Five of the Indenture for the purposes
of the Subsidiary Guarantee made pursuant to this Supplemental Indenture,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby; and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Article Five of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by
the Subsidiary Guarantor for the purpose of the Subsidiary Guarantee made
pursuant to this Supplemental Indenture.
(i) The Subsidiary Guarantor shall have the right to seek contribution
from any other non-paying Subsidiary Guarantor, if any, so long as the exercise
of such right does not impair the rights of the Holders under the Subsidiary
Guarantee made pursuant to this Supplemental Indenture.
(j) The Subsidiary Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of the Indenture or this Subsidiary
Guarantee; and the Subsidiary Guarantor (to the extent that it may lawfully do
so) hereby expressly waives 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.
5. Subsidiary Guarantor May Consolidate, Etc. on Certain Terms.
(a) Except as set forth in Articles Eight and Ten of the Indenture,
nothing contained in the Indenture, this Supplemental Indenture or in the Notes
shall prevent any consolidation or merger of the Subsidiary Guarantor with or
into the Company or any other Subsidiary Guarantor or shall prevent any
transfer, sale or conveyance of the property of the Subsidiary Guarantor as an
entirety or substantially as an entirety, to the Company or any other Subsidiary
Guarantor.
(b) Except as set forth in Articles Eight and Ten of the Indenture, upon
the sale, exchange or transfer, to any Person not an Affiliate of the Company,
of all of the Capital Stock of the Subsidiary Guarantor held by the Company and
its Subsidiaries, or of all or substantially all of the assets of the Subsidiary
Guarantor, whether by way of merger, consolidation or otherwise, which sale,
exchange or transfer is made in compliance with all applicable provisions of the
Indenture, then such Subsidiary Guarantor (in the event of a sale, exchange or
transfer of all the Capital Stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale, exchange or transfer
of all or substantially all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligation under its Subsidiary Guarantee; provided
that the Net Cash Proceeds of such sale, exchange or transfer are applied in
accordance with Section 10.15 of the Indenture. Except with respect to
transactions set forth in the preceding sentence, the Company and the Subsidiary
Guarantor covenant and agree that upon any such merger, consolidation or sale,
the performance of all covenants and conditions of this Supplemental Indenture
to be performed by such Subsidiary Guarantor shall be expressly assumed by
supplemental indenture satisfactory in form to the Trustee, by the corporation
formed by such consolidation, or into which the Subsidiary Guarantor shall have
merged, or by the corporation which shall have acquired such property. Upon
receipt of an Officers' Certificate of the Company or the Subsidiary Guarantor,
as the case may be, to the effect that the Company or such Subsidiary Guarantor
has complied with the first sentence of this Section 5(b), the Trustee shall
execute any documents reasonably requested by the Company or the Subsidiary
Guarantor, at the cost of the Company or such Subsidiary Guarantor, as the case
may be, in order to evidence the release of such Subsidiary Guarantor from its
obligations under its Guarantee endorsed on the Notes and under the Indenture
and this Supplemental Indenture.
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6. Releases upon Release of Guarantee of Guaranteed Indebtedness.
Concurrently with the release or discharge of all of the Subsidiary Guarantor's
Guarantees of the payment of Indebtedness of the Company (other than a release
or discharge by or as a result of payment under such Guarantee of Indebtedness),
the Subsidiary Guarantor shall be automatically and unconditionally released and
relieved of its obligations under this Supplemental Indenture and its Subsidiary
Guarantee made pursuant to Section 4 of this Supplemental Indenture. Upon
delivery by the Company to the Trustee of an Officer's Certificate to the effect
that such release or discharge has occurred, the Trustee shall execute any
documents reasonably required in order to evidence the release of the Subsidiary
Guarantor from its obligations under this Supplemental Indenture and its
Subsidiary Guarantee made pursuant hereto; provided such documents shall not
affect or impair the rights of the Trustee and Paying Agent under Section 6.07
of the Indenture.
7. Releases upon Designation as an Unrestricted Subsidiary. Upon the
Designation of the Subsidiary Guarantor as an Unrestricted Subsidiary in
compliance with Section 10.20 of the Indenture, the Subsidiary Guarantor shall
be automatically and unconditionally released and relieved of its obligations
under this Supplemental Indenture and its Subsidiary Guarantee made pursuant to
Section 4 of this Supplemental Indenture. Upon delivery by the Company to the
Trustee of an Officer's Certificate to the effect that such Designation has
occurred in compliance with Section 10.20 of the Indenture, the Trustee shall
execute any documents reasonably required in order to evidence the release of
the Subsidiary Guarantor from its obligations under this Supplemental Indenture
and its Subsidiary Guarantee made pursuant hereto; provided such documents shall
not affect or impair the rights of the Trustee and Paying Agent under Section
6.07 of the Indenture.
8. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
9. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
10. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction hereof.
11. Ranking. [Ranking terms to be provided as required by Section 10.22 of
the Indenture.]
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
Dated: ___________ __, ____ [Subsidiary Guarantor]
By:
---------------------------------------
Name:
Title:
Dated: ___________ __, ____ State Street Bank and Trust Company of
California, N.A., as Trustee
By:
---------------------------------------
Name:
Title:
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ANNEX A TO SUPPLEMENTAL INDENTURE
FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
Each Subsidiary Guarantor (as defined in the Indenture) has jointly and
severally unconditionally guaranteed (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Notes, whether at stated
maturity or an Interest Payment Date, by acceleration, call for redemption or
otherwise, (b) the due and punctual payment of interest on the overdue principal
and premium of, if any, and interest, to the extent lawful, on the Notes and (c)
that in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, the same will be promptly paid in full when due in
accordance with the terms of the extension of renewal, whether at Stated
Maturity, by acceleration or otherwise. Notwithstanding the foregoing, in the
event that the Subsidiary Guarantee would constitute or result in a violation of
any applicable fraudulent conveyance or similar law of any relevant
jurisdiction, the liability of the Subsidiary Guarantor under its Subsidiary
Guarantee shall be limited to such amount as will not, after giving effect
thereto, and to all other liabilities of the Subsidiary Guarantor, result in
such amount constituting a fraudulent transfer or conveyance. The Subsidiary
Guarantee shall not be valid or obligatory for any purpose until the certificate
of authentication on the Note upon which the Subsidiary Guarantee is noted shall
have been executed by the Trustee under the Indenture by the manual or facsimile
signature of one of its authorized officers. [Ranking terms to be provided as
required by Section 10.22 of the Indenture.]
Dated: __________ __, ____ [Subsidiary Guarantor]
By:
---------------------------------------
Name:
Title:
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EXHIBIT C
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A
TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
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EXHIBIT D
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional (non-QIB) Accredited Investors
__________, ____
State Street Bank and Trust Company
of California, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Re: Rhythms NetConnections Inc.(the "Company")
Indenture (the "Indenture") relating to
12 3/4% Senior Notes due 2009
Ladies and Gentlemen:
In connection with our proposed purchase of 12 3/4% Senior Notes due
2009 (the "Notes") of the Company we confirm that:
1. We have received such information as we deem necessary in order
to make our investment decision.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Notes except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold within the United States or to, or for the account or benefit of,
U.S. persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(A) to the Company, (B) inside the United States in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the
Trustee a signed letter substantially in the form hereof, (D) outside the
United States in accordance with Regulation S under the Securities Act,
(E) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
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4. We understand that, on any proposed resale of Notes, we will be
required to furnish to the Trustee and the Company such certification,
legal opinion and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Notes purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company and your and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Proposed Transferee]
By:
--------------------------
[Authorized Signature]
Signature Guarantee: _____________________
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EXHIBIT E
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
__________, ____
State Street Bank and Trust Company
of California, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Re: Rhythms NetConnections Inc. (the "Company")
12 3/4% Senior Notes due 2009
Ladies and Gentlemen:
In connection with our proposed sale of 12 3/4% Senior Notes due
2009 (the "Notes") of the Company, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(a) or Rule 904(a) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes;
(6) if the circumstances set forth in Rule 904(b) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation or
other notice stating that the Notes may be offered and sold during the
distribution compliance period specified in Rule 903(b)(3), as applicable,
in accordance with the provisions of Regulation S; pursuant to
registration of the Securities under the Securities Act; or pursuant to an
available exemption from the registration requirements under the
Securities Act;
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(7) if the sale is made during a distribution compliance period and
the provisions of Rule 903(b)(3) are applicable thereto, we confirm that
such sale has been made in accordance with such provisions; and
(8) if the provisions of Rule 144 under the Securities Act are
applicable, we have complied with the terms and conditions thereof.
You and the Company and your and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------
Authorized Signature
Signature Guarantee:
---------------------
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SCHEDULE A
INDEBTEDNESS OF THE COMPANY OR RESTRICTED SUBSIDIARIES
THAT IS OUTSTANDING OR COMMITTED BUT UNDRAWN
100