SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 4, 1998
GST Telecommunications, Inc.
GST USA, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Canada 1-12866 N/A
Delaware 333-33601-02 83-0310464
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4001 Main Street, Vancouver, Washington 98663
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (360) 906-7100
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On May 4, 1998, GST Telecommunications, Inc. (the "Company") issued a
press release announcing that GST Network Funding, Inc. ("GST Network"), an
indirect wholly owned subsidiary of the Company and a wholly owned subsidiary of
GST USA, Inc. ("GST USA"), had completed a private placement of $500.0 million
principal amount at maturity of 10 1/2% Senior Secured Discount Notes due 2008
(the "Notes").
The Notes will fully accrete to face value on May 1, 2003. From and
after May 1, 2003, the Notes will bear interest payable in cash, at the rate of
10 1/2% per annum on each May 1 and November 1, commencing November 1, 2003. The
Notes will be unconditionally and irrevocably assumed by GST USA, and guaranteed
by the Company, on May 1, 2003, or earlier if permitted under the terms of GST
USA's and the Company's outstanding indebtedness. Neither GST USA nor the
Company will be liable on the Notes until they are assumed. The Notes are
initially secured by a first priority security interest in United States
government securities purchased with the proceeds from the offering.
GST Network intends to use the net proceeds from the offering,
aggregating approximately $288.5 million, to purchase telecommunications
equipment for the continued expansion of the Company's infrastructure, including
the development and construction of additional networks and longhaul fiber optic
facilities. The Notes will also be secured by a first priority security interest
in all equipment purchased by GST Network.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(c) EXHIBITS.
4.1 Indenture dated May 4, 1998 by and among GST
Telecommunications, Inc., GST USA, Inc., GST Network Funding,
Inc. and United States Trust Company of New York, as trustee.
10.1 Placement Agreement dated April 29, 1998 by and among GST
Telecommunications, Inc., GST USA, Inc., GST Network Funding,
Inc. and the several Placement Agents named in Schedule I
thereto.
10.2 Registration Rights Agreement dated May 4, 1998 by and among
GST Telecommunications, Inc., GST USA, Inc., GST Network
Funding, Inc. and Morgan Stanley & Co. Incorporated, Bear,
Stearns & Co. Inc., Credit Suisse First Boston Corporation and
SBC Warburg Dillon Read Inc.
10.3 Collateral Pledge and Security Agreement dated as of May 4,
1998 from GST Network Funding, Inc. to United States Trust
Company of New York, as Trustee.
-2-
<PAGE>
10.4 Reimbursement and Commitment Fee Agreement dated May 4, 1998
among GST Telecommunications, Inc., GST USA, Inc. and GST
Network Funding, Inc.
99.1 Press Release of GST Telecommunications, Inc. dated May 4,
1998.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
GST TELECOMMUNICATIONS, INC.
Dated: May 19, 1998 By:/s/ Stephen Irwin
------------------------------------
Stephen Irwin
Vice Chairman of the Board and
Secretary
GST USA, INC.
Dated: May 15, 1998 By:/s/ Stephen Irwin
------------------------------------
Stephen Irwin
Senior Vice President and
Secretary
-4-
GST NETWORK FUNDING, INC.
GST USA, INC.
GST TELECOMMUNICATIONS, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
Indenture
Dated as of May 4, 1998
10 1/2% Senior Secured Discount Notes due 2008
<PAGE>
CROSS-REFERENCE TABLE
TIA SECTIONS INDENTURE SECTIONS
Section 310(a)(1)............................................ 7.10
(a)(2)............................................ 7.10
(b)............................................... 7.08
Section 313(c)............................................... 7.06; 12.02
Section 314(a)............................................... 4.20; 12.02
(a)(4)............................................ 4.19; 12.02
(c)(1)............................................ 12.03
(c)(2)............................................ 12.03
(e)............................................... 12.04
Section 315(b)............................................... 7.05; 12.02
Section 316(a)(1)(A)......................................... 6.05
(a)(1)(B)......................................... 6.04
(b)............................................... 6.07
Section 317(a)(1)............................................ 6.08
(a)(2)............................................ 6.09
Section 318(a)............................................... 12.01
(c)............................................... 12.01
- -----------------
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY.......................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.............23
SECTION 1.03. Rules of Construction.........................................23
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating...............................................24
SECTION 2.02. Restrictive Legends...........................................25
SECTION 2.03. Execution, Authentication and Denominations...................28
SECTION 2.04. Registrar and Paying Agent....................................29
SECTION 2.05. Paying Agent to Hold Money in Trust...........................30
SECTION 2.06. Transfer and Exchange.........................................30
SECTION 2.07. Book-Entry Provisions for Global Securities...................31
SECTION 2.08. Special Transfer Provisions...................................33
SECTION 2.09. Replacement Securities........................................37
SECTION 2.10. Outstanding Securities........................................37
SECTION 2.11. Temporary Securities..........................................38
SECTION 2.12. Cancellation..................................................38
SECTION 2.13. CUSIP, CINS and ISIN Numbers..................................38
SECTION 2.14. Defaulted Interest............................................39
SECTION 2.15. Issuance of Additional Securities.............................39
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption...........................................39
SECTION 3.02. Mandatory Redemption..........................................40
SECTION 3.03. Notices to Trustee............................................40
- --------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
<PAGE>
SECTION 3.04. Selection of Securities to Be Redeemed........................40
SECTION 3.05. Notice of Redemption..........................................41
SECTION 3.06. Effect of Notice of Redemption................................42
SECTION 3.07. Deposit of Redemption Price...................................42
SECTION 3.08. Payment of Securities Called for Redemption...................42
SECTION 3.09. Securities Redeemed in Part...................................42
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.........................................43
SECTION 4.02. Maintenance of Office or Agency...............................43
SECTION 4.03. Limitation on Indebtedness....................................44
SECTION 4.04. Limitation on Restricted Payments.............................46
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.............................49
SECTION 4.06. Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries..............................51
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries..................................................51
SECTION 4.08. Limitation on Transactions with Shareholders and Affiliates...52
SECTION 4.09. Limitation on Liens...........................................53
SECTION 4.10. Limitation on Sale-Leaseback Transactions.....................54
SECTION 4.11. Limitation on Investments.....................................55
SECTION 4.12. Limitation on Asset Sales.....................................55
SECTION 4.13. Impairment of Security Interest or Ability to
Assume the Securities. .......................................56
SECTION 4.14. Repurchase of Securities upon a Change of Control.............56
SECTION 4.15. Existence.....................................................57
SECTION 4.16. Payment of Taxes and Other Claims.............................57
SECTION 4.17. Maintenance of Properties and Insurance.......................57
SECTION 4.18. Notice of Defaults............................................58
SECTION 4.19. Compliance Certificates.......................................58
SECTION 4.20. Commission Reports and Reports to Holders.....................59
SECTION 4.21. Waiver of Stay, Extension or Usury Laws.......................59
SECTION 4.22. Additional Amounts............................................59
SECTION 4.23. Assumption of Securities by GST USA...........................60
- --------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
ii
<PAGE>
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Consolidation, Merger and Sale of Assets......................61
SECTION 5.02. Successor Substituted.........................................62
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.............................................63
SECTION 6.02. Acceleration..................................................65
SECTION 6.03. Other Remedies................................................65
SECTION 6.04. Waiver of Past Defaults.......................................65
SECTION 6.05. Control by Majority...........................................66
SECTION 6.06. Limitation on Suits...........................................66
SECTION 6.07. Rights of Holders to Receive Payment..........................67
SECTION 6.08. Collection Suit by Trustee....................................67
SECTION 6.09. Trustee May File Proofs of Claim..............................67
SECTION 6.10. Priorities....................................................67
SECTION 6.11. Undertaking for Costs.........................................68
SECTION 6.12. Restoration of Rights and Remedies............................68
SECTION 6.13. Rights and Remedies Cumulative................................68
SECTION 6.14. Delay or Omission Not Waiver..................................68
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General.......................................................69
SECTION 7.02. Certain Rights of Trustee.....................................69
SECTION 7.03. Individual Rights of Trustee..................................70
SECTION 7.04. Trustee's Disclaimer..........................................70
SECTION 7.05. Notice of Default.............................................70
SECTION 7.06. Reports by Trustee to Holders.................................71
SECTION 7.07. Compensation and Indemnity....................................71
SECTION 7.08. Replacement of Trustee........................................71
- --------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
iii
<PAGE>
SECTION 7.09. Successor Trustee by Merger, Etc..............................72
SECTION 7.10. Eligibility...................................................73
SECTION 7.11. Money Held in Trust...........................................73
SECTION 7.12. Withholding Taxes.............................................73
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations..........................73
SECTION 8.02. Defeasance and Discharge of Indenture.........................74
SECTION 8.03. Defeasance of Certain Obligations.............................77
SECTION 8.04. Application of Trust Money....................................79
SECTION 8.05. Repayment to Issuer...........................................79
SECTION 8.06. Reinstatement.................................................79
SECTION 8.07. Insiders......................................................79
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders....................................80
SECTION 9.02. With Consent of Holders.......................................80
SECTION 9.03. Revocation and Effect of Consent..............................81
SECTION 9.04. Notation on or Exchange of Securities.........................82
SECTION 9.05. Trustee to Sign Amendments, Etc...............................82
SECTION 9.06. Conformity with Trust Indenture Act...........................83
ARTICLE TEN
MEETINGS OF HOLDERS
SECTION 10.01. Purposes for Which Meetings May Be Called. .................83
SECTION 10.02. Manner of Calling Meetings. ................................83
SECTION 10.03. Call of Meetings by Issuer or Holders. .....................84
SECTION 10.04. Who May Attend and Vote at Meetings. .......................84
SECTION 10.05. Quorum; Action...............................................84
SECTION 10.06. Regulations May Be Made by Trustee; Conduct of the Meeting;
Voting Rights; Adjournment. ................................85
- --------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
iv
<PAGE>
SECTION 10.07. Voting at the Meeting and Record to Be Kept. ...............86
SECTION 10.08. Exercise of Rights of Trustee or Holders May
Not Be Hindered or Delayed by Call of Meeting. .............86
SECTION 10.09. Procedures Not Exclusive. ..................................86
ARTICLE ELEVEN
SECURITY
SECTION 11.01. Security.....................................................86
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act of 1939..................................89
SECTION 12.02. Notices......................................................89
SECTION 12.03. Certificate and Opinion as to Conditions Precedent...........90
SECTION 12.04. Statements Required in Certificate or Opinion................90
SECTION 12.05. Rules by Trustee, Paying Agent or Registrar..................91
SECTION 12.06. Payment Date Other Than a Business Day.......................91
SECTION 12.07. Governing Law; Consent to Jurisdiction and Service...........91
SECTION 12.08. No Adverse Interpretation of Other Agreements................91
SECTION 12.09. No Recourse Against Others...................................92
SECTION 12.10. Successors...................................................92
SECTION 12.11. Duplicate Originals..........................................92
SECTION 12.12. Separability.................................................92
SECTION 12.13. Table of Contents, Headings, Etc.............................92
EXHIBIT A Form of Security................................................A-1
EXHIBIT B Form of Certificate.............................................B-1
EXHIBIT C Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S............................C-1
EXHIBIT D Form of Certificate to be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.....................D-1
- --------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
v
<PAGE>
INDENTURE, dated as of May 4, 1998, among GST NETWORK FUNDING, INC., a
Delaware corporation (the "COMPANY"), GST USA, INC., a Delaware corporation
("GST USA"), GST TELECOMMUNICATIONS, INC., a federally chartered Canadian
corporation ("GST"), and UNITED STATES TRUST COMPANY OF NEW YORK (the
"TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $500,000,000 principal
amount at maturity of the Company's 10 1/2% Senior Secured Discount Notes due
2008 (the "SECURITIES") issuable as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the
Company, GST USA and GST, in accordance with its terms, have been done, and the
Company, GST USA and GST have done all things necessary to make the Securities,
when executed by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, the valid obligations of the Company
as hereinafter provided.
This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act of 1939, as amended, that are required to be a part
of and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCRETED VALUE" means, for any Specified Date, the amount calculated
pursuant to (i), (ii), (iii) or (iv) below for each $1,000 of principal amount
at maturity of the Securities:
(i) if the Specified Date occurs on one or more of the following
dates (each a "SEMI-ANNUAL ACCRUAL DATE"), the Accreted Value will
equal the amount set forth below for such Semi-Annual Accrual Date:
<PAGE>
SEMI-ANNUAL ACCRETED
ACCRUAL DATE VALUE
November 1, 1998............................... $ 630.95
May 1, 1999.................................... 664.08
November 1, 1999............................... 698.94
May 1, 2000.................................... 735.64
November 1, 2000............................... 774.26
May 1, 2001.................................... 814.91
November 1, 2001............................... 857.69
May 1, 2002.................................... 902.72
November 1, 2002............................... 950.11
May 1, 2003.................................... $1,000.00
(ii) if the Specified Date occurs before the first Semi-Annual
Accrual Date, the Accreted Value will equal the sum of (a) $599.99 and
(b) an amount equal to the product of (1) the Accreted Value for the
first Semi-Annual Accrual Date less $599.99 MULTIPLIED by (2) a
fraction, the numerator of which is the number of days from the Closing
Date to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is the number of days elapsed from
the Closing Date to the first Semi-Annual Accrual Date, using a 360-day
year of twelve 30-day months;
(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value
for the Semi-Annual Accrual Date immediately preceding such Specified
Date and (b) an amount equal to the product of (1) the Accreted Value
for the immediately following Semi-Annual Accrual Date less the
Accreted Value for the immediately preceding Semi-Annual Accrual Date
multiplied by (2) a fraction, the numerator of which is the number of
days from the immediately preceding Semi-Annual Accrual Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180; or
(iv) if the Specified Date occurs after the last Semi-Annual
Accrual Date, the Accreted Value will equal $1,000.
"ACCRUAL NOTES" means the 12 3/4% Senior Subordinated Accrual Notes due
2007 of GST issued pursuant to the Accrual Notes Indenture.
2
<PAGE>
"ACCRUAL NOTES INDENTURE" means the indenture dated as of November 19,
1997 between GST and United States Trust Company of New York.
"ACQUIRED EQUIPMENT" has the meaning provided in Section 11.01.
"ACQUIRED EQUIPMENT COST" has the meaning specified in Section 11.01.
"ADDITIONAL AMOUNTS" has the meaning provided in Section 4.22.
"ADJUSTED CONSOLIDATED NET INCOME" means, for any period, the aggregate
net income (or loss) of GST and its Restricted Subsidiaries for such period
determined in conformity with GAAP; PROVIDED that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income of any Person (other than net income attributable to a
Restricted Subsidiary) in which any Person (other than GST or any of its
Restricted Subsidiaries) has an interest and the net income of any Unrestricted
Subsidiary, except to the extent of the amount of dividends or other
distributions actually paid to GST or any of its Restricted Subsidiaries by such
other Person, or such Unrestricted Subsidiary, during such period; (ii) solely
for the purposes of calculating the amount of Restricted Payments that may be
made pursuant to clause (C) of the first paragraph of Section 4.04 (and in such
case, except to the extent includable pursuant to clause (i) above), the net
income (or loss) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with GST or any of its Restricted
Subsidiaries or all or substantially all of the property and assets of such
Person are acquired by GST or any of its Restricted Subsidiaries; (iii) the net
income of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary of
such net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Restricted Subsidiary; (iv) any
gains or losses (on an after-tax basis) attributable to Asset Sales; (v) except
for purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of Section 4.04, any amount paid
or accrued as dividends on Preferred Stock of GST or any Restricted Subsidiary
owned by Persons other than GST and any of its Restricted Subsidiaries; and (vi)
all extraordinary gains and extraordinary losses.
"ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of
assets of GST and its Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of GST and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the quarterly or annual consolidated balance sheet of GST
3
<PAGE>
and its Restricted Subsidiaries, prepared in conformity with GAAP and most
recently filed with the Commission pursuant to Section 4.20.
"AFFILIATE" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGENT" means any Registrar, Paying Agent, authenticating agent or
co-Registrar.
"AGENT MEMBERS" has the meaning provided in Section 2.07(a).
"ASSET ACQUISITION" means (i) an investment by GST or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary of GST or shall be merged into or consolidated
with GST or any of its Restricted Subsidiaries; PROVIDED that such Person's
primary business is related, ancillary or complementary to the businesses of GST
and its Restricted Subsidiaries on the date of such investment or (ii) an
acquisition by GST or any of its Restricted Subsidiaries of the property and
assets of any Person other than GST or any of its Restricted Subsidiaries that
constitute substantially all of a division or line of business of such Person;
PROVIDED that the property and assets acquired are related, ancillary or
complementary to the businesses of GST and its Restricted Subsidiaries on the
date of such acquisition.
"ASSET SALE" means any sale, transfer or other disposition (including
by way of merger, consolidation or sale-leaseback transactions) in one
transaction or a series of related transactions by GST or any of its Restricted
Subsidiaries to any Person other than GST or any of its Restricted Subsidiaries
of (i) all or any of the Capital Stock of any Restricted Subsidiary, (ii) all or
substantially all of the property and assets of an operating unit or business of
GST or any of its Restricted Subsidiaries or (iii) any other property or assets
of GST or any of its Restricted Subsidiaries outside the ordinary course of
business of GST or such Restricted Subsidiary and, in each case, that is not
governed by the provisions of Article Five; PROVIDED that "Asset Sale" shall not
include (A) sales or other dispositions of inventory, receivables and other
current assets; or (B) sales or other dispositions of assets with a fair market
value (as certified in an Officers' Certificate) not in excess of $1 million; or
(C) sales of Acquired Equipment by the Company to GST USA in accordance with the
terms of this Indenture; or (D) sales or other dispositions of assets to the
extent GST or a Restricted Subsidiary receives consideration at least equal to
the fair market value of the assets sold or disposed of, PROVIDED that the
consideration received consists of property or assets (other than current
assets) of a nature or type or that are used in a business
4
<PAGE>
(or a company having property or assets of a nature or type, or engaged in a
business) similar or related to the nature or type of the property and assets
of, or business of, GST and its Restricted Subsidiaries existing on the date of
such sale or other disposition.
"ASSUMPTION DATE" means the date on which GST USA and GST execute and
deliver the supplemental indenture required by Section 4.23(a).
"AVERAGE LIFE" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person or any committee of such Board of Directors duly
authorized to act with respect to this Indenture.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution, certified by the Secretary or Assistant Secretary of such Person to
have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the date of this Indenture, including, without limitation, all
Common Stock and Preferred Stock.
"CAPITALIZED LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person; and "Capitalized
Lease Obligations" means the discounted present value of the rental obligations
under such lease.
"CHANGE OF CONTROL" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of Voting Stock representing more than 30% of the total voting power of the
Voting Stock of GST on a fully diluted basis; (ii)
5
<PAGE>
individuals who on the Closing Date constitute the Board of Directors of GST
(together with any new directors whose election by the Board of Directors of GST
or whose nomination for election by GST's shareholders was approved by a vote of
at least two-thirds of the members of the Board of Directors then in office who
either were members of the Board of Directors of GST on the Closing Date or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the members of the Board of Directors of
GST then in office; or (iii) all of the Common Stock of GST USA or the Company
is not beneficially owned by GST.
"CLOSING DATE" means the date on which the Securities are originally
issued under this Indenture.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"COMMON SHARES" means the common shares of GST.
"COMMON STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Indenture, including, without limitation, all
series and classes of such common stock.
"COMPANY" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"COMPANY ORDER" means a written request or order signed in the name of
the Issuer (i) by its Chairman, a Vice Chairman, its President or a Vice
President and (ii) by its Chief Financial Officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee;
PROVIDED, HOWEVER, that such written request or order may be signed by any two
of the officers or directors listed in clause (i) above in lieu of being signed
by one of such officers or directors listed in such clause (i) and one of the
officers listed in clause (ii) above.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts for
such period of (i) Adjusted Consolidated Net Income, (ii) Consolidated Interest
Expense, to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, (iii) income taxes, to the extent such amount was
deducted in calculating Adjusted Consolidated Net Income (other than income
taxes (either positive or negative) attributable to either extraordinary and
non-recurring gains or losses or sales of assets), (iv) depreciation expense, to
the extent such amount
6
<PAGE>
was deducted in calculating Adjusted Consolidated Net Income, (v) amortization
expense, to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, and (vi) all other non-cash items reducing Adjusted
Consolidated Net Income (other than items that will require cash payments and
for which an accrual or reserve is, or is required by GAAP to be, made), less
all non-cash items increasing Adjusted Consolidated Net Income, all as
determined on a consolidated basis for GST and its Restricted Subsidiaries in
conformity with GAAP; PROVIDED that, if any Restricted Subsidiary is not a
Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount equal to (A)
the amount of the Adjusted Consolidated Net Income attributable to such
Restricted Subsidiary multiplied by (B) the quotient of (1) the number of shares
of outstanding Common Stock of such Restricted Subsidiary not owned on the last
day of such period by GST or any of its Restricted Subsidiaries divided by (2)
the total number of shares of outstanding Common Stock of such Restricted
Subsidiary on the last day of such period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including amortization of
original issue discount on any Indebtedness and the interest portion of any
deferred payment obligation, calculated in accordance with the effective
interest method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by GST or any of its Restricted
Subsidiaries) and all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by GST and its Restricted Subsidiaries during such period; excluding,
however, (i) any amount of such interest of any Restricted Subsidiary if the net
income of such Restricted Subsidiary is excluded in the calculation of Adjusted
Consolidated Net Income pursuant to clause (iii) of the definition thereof (but
only in the same proportion as the net income of such Restricted Subsidiary is
excluded from the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof) and (ii) any premiums, fees and expenses
(and any amortization thereof) payable in connection with the offering of the
Securities, all as determined on a consolidated basis (without taking into
account Unrestricted Subsidiaries) in conformity with GAAP.
"CONSOLIDATED NET WORTH" means, at any date of determination,
shareholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of GST and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of
Capital Stock of GST or any of its Restricted Subsidiaries, each item to be
determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
7
<PAGE>
"CONVERTIBLE NOTES" means the 137/8% Convertible Senior Subordinated
Discount Notes due 2005 of GST issued pursuant to the Convertible Notes
Indenture.
"CONVERTIBLE NOTES INDENTURE" means the convertible notes indenture
dated December 19, 1995 among GST, as issuer, GST USA, as guarantor, and United
States Trust Company of New York, as trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 114 West 47th Street, New York, New York 10036- 1532.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect GST or
any of its Restricted Subsidiaries against fluctuations in currency values to or
under which GST or any of its Restricted Subsidiaries is a party or a
beneficiary on the date of this Indenture or becomes a party or a beneficiary
thereafter.
"DEFAULT" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"DEPOSITARY" means The Depository Trust Company, its nominees, and
their respective successors.
"DEVELOPMENT COMPANY" means a Restricted Subsidiary whose primary
business is the development, ownership and operation of alternative access
telecommunications networks.
"EVENT OF DEFAULT" has the meaning provided in Section 6.01.
"EXCESS PROCEEDS" has the meaning provided in Section 4.12.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE SECURITIES" means any securities of the Issuer containing
terms identical to the Securities (except that such Exchange Securities (i)
shall be registered under the Securities Act, (ii) will not provide for an
increase in the rate of interest (other than with respect to overdue amounts)
and (iii) will not contain terms with respect to transfer restrictions) that are
issued and exchanged for the Securities pursuant to the Registration Rights
Agreement and this Indenture.
"EXISTING INDENTURES" means, collectively the Convertible Notes
Indenture, the Senior Notes Indenture, the Secured Notes Indenture and the
Accrual Notes Indenture.
8
<PAGE>
"FAIR MARKET VALUE" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors of GST (whose
determination shall be conclusive) and evidenced by a Board Resolution.
"FEE NOTES" means the intercompany notes due May 1, 2003 issued to GST
Network in payment of the commitment fees by GST USA and guaranteed by GST;
PROVIDED that the aggregate principal amount of such notes shall be reduced to
the extent the aggregate principal amount exceeds the principal amount at
maturity of the Securities less (x) the principal amount of Pledged Securities
and cash then held in the Pledge Account, together with accrued interest thereon
and (y) the principal amount of all Intercompany Notes then held as security for
the Securities plus the amount of interest that will accrue on such Intercompany
Notes by May 1, 2003.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained in this
Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants contained herein and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the offering of the Securities and (ii)
except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"GLOBAL SECURITIES" has the meaning provided in Section 2.01.
"GST" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"GST FUNDING" means GST Equipment Funding, Inc., a Delaware
corporation.
"GST USA" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without
9
<PAGE>
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other 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.
"GUARANTEED INDEBTEDNESS" has the meaning provided in Section 4.07.
"HOLDER" or "SECURITYHOLDER" means the then registered holder of any
Security.
"INCUR" means, with respect to any Indebtedness, to incur, create,
issue, assume, guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "incurrence" of Indebtedness by reason of a Person
becoming a Restricted Subsidiary; PROVIDED that neither the accrual of interest
nor the accretion of original issue discount shall be considered an Incurrence
of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; PROVIDED that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. 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, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, PROVIDED (A)
that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness
10
<PAGE>
less the unamortized portion of the original issue discount of such Indebtedness
at the time of its issuance as determined in conformity with GAAP, (B) money
borrowed and set aside at the time of the Incurrence of any Indebtedness in
order to pre-fund the payment of interest as such Indebtedness shall be deemed
not to be "Indebtedness" and (C) that Indebtedness shall not include any
liability for federal, state, local or other taxes.
"INDEBTEDNESS TO EBITDA RATIO" means, as at any date of determination,
the ratio of (i) the aggregate amount of Indebtedness of GST and its Restricted
Subsidiaries on a consolidated basis as at the date of determination (the
"TRANSACTION DATE") to (ii) the Consolidated EBITDA of GST for the then most
recent four full fiscal quarters for which reports have been filed pursuant to
Section 4.20 (such four full fiscal quarter period being referred to herein as
the "FOUR QUARTER PERIOD"); PROVIDED that (x) pro forma effect shall be given to
any Indebtedness Incurred from the beginning of the Four Quarter Period through
the Transaction Date (including any Indebtedness Incurred on the Transaction
Date), to the extent outstanding on the Transaction Date, (y) if during the
period commencing on the first day of such Four Quarter Period through the
Transaction Date (the "REFERENCE PERIOD"), GST or any of its Restricted
Subsidiaries shall have engaged in any Asset Sale, Consolidated EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive), or
increased by an amount equal to the EBITDA (if negative), directly attributable
to the assets which are the subject of such Asset Sale as if such Asset Sale had
occurred on the first day of such Reference Period or (z) if during such
Reference Period GST or any of the Restricted Subsidiaries shall have made any
Asset Acquisition, Consolidated EBITDA of GST shall be calculated on a pro forma
basis as if such Asset Acquisition and any Incurrence of Indebtedness to finance
such Asset Acquisition had taken place on the first day of such Reference
Period.
"INDENTURE" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"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)
of Regulation D under the Securities Act.
"INTERCOMPANY NOTES" means the promissory notes due May 1, 2003 issued
to the Company by GST USA and guaranteed by GST.
"INTEREST PAYMENT DATE" means each semiannual interest payment date on
May 1 and November 1 of each year, commencing November 1, 2003.
"INTEREST RATE AGREEMENT" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate
11
<PAGE>
cap agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect GST or any of its
Restricted Subsidiaries against fluctuations in interest rates in respect of
Indebtedness to or under which GST or any of its Restricted Subsidiaries is a
party or a beneficiary on the date of this Indenture or becomes a party or a
beneficiary hereafter; PROVIDED that the notional principal amount thereof does
not exceed the principal amount of the Indebtedness of GST and its Restricted
Subsidiaries that bears interest at floating rates.
"INTERNATIONAL ASSET" has the meaning provided in Section 4.11.
"INTERNATIONAL BUSINESS" has the meaning provided in Section 4.11.
"INVESTMENT" in any Person means any direct or indirect advance, loan
or other extension of credit (including, without limitation, by way of Guarantee
or similar arrangement; but excluding advances to customers in the ordinary
course of business that are, in conformity with GAAP, recorded as accounts
receivable on the balance sheet of GST or its Restricted Subsidiaries) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other similar instruments issued by, such Person and shall include
(i) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary and
(ii) the fair market value of the Capital Stock (or any other Investment) held
by GST and its Restricted Subsidiaries of any Person that has ceased to be a
Restricted Subsidiary by reason of any transaction permitted by clause (iii) of
Section 4.06. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.04, (i) "Investment" shall include the fair market value of the assets
(net of liabilities to GST or any of its Restricted Subsidiaries) of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the assets
(net of liabilities) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
by the Board of Directors of GST in good faith.
"ISSUER" means the Company, until GST USA becomes the obligor on the
Securities on the Assumption Date, after which the term "Issuer" means GST USA.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof, any sale with
recourse against the seller or any Affiliate of the seller, or any agreement to
give any security interest).
12
<PAGE>
"NET CASH PROCEEDS" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to GST or any Restricted Subsidiary) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of GST and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by GST or
any Restricted Subsidiary as a reserve against any liabilities associated with
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 determined in conformity with GAAP and (b) with respect
to any issuance or sale of Capital Stock, the proceeds of such issuance or sale
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal, but
not interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obligations are financed or sold with
recourse to GST or any Restricted Subsidiary) and proceeds from the conversion
of other property received when converted to cash or cash equivalents, net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"NON-U.S. PERSON" means a person who is not a U.S. person, as defined
in Regulation S.
"OFFER TO PURCHASE" means an offer to purchase Securities by the Issuer
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall be a Business Day
no earlier than 30 days nor later than 60 days from the date such notice is
mailed) (the "PAYMENT DATE"); (iii) that any Security not tendered will continue
to accrue interest (or original issue discount) pursuant to its terms; (iv)
that, unless the Issuer defaults in the payment of the purchase price, any
Security accepted for payment pursuant to the Offer to Purchase shall cease to
accrue interest (or original issue discount) on and after the Payment Date; (v)
that Holders electing to have a Security purchased pursuant to the Offer to
Purchase will be required to surrender such Security, together with the form
entitled "Option of the Holder to Elect Purchase"
13
<PAGE>
on the reverse side thereof completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
immediately preceding the Payment Date; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the third Business Day immediately preceding the Payment Date, a
telegram, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase and a
statement that such Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion thereof; PROVIDED that each Security purchased and each new Security
issued shall be in a principal amount at maturity of $1,000 or integral
multiples thereof. On the Payment Date, the Issuer shall (i) accept for payment
on a pro rata basis Securities or portions thereof tendered pursuant to an Offer
to Purchase; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Securities or portions
thereof so accepted together with an Officers' Certificate specifying the
Securities or portions thereof accepted for payment by the Issuer. The Paying
Agent shall promptly mail to the Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered; PROVIDED that each Security
purchased and each new Security issued shall be in a principal amount at
maturity of $1,000 or integral multiples thereof. The Issuer will publicly
announce the results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Issuer will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Issuer is required to
repurchase Securities pursuant to an Offer to Purchase.
"OFFICER" means, with respect to any Person, (i) the Chairman of the
Board, the Vice Chairman of the Board, the President, any Vice President, the
Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary, in each case of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; PROVIDED, HOWEVER, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"OFFSHORE GLOBAL SECURITY" has the meaning provided in Section 2.01.
14
<PAGE>
"OFFSHORE PHYSICAL SECURITIES" has the meaning provided in Section
2.01.
"OPINION OF COUNSEL" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company, GST USA or GST. Each such
Opinion of Counsel shall include the statements provided for in TIA Section
314(e).
"PAYING AGENT" has the meaning provided in Section 2.04, except that,
for the purposes of Article Eight, the Paying Agent shall not be GST or a
Subsidiary of GST or an Affiliate of any of them. The term "Paying Agent"
includes any additional Paying Agent.
"PAYMENT DATE" has the meaning provided in the definition of "Offer to
Purchase."
"PERMITTED INVESTMENT" means (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, GST or a Restricted Subsidiary;
PROVIDED that such person's primary business is related, ancillary or
complementary to the businesses of GST and its Restricted Subsidiaries on the
date of such Investment; (ii) a Temporary Cash Investment; (iii) payroll, travel
and similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP; (iv)
loans or advances to employees made in the ordinary course of business that do
not exceed $1 million in the aggregate at any time outstanding; and (v) stock,
obligations or securities received in satisfaction of judgments.
"PERMITTED LIENS" means (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of GST or any of its Restricted Subsidiaries; (vi) Liens
(including extensions and renewals thereof) upon real or personal property
15
<PAGE>
acquired after the Closing Date; PROVIDED that (a) such Lien is created solely
for the purpose of securing Indebtedness Incurred, in accordance with Section
4.03, (1) to finance the cost (including, without limitation, the cost of
design, development, construction, acquisition, installation or integration) of
the item of property or assets subject thereto and such Lien is created prior
to, at the time of or within six months after the later of the acquisition, the
completion of construction or the commencement of full operation of such
property or (2) to refinance any Indebtedness previously so secured, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost and (c) any such Lien shall not extend to or cover any property or
assets other than such item of property or assets and any improvements on such
item; (vii) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of GST and its Restricted
Subsidiaries, taken as a whole; (viii) Liens encumbering property or assets
under construction arising from progress or partial payments by a customer of
GST or its Restricted Subsidiaries relating to such property or assets; (ix) any
interest or title of a lessor in the property subject to any Capitalized Lease
or operating lease; (x) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (xi) Liens on property of, or on shares
of stock or Indebtedness of, any corporation existing at the time such
corporation becomes, or becomes a part of, any Restricted Subsidiary; PROVIDED
that such Liens do not extend to or cover any property or assets of GST or any
Restricted Subsidiary other than the property or assets acquired; (xii) Liens in
favor of GST or any Restricted Subsidiary; (xiii) Liens arising from the
rendering of a final judgment or order against GST or any Restricted Subsidiary
that does not give rise to an Event of Default; (xiv) 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; (xv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (xvi) Liens encumbering customary initial
deposits and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed to protect GST or any of
its Restricted Subsidiaries from fluctuations in interest rates or the price of
commodities; (xvii) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by GST or
any of its Restricted Subsidiaries in the ordinary course of business in
accordance with the past practices of GST and its Restricted Subsidiaries prior
to the Closing Date; and (xviii) Liens on or sales of receivables.
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PHOENIX FIBER" means Phoenix Fiber Access, Inc., a subsidiary of GST
USA.
16
<PAGE>
"PHYSICAL SECURITIES" has the meaning provided in Section 2.01.
"PLEDGE ACCOUNT" means the accounts established with the Trustee
pursuant to the terms of the Pledge Agreement for the deposit of the Pledged
Securities purchased by the Company with the net proceeds from the sale of the
Securities.
"PLEDGE AGREEMENT" means the Collateral Pledge and Security Agreement,
dated as of the Closing Date, made by the Company in favor of the Trustee, as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time.
"PLEDGED SECURITIES" means the securities which shall consist of U.S.
Government Securities, purchased by the Company with the proceeds from the sale
of the Securities or the proceeds from such securities, to be held in the Pledge
Account, all in accordance with the terms of the Pledge Agreement.
"PREFERRED STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of this Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
"PRINCIPAL" of a debt security, including the Securities, means the
principal amount due on the Stated Maturity as shown on such debt security.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Securities in the form set forth in Section 2.02(a).
"PROTECTED PROPERTY" has the meaning provided in Section 4.09.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REDEEMABLE PREFERRED SHARES" means the Series A Convertible Preference
Shares of GST outstanding on the Closing Date.
"REDEEMABLE STOCK" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Securities, (ii) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Securities or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Securities; PROVIDED that any
Capital Stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require
17
<PAGE>
such Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the Stated Maturity of
the Securities shall not constitute Redeemable Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained in
Section 4.12 and Section 4.14 and such Capital Stock specifically provides that
such Person will not repurchase or redeem any such stock pursuant to such
provision prior to the Issuer's repurchase of such Securities as are required to
be repurchased pursuant to Section 4.12 and Section 4.14.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which such Security is to be redeemed pursuant to
this Indenture.
"REGISTRAR" has the meaning provided in Section 2.04.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated the date hereof, among the Company, GST USA, GST, Morgan
Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Credit Suisse First Boston
Corporation and SBC Warburg Dillon Read Inc.
"REGISTRATION STATEMENT" means the Registration Statement as defined
and described in the Registration Rights Agreement.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date means the April 15 or October 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"REGULATION S" means Regulation S under the Securities Act.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and in each case having direct
responsibility for the administration of this Indenture or the Pledge Agreement
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.
18
<PAGE>
"RESTRICTED PAYMENTS" has the meaning provided in Section 4.04.
"RESTRICTED SUBSIDIARY" means any Subsidiary of GST other than an
Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"SECURED NOTES" means the 13 1/4 Senior Secured Notes due 2007 of GST
Funding issued pursuant to the Secured Notes Indenture.
"SECURED NOTES INDENTURE" means the Indenture dated as of May 13, 1997
among GST, GST USA, GST Funding and United States Trust Company of New York.
"SECURITIES" means any of the securities, as defined in the first
paragraph of the recitals hereof, that are authenticated and delivered under
this Indenture. For all purposes of this Indenture, the term "Securities" shall
include the Securities initially issued on the Closing Date, any Exchange
Securities to be issued and exchanged for any Securities pursuant to the
Registration Rights Agreement and this Indenture and any other Securities issued
after the Closing Date under this Indenture. For purposes of this Indenture, all
Securities shall vote together as one series of Securities under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITY GUARANTEE" means the full and unconditional Guarantee by GST
of (x) the Fee Notes and the Intercompany Notes prior to the Assumption Date and
(y) the Securities after the Assumption Date, as set forth in the supplemental
indenture to be delivered under Section 4.23.
"SECURITY REGISTER" has the meaning provided in Section 2.04.
"SENIOR NOTES" means the 137/8% Senior Discount Notes due 2005 of GST
USA issued pursuant to the Senior Notes Indenture.
"SENIOR NOTES INDENTURE" means the senior notes indenture dated
December 19, 1995 among GST USA, as issuer, GST, as guarantor, and United States
Trust Company of New York, as trustee.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement
as defined and described in the Registration Rights Agreement.
19
<PAGE>
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of GST, accounted for more than 10% of the consolidated
revenues of GST and its Restricted Subsidiaries or (ii) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of GST
and its Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of GST for such fiscal year.
"SPECIFIED DATE" means any Redemption Date, and Payment Date for an
Offer to Purchase or any date on which the Notes first become due and payable
after an Event of Default.
"STATED MATURITY" means, (i) with respect to any debt security, the
date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"SUBSIDIARY GUARANTEE" has the meaning provided in Section 4.07.
"SUBSIDIARY GUARANTOR" means a Restricted Subsidiary that executes and
delivers a Subsidiary Guarantee.
"TEMPORARY CASH INVESTMENT" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker-dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Issuer) organized and in
20
<PAGE>
existence under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard & Poor's Ratings Services, and (v) securities with maturities of six
months or less from the date of acquisition issued or fully and unconditionally
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Standard & Poor's Ratings Services or Moody's Investors Service,
Inc.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date this
Indenture was executed, except as provided in Section 9.06.
"TOMEN" means Tomen Corporation or its Affiliates.
"TOMEN FACILITY" means, collectively, the Tomen Master Agreement
together with all other agreements (including credit agreements), instruments
and documents executed or delivered pursuant thereto or in connection therewith,
in each case as such agreements, instruments or documents may be amended,
supplemented, extended, renewed, replaced or otherwise modified from time to
time.
"TOMEN MASTER AGREEMENT" means the Master Agreement dated October 24,
1994, among Tomen America Inc., GST (formerly known as Greenstar
Telecommunications Inc.), GST Telecom Inc., Pacwest Network, Inc., Pacwest
Network L.L.C. and Pacific Lightwave, Inc.
"TRADE PAYABLES" means any accounts payable or any other indebtedness
or monetary obligations to trade creditors created, assumed or Guaranteed by GST
or any of its Restricted Subsidiaries arising in the ordinary course of business
in connection with the acquisition of goods or services by GST or its Restricted
Subsidiaries.
"TRANSACTION DATE" means, with respect to the Incurrence of any
Indebtedness by GST or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"TRUSTEE" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"UNITED STATES BANKRUPTCY CODE" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
21
<PAGE>
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of GST that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of GST in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors of GST may designate any
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary),
other than GST USA or a Subsidiary Guarantor, to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, GST or any Restricted Subsidiary; PROVIDED that (A) any
Guarantee by GST or any Restricted Subsidiary of any Indebtedness of the
Subsidiary being so designated shall be deemed an Incurrence of such
Indebtedness and an Investment by GST or such Restricted Subsidiary at the time
of such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, that such designation would be permitted under Section 4.04 and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) above would be permitted under Section 4.03 and Section 4.04. The
Board of Directors of GST may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary of GST; PROVIDED that immediately after giving effect to
such designation (x) the Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation are permitted to be Incurred for
all purposes of this Indenture and (y) no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors of
GST shall be evidenced to the Trustee by promptly filing with the Trustee a copy
of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. GLOBAL SECURITY" has the meaning provided in Section 2.01.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Securities, and shall also include a depository
receipt issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt; PROVIDED that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"U.S. GOVERNMENT SECURITIES" means the direct obligations of,
obligations fully guaranteed by, or participations in pools consisting solely of
obligations of or obligations
22
<PAGE>
guaranteed by, the United States of America for the payment of which guarantees
or obligations the full faith and credit of the Unites States of America is
pledged and which are not callable or redeemable at the option of the issuer
thereof.
"U.S. PERSON" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"U.S. PHYSICAL SECURITIES" has the meaning provided in Section 2.01.
"VOTING STOCK" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person,
such Subsidiary if all of the outstanding Capital Stock in such Subsidiary
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned by such Person or one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Holder or a Securityholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the indenture securities means the Company, and after the
Assumption Date, GST USA and GST or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
23
<PAGE>
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(vii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's
certificate of authentication shall be substantially in the form annexed hereto
as Exhibit A with such appropriate insertions, substitutions and other
variations as are required or permitted under this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange
agreements to which the Issuer is subject or usage. The Issuer shall approve the
form of the Securities and any notation, legend or endorsement on the
Securities. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of the Securities
annexed hereto as Exhibit A shall constitute, and are hereby expressly made, a
part of this Indenture. Each of the Company, GST USA, GST and the Trustee, by
its execution and delivery of this Indenture, expressly agrees to the terms and
provisions of the Securities applicable to it and to be bound thereby.
Securities offered and sold in reliance on Rule 144A shall be issued in
the form of permanent global Securities in registered form, substantially in the
form set forth in Exhibit A (the "U.S. GLOBAL SECURITY"), deposited with the
Trustee, as custodian for the Depositary, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount at maturity of the U.S. Global Security may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
24
<PAGE>
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of one or more temporary global
Securities in registered form substantially in the form set forth in Exhibit A
(each a "TEMPORARY OFFSHORE GLOBAL SECURITY") deposited with the Trustee, as
custodian for the Depositary, duly executed by the Issuer and authenticated by
the Trustee as hereinafter provided. At any time following June 13, 1998 (the
"OFFSHORE SECURITIES EXCHANGE DATE"), upon receipt by the Trustee and the Issuer
of a certificate substantially in the form of Exhibit B hereto, one or more
permanent global Securities in registered form substantially in the form set
forth in Exhibit A (the "PERMANENT OFFSHORE GLOBAL SECURITY"; and together with
the Temporary Offshore Global Security, the "OFFSHORE GLOBAL SECURITIES") duly
executed by the Issuer and authenticated by the Trustee as hereinafter provided
shall be deposited with the Trustee, as custodian for the Depositary, and the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount at maturity of the Temporary Offshore Global Security in an
amount equal to the principal amount at maturity of the beneficial interest in
the Temporary Offshore Global Security transferred.
Securities which are offered and sold to Institutional Accredited
Investors which are not QIBs (excluding Non-U.S. Persons) shall be issued in the
form of permanent certificated Securities in registered form in substantially
the form set forth in Exhibit A (the "U.S. PHYSICAL SECURITIES"). Securities
issued pursuant to Section 2.07 in exchange for interests in the Offshore Global
Security shall be in the form of permanent certificated Securities in registered
form substantially in the form set forth in Exhibit A (the "OFFSHORE PHYSICAL
SECURITIES").
The Offshore Physical Securities and U.S. Physical Securities are
sometimes collectively herein referred to as the "PHYSICAL SECURITIES". The U.S.
Global Security and the Offshore Global Security are sometimes referred to as
the "GLOBAL SECURITIES".
The definitive Securities shall be typed, printed, 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
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
SECTION 2.02. RESTRICTIVE LEGENDS. (a) Unless and until a Security is
exchanged for an Exchange Security in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, (i) the U.S. Global
Security and each U.S. Physical Security shall bear the legend set forth below
on the face thereof and (ii) the Offshore Physical Securities and the Offshore
Global Security shall bear the legend set forth below on the face thereof until
at least 41 days after the Closing Date and receipt by the Company and the
Trustee of a certificate in the form of Exhibit B hereto:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
25
<PAGE>
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD 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 AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS NOTE 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
UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO GST FUNDING, GST OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE ACCRETED VALUE OF
NOTES AT THE TIME OF TRANSFER OF LESS THAN $100,000, AN
OPINION OF COUNSEL ACCEPTABLE TO GST FUNDING OR GST USA, AS
THE CASE MAY BE, THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 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 (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX
SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS
26
<PAGE>
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND GST FUNDING OR GST
USA, AS THE CASE MAY BE, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Each Global Security, whether or not an Exchange Security, shall
also bear the following legend on the face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE &
CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.08 OF THE INDENTURE.
27
<PAGE>
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS. Subject to
Article Four, the aggregate principal amount at maturity of Securities that may
be authenticated and delivered under this Indenture is unlimited. Two Officers
shall execute the Securities for the Issuer by facsimile or manual signature in
the name and on behalf of the Issuer.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee or authenticating agent authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of a
Company Order authenticate for original issue Securities in the aggregate
principal amount at maturity specified in such Company Order; PROVIDED that the
Trustee shall be entitled to receive an Officers' Certificate and an Opinion of
Counsel of the Company in connection with such authentication of Securities. The
Opinion of Counsel shall, if requested by the Trustee, be to the effect that:
(a) the form and terms of such Securities have been established
by or pursuant to a Board Resolution or, if applicable, an indenture
supplemental hereto in conformity with the provisions of this
Indenture;
(b) such supplemental indenture, if any, when executed and
delivered by the Company, GST USA, GST and the Trustee, will constitute
a valid and binding obligation of the Company, GST USA and GST;
(c) such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and binding obligations of the Company in accordance with their terms
and will be entitled to the benefits of this Indenture, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equitable principles; and
(d) the Company has been duly incorporated in, and is a validly
existing corporation in good standing under the laws of, the State of
Delaware.
28
<PAGE>
Such Company Order shall specify the amount of Securities to be authenticated
and the date on which the original issue of Securities is to be authenticated
and in case of an issuance of Securities pursuant to Section 2.15, shall certify
that such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such authenticating agent. An authenticating
agent has the same rights as an Agent to deal with the Issuer or an Affiliate of
the Issuer.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 in principal amount at maturity and
any integral multiple of $1,000 in excess thereof.
SECTION 2.04. REGISTRAR AND PAYING AGENT. The Issuer shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "REGISTRAR"), an office or agency where Securities may be
presented for payment (the "PAYING AGENT") and an office or agency where notices
and demands to or upon the Issuer in respect of the Securities and this
Indenture may be served, which shall be in the Borough of Manhattan, The City of
New York. The Issuer shall cause the Registrar to keep a register of the
Securities and of their transfer and exchange (the "SECURITY REGISTER"). The
Issuer may have one or more co- Registrars and one or more additional Paying
Agents.
The Issuer shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Issuer shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Issuer fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue and shall be
entitled to compensation therefor pursuant to Section 7.07. The Issuer may
remove any Agent upon written notice to such Agent and the Trustee; PROVIDED
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Issuer and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Issuer, any Subsidiary of the
Issuer, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands; PROVIDED, HOWEVER,
that neither the Issuer, a Subsidiary of the Issuer nor an Affiliate of any of
them shall act as Paying Agent in connection with the defeasance of the
Securities or the discharge of this Indenture under Article Eight.
29
<PAGE>
The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. The Trustee
shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders and shall otherwise
comply with TIA ss.312(a). If, at any time, the Trustee is not the Registrar,
the Registrar shall make available to the Trustee before each Interest Payment
Date and at such other times as the Trustee may reasonably request, the names
and addresses of the Holders as they appear in the Security Register.
SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Not later than 11:00
a.m. New York City time on each due date of the principal, premium, if any, and
interest on any Securities, the Issuer shall deposit, or cause to be deposited,
with the Paying Agent money in immediately available funds sufficient to pay
such principal, premium, if any, and interest so becoming due. The Issuer shall
require each Paying Agent, if any, other than the Trustee to agree in writing
that such 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, and interest on the Securities (whether such money has been
paid to it by the Issuer or any other obligor on the Securities), and that such
Paying Agent shall promptly notify the Trustee in writing of any default by the
Issuer (or any other obligor on the Securities) in making any such payment. The
Issuer at any time may require a 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 payment default, upon written request to a Paying
Agent, require such Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed. Upon doing so, the Paying Agent shall have
no further liability for the money so paid over to the Trustee. If the Issuer or
any Subsidiary of the Issuer or any Affiliate of any of them acts as Paying
Agent, it will, on or before each due date of any principal of, premium, if any,
or interest on the Securities, segregate and hold in a separate trust fund for
the benefit of the Holders a sum of money sufficient to pay such principal,
premium, if any, or interest so becoming due until such sum of money shall be
paid to such Holders or otherwise disposed of as provided in this Indenture, and
will promptly notify the Trustee in writing of its action or failure to act as
required by this Section 2.05.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities are issuable only
in registered form. A Holder may transfer a Security by written application to
the Registrar stating the name of the proposed transferee and otherwise
complying with the terms of this Indenture. No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Holder only upon
registration of the transfer by the Registrar in the Security Register. Prior to
the registration of any transfer by a Holder as provided herein, the Company
and, after the Assumption Date, GST USA and GST, the Trustee, and any agent of
the Issuer shall treat the person in whose name the Security is registered as
the owner thereof for all purposes whether or not the Security shall be overdue,
and neither the Company and, after the Assumption Date, GST USA and GST, the
Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of or beneficial owner of an interest in a Global
Security shall, by
30
<PAGE>
acceptance of such Global Security, be deemed to have agreed that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Depositary (or its agent), and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book entry. When Securities are presented to the Registrar or a
co- Registrar with a request to register the transfer or to exchange them for an
equal principal amount at maturity of Securities of other authorized
denominations (including on exchange of Securities for Exchange Securities), the
Registrar shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Securities are
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and Registrar duly executed by the Holder thereof or
by an attorney who is authorized in writing to act on behalf of the Holder);
PROVIDED that no exchanges of Securities for Exchange Securities shall occur
until a Registration Statement shall have been declared effective by the
Commission and that any Securities that are exchanged for Exchange Securities
shall be cancelled by the Trustee. To permit registrations of transfers and
exchanges in accordance with the terms, conditions and restrictions hereof, the
Issuer shall execute and the Trustee shall authenticate Securities at the
Registrar's request. No service charge shall be made to any Holder for any
registration of transfer or exchange or redemption of the Securities, but the
Issuer may require payment by the Holder of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon transfers, exchanges or redemptions pursuant to Section 2.11, 3.09, 4.12,
4.14 or 9.04).
The Registrar shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Securities
selected for redemption under Section 3.04 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES. (a) The U.S.
Global Security and Offshore Global Security initially shall (i) be registered
in the name of the Depositary for such Global Securities or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under any
Global Security, and the Depositary may be treated by the Company and, after the
Assumption Date, GST USA and GST, the Trustee and any agent of the Company and,
after the Assumption Date, GST USA and GST or the Trustee as the absolute owner
of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company and, after the Assumption
Date, GST USA
31
<PAGE>
and GST, the Trustee or any agent of the Company and, after the Assumption Date,
GST USA and GST or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a beneficial owner of any Security.
(b) Transfers of a Global Security shall be limited to transfers of
such Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the applicable rules and
procedures of the Depositary and the provisions of Section 2.08. In addition,
Physical Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in the U.S. Global Security or the Offshore
Global Security, respectively, if (i) the Depositary notifies the Issuer that it
is unwilling or unable to continue as Depositary for the U.S. Global Security or
the Offshore Global Security, as the case may be, and a successor depositary is
not appointed by the Issuer within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a request
to the foregoing effect from the Depositary.
(c) Any beneficial interest in one of the Global Securities that is
transferred to a person who takes delivery in the form of an interest in the
other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Security for as long as it remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b) of this
Section 2.07 of a portion of the beneficial interests in a Global Security to
beneficial owners who are required to hold Physical Securities, the Registrar
shall reflect on its books and records the date and a decrease in the principal
amount at maturity of the Global Security in an amount equal to the principal
amount at maturity of the beneficial interest in the Global Security to be
transferred, and the Issuer shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Securities of like tenor and amount.
(e) In connection with the transfer of an entire Global Security to
beneficial owners pursuant to paragraph (b) of this Section 2.07, the Global
Security shall be deemed to be surrendered to the Trustee for cancellation, and
the Issuer shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the Global Security an equal aggregate principal amount
at maturity of Physical Securities of authorized denominations.
32
<PAGE>
(f) Any U.S. Physical Security delivered in exchange for an interest in
the U.S. Global Security pursuant to paragraph (b) or (d) of this Section 2.07
shall, except as otherwise provided by paragraph (d) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the U.S. Physical Security
set forth in Section 2.02.
(g) The registered holder of a Global Security 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 Securities.
(h) QIBs that are beneficial owners of interests in a Global Security
may receive Physical Securities (which shall bear the Private Placement Legend
if required by Section 2.02) in accordance with the procedures of the
Depositary. In connection with the execution, authentication and delivery of
such Physical Securities, the Registrar shall reflect on its books and records a
decrease in the principal amount at maturity of the relevant Global Security
equal to the principal amount at maturity of such Physical Securities and the
Issuer shall execute and the Trustee shall authenticate and deliver one or more
Physical Securities having an equal aggregate principal amount at maturity.
(i) Any Offshore Physical Security delivered in exchange for an
interest in the Offshore Global Security pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (d) of Section 2.08,
bear the legend regarding transfer restrictions applicable to the Offshore
Physical Security set forth in Section 2.02.
SECTION 2.08. SPECIAL TRANSFER PROVISIONS. Unless and until a Security
is exchanged for an Exchange Security in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the
following provisions shall apply:
(a) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Physical Security
or an interest in the U.S. Global Security to a QIB (excluding Non-U.S.
Persons):
(i) If the Security to be transferred consists of (A) U.S.
Physical Securities, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Security stating, or has otherwise advised
the Issuer and the 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 Security stating,
or has otherwise advised the Issuer and the Registrar in writing, that
it is purchasing the Security 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
33
<PAGE>
on Rule 144A and acknowledges that it has received such information
regarding the Issuer 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 or (B)
an interest in the U.S. Global Security, the transfer of such interest
may be effected only through the book entry system maintained by the
Depositary.
(ii) If the proposed transferee is an Agent Member, and the
Security to be transferred consists of U.S. Physical Securities, upon
receipt by the Registrar of the documents referred to in clause (i) and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount at maturity of
the U.S. Global Security in an amount equal to the principal amount at
maturity of the U.S. Physical Securities to be transferred, and the
Trustee shall cancel the U.S. Physical Security so transferred.
(b) TRANSFERS OF INTERESTS IN THE TEMPORARY OFFSHORE GLOBAL SECURITY OR
LEGENDED OFFSHORE PHYSICAL SECURITIES. The following provisions shall apply with
respect to registration of any proposed transfer of interests in the Temporary
Offshore Global Security or Legended Offshore Physical Securities:
(i) The Registrar shall register the transfer of any Security (A)
if the proposed transferee is a Non-U.S. Person and the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit C hereto or (B) if the proposed transferee is a
QIB and the proposed transferor has checked the box provided for on the
form of Security stating, or has otherwise advised the Issuer and the
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 Security stating, or has
otherwise advised the Issuer and the Registrar in writing, that it is
purchasing the Security 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 Issuer
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, upon receipt
by the Registrar of the documents referred to in clause (i)(B) above
and instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount at maturity of
the
34
<PAGE>
U.S. Global Security, in an amount equal to the principal amount at
maturity of the Temporary Offshore Global Security to be transferred,
and the Trustee shall decrease the amount of the Temporary Offshore
Global Security.
(c) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following
provisions shall apply with respect to any transfer of a Security to a Non-U.S.
Person:
(i) Prior to June 13, 1998, the Registrar shall register any
proposed transfer of a Security to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit C hereto from the
proposed transferor.
(ii) On and after June 13, 1998, the Registrar shall register any
proposed transfer to any Non-U.S. Person if the Security to be
transferred is a U.S. Physical Security or an interest in the U.S.
Global Security, upon receipt of a certificate substantially in the
form of Exhibit C from the proposed transferor.
(iii) (A) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Registrar of (1) the documents required by paragraph (i) and (2)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount at maturity of the U.S.
Global Security in an amount equal to the principal amount at maturity
of the beneficial interest in the U.S. Global Security to be
transferred, and (B) if the proposed transferee is an Agent Member,
upon receipt by the Registrar of instructions given in accordance with
the Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount at maturity of the Offshore Global Security in an
amount equal to the principal amount at maturity of the U.S. Physical
Securities or the U.S. Global Security, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Security, if
any, so transferred or decrease the amount of the U.S. Global Security.
(d) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the Private Placement Legend is
no longer required by Section 2.02 or (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Issuer 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. Notwithstanding the foregoing, upon the exchange of Securities for Exchange
35
<PAGE>
Securities as described in Section 2.06 hereof and the Registration Statement,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend.
(e) GENERAL. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of, or beneficial owner of an interest in,
such Security acknowledges the restrictions on transfer of such Security set
forth in this Indenture and in the Private Placement Legend and agrees that it
will transfer such Security only as provided in this Indenture. The Registrar
shall not register a transfer of any Security unless such transfer complies with
the restrictions on transfer of such Security set forth in this Indenture. In
connection with any transfer of Securities to an Institutional Accredited
Investor, each such Holder or beneficial owner agrees by its acceptance of
Securities to furnish to the Registrar or to the Issuer such certifications,
legal opinions or other information as such Person may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
PROVIDED that the Registrar shall not be required to determine (but may rely on
a determination made by the Issuer with respect to) the sufficiency of any such
certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07 or this Section 2.08.
The Issuer 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 written notice to the Registrar.
(f) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Security to any Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Security,
whether or not such Security bears the Private Placement Legend, if (A)
the requested transfer is after the time period referred to in Rule
144(k) under the Securities Act as in effect at the time of such
transfer or (B) the proposed transferee has delivered to the Registrar
(1) a certificate substantially in the form of Exhibit D hereto and (2)
if such transfer is in respect of an aggregate Accreted Value of
Securities at the time of transfer of less than $100,000 an Opinion of
Counsel acceptable to the Issuer that such transfer is in compliance
with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Registrar of (A) the documents, if any, required by paragraph (i) and
(B) instructions given in accordance with the Depositary's and the
Registrar's procedures the Registrar shall reflect on its books and
records the date and a decrease in the principal amount at maturity of
the U.S. Global Security in an amount equal to the principal amount at
maturity of the beneficial interest in the U.S.
36
<PAGE>
Global Security to be transferred, and the Issuer shall execute, and
the Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(g) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL
SECURITY OR UNLEGENDED OFFSHORE PHYSICAL SECURITIES TO U.S. PERSONS. The
following provisions shall apply with respect to any transfer of interests in
the Permanent Offshore Global Security or Offshore Physical Securities to U.S.
Persons: The Registrar shall register the transfer of any such Security without
requiring any additional certification.
SECTION 2.09. REPLACEMENT SECURITIES. If a mutilated Security is
surrendered to the Trustee or if the Holder claims that the Security has been
lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee
shall authenticate a replacement Security of like tenor and principal amount at
maturity and bearing a number not contemporaneously outstanding; PROVIDED that
the requirements of the second paragraph of Section 2.10 are met. If required by
the Trustee or the Issuer, an indemnity bond must be furnished that is
sufficient in the judgment of both the Trustee and the Issuer to protect the
Issuer, the Trustee or any Agent from any loss that any of them may suffer if a
Security is replaced. The Issuer may charge such Holder for its expenses and the
expenses of the Trustee in replacing a Security. In case any such mutilated,
lost, destroyed or wrongfully taken Security has become or is about to become
due and payable, the Issuer in its discretion may pay the principal of, premium,
if any, and interest accrued on such Security instead of issuing a new Security
in replacement thereof.
Every replacement Security is an additional obligation of the Issuer
and shall be entitled to the benefits of this Indenture.
SECTION 2.10. OUTSTANDING SECURITIES. Securities outstanding at any
time are all Securities that have been authenticated by the Trustee except for
those cancelled by it, those delivered to it for cancellation and those
described in this Section 2.10 as not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Issuer receive proof
satisfactory to them that the replaced Security is held by a BONA FIDE
purchaser.
If the Paying Agent (other than the Issuer or an Affiliate of the
Issuer) holds on the maturity date money sufficient to pay the principal of,
premium, if any, and interest accrued on Securities payable on that date, then
on and after that date such Securities cease to be outstanding and interest on
them shall cease to accrue.
A Security does not cease to be outstanding because the Issuer or one
of its Affiliates holds such Security, PROVIDED, HOWEVER, that, in determining
whether the Holders of the requisite principal amount of the outstanding
Securities have given any request, demand,
37
<PAGE>
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Issuer or any other obligor upon the Securities or any Affiliate of the
Issuer or of 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 Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities 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 Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or any Affiliate of the Issuer or of such
other obligor.
SECTION 2.11. TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the Officers executing the
temporary Securities, as evidenced by their execution of such temporary
Securities. If temporary Securities are issued, the Issuer will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Issuer designated for such purpose pursuant to Section 4.02,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities the Issuer shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount at maturity of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under this Indenture
as definitive Securities.
SECTION 2.12. CANCELLATION. The Issuer at any time may deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Securities previously authenticated
hereunder which the Issuer has not issued and sold. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
transfer, exchange or payment. The Trustee shall cancel all Securities
surrendered for transfer, exchange, payment or cancellation and shall destroy
them in accordance with its normal procedure. The Issuer shall not issue new
Securities to replace Securities it has paid in full or delivered to the Trustee
for cancellation.
SECTION 2.13. CUSIP, CINS AND ISIN NUMBERS. The Issuer in issuing the
Securities may use "CUSIP", "CINS", "ISIN" or other identification numbers (if
then generally in use), and, if so, the Trustee shall use CUSIP numbers, CINS
numbers, ISIN numbers or other identification numbers, as the case may be, in
notices of redemption or exchange as a convenience to Holders; PROVIDED that any
such notice shall state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of
38
<PAGE>
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Securities; PROVIDED FURTHER that failure
to use "CUSIP", "CINS", "ISIN" or other identification numbers in any notice of
redemption or exchange shall not effect the validity or sufficiency of such
notice.
SECTION 2.14. DEFAULTED INTEREST. If the Issuer defaults in a payment
of interest on the Securities, it shall pay, or shall deposit with the Paying
Agent money in immediately available funds sufficient to pay the defaulted
interest, plus (to the extent lawful) any interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date. A
special record date, as used in this Section 2.14 with respect to the payment of
any defaulted interest, shall mean the 15th day next preceding the date fixed by
the Issuer for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Issuer shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.15. ISSUANCE OF ADDITIONAL SECURITIES. The Issuer may,
subject to Article Four of this Indenture, issue additional Securities under
this Indenture. The Securities issued on the Closing Date and any additional
Securities subsequently issued shall be treated as a single class for all
purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. RIGHT OF REDEMPTION. (a) The Securities may be redeemed
at the option of the Issuer, in whole or in part, at any time or from time to
time, on or after May 1, 2003 and prior to maturity, at the following Redemption
Prices (expressed in percentages of their principal amount at maturity), plus
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date that is on or
prior to the Redemption Date to receive interest due on an Interest Payment
Date) if redeemed during the 12-month period commencing May 1 of the years set
forth below:
39
<PAGE>
YEAR REDEMPTION PRICE
2003 105.250%
2004 103.500%
2005 101.750%
2006 and thereafter 100.0000%
(b) In addition, the Securities may be redeemed as a whole, but not in
part, at the option of GST, at any time after GST USA has become the obligor on
the Securities and GST has guaranteed the Securities, at 100% of their Accreted
Value on the Redemption Date, together with accrued interest thereon, if any, to
the Redemption Date, in the event GST has become or would become obligated to
pay, on the next date on which any amount would be payable with respect to the
Security Guarantee, any Additional Amounts as a result of a change in the laws
(including any regulations promulgated thereunder) of Canada (or any political
subdivision or taxing authority thereof or therein), or change in any official
position regarding the application or interpretation or such laws or
regulations, which change is announced or becomes effective on or after the
Closing Date.
SECTION 3.02. MANDATORY REDEMPTION. If on May 1, 2003 GST USA is
prohibited by the Existing Indentures from assuming all of the Securities, the
Company will redeem, upon not less than 10 nor more than 30 days' notice, on
such date the portion of the Securities that cannot be assumed or guaranteed at
105.250% of their principal amount at maturity plus accrued and unpaid interest
to the date of redemption.
SECTION 3.03. NOTICES TO TRUSTEE. If the Issuer elects to redeem
Securities pursuant to Section 3.01(a), GST elects to redeem the Securities
pursuant to Section 3.01(b) or the Company is required to redeem Securities
pursuant to Section 3.02, the Issuer, GST or the Company shall notify the
Trustee in writing of the Redemption Date and the principal amount at maturity
of Securities to be redeemed.
The Company, GST USA or GST, as the case may be, shall give each notice
provided for in this Section 3.03 in an Officers' Certificate at least 25 days
before mailing the notice to Holders required pursuant to Section 3.05 (unless a
shorter period shall be satisfactory to the Trustee).
SECTION 3.04. SELECTION OF SECURITIES TO BE REDEEMED. If less than all
of the Securities are to be redeemed at any time pursuant to Section 3.01(a) or
Section 3.02, the Trustee shall select the Securities to be redeemed in
compliance with the requirements, as certified to it by the Issuer, of the
principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed on a national securities exchange by
lot or by such other
40
<PAGE>
method as the Trustee in its sole discretion shall deem fair and appropriate;
PROVIDED, HOWEVER, that no Securities of $1,000 in principal amount at maturity
or less shall be redeemed in part.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption. Securities in denominations of $1,000
in principal amount at maturity may only be redeemed in whole. The Trustee may
select for redemption portions (equal to $1,000 in principal amount at maturity
or any integral multiple thereof) of Securities that have denominations larger
than $1,000 in principal amount at maturity. Provisions of this Indenture that
apply to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Issuer and the Registrar
promptly in writing of the Securities or portions of Securities to be called for
redemption.
SECTION 3.05. NOTICE OF REDEMPTION. With respect to any redemption of
Securities, at least 30 days but not more than 60 days before a Redemption Date
in the case of the redemption under Section 3.01 and at least 10 but not more
than 30 days prior to May 1, 2003 in the case of a redemption under Section
3.02, the Issuer shall mail a notice of redemption by first class mail to each
Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered
to the Paying Agent in order to collect the Redemption Price;
(e) that, unless the Issuer defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the Redemption Price plus accrued
interest to the Redemption Date upon surrender of the Securities to the
Paying Agent;
(f) that, if any Security is being redeemed in part, the
portion of the principal amount at maturity (equal to $1,000 in
principal amount at maturity or any integral multiple thereof) of such
Security to be redeemed and that, on and after the Redemption Date,
upon surrender of such Security, a new Security or Securities in
principal amount at maturity equal to the unredeemed portion thereof
will be reissued; and
41
<PAGE>
(g) that, if any Security contains a CUSIP, CINS, ISIN or
other identification number as provided in Section 2.13, no
representation is being made as to the correctness of the CUSIP, CINS,
ISIN or other identification number either as printed on the Securities
or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the
Securities.
At the Issuer's request (which request may be revoked by the Issuer at
any time prior to the time at which the Trustee shall have given such notice to
the Holders), made in writing to the Trustee at least five days before mailing
the notice to Holders referred to in Section 3.01 or 3.02, the Trustee shall
give such notice of redemption in the name and at the expense of the Issuer, GST
or the Company. If, however, the Issuer, GST or the Company gives such notice to
the Holders, the Issuer, GST or the Company shall concurrently deliver to the
Trustee an Officers' Certificate stating that such notice has been given.
SECTION 3.06. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption
is mailed, Securities called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Securities to
the Paying Agent, such Securities shall be paid at the Redemption Price, plus
accrued interest, if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether
or not the Holder receives the notice. In any event, failure to give such
notice, or any defect therein, shall not affect the validity of the proceedings
for the redemption of Securities held by Holders to whom such notice was
properly given.
SECTION 3.07. DEPOSIT OF REDEMPTION PRICE. Prior to any Redemption
Date, the Issuer shall deposit, or cause to be deposited, with the Paying Agent
(or, if the Issuer is acting as its own Paying Agent, shall segregate and hold
in trust as provided in Section 2.05) money sufficient to pay the Redemption
Price of and accrued interest on all Securities to be redeemed on that date
other than Securities or portions thereof called for redemption on that date
that have been delivered by the Issuer to the Trustee for cancellation.
SECTION 3.08. PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of
redemption has been given in the manner provided above, the Securities or
portion of Securities specified in such notice to be redeemed shall become due
and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest to such Redemption Date, and on and after such
date (unless the Issuer shall default in the payment of such Securities at the
Redemption Price and accrued interest to the Redemption Date, in which case the
principal, until paid, shall bear interest from the Redemption Date at the rate
prescribed in the Securities), such Securities shall cease to accrue interest
(or original issue discount). Upon surrender of any Security for redemption in
accordance with a notice of redemption, such Security shall be paid and redeemed
by the Issuer at the Redemption Price, together with accrued interest, if any,
to the
42
<PAGE>
Redemption Date; PROVIDED that installments of interest shall be payable to the
Holders registered as such at the close of business on the relevant Regular
Record Date that is on or prior to the Redemption Date.
SECTION 3.09. SECURITIES REDEEMED IN PART. Upon surrender of any
Security that is redeemed in part, the Issuer shall execute and the Trustee
shall authenticate and deliver to the Holder a new Security equal in principal
amount at maturity to the unredeemed portion of such surrendered Security.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Issuer shall pay the principal
of, premium, if any, and interest on the Securities on the dates and in the
manner provided in the Securities and this Indenture. An installment of
principal, premium, if any, or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Issuer, a Subsidiary of the
Issuer, or any Affiliate of any of them) holds on that date money designated for
and sufficient to pay the installment. If the Issuer or any Subsidiary of the
Issuer or any Affiliate of any of them, acts as Paying Agent, an installment of
principal, premium, if any, or interest shall be considered paid on the due date
if the entity acting as Paying Agent complies with the last sentence of Section
2.05. As provided in Section 6.09, upon any bankruptcy or reorganization
procedure relative to the Issuer, the Trustee shall serve as the Paying Agent
and conversion agent, if any, for the Securities.
The Issuer shall pay interest on overdue principal, premium, if any,
and interest on overdue installments of interest, to the extent lawful, at the
rate per annum specified in the Securities.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in the Borough of Manhattan, the City of New York, an office or agency (which
may be an office of the Trustee, Registrar or co-Registrar or any Affiliate of
any of them) where Securities may be surrendered for registration of transfer or
exchange or for presentation for payment and where notices and demands to or
upon the Issuer in respect of the Securities and this Indenture may be served.
The Issuer will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Issuer
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 address of the Trustee set
forth in Section 12.02.
43
<PAGE>
The Issuer may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Issuer will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee, located in the Borough of Manhattan, the City of New York, as such
office of the Issuer in accordance with Section 2.04.
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) GST will not, and will
not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other
than the Securities and Indebtedness existing on the Closing Date); PROVIDED
that GST and GST USA may Incur Indebtedness if, after giving effect to the
Incurrence of such Indebtedness and the receipt and application of the proceeds
therefrom, the Indebtedness to EBITDA Ratio would be greater than zero and less
than 5:1. The Company may not Incur any Indebtedness other than the Securities.
Notwithstanding the foregoing, GST and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following:
(i) Indebtedness outstanding at any time (including, but not
limited to, Indebtedness under the Tomen Facility) in an aggregate
principal amount not to exceed $320 million, less any amount of
Indebtedness permanently repaid as provided under Section 4.12;
(ii) Indebtedness (A) to GST evidenced by a promissory note or
(B) to any of its Restricted Subsidiaries; PROVIDED that any subsequent
event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness
(other than to GST or another Restricted Subsidiary) shall be deemed,
in each case, to constitute an Incurrence of such Indebtedness not
permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds
of which are used to refinance or refund, then outstanding
Indebtedness, other than Indebtedness Incurred under clause (i), (ii),
(iv), (v), (vii) or (viii) of this paragraph, and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses); PROVIDED that
Indebtedness the proceeds of which are used to refinance or refund the
Securities and Security Guarantee or Indebtedness that is or would be
PARI PASSU with, or subordinated in right of payment to, the Securities
and Security Guarantee shall only be permitted under this clause (iii)
if (A) in case the Securities and Security Guarantee are refinanced in
part, or the Indebtedness to be
44
<PAGE>
refinanced is or would be PARI PASSU with the Securities or Security
Guarantee, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made PARI PASSU with, or subordinate in right
of payment to, the remaining Securities or Security Guarantee, (B) in
case the Indebtedness to be refinanced is or would be subordinated in
right of payment to the Securities or Security Guarantee, such new
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made subordinate in right of payment to the Securities or
Security Guarantee at least to the extent that the Indebtedness to be
refinanced is subordinated to the Securities or Security Guarantee and
(C) such new Indebtedness, determined as of the date of Incurrence of
such new Indebtedness, does not mature prior to the Stated Maturity of
the Indebtedness to be refinanced or refunded, and the Average Life of
such new Indebtedness is at least equal to the remaining Average Life
of the Indebtedness to be refinanced or refunded; and PROVIDED FURTHER
that in no event may Indebtedness of GST or GST USA be refinanced by
means of any Indebtedness of any Restricted Subsidiary of GST USA
pursuant to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or
appeal bonds provided in the ordinary course of business, (B) under
Currency Agreements and Interest Rate Agreements; PROVIDED that such
agreements do not increase the Indebtedness of the obligor outstanding
at any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of GST or any of the
Restricted Subsidiaries pursuant to such agreements, in any case
Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary (other than Guarantees of Indebtedness Incurred
by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition),
in a principal amount not to exceed the gross proceeds actually
received by GST or any Restricted Subsidiary in connection with such
disposition;
(v) Indebtedness of GST not to exceed, at any one time
outstanding, two times the Net Cash Proceeds received by GST after the
Closing Date from the issuance and sale of its Capital Stock (other
than Redeemable Stock) to a Person other than a Subsidiary of GST to
the extent such Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clauses (iii), (iv) or (vi) of the
second paragraph of Section 4.04 to make a Restricted Payment; PROVIDED
that such Indebtedness does not mature prior to the Stated Maturity of
the Securities and has an Average Life longer than the Securities;
45
<PAGE>
(vi) Indebtedness Incurred to finance the cost (including,
without limitation, the cost of design, development, construction,
acquisition, installation or integration) of network assets (including,
without limitation, equipment and real property and leasehold
improvements that are necessary to install or operate network assets;
PROVIDED that in no event shall the cost of any such real property and
leasehold improvements financed hereby exceed 20% of the total cost of
the related network assets) or inventory purchased or leased by GST or
any of its Restricted Subsidiaries after the Closing Date;
(vii) Indebtedness of GST or GST USA under one or more
revolving credit or working capital facilities in an aggregate
principal amount outstanding at any time not to exceed the lesser of
(A) $50 million and (B) 75% of the consolidated book value of the
accounts receivable of GST and its Restricted Subsidiaries; and
(viii) Indebtedness of GST or GST USA to the extent the
proceeds thereof are promptly (a) used to purchase Securities tendered
in an Offer to Purchase made as a result of a Change of Control or (b)
deposited to defease the Securities under Article Eight.
(b) For purposes of determining any particular amount of Indebtedness
under this Section 4.03, (1) Indebtedness Incurred under the Tomen Facility on
or prior to the Closing Date shall be treated as Incurred pursuant to clause (i)
of the second paragraph of this Section 4.03 and (2) Guarantees, Liens or
obligations with respect to letters of credit supporting Indebtedness otherwise
included in the determination of such particular amount shall not be included.
For purposes of determining compliance with this Section 4.03, in the event that
an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses, GST, in its sole discretion, shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. GST will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, (i) declare or
pay any dividend or make any distribution on its Capital Stock (other than
dividends or distributions payable solely in shares of its or such Restricted
Subsidiary's Capital Stock (other than Redeemable Stock) or in options, warrants
or other rights to acquire such shares of Capital Stock) held by Persons other
than GST or any of its Restricted Subsidiaries (and other than pro rata
dividends or distributions on Common Stock of Restricted Subsidiaries), (ii)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of GST (including options, warrants or other rights to acquire such shares
of Capital Stock) held by Persons other than any Wholly Owned Restricted
Subsidiaries of GST, (iii) make any voluntary or optional principal payment, or
voluntary or optional redemption, repurchase, defeasance, or other acquisition
or retirement for value, of Indebtedness of GST USA or GST that is subordinated
in right of payment to the Securities or the Security Guarantee, as the case may
be, or (iv) make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (i) through (iv)
being collectively "RESTRICTED
46
<PAGE>
PAYMENTS") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) GST could not Incur at least $1.00 of Indebtedness under the
first paragraph of Section 4.03 or (C) the aggregate amount of all Restricted
Payments (the amount, if other than in cash, to be determined in good faith by
the Board of Directors, whose determination shall be conclusive and evidenced by
a Board Resolution) made after the Closing Date shall exceed the sum of (1) 50%
of the aggregate amount of the Adjusted Consolidated Net Income (or, if the
Adjusted Consolidated Net Income is a loss, minus 100% of such amount)
(determined by excluding income resulting from transfers of assets by GST or a
Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date and ending on
the last day of the last fiscal quarter preceding the Transaction Date for which
reports have been filed pursuant to Section 4.20 plus (2) the aggregate Net Cash
Proceeds received by GST after May 13, 1997 from the issuance and sale permitted
by this Indenture of its Capital Stock (other than Redeemable Stock) to a Person
who is not a Subsidiary of GST, or from the issuance to a Person who is not a
Subsidiary of GST of any options, warrants or other rights to acquire Capital
Stock of GST (in each case, exclusive of any Redeemable Stock or any options,
warrants or other rights that are redeemable at the option of the holder, or are
required to be redeemed, prior to the Stated Maturity of the Securities), in
each case except to the extent such Net Cash Proceeds are used to Incur
Indebtedness pursuant to clause (v) of the second paragraph of Section 4.03,
plus (3) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments and reductions in Investments made pursuant
to clause (vi) of the second paragraph of this Section 4.04) in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to GST or any
Restricted Subsidiary (except to the extent any such payment is included in the
calculation of Adjusted Consolidated Net Income), or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "INVESTMENTS"), not to exceed the amount of
Investments previously made by GST and its Restricted Subsidiaries in such
Person.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date
of declaration thereof if, at said date of declaration, such payment
would comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Intercompany Notes or, after
GST USA assumes the Securities, the Securities or Security Guarantee,
including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause
(iii) of the second paragraph of Section 4.03;
47
<PAGE>
(iii) the repurchase, redemption or other acquisition of
Capital Stock of GST in exchange for, or out of the proceeds of a
substantially concurrent offering of, shares of Capital Stock (other
than Redeemable Stock) of GST;
(iv) the acquisition of Indebtedness of GST USA or GST which
is subordinated in right of payment to the Intercompany Notes or, after
GST USA assumes the Securities, the Securities or Security Guarantee,
in exchange for, or out of the proceeds of, a substantially concurrent
offering of, shares of the Capital Stock of GST (other than Redeemable
Stock);
(v) payments or distributions, in the nature of satisfaction
of dissenters' rights, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with Article
Five;
(vi) Investments in any Person or Persons (other than an
Affiliate (other than a Subsidiary) of the Company), the primary
business of which is related, ancillary or complementary to the
business of GST and its Restricted Subsidiaries on the date of such
Investments, in an aggregate amount not to exceed $50 million plus, (a)
in any fiscal year, an amount not to exceed 10% of GST's Consolidated
EBITDA (if positive) for the immediately preceding fiscal year, (b) an
amount not to exceed the Net Cash Proceeds received by GST after May
13, 1997 from the issuance and sale permitted by this Indenture of its
Capital Stock (other than Redeemable Stock) to a Person that is not a
Subsidiary of GST, except to the extent such Net Cash Proceeds are used
to Incur Indebtedness pursuant to clause (v) under Section 4.03 or to
make Restricted Payments pursuant to clause (C)(2) of the first
paragraph or clause (iii) or (iv) of this paragraph of this Section
4.04 and (c) the net reduction in Investments in any Person made
pursuant to this clause (vi), except to the extent such reduction is
included in the calculation of Adjusted Consolidated Net Income;
PROVIDED that the net reduction in any such Investment shall not exceed
the amount of Investments previously made in such Person;
(vii) Investments by GST or a Restricted Subsidiary made
pursuant to the second paragraph of Section 4.11, in an aggregate
amount not to exceed $25 million; and
(viii) cash payments in lieu of the issuance of fractional
Common Shares upon conversion (including mandatory conversion) of the
Convertible Notes provided for in the Convertible Notes Indenture or
the Redeemable Preferred Shares; PROVIDED that, except in the case of
clauses (i) and (iii), no Default or Event of Default shall have
occurred and be continuing or occur as a consequence of the actions or
payments set forth herein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof and an
exchange of Capital Stock for
48
<PAGE>
Capital Stock or Indebtedness referred to in clause (iii) or (iv) thereof), and
the Net Cash Proceeds from any issuance of Capital Stock referred to in clauses
(iii), (iv) and (vi) shall be included in calculating whether the conditions of
clause (C) of the first paragraph of this Section 4.04 have been met with
respect to any subsequent Restricted Payments. In the event the proceeds of an
issuance of Capital Stock of GST are used for the redemption, repurchase or
other acquisition of the Securities or Indebtedness that is PARI PASSU with the
Securities or Security Guarantee, then the Net Cash Proceeds of such issuance
shall be included in clause (C) of the first paragraph of this Section 4.04 only
to the extent such proceeds are not used for such redemption, repurchase or
other acquisition of Indebtedness.
The Company will not, and will not permit any Subsidiary to, directly
or indirectly, make any Restricted Payment other than Investments in Pledged
Securities, cash, the Fee Notes and Intercompany Notes, in each case pledged to
secure the Securities.
SECTION 4.05. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES. GST will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by GST or any other Restricted Subsidiary, (ii) pay
any Indebtedness owed to GST or any other Restricted Subsidiary, (iii) make
loans or advances to GST or any other Restricted Subsidiary or (iv) transfer any
of its property or assets to GST or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in this Indenture or any
other agreement in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; PROVIDED
that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any
material respect to the Holders than those encumbrances or restrictions
that are then in effect and that are being extended, refinanced,
renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or
assets of such Person acquired by GST or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other
than such Person or the property or assets of such Person so acquired;
49
<PAGE>
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of GST or any
Restricted Subsidiary not otherwise prohibited by this Indenture or (C)
arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of GST or any Restricted
Subsidiary in any manner material to GST or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary;
(vi) with respect to any Development Company, imposed pursuant
to or in connection with any Indebtedness Incurred by such Development
Company to finance at least 50% of the total financing required for the
development and construction of all of such Development Company's
alternative access networks or any Indebtedness Incurred to refinance
or replace such Indebtedness; PROVIDED that (a) such Indebtedness
(including such refinancing Indebtedness) is permitted to be Incurred
under Section 4.03, (b) such encumbrances and restrictions are no more
restrictive in any material respect than those encumbrances and
restrictions existing under the Tomen Facility as in effect on the
Closing Date and (c) such encumbrances and restrictions shall only
apply to such Development Company for so long as such Indebtedness (or
such refinancing Indebtedness) remains outstanding; or
(vii) with respect to any Development Company (a "RESTRICTED
DEVELOPMENT COMPANY"), imposed pursuant to or in connection with any
Indebtedness Incurred by another Development Company to finance at
least 50% of the total financing required for the development and
construction of all of such other Development Company's alternative
access networks or any Indebtedness Incurred to refinance or replace
such Indebtedness; PROVIDED that (a) such encumbrances and restrictions
shall not apply to such Restricted Development Company prior to the
occurrence of an event of default under such Indebtedness (or
refinancing Indebtedness), (b) such Indebtedness (including such
refinancing Indebtedness) is permitted to be Incurred under Section
4.03, (c) such encumbrances and restrictions are no more restrictive in
any material respect than those contemplated by the Tomen Facility as
in effect on the Closing Date and (d) at least 50% of the total
financing required for the development and construction of all of such
Restricted Development Company's alternative access networks was
provided by the holder of the Indebtedness of such other Development
Company.
50
<PAGE>
The Company will not, and will not permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any of the
matters referred to in the first paragraph of this section.
Nothing contained in this Section 4.05 shall prevent GST or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 or (2) restricting the sale
or other disposition of property or assets of GST or any of its Restricted
Subsidiaries that secure Indebtedness of GST or any of its Restricted
Subsidiaries.
SECTION 4.06. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. GST will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell any shares of Capital Stock
of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except
(i) to GST or a Wholly Owned Restricted Subsidiary;
(ii) issuances or sales to foreign nationals of shares of
Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law;
(iii) if, immediately after giving effect to such issuance or
sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary; or
(iv) a sale of Common Stock of Phoenix Fiber, and in
connection and concurrently with such sale, a sale of Common Stock of
GST Tucson Lightwave, Inc.; PROVIDED that the proceeds of any such sale
under this clause (iv) shall be applied in accordance with clause (A)
or (B) of the first paragraph of Section 4.12.
The Company will not sell, and will not permit any Subsidiary, directly
or indirectly, to issue or sell, any shares of Capital Stock of a Subsidiary of
the Company (including options, warrants or other rights to purchase shares of
such Capital Stock).
SECTION 4.07. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED
SUBSIDIARIES. GST will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of GST or any Indebtedness of GST USA
("GUARANTEED INDEBTEDNESS"), unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee (a "SUBSIDIARY GUARANTEE") of payment of the
Securities by such Restricted Subsidiary and (ii) such Restricted Subsidiary
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, GST or GST USA as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee; PROVIDED that this
51
<PAGE>
paragraph shall not be applicable to any Guarantee of any Restricted Subsidiary
that (x) existed at the time such Person became a Restricted Subsidiary and (y)
was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) PARI
PASSU with the Intercompany Notes, the Securities or the Security Guarantee,
then the Guarantee of such Guaranteed Indebtedness shall be PARI PASSU with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the
Intercompany Notes, the Securities or the Security Guarantee, then the Guarantee
of such Guaranteed Indebtedness shall be subordinated to the Subsidiary
Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Intercompany Notes, the Securities or Security Guarantee, as
the case may be.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may 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 GST of all of GST's and each Restricted
Subsidiary's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not prohibited by
this Indenture) or (ii) the release or discharge of the Guarantee which resulted
in the creation of such Subsidiary Guarantee, except a discharge or release by
or as a result of payment under such Guarantee.
The Company will not permit any Subsidiary to, directly or indirectly,
Guarantee any Indebtedness.
SECTION 4.08. LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND
AFFILIATES. GST will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of GST or any Restricted
Subsidiary or with any Affiliate of GST or any Restricted Subsidiary, except
upon fair and reasonable terms no less favorable to GST or such Restricted
Subsidiary than could be obtained, at the time of such transaction or, if such
transaction is pursuant to a written agreement, at the time of the execution of
the agreement providing therefor, in a comparable arm's-length transaction with
a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors of GST or (B) for which GST or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to GST or such Restricted
Subsidiary from a financial point of view; (ii) any transaction solely between
GST and any of its Wholly Owned Restricted Subsidiaries or solely between Wholly
Owned Restricted Subsidiaries; (iii) the payment of reasonable and customary
regular fees (including through the issuance of shares of Common Stock of GST or
options, warrants or other rights to acquire such shares) to
52
<PAGE>
directors of GST who are not employees of GST or any of its Subsidiaries; (iv)
any payments or other transactions pursuant to any tax-sharing agreement between
GST and any other Person with which GST files a consolidated tax return or with
which GST is part of a consolidated group for tax purposes; or (v) any
Restricted Payments not prohibited by Section 4.04. Notwithstanding the
foregoing, any transaction or series of transactions covered by the first
paragraph of this Section 4.08 and not covered by clauses (ii) through (vi) of
this paragraph, the aggregate amount of which exceeds $500,000 in value, must be
approved or determined to be fair in the manner provided for in clause (i)(A) or
(B) above.
The Company will not, and will not permit any Subsidiary to, directly
or indirectly, enter into, renew or extend any of the transactions described in
the first paragraph of this section other than any transaction between the
Company and GST or any of its Restricted Subsidiaries required or permitted by
this Indenture and Pledge Agreement.
SECTION 4.09. LIMITATION ON LIENS. GST will not, and will not permit
any Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien
on any of its assets or properties of any character, or any shares of Capital
Stock or Indebtedness of any Restricted Subsidiary (collectively, "PROTECTED
PROPERTY"), without making effective provision for all of the Securities (or in
the case of a Lien on Protected Property of GST, the Security Guarantee) and all
other amounts due under this Indenture to be directly secured equally and
ratably with (or, if the obligation or liability to be secured by such Lien is
subordinated in right of payment to the Securities or the Security Guarantee,
prior to) the obligation or liability secured by such Lien; provided that
neither GST nor any Restricted Subsidiary will create, Incur, assume or suffer
to exist any Lien on the Pledged Securities, the Pledge Account or any Acquired
Equipment, except Liens securing the Securities and the Intercompany Notes.
The foregoing limitation does not apply to
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or
Capital Stock of GST or its Restricted Subsidiaries securing the
Initial Note, the Intercompany Notes or created in favor of the
Company, the Trustee or the Holders of the Securities;
(iii) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to GST or a Wholly
Owned Restricted Subsidiary to secure Indebtedness owing to GST or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under
clause (iii) of the second paragraph of Section 4.03; PROVIDED that
such Liens do not extend to or cover any property or assets
53
<PAGE>
of GST or any Restricted Subsidiary other than the property or assets
securing the Indebtedness being refinanced;
(v) Liens upon or Capital Leases with respect to inventory,
property or equipment acquired or held by GST or any of its Restricted
Subsidiaries to secure all or a part of the purchase price therefor or
GST's or such Restricted Subsidiary's obligations under such lease;
PROVIDED that such Liens do not extend to or cover any property or
assets of GST or any Restricted Subsidiary other than the inventory,
property or equipment acquired;
(vi) Liens on assets or property of, or the Capital Stock of,
a Development Company securing Indebtedness Incurred under clause (i)
of the second paragraph of Section 4.03 to finance at least 50% of the
total financing for the development and construction of the alternative
access networks owned by such Development Company; PROVIDED such Liens
do not extend to or cover any other property or assets of GST or any of
its Restricted Subsidiaries;
(vii) Liens on any property or assets of a Restricted
Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted to be Incurred under the Indenture; or
(viii) Permitted Liens.
The Company will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien on any of its assets or properties of
any character other than Liens granted in favor of the Trustee or the Holders of
the Securities.
SECTION 4.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. GST will not,
and will not permit any Restricted Subsidiary to, enter into any sale-leaseback
transaction involving any of its assets or properties whether now owned or
hereafter acquired, whereby GST or a Restricted Subsidiary sells or transfers
such assets or properties and then or thereafter leases such assets or
properties or any part thereof or any other assets or properties which GST or
such Restricted Subsidiary, as the case may be, intends to use for substantially
the same purpose or purposes as the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if
(i) the lease is for a period, including renewal rights, of
not in excess of three years;
(ii) the lease secures or relates to industrial revenue or
pollution control bonds;
54
<PAGE>
(iii) the transaction is solely between GST and any Wholly
Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or
(iv) GST or such Restricted Subsidiary, within 12 months after
the sale or transfer of any assets or properties is completed, applies
an amount not less than the net proceeds received from such sale in
accordance with clause (A) or (B) of the first paragraph of Section
4.12.
The Company will not, and will not permit any Subsidiary to, enter into
any sale-leaseback transaction.
SECTION 4.11. LIMITATION ON INVESTMENTS. GST will not, and will not
permit any Restricted Subsidiary to, (i) make any Investment in any Person
(including an Unrestricted Subsidiary) that during its most recent fiscal year
derived or in its current fiscal year is expected by the Board of Directors of
GST to derive more than $250,000 in revenues from, or in its most recent fiscal
year spent or in its current fiscal year is expected by the Board of Directors
of GST to spend more than $250,000 on, operations or activities located outside
the continental United States (other than in the State of Hawaii or between the
continental United States and the State of Hawaii) (an "INTERNATIONAL BUSINESS")
or (ii) acquire or own (directly or indirectly), other than through an
Unrestricted Subsidiary, any entity, business or asset that is primarily located
outside the continental United States (other than in the State of Hawaii) or any
right with respect to any of the foregoing (an "INTERNATIONAL ASSET").
Notwithstanding the foregoing, and subject to Section 4.04, GST and its
Restricted Subsidiaries may make an Investment in an Unrestricted Subsidiary
which owns, intends to acquire or has rights with respect to an International
Business or International Asset provided that the aggregate amount of such
Investments does not exceed (i) $25 million plus, (A) in any fiscal year, an
amount not to exceed 10% of GST's Consolidated EBITDA (if positive) for the
immediately preceding fiscal year and (B) an amount not to exceed the Net Cash
Proceeds received by GST after May 13, 1997 from the issuance and sale permitted
by this Indenture of its Capital Stock (other than Redeemable Stock) to a Person
who is not a Subsidiary of GST, less (ii) the amount of any Investments made
pursuant to the first paragraph, or the amount of any Restricted Payment made
pursuant to clause (iii), (iv) or (vi) of the second paragraph, of Section 4.04;
PROVIDED that the International Business or International Assets are related,
ancillary or complementary to the primary business of GST and its Restricted
Subsidiaries on the date of such Investment.
SECTION 4.12. LIMITATION ON ASSET SALES. GST will not, and will not
permit any Restricted Subsidiary to, consummate any Asset Sale, unless (i) the
consideration received by GST or such Restricted Subsidiary is at least equal to
the fair market value of the assets sold or disposed of and (ii) at least 85% of
the consideration received consists of cash or Temporary Cash
55
<PAGE>
Investments; PROVIDED, HOWEVER, that clause (ii) shall not apply to long-term
assignments of capacity in a network. In the event and to the extent that the
Net Cash Proceeds received by GST or its Restricted Subsidiaries from one or
more Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of GST and its Subsidiaries has been
prepared), then GST shall or shall cause the relevant Restricted Subsidiary to
(i) within 12 months after the date Net Cash Proceeds so received exceed 10% of
Adjusted Consolidated Net Tangible Assets (A) apply an amount equal to such
excess Net Cash Proceeds to permanently repay unsubordinated Indebtedness of GST
or GST USA or Indebtedness of any Restricted Subsidiary (other than GST USA), in
each case owing to a Person other than GST or any of its Restricted Subsidiaries
or (B) invest an equal amount, or the amount not so applied pursuant to clause
(A) (or enter into a definitive agreement committing to so invest within 12
months after the date of such agreement), in property or assets of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, GST and its
Restricted Subsidiaries existing on the date of such investment (as determined
in good faith by the Board of Directors of GST, whose determination shall be
conclusive and evidenced by a Board Resolution) and (ii) apply (no later than
the end of the 12-month period referred to in clause (i)) such excess Net Cash
Proceeds (to the extent not applied pursuant to clause (i)) as provided in the
following paragraph of this Section 4.12. The amount of such excess Net Cash
Proceeds required to be applied (or to be committed to be applied) during such
12-month period as set forth in clause (i) of the preceding sentence and not
applied as so required by the end of such period shall constitute "Excess
Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.12 totals at least $5.0 million, the Issuer must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate Accreted Value of
Securities equal to the Excess Proceeds on such date, at a purchase price equal
to 101% of the Accreted Value of the Securities on the relevant Payment Date,
plus, in each case, accrued interest to such Payment Date.
The Company will not, and will not permit any Subsidiary to, consummate
any Asset Sale except as permitted under the Pledge Agreement.
SECTION 4.13. IMPAIRMENT OF SECURITY INTEREST OR ABILITY TO ASSUME THE
SECURITIES. Except as specifically provided in the Pledge Agreement, none of
GST, GST USA nor the Company shall, nor shall they permit any Subsidiary to,
take or knowingly omit to take any action that (i) might or would have the
result of materially impairing the security interest with respect to the Pledged
Securities, any Acquired Equipment, the Fee Notes or Intercompany Notes for the
benefit of the Trustee and the Holders of the Securities, (ii) grant to any
Person other than
56
<PAGE>
the Trustee or the Holders of the Securities, any interest whatsoever in the
Pledged Securities, other amounts in the Pledge Account, any Acquired Equipment,
the Fee Notes or any Intercompany Note, (iii) would prevent, or restrict GST USA
from assuming, or GST from guaranteeing, the Securities on May 1, 2003 or
earlier if permitted by the Existing Indentures or (iv) would prevent or
restrict GST USA from issuing Fee Notes to the Company.
SECTION 4.14. REPURCHASE OF SECURITIES UPON A CHANGE OF CONTROL. The
Issuer must commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all Securities then outstanding, at a
purchase price equal to 101% of the Accreted Value thereof on the relevant
Payment Date, plus accrued interest to such Payment Date. Prior to the mailing
of the notice to Holders commencing such Offer to Purchase, but in any event
within 30 days following any Change of Control, the Issuer covenants to (i)
repay in full all indebtedness of the Issuer that would prohibit the repurchase
of the Securities pursuant to such Offer to Purchase or (ii) obtain any
requisite consents under instruments governing any such indebtedness of the
Issuer to permit the repurchase of the Securities. The Issuer shall first comply
with the covenant in the preceding sentence before it shall repurchase
Securities pursuant to this Section 4.14.
SECTION 4.15. EXISTENCE. Subject to compliance with the terms of
Articles Four and Five of this Indenture, GST will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence and
the existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of GST and each such Subsidiary and the
rights (whether pursuant to charter, partnership certificate, agreement, statute
or otherwise), material licenses and franchises of GST and each such Subsidiary;
PROVIDED that GST shall not be required to preserve any such right, license or
franchise, or the existence of any Restricted Subsidiary (other than of the
Issuer), if the maintenance or preservation thereof is no longer desirable in
the conduct of the business of GST and its Restricted Subsidiaries taken as a
whole.
SECTION 4.16. PAYMENT OF TAXES AND OTHER CLAIMS. GST will pay or
discharge and shall cause each of its Subsidiaries to pay or discharge, or cause
to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon (a)
GST or any such Subsidiary, (b) the income or profits of any such Subsidiary
which is a corporation or (c) the property of GST or any such Subsidiary and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a lien upon the property of GST or any such
Subsidiary; PROVIDED that GST shall not be required to pay or discharge, or
cause to be paid or discharged, any such tax, assessment, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
SECTION 4.17. MAINTENANCE OF PROPERTIES AND INSURANCE. GST will cause
all properties used or useful in the conduct of its business or the business of
any of its Restricted
57
<PAGE>
Subsidiaries, to be maintained and kept in reasonable condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the reasonable business judgment of GST may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; PROVIDED that nothing in this Section
4.17 shall prevent GST or any such Subsidiary from discontinuing the use,
operation or maintenance of any of such properties or disposing of any of them,
if such discontinuance or disposal is, in the reasonable business judgment of
GST, desirable in the conduct of the business of GST or such Subsidiary.
GST will provide or cause to be provided, for itself and its Restricted
Subsidiaries, insurance (including appropriate self-insurance) against loss or
damage of the kinds customarily insured against by corporations similarly
situated and owning like properties, including, but not limited to, products
liability insurance and public liability insurance, with reputable insurers or
with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which GST or such Restricted Subsidiary, as the case may be, is then
conducting business.
SECTION 4.18. NOTICE OF DEFAULTS. In the event that GST or the Issuer
becomes aware of any Default or Event of Default, GST or the Issuer, promptly
after it becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.19. COMPLIANCE CERTIFICATES. (a) GST shall deliver to the
Trustee, within 90 days after the end of GST's fiscal year, an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that occurred during such fiscal year. Such certificates shall contain a
certification from the principal executive officer, principal financial officer
or principal accounting officer of GST that a review has been conducted of the
activities of GST and the Restricted Subsidiaries and GST's and the Restricted
Subsidiaries' performance under this Indenture and that, to the best knowledge
of such officer, GST has complied with all conditions and covenants under this
Indenture. For purposes of this Section 4.19, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. If any such officer knows of such a Default or
Event of Default, the certificate shall describe any such Default or Event of
Default and its status.
(b) GST shall deliver to the Trustee, within 90 days after the end of
its fiscal year, a certificate signed by GST's independent certified public
accountants stating (i) that their audit examination has included a review of
the terms of this Indenture and the Securities as they relate to accounting
matters, (ii) that they have read the most recent Officers' Certificate
delivered to the Trustee pursuant to paragraph (a) of this Section 4.19 and
(iii) whether, in connection with their audit examination, anything came to
their attention that caused them to believe that GST or the Issuer was not in
compliance with any of the terms, covenants, provisions or conditions of
58
<PAGE>
Article Four and Section 5.01 of this Indenture as they pertain to accounting
matters and, if any Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; PROVIDED that such
independent certified public accountants shall not be liable in respect of such
statement by reason of any failure to obtain knowledge of any such Default or
Event of Default that would not be disclosed in the course of an audit
examination conducted in accordance with generally accepted auditing standards
in effect at the date of such examination.
(c) Within 90 days of the end of each of GST's fiscal years, GST shall
deliver to the Trustee a list of all Significant Subsidiaries. The Trustee shall
have no duty with respect to any such list except to keep it on file and make it
available for inspection by the Holders upon reasonable notice to the Trustee
and during normal business hours.
SECTION 4.20. COMMISSION REPORTS AND REPORTS TO HOLDERS. At all times
from and after the earlier of (i) the date of the commencement of an Exchange
Offer or the effectiveness of the Shelf Registration Statement (the
"REGISTRATION") and (ii) six months after the Closing Date, in either case,
whether or not the Company is then required to file reports with the Commission,
the Company shall file with the Commission all such reports and other
information as it would be required to file with the Commission by Sections
13(a) or 15(d) under the Exchange Act if it were subject thereto. In addition,
at all times prior to the earlier of the date of the Registration and six months
after the Closing Date, the Company shall, at its cost, deliver to each Holder
of the Securities quarterly and annual reports substantially equivalent to those
which would be required by the Exchange Act. In addition, at all times prior to
the Registration, upon the request of any Holder or any prospective purchaser of
the Securities designated by a Holder, the Company shall supply to such Holder
or such prospective purchaser the information required under Rule 144A under the
Securities Act. Whether or not GST is required to file reports with the
Commission, if any Securities are outstanding, GST shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Exchange Act. The
Company and GST shall supply the Trustee and each Holder of Securities or shall
supply to the Trustee for forwarding to each Holder, without cost to such Holder
or the Trustee, copies of such reports or other information.
SECTION 4.21. WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the
Issuer and GST 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 law or other
law that would prohibit or forgive the Issuer or GST, as the case may be, from
paying all or any portion of the principal of, premium, if any, or interest on
the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) each of the Issuer and
GST 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
59
<PAGE>
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.22. ADDITIONAL AMOUNTS. Any payments made by GST under or
respect to the Securities pursuant to the Security Guarantee will be made free
and clear of and without withholding or deduction for or on account of any
present or future tax, duty, levy, impost, assessment or other governmental
charge (including penalties, interest and other liabilities related thereto)
imposed or levied by or on behalf of the Government of Canada or of any province
or territory thereof or by any authority or agency therein or thereof having
power to tax (hereinafter "TAXES"), unless GST is required to withhold or deduct
Taxes by law or by the interpretation or administration thereof. If GST is
required to withhold or deduct any amount for or on account of Taxes from any
payment made under or with respect to the Securities, GST will pay such
additional amounts ("ADDITIONAL AMOUNTS") as may be necessary, so that the net
amount received by each Holder of Securities (including Additional Amounts)
after such withholding or deduction will not be less than the amount such Holder
would have received if such Taxes had not been withheld or deducted; PROVIDED,
HOWEVER, that no Additional Amounts will be payable with respect to a payment
made to a Holder (an "EXCLUDED HOLDER") (i) with which GST does not deal at
arm's length (within the meaning of the Income Tax Act (Canada)) at the time of
making such payment, or (ii) which is subject to such Taxes by reason of its
being connected with Canada or any province or territory thereof otherwise than
solely by reason of the Holder's activity in connection with purchasing the
Securities, by the mere holding of Securities or by reason of the receipt of
payments thereunder. GST will, upon written request of any Holder (other than an
Excluded Holder), reimburse such Holder, for the amount of (i) any Taxes so
levied or imposed and paid by such Holder as a result of payments made under or
with respect to the Securities and (ii) any Taxes so levied or imposed with
respect to any reimbursement under the foregoing clause (i), but excluding any
such Taxes on such Holder's net income so that the net amount received by such
Holder after such reimbursement will not be less than the net amount the Holder
would have received if Taxes on such reimbursement had not been imposed.
At least 30 days prior to each date on which any payment under or with
respect to the Securities is due and payable, if GST will be obligated to pay
Additional Amounts with respect to such payment, GST will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to Holders on the
payment date. Whenever in this Indenture there is mentioned, in any context, the
payment of principal (or premium, if any), Redemption Price, interest or any
other amount payable under or with respect to any Security, such mention shall
be deemed to include mention of the payment of Additional Amounts to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof.
60
<PAGE>
SECTION 4.23. ASSUMPTION OF SECURITIES BY GST USA. (a) On May 1, 2003,
or earlier if permitted under the terms of the Existing Indentures, GST USA and
GST will execute and deliver a supplemental indenture to this Indenture in the
form attached hereto as Exhibit E and GST USA will execute and deliver a
Collateral Pledge and Security Agreement substantially in the form of the Pledge
Agreement in favor of the Trustee granting to the Trustee for the benefit of the
Holders of the Securities a first priority security interest in all Acquired
Equipment that secured the Intercompany Notes or was held by the Company on the
Assumption Date.
(b) On the Assumption Date, GST USA will deliver to the Trustee an
Opinion of Counsel to the effect that, after giving effect to the assumption of
the Securities by GST USA pursuant to the supplemental indenture delivered
pursuant to clause (a) above:
(i) each of the Securities and this Indenture constitutes a
valid and binding obligation of GST USA in accordance with its terms
and the Securities are entitled to the benefits of this Indenture,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equitable principles;
(ii) each of this Indenture and the indenture supplement
delivered under clause (a) above constitutes a valid and binding
obligation of GST in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equitable principles; and
(iii) GST USA has granted to the Trustee for the benefit of
the holders of the Securities a valid and perfected first priority
security interest in all Acquired Equipment that secured the
Intercompany Notes or was held by the Company on the Assumption Date to
secure the payment of principal of and interest on, and any other
amounts owing in respect of, the Securities.
(c) On the Assumption Date, upon delivery of the Opinion of
Counsel pursuant to clause (b) above, GST USA will liquidate the Company and
will cause the Company to distribute all of its assets (if any) to GST USA.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. CONSOLIDATION, MERGER AND SALE OF ASSETS. Neither GST nor
GST USA shall consolidate with, merge with or into, or sell, convey, transfer,
lease or otherwise dispose of all or substantially all of its property and
assets (as an entirety or substantially an
61
<PAGE>
entirety in one transaction or a series of related transactions) to, any Person
(other than a consolidation or merger with or into a Wholly Owned Restricted
Subsidiary with a positive net worth; PROVIDED that, in connection with any such
merger or consolidation, no consideration (other than Common Stock in the
surviving Person, GST or GST USA) shall be issued or distributed to the
stockholders of GST or GST USA) or permit any Person to merge with or into GST
or GST USA unless:
(i) GST or GST USA shall be the continuing Person, or the
Person (if other than GST or GST USA) formed by such consolidation or
into which GST or GST USA is merged or that acquired or leased such
property and assets of GST or GST USA shall be a corporation organized
and validly existing under the laws of the United States of America or
any jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the
obligations of GST or GST USA, as the case may be, on all of the
Securities, the Intercompany Notes and the Security Guarantee and under
this Indenture;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a
PRO FORMA basis, GST, GST USA or any Person becoming the successor
obligor of the Securities or the Security Guarantee, as the case may
be, shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of GST or GST USA, as the case may be,
immediately prior to such transaction;
(iv) immediately after giving effect to such transaction on a
PRO FORMA basis GST or GST USA, as the case may be, or any Person
becoming the successor obligor of the Securities or the Security
Guarantee, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03(a); and
(v) GST or GST USA, as the case may be, delivers to the
Trustee an Officers' Certificate (attaching the arithmetic computations
to demonstrate compliance with clauses (iii) and (iv)) and Opinion of
Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision
and that all conditions precedent provided for herein relating to such
transaction have been complied with; PROVIDED, HOWEVER, that clauses
(iii) and (iv) above do not apply if, in the good faith determination
of the Board of Directors of GST or GST USA, as the case may be, whose
determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the jurisdiction of
incorporation of GST to a state in the United States or of GST USA to
another state of the United States; and PROVIDED FURTHER that any
62
<PAGE>
such transaction shall not have as one of its purposes the evasion of
the foregoing limitations.
The restrictions and conditions described in the preceding paragraph
shall also apply to the Company except that clauses (iii) and (iv) shall not
apply to a merger or consolidation of GST USA and the Company or the sale,
conveyance or other disposition of all or substantially all of the assets of the
Company to GST USA.
SECTION 5.02. SUCCESSOR SUBSTITUTED. Upon any consolidation or merger,
or any sale, conveyance, transfer or other disposition of all or substantially
all of the property and assets of the Company, GST USA or GST in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company, GST USA or GST is merged or to which
such sale, conveyance, transfer or other disposition is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company,
GST USA or GST, as the case may be, under this Indenture with the same effect as
if such successor Person had been named as the Company, GST USA or GST, as the
case may be, herein; PROVIDED that the Company, GST USA or GST, as the case may
be, shall not be released from its obligations to pay the principal of, premium,
if any, or interest on the Securities in the case of a lease of all or
substantially all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall occur with
respect to the Securities if:
(a) the Issuer defaults in the payment of principal of (or
premium, if any, on) any Security when the same becomes due and payable
at maturity, upon acceleration, redemption or otherwise;
(b) the Issuer defaults in the payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(c) the Company, GST USA or GST defaults in the performance of
or breaches any other covenant or agreement of the Company, GST USA or
GST in this Indenture or under the Securities, the Security Guarantee,
the Fee Notes or any Intercompany Note and such default or breach
continues for a period of 30 consecutive days after written notice by
the Trustee or the Holders of 25% or more in aggregate principal amount
of Securities;
63
<PAGE>
(d) there occurs with respect to any issue or issues of
Indebtedness of GST or any Significant Subsidiary having an outstanding
principal amount of $5 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the
holder thereof to declare such Indebtedness to be due and payable prior
to its Stated Maturity and such Indebtedness has not been discharged in
full or such acceleration has not been rescinded or annulled within 30
days of such acceleration and/or (II) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such
defaulted payment shall not have been made, waived or extended within
30 days of such payment default;
(e) any final judgment or order (not covered by insurance) for
the payment of money in excess of $5 million in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company, GST USA, GST or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any
period of 30 consecutive days following entry of the final judgment or
order that causes the aggregate amount for all such final judgments or
orders outstanding and not paid or discharged against all such Persons
to exceed $5 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
(f) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company, GST USA, GST
or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company,
GST USA, GST or any Significant Subsidiary (other than a liquidation of
the Company into GST USA in connection with the assumption of the
Securities) or for all or substantially all of the property and assets
of the Company, GST USA, GST or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company, GST USA, GST
or any Significant Subsidiary (other than a liquidation of the Company
into GST USA in connection with the assumption of the Securities) and,
in each case, such decree or order shall remain unstayed and in effect
for a period of 30 consecutive days;
(g) the Company, GST USA, GST or any Significant Subsidiary
(A) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents
to the entry of an order for relief in an involuntary case under any
such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company, GST USA, GST or any Significant
Subsidiary (other than a liquidation of the Company into GST USA in
connection with the assumption of the
64
<PAGE>
Securities) or for all or substantially all of the property and assets
of the Company, GST USA, GST or any Significant Subsidiary or (C)
effects any general assignment for the benefit of creditors;
(h) the Trustee or the Company does not have at all times a
first priority perfected security interest in all Pledged Securities,
the Pledge Account, all Acquired Equipment, the Fee Notes and
Intercompany Notes or the Company, GST USA or GST asserts in writing
that the security arrangements under this Indenture, the Pledge
Account, the Fee Notes and the Intercompany Notes are not in full force
and effect; or
(i) GST USA shall not have become a direct obligor on the
Securities (other than Securities to be redeemed as described under
Section 3.02 for which the Company shall have deposited the redemption
price) and GST shall not have become a guarantor of the Securities by
May 1, 2003.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event
of Default specified in clause (f) or (g) of Section 6.01 that occurs with
respect to the Company, GST USA or GST or clause (h)) occurs and is continuing
under this Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the outstanding Securities, by written notice to the Issuer
(and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the Accreted Value of,
premium, if any, and accrued interest, on the Securities to be immediately due
and payable. Upon a declaration of acceleration, such Accreted Value, premium,
if any, and accrued interest shall be immediately due and payable. In the event
of a declaration of acceleration because an Event of Default set forth in clause
(d) of Section 6.01 has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (d) shall be
remedied or cured by GST or the relevant Significant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause
(f) or (g) of Section 6.01 occurs with respect to the Company, GST USA or GST or
an Event of Default specified in clause (h) occurs, the Accreted Value of,
premium, if any, and accrued interest on the Securities then outstanding 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.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may, and at the direction of the Holders of not less
than a majority of the outstanding principal amount of the Securities shall,
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
65
<PAGE>
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding.
SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Sections 6.02, 6.07
and 9.02, the Holders of at least a majority in principal amount of the
outstanding Securities, by written notice to the Issuer and to the Trustee, may
waive all past Defaults and Events of Default and rescind and annul a
declaration of acceleration (except a Default in the payment of principal of,
premium, if any, or interest on any Security as specified in clause (a) or (b)
of Section 6.01 or in respect of a covenant or provision of this Indenture which
cannot be modified or amended without the consent of the holder of each
outstanding Security affected) if (i) all existing Events of Default, other than
the nonpayment of principal of, premium, if any, or interest on the Securities
that have become due solely by such declaration of acceleration, have been cured
or waived and (ii) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction. 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 thereto.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of at least a majority
in aggregate principal amount of the outstanding Securities may 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. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of Securities not joining in the giving of such direction and may take
any other action it deems proper that is not inconsistent with any such
direction received from Holders of Securities pursuant to this Section 6.05.
SECTION 6.06. LIMITATION ON SUITS. A Holder may not pursue any remedy
with respect to this Indenture or the Securities unless:
(i) the Holder gives the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of outstanding Securities make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer and, if requested provide,
the Trustee indemnity satisfactory to the Trustee against any costs,
liabilities or expenses which may be incurred in compliance with such
request;
66
<PAGE>
(iv) the Trustee does not comply with the request within 60
days after receipt of the written request and the offer of indemnity;
and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Securities do not give
the Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section 6.06,
the Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Securities have concurred in any request or direction of the Trustee to pursue
any remedy available to the Trustee or the Holders with respect to this
Indenture or the Securities or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Security to
receive payment of the principal of, premium, if any, or interest on such
Security, or to bring suit for the enforcement of any such payment, on or after
the due date expressed in such Security, shall not be impaired or affected
without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default in
payment of principal, premium or interest specified in clause (a), (b) or (c) of
Section 6.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Issuer or any other
obligor of the Securities for the whole amount of principal, premium, if any,
and accrued interest remaining unpaid, together with interest on overdue
principal, premium, if any, and, to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the rate
specified in the Securities, and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Issuer (or any other obligor of the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Securities or upon any such claims and to distribute the same,
67
<PAGE>
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official 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 to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agent and counsel, and
any other amounts due the Trustee under Section 7.07. Nothing herein contained
shall be deemed to empower 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 Securities 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.
SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to
this Article Six, it shall pay out the money in the following order:
FIRST: to the Trustee for all amounts due under Section 7.07;
SECOND: to the Holders for amounts then due and unpaid for
principal of, premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium, if any, and interest, respectively; and
THIRD: to the Issuer or any other obligors of the Securities,
as their interests may appear, or as a court of competent jurisdiction
may direct.
The Trustee, upon prior written notice to the Issuer, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 of this Indenture, or a suit by Holders of more than 10% in principal
amount of the outstanding Securities.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
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
68
<PAGE>
such proceeding, the Issuer, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Issuer, Trustee and the Holders shall continue as
though no such proceeding had been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Securities in Section 2.09, 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 6.14. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder 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 Six 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.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. GENERAL. The duties and responsibilities of the Trustee
shall be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, 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. Whether or not herein 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
Article Seven.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to TIA Sections 315(a)
through (d):
(i) 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, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or
69
<PAGE>
presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document and may in good faith
conclusively rely as to the truth of the statements and the correctness
of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate, opinion and/or an accountants'
certificate;
(iii) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders, unless such Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory to
it against the costs, expenses and liabilities that might be incurred
by it in compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within
its rights or powers or for any action it takes or omits to take in
accordance with the direction of the Holders of a majority in principal
amount of the outstanding Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture; PROVIDED that the Trustee's conduct does not
constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(vii) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, GST USA or GST personally
or by agent or attorney; and
70
<PAGE>
(viii) any request or direction of the Company, GST USA or GST
mentioned herein shall be sufficiently evidenced by a Company Order and
any resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company, GST USA, GST or their Affiliates with
the same rights it would have if it were not the Trustee. Any Agent may do the
same with like rights. However, the Trustee is subject to TIA Sections 310(b)
and 311.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Securities, (ii) shall not be accountable for the Company's use or application
of the proceeds from the Securities and (iii) shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is known to an
officer assigned to administer corporate trust matters of the Trustee, the
Trustee shall mail to each Holder in the manner and to the extent provided in
TIA Section 313(c) notice of the Default or Event of Default within 45 days
after it occurs, unless such Default or Event of Default has been cured;
PROVIDED, HOWEVER, that, except in the case of a default in the payment of the
principal of, premium, if any, or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
May 15, beginning with May 15, 1998, the Trustee shall mail to each Holder as
provided in TIA Section 313(c) a brief report that complies with TIA Section
313(a) dated as of such May 15, if required by TIA Section 313(a).
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company and, after the
Assumption Date, GST USA and GST, jointly and severally, shall pay to the
Trustee from time to time such compensation as shall be agreed upon in writing
for its services. The compensation of the Trustee shall not be limited by any
law on compensation of a trustee of an express trust. The Company, and after the
Assumption Date, GST USA and GST, jointly and severally, shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses (including costs
of collection) and advances incurred or made by the Trustee. Such expenses shall
include the reasonable compensation and expenses of the Trustee's agents and
counsel.
71
<PAGE>
The Company, and after the Assumption Date, GST USA and GST, jointly
and severally, shall indemnify the Trustee for, and hold it harmless against,
any loss or liability or expense incurred by it without negligence or bad faith
on its part in connection with the acceptance or administration of this
Indenture and its duties under this Indenture and the Securities, including,
without limitation, the costs and expenses of defending itself against any claim
or liability and of complying with any process served upon it or any of its
officers in connection with the exercise or performance of any of its powers or
duties under this Indenture and the Securities.
To secure the Issuer's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Securities.
If the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in clause (f) or (g) of Section 6.01, the
expenses and the compensation for the services will be intended to constitute
expenses of administration under Title 11 of the United States Bankruptcy Code
or any applicable federal or state law for the relief of debtors.
SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign at any time by so notifying the Issuer in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Issuer. The Issuer may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date of
the proposed removal if: (i) the Trustee is no longer eligible under Section
7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver
or other public officer takes charge of the Trustee or its property; or (iv) the
Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the outstanding Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuer. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders
of a majority in principal amount of the outstanding Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
72
<PAGE>
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any Holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Issuer shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Issuer's obligations under Section 7.07 shall continue indefinitely
for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. ELIGIBILITY. This Indenture shall always have a Trustee
who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have
a combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition.
SECTION 7.11. MONEY HELD IN TRUST. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree in writing
with the Issuer. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law and except for money held in
trust under Article Eight of this Indenture.
SECTION 7.12. WITHHOLDING TAXES. The Trustee, as agent for the Issuer,
shall exclude and withhold from each payment of principal and interest and other
amounts due hereunder or under the Securities any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any
73
<PAGE>
amounts payable in respect of the Securities, to withhold such amounts and
timely pay the same to the appropriate authority in the name of and on behalf of
the holders of the Securities, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each holder of a Security appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such holders may reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS. Except as otherwise
provided in this Section 8.01, the Issuer may terminate the Company's, GST USA's
and GST's obligations under the Securities and this Indenture if:
(i) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities that are paid pursuant to Section 4.01 or
Securities for whose payment money or securities have theretofore been
held in trust and thereafter repaid to the Issuer, as provided in
Section 8.05) have been delivered to the Trustee for cancellation and
the Issuer has paid all sums payable by it hereunder; or
(ii) (A) the Securities mature within one year or all of them
are to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B)
the Issuer irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if, any, and interest on the Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder, (C) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, (D) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Company, GST USA or GST is a party or by which
it is bound and (E) the Issuer has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, in each case stating
that all conditions precedent provided for herein relating to the
satisfaction and discharge of this Indenture have been complied with.
74
<PAGE>
With respect to the foregoing clause (i), the Issuer's and, after the
Assumption Date, GST's and GST USA's obligations under Section 7.07 shall
survive. With respect to the foregoing clause (ii), the Issuer's obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 4.22,
7.07, 7.08, 8.04, 8.05 and 8.06 and Article Eleven and the Security Guarantee
shall survive until the Securities are no longer outstanding. Thereafter, only
the Issuer's and, after the Assumption Date, GST's and GST USA's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's, GST USA's and GST's obligations under the Securities and this
Indenture except for those surviving obligations specified above.
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE. The Issuer will be
deemed to have paid and the Company, GST USA and GST will be discharged from any
and all obligations in respect of the Securities on the 123rd day (or, to the
extent applicable under clause (B) below, one year) after the deposit referred
to in clause (A) of this Section 8.02 if:
(A) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10) and conveyed all right, title and
interest for the benefit of the Holders, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee as trust funds in trust, specifically pledged to the Trustee
for the benefit of the Holders as security for payment of the principal
of, premium, if any, and interest, if any, on the Securities, and
dedicated solely to, the benefit of the Holders, in and to (1) money in
an amount, (2) U.S. Government Obligations that, through the payment of
interest, premium, if any, and principal in respect thereof in
accordance with their terms, will provide, not later than one day
before the due date of any payment referred to in this clause (A),
money in an amount or (3) a combination thereof in an amount
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of, premium, if
any, and accrued interest on the outstanding Securities at the Stated
Maturity of such principal or interest; PROVIDED that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such principal,
premium, if any, and interest with respect to the Securities;
(B) the Issuer shall have delivered to the Trustee (i) either
(x) an Opinion of Counsel to the effect that Holders will not recognize
income, gain or loss for United States federal income tax purposes as a
result of the Issuer's exercise of its option under this Section 8.02
and will be subject to United States federal income tax on the same
amount and in the same manner and at the same times as would have been
the case if such option had not been exercised, which Opinion of
Counsel must be based upon (and accompanied
75
<PAGE>
by a copy of) a ruling of the United States Internal Revenue Service to
the same effect unless there has been a change in applicable United
States federal income tax law after the Closing Date such that a ruling
is no longer required or (y) a ruling directed to the Trustee received
from the United States Internal Revenue Service to the same effect as
the aforementioned Opinion of Counsel; (ii) an Opinion of Counsel or a
ruling from Revenue Canada, Taxation to the effect that Holders will
not recognize income, gain or loss for Canadian federal, provincial or
territorial income tax or other tax purposes as a result of such
deposit and defeasance and will be subject to Canadian federal or
provincial income tax and other tax on the same amounts, in the same
manner and at the same times as would have been the case had such
deposit and defeasance not occurred (and for purposes of such opinion,
such Canadian counsel shall assume that Holders of the Securities
include Holders who are not resident in Canada); and (iii) an Opinion
of Counsel to the effect that (x) the creation of the defeasance trust
does not violate the Investment Company Act of 1940 and (y) after the
passage of 123 days following the deposit (except, with respect to any
trust funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit), the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law in a case commenced by or
against the Company, GST USA or GST under either such statute, and
either (I) the trust funds will no longer remain the property of the
Issuer or GST (and therefore will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (II) if a court were to rule
under any such law in any case or proceeding that the trust funds
remained property of the Issuer or GST (a) assuming such trust funds
remained in the possession of the Trustee prior to such court ruling to
the extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid and perfected security interest in such
trust funds that is not avoidable in bankruptcy or otherwise (except
for the effect of Section 552(b) of the United States Bankruptcy Code
on interest on the trust funds accruing after the commencement of a
case under such statute), (b) the Holders will be entitled to receive
adequate protection of their interests in such trust funds if such
trust funds are used in such case or proceeding and (c) no property,
rights in property or other interests granted to the Trustee or the
Holders in exchange for, or with respect to, such trust funds will be
subject to any prior rights of holders of other Indebtedness of the
Company, GST USA, GST, or any of its Subsidiaries;
(C) immediately after giving effect to such deposit on a PRO
FORMA basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on
the 123rd day (or one year) after the date of such deposit, and such
deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company,
GST USA, GST or any of their respective Subsidiaries is a party or by
which the Company, GST USA, GST or any of their respective Subsidiaries
is bound;
76
<PAGE>
(D) if the Securities are then listed on a national securities
exchange, the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Securities will not be delisted as a
result of such deposit, defeasance and discharge; and
(E) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (B)(iii)(y) of this Section 8.02, none of the
Company's, GST USA's or GST's obligations under this Indenture shall be
discharged. Subsequent to the end of such 123- day (or one year) period with
respect to this Section 8.02, the Company's, GST USA's and GST's obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 4.22,
7.07, 7.08, 8.05 and 8.06 and Article Eleven and the Security Guarantee shall
survive until the Securities are no longer outstanding. Thereafter, only the
Issuer's obligations in Sections 7.07, 8.05 and 8.06 shall survive. If and when
a ruling from the United States Internal Revenue Service or an Opinion of
Counsel referred to in clause (B)(i) of this Section 8.02 may be provided
specifically without regard to, and not in reliance upon, the continuance of the
Issuer's obligations under Section 4.01 and GST's obligations under the Security
Guarantee, then the Issuer's obligations under such Section 4.01 and GST's
obligations under the Security Guarantee shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance contemplated
by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's, GST USA's and GST's
obligations under the Securities and this Indenture except for those surviving
obligations in the immediately preceding paragraph.
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS. The Company, GST USA
and GST may omit to comply with any term, provision or condition set forth in
clauses (iii) and (iv) of Section 5.01 and Sections 4.03 through 4.21, and
clause (c) of Section 6.01 with respect to clauses (iii) and (iv) of Section
5.01 and Sections 4.03 through 4.21, and clauses (d), (e) and (h) of Section
6.01 shall be deemed not to be Events of Default, in each case with respect to
the outstanding Securities if:
(i) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10) and conveyed all right, title and
interest to the Trustee for the benefit of the Holders, under the terms
of an irrevocable trust agreement in form and substance satisfactory to
the Trustee as trust funds in trust, specifically pledged to the
Trustee for the benefit of the Holders as security for payment of the
principal of, premium, if any, and interest, if any, on the
77
<PAGE>
Securities, and dedicated solely to, the benefit of the Holders, in and
to (A) money in an amount, (B) U.S. Government Obligations that,
through the payment of interest and principal in respect thereof in
accordance with their terms, will provide, not later than one day
before the due date of any payment referred to in this clause (i),
money in an amount or (C) a combination thereof in an amount
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of, premium, if
any, and interest on the outstanding Securities on the Stated Maturity
of such principal or interest; PROVIDED that the Trustee shall have
been irrevocably instructed to apply such money or the proceeds of such
U.S. Government Obligations to the payment of such principal, premium,
if any, and interest with respect to the Securities;
(ii) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Company, GST USA, GST or any of their
respective Subsidiaries is a party or by which it is bound;
(iii) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(iv) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940, (B) the Holders
have a valid first-priority security interest in the trust funds, (C)
the Holders will not recognize income, gain or loss for United States
federal income tax purposes as a result of such deposit and the
defeasance of the obligations referred to in the first paragraph of
this Section 8.03 and will be subject to United States federal income
tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not
occurred, (D) the Holders will not recognize income, gain or loss for
Canadian federal, provincial or territorial income tax or other tax
purposes as a result of such deposit and the defeasance of the
obligations referred to in the first paragraph of this Section 8.03 and
will be subject to Canadian federal or provincial income tax and other
tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not
occurred and (E) after the passage of 123 days following the deposit
(except, with respect to any trust funds for the account of any Holder
who may be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust funds
will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law
in a case commenced by or against the Issuer or GST under either such
statute, and either (1) the trust funds will no longer remain the
property of the Issuer or GST (and therefore will not be subject to the
78
<PAGE>
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (2) if a court
were to rule under any such law in any case or proceeding that the
trust funds remained property of the Issuer or GST (x) assuming such
trust funds remained in the possession of the Trustee prior to such
court ruling to the extent not paid to the Holders, the Trustee will
hold, for the benefit of the Holders, a valid and perfected security
interest in such trust funds that is not avoidable in bankruptcy or
otherwise (except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (y) the Holders will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding and
(z) no property, rights in property or other interests granted to the
Trustee or the Holders in exchange for, or with respect to, such trust
funds will be subject to any prior rights of holders of other
Indebtedness of GST, GST USA, the Company or any of its Subsidiaries;
(v) if the Securities are then listed on a national securities
exchange, the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit and defeasance will not cause
the Securities to be delisted; and
(vi) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. APPLICATION OF TRUST MONEY. Subject to Section 8.06, the
Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
and shall apply the deposited money and the money from U.S. Government
Obligations in accordance with the Securities and this Indenture to the payment
of principal of, premium, if any, and interest on the Securities; but such money
need not be segregated from other funds except to the extent required by law.
SECTION 8.05. REPAYMENT TO ISSUER. Subject to Sections 7.07, 8.01, 8.02
and 8.03, the Trustee and the Paying Agent shall promptly pay to the Issuer upon
request any excess money held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Issuer any money held by them for the payment of
principal, premium, if any, or interest that remains unclaimed for two years;
PROVIDED that the Trustee or such Paying Agent before being required to make any
payment may cause to be published at the expense of the Issuer once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money at such Holder's address (as set forth in the Security
Register) notice that such money remains unclaimed and that after a date
specified therein (which shall be at least 30 days from the date of such
publication or mailing) any unclaimed balance of such money then remaining will
be repaid to the Issuer. After payment to the Issuer, Holders entitled to such
money must look to the Issuer for payment as general creditors
79
<PAGE>
unless an applicable law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with Section
8.01, 8.02 or 8.03, as the case may be, by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's,
GST USA's and GST's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.01, 8.02 or 8.03, as the case may be, until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.01, 8.02 or 8.03, as the case may be; PROVIDED that,
if the Company, GST USA or GST has made any payment of principal of, premium, if
any, or interest on any Securities because of the reinstatement of its
obligations, the Company, GST USA or GST, as the case may be, shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
SECTION 8.07. INSIDERS. With respect to the determination of the
Persons constituting beneficial owners of Securities and whether any such Person
is an "insider" for purposes of Sections 8.02(B)(iii)(y) and 8.03(iv)(E), the
Trustee may rely on an Officers' Certificate.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, GST USA and GST,
when authorized by resolutions of their Boards of Directors, and the Trustee may
amend or supplement this Indenture, the Securities or the Pledge Agreement
without notice to or the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency in this
Indenture or the Pledge Agreement; PROVIDED that such amendments or
supplements shall not adversely affect the interests of the Holders in
any material respect;
(b) to comply with Article Five or Section 4.23 hereof;
(c) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
80
<PAGE>
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(e) to make any change that, in the opinion of the Board of
Directors of GST evidenced by a Board Resolution, does not materially
and adversely affect the rights of any Holder.
SECTION 9.02. WITH CONSENT OF HOLDERS. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, GST USA and GST, when
authorized by their Boards of Directors (as evidenced by a Board Resolution),
and the Trustee may amend this Indenture, the Securities or the Pledge Agreement
with the written consent of the Holders of a majority in aggregate principal
amount of the outstanding Securities, and the Holders of a majority in aggregate
principal amount of the outstanding Securities by written notice to the Trustee
may waive future compliance by the Company, GST USA or GST with any provision of
this Indenture, the Securities or the Pledge Agreement.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security;
(ii) reduce the Accreted Value or principal of, or premium, if
any, or interest on, any Security or adversely affect any right of
repayment at the option of any Holder of any Security;
(iii) change the place or currency of payment of principal of,
or premium, if any, or interest on, any Security;
(iv) impair the right to institute suit for the enforcement of
any payment on or after the Stated Maturity (or, in the case of a
redemption, on or after the Redemption Date) of any Security;
(v) reduce the percentage of outstanding Securities the
consent of whose Holders is required for any such supplemental
indenture or for any waiver of compliance with certain provisions of
this Indenture or certain Defaults and their consequences provided for
in this Indenture;
(vi) waive a default in the payment of principal of, premium,
if any, or interest on the Securities;
81
<PAGE>
(vii) amend or modify the terms of the Pledge Agreement in a
manner that would materially and adversely affect the Holders;
(viii) release GST from its Security Guarantee; or
(ix) modify any of the provisions of this Section 9.02, except
to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Issuer shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Issuer will
mail supplemental indentures to Holders upon request. Any failure of the Issuer
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. REVOCATION AND EFFECT OF CONSENT. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the Security of the consenting Holder, even if
notation of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to its Security or portion of its
Security. Such revocation shall be effective only if the Trustee receives the
notice of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Securities.
The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement 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.
82
<PAGE>
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in any of clauses (i)
through (ix) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (ix) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Security that evidences the same indebtedness as the Security of the consenting
Holder.
SECTION 9.04. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment,
supplement or waiver changes the terms of a Security, the Trustee may require
the Holder to deliver such Security to the Trustee. At the Issuer's expense the
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder and the Trustee may place an appropriate
notation on any Security thereafter authenticated. Alternatively, if the Issuer
or the Trustee so determines, the Issuer in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Subject to the preceding sentence, the Trustee shall sign such
amendment, supplement or waiver if the same does not adversely affect the rights
of the Trustee. The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
MEETINGS OF HOLDERS
SECTION 10.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of
Holders may be called at any time and from time to time pursuant to the
provisions of this Article Ten for any of the following purposes:
(a) to give any notice to the Issuer or to the Trustee, or to
give any directions to the Trustee, or to waive or to consent to the
waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Holders pursuant to any of the provisions of Article Six;
83
<PAGE>
(b) to remove the Trustee or appoint a successor Trustee
pursuant to the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant
to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount at
maturity of the Securities under any other provision of this Indenture,
or authorized or permitted by law.
SECTION 10.02. MANNER OF CALLING MEETINGS. The Trustee may at any time
call a meeting of Holders to take any action specified in Section 10.01, to be
held at such time and at such place in The City of New York, New York or
elsewhere as the Trustee will determine. Notice of every meeting of Holders,
setting forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting, will be mailed by the Trustee, first-class
postage prepaid, to the Issuer and to the Holders at their last addresses as
they will appear on the registration books of the Registrar not less than 10 nor
more than 60 days prior to the date fixed for a meeting.
Any meeting of Holders will be valid without notice if the Holders of
all outstanding Securities are present in Person or by proxy, or if notice is
waived before or after the meeting by the Holders of all outstanding Securities,
and if the Issuer and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
SECTION 10.03. CALL OF MEETINGS BY ISSUER OR HOLDERS. In case at any
time the Issuer, pursuant to a Board Resolution, or the Holders of not less than
10% in aggregate principal amount at maturity of the outstanding Securities will
have requested the Trustee to call a meeting of Holders to take any action
specified in Section 10.01, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee will not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Issuer or the Holders of Securities in the amount above
specified may determine the time and place in The City of New York, New York or
elsewhere for such meeting and may call such meeting for the purpose of taking
such action, by mailing or causing to be mailed notice thereof as provided in
Section 10.02, or by causing notice thereof to be published at least once in
each of two successive calendar weeks (on any Business Day during such week) in
a newspaper or newspapers printed in the English language, customarily published
at least five days a week of a general circulation in The City of New York,
State of New York, the first such publication to be not less than 10 nor more
than 60 days prior to the date fixed for the meeting.
84
<PAGE>
SECTION 10.04. WHO MAY ATTEND AND VOTE AT MEETINGS. To be entitled to
vote at any meeting of Holders, a Person will (i) be a registered Holder of one
or more Securities, or (ii) be a Person appointed by an instrument in writing as
proxy for the registered Holder or Holders of Securities. The only Persons who
will be entitled to be present or to speak at any meeting of Holders will be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Issuer or GST and their counsel.
SECTION 10.05. QUORUM; ACTION. The Persons entitled to vote a majority
in principal amount of the outstanding Securities shall constitute a quorum. In
the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Securities,
be dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 10.02, except that such
notice need be given only once and not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the principal amount
of the outstanding Securities which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned
for a lack of a quorum, the Persons entitled to vote 25% in principal amount at
maturity of the outstanding Securities at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any action or matter, except as otherwise
specified herein, shall be effectively passed and decided if passed or decided
by the Persons entitled to vote not less than a majority in principal amount at
maturity of outstanding Securities represented and voting at such meeting.
Any action or matter passed or decision taken at any meeting of Holders
of Securities duly held in accordance with this Section 10.05 shall be binding
on all the Holders of Securities, whether or not present or represented at the
meeting.
SECTION 10.06. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE
MEETING; VOTING RIGHTS; ADJOURNMENT. Notwithstanding any other provision of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any action by or any meeting of Holders, in regard to proof of the
holding of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, and submission and examination
85
<PAGE>
of proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it will think appropriate. Such
regulations may fix a record date and time for determining the Holders of record
of Securities entitled to vote at such meeting, in which case those and only
those Persons who are Holders of Securities at the record date and time so
fixed, or their proxies, will be entitled to vote at such meeting whether or not
they will be such Holders at the time of the meeting.
The Trustee will, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting will have been called by the Issuer
or by Holders as provided in Section 10.03, in which case the Issuer or the
Holders calling the meeting, as the case may be, will in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting will be elected by vote of the Holders of a majority in principal amount
at maturity of the Securities represented at the meeting and entitled to vote.
At any meeting each Holder or proxy will, subject to the provisions of
Section 10.04 hereof, be entitled to one vote for each $1,000 principal amount
at maturity of Securities held or represented by him or her; PROVIDED, HOWEVER,
that no vote will be cast or counted at any meeting in respect of any Securities
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman may adjourn any such meeting if he is unable to
determine whether any Holder or proxy will be entitled to vote at such meeting.
The chairman of the meeting will have no right to vote other than by virtue of
Securities held by him or instruments in writing as aforesaid duly designating
him as the proxy to vote on behalf of other Holders. Any meeting of Holders duly
called pursuant to the provisions of Section 10.02 or Section 10.03 may be
adjourned from time to time by vote of the Holders of a majority in aggregate
principal amount at maturity of the Securities represented at the meeting and
entitled to vote, and the meeting may be held as so adjourned without further
notice.
SECTION 10.07. VOTING AT THE MEETING AND RECORD TO BE KEPT. The vote
upon any resolution submitted to any meeting of Holders will be by written
ballots on which will be subscribed the signatures of the Holders of Securities
or/of their representatives by proxy and the principal amount at maturity of the
Securities voted by the ballot. The permanent chairman of the meeting will
appoint two inspectors of votes, who will count all votes cast at the meeting
for or against any resolution and will make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Holders
will be prepared by the secretary of the meeting and there will be attached to
such record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more Persons having knowledge of
the facts, setting forth a copy of the notice of the meeting and showing that
such notice was mailed as provided in Section 10.02. The record will be signed
and verified by the affidavits of the permanent chairman and the secretary of
the meeting and one of the duplicates will be delivered to the Issuer and the
86
<PAGE>
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting.
Any record so signed and verified will be conclusive evidence of the
matters therein stated.
SECTION 10.08. EXERCISE OF RIGHTS OF TRUSTEE OR HOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING. Nothing contained in this Article Ten
will be deemed or construed to authorize or permit, by reason of any call of a
meeting of Holders or any rights expressly or impliedly conferred hereunder to
make such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Holders under any of the
provisions of this Indenture or of the Securities.
SECTION 10.09. PROCEDURES NOT EXCLUSIVE. The procedures set forth in
this Article Ten are not exclusive and the rights and obligations of the Issuer,
GST, the Trustee and the Holders under other Articles of this Indenture
(including, without limitation, Articles Six, Seven, Eight and Nine) will in no
way be limited by the provisions of this Article Ten.
ARTICLE ELEVEN
SECURITY
SECTION 11.01. SECURITY. (a) On the Closing Date, the Company shall (i)
enter into the Pledge Agreement and comply with the terms and provisions thereof
and (ii) purchase the Pledged Securities to be pledged to the Trustee for the
benefit of the Holders in an amount equal to the net proceeds to be received by
the Company from the sale of the Securities (plus all cash owned by the Company
on the Closing Date). The Pledged Securities shall be pledged by the Company to
the Trustee for the benefit of the Holders and shall be held by the Trustee in
the Pledge Account pending disposition pursuant to the Pledge Agreement.
(b) On the Closing Date, GST USA, GST and the Company shall
enter into the Reimbursement and Commitment Fee Agreement. The Securities will
be secured by a first priority security interest in the Pledged Securities and
in the Pledge Account and by a first priority security interest in the Company's
rights under the Reimbursement and Commitment Fee Agreement and any Fee Notes
issued thereunder.
(c) Each Holder, by its acceptance of a Security, consents and
agrees to the terms of the Pledge 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
Agreement and to perform its respective obligations and exercise its
87
<PAGE>
respective 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, or as
may be required by the provisions of the Pledge Agreement, to assure and confirm
to the Trustee the security interest in the Pledged Securities contemplated
hereby, by the Pledge Agreement or any part thereof, as from time to time
constituted, so as to render the same available for the security and benefit of
this Indenture and of the Securities secured hereby, according to the intent and
purposes herein expressed. The Company shall take, or shall cause to be taken,
any and all actions reasonably required (and any action requested by the
Trustee) to cause the Pledge Agreement to create and maintain, as security for
the obligations of the Company under this Indenture and the Securities, valid
and enforceable first priority security interests in and on all the Pledged
Securities, the Pledge Account, the Fee Notes, the Intercompany Notes and the
Acquired Equipment in favor of the Trustee, superior to and prior to the rights
of third Persons and subject to no other Liens.
(d) Upon written request by the Company to the Trustee,
Pledged Securities shall be released from the Pledge Account to the Company in
order to finance the cost (including, without limitation, the cost of design,
development, construction, acquisition, installation or integration)
(collectively, "ACQUIRED EQUIPMENT COST") of telecommunications inventory or
equipment purchased or leased by the Company ("ACQUIRED EQUIPMENT"). The release
of amounts to the Company in order to finance Acquired Equipment Cost shall
occur concurrently with the expenditure of funds by the Company with respect to
such costs and shall be in an amount equal to such costs. Immediately upon the
acquisition of Acquired Equipment, the Company shall grant a first priority
security interest in such Acquired Equipment to the Trustee for the benefit of
the Holders of the Securities. GST USA shall purchase all Acquired Equipment
from the Company at a purchase price equal to the Acquired Equipment Cost for
such Acquired Equipment and the purchase price shall be paid in the form of an
Intercompany Note in a principal amount equal to the Acquired Equipment Cost,
issued by GST USA and fully and unconditionally guaranteed by GST. Each
Intercompany Note shall be secured by a first priority security interest in all
Acquired Equipment purchased by GST USA. The Company shall grant a first
priority security interest in all Intercompany Notes to the Trustee for the
benefit of the Holders of the Securities. On the Assumption Date, GST USA shall
grant a first priority security interest in all Acquired Equipment securing
Intercompany Notes or then held by the Company to the Trustee for the benefit of
the Holders of the Securities.
(e) The release of any Pledged Securities pursuant to the
Pledge 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 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 Agreement (other than pursuant to Sections 7(a), 7(b) or 7(c) thereof)
88
<PAGE>
and relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Pledge 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.
(f) The Company shall cause TIA Section 314(b), relating to
opinions of counsel regarding the Lien under the Pledge Agreement, to be
complied with. The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such instruments.
(g) 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 at maturity of Securities then outstanding 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 Agreement and (ii) collect
and receive any and all amounts payable in respect of the obligations of the
Company 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).
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT OF 1939. Prior to the effectiveness
of the Registration Statement, this Indenture shall incorporate and be governed
by the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. After the effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of the TIA that are
required to be a part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 12.02. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail addressed as follows:
89
<PAGE>
IF TO THE COMPANY:
GST Network Funding, Inc.
4001 Main Street
Vancouver, Washington 98663
Attention: Chief Executive Officer
IF TO GST USA:
GST USA, Inc.
4001 Main Street
Vancouver, Washington 98663
Attention: Chief Executive Officer
IF TO GST:
GST Telecommunications, Inc.
4001 Main Street
Vancouver, Washington 98663
Attention: Chief Executive Officer
IF TO THE TRUSTEE:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
The Company, GST USA, GST or the Trustee by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Security Register by first class mail
and shall be sufficiently given to him if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
and except as otherwise provided in this Indenture, if a notice or communication
is mailed in the manner provided in this Section 12.02, it is duly given,
whether or not the addressee receives it.
90
<PAGE>
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 give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 12.03. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company, GST USA or GST to the
Trustee to take any action under this Indenture, the Company, GST USA or GST
shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
SECTION 12.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each person 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 statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
PROVIDED, HOWEVER, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
91
<PAGE>
SECTION 12.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR. The Trustee
may make reasonable rules for action by or at a meeting of Holders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 12.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If an Interest
Payment Date, Redemption Date, Payment Date, Stated Maturity or date of maturity
of any Security shall not be a Business Day, then payment of principal of,
premium, if any, or interest on such Security, as the case may be, 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, Payment Date,
Redemption Date, or at the Stated Maturity or date of maturity of such Security;
PROVIDED that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 12.07. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. This
Indenture and the Securities shall be governed by the laws of the State of New
York. Each of the Company, GST USA and GST will appoint Olshan Grundman Frome &
Rosenzweig LLP, 505 Park Avenue, New York, New York 10022, Attention: David
Adler, Esq. as its agent for service of process in any suit, action or
proceeding with respect to this Indenture or the Securities and for actions
brought under federal or state securities laws brought in any federal or state
court located in The City of New York and each of the Company, GST USA and GST
agrees to submit to the jurisdiction of any such court.
SECTION 12.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company, GST USA, GST or any of their Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.09. NO RECOURSE AGAINST OTHERS. No recourse for the payment
of the principal of, premium, if any, or interest on any of the Securities, or
for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company, GST USA or
GST contained in this Indenture, or in any of the Securities, or because of the
creation of any Indebtedness represented thereby, shall be had against any
incorporator or against any past, present or future partner, shareholder, other
equityholder, officer, director, employee or controlling person, as such, of the
Company, GST USA or GST or of any successor Person, either directly or through
the Company, GST USA or GST or any successor Person, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Securities.
92
<PAGE>
SECTION 12.10. SUCCESSORS. All agreements of the Company, GST USA and
GST in this Indenture and the Securities shall bind their respective successors.
All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.11. 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.
SECTION 12.12. SEPARABILITY. In case any provision in this Indenture or
in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
93
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
GST NETWORK FUNDING, INC.
By:/s/ Stephen Irwin
----------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST USA, INC.
By:/s/ Stephen Irwin
----------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST TELECOMMUNICATIONS, INC.
By:/s/ Stephen Irwin
----------------------------------
Name: Stephen Irwin
Title: Vice Chairman and
Secretary
UNITED STATES TRUST COMPANY
OF NEW YORK
By:/s/ Louis Young
----------------------------------
Name: Louis Young
Title: Vice President
94
<PAGE>
EXHIBIT A
[FACE OF NOTE]
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT DANIEL
TRAMPUSH, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (360) 906-7100.
GST NETWORK FUNDING, INC.
10 1/2% Senior Secured Discount Note due 2008
[CUSIP _______]
No. ____________ $_________
GST NETWORK FUNDING, INC., a Delaware corporation (the "COMPANY" or
together with any successor under the Indenture hereinafter referred to, the
"ISSUER") for value received, promises to pay to __________, or its registered
assigns, the principal sum of $__________ on May 1, 2008.
Interest Payment Dates: May 1 and November 1, commencing November 1,
2003.
Regular Record Dates: April 15 and October 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Date: ____________ GST NETWORK FUNDING, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 10 1/2% Senior Secured Discount Notes due 2008 described in
the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Trustee
By:
------------------------------
Authorized Signatory
A-2
<PAGE>
[REVERSE SIDE OF NOTE]
GST NETWORK FUNDING, INC.
10 1/2% Senior Secured Discount Note due 2008
1. PRINCIPAL AND INTEREST.
On or after May 1, 2003, or earlier if permitted by the Existing
Indentures (the "ASSUMPTION DATE"), the Notes will be unconditionally and
irrevocably assumed by GST USA, Inc. a Delaware corporation ("GST USA"), and
guaranteed (the "NOTE GUARANTEE") by GST Telecommunications, Inc., a federally
chartered Canadian corporation ("GST"). As used in this Note, the term Issuer
means the Company until GST USA becomes the obligor hereunder, after which the
term "Issuer" means GST USA or any successor thereto. Upon GST USA's assumption
of this note, the Company will be liquidated and all of its assets distributed
to its sole stockholder, GST USA.
The Issuer will pay the principal of this Note on May 1, 2008.
The Issuer promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest on the Notes shall accrue at the rate of 10 1/2% per annum
(the "INTEREST RATE") and will be payable in U.S. dollars semiannually (to the
Holders of record of the Notes at the close of business on the April 15 or
October 15 immediately preceding the Interest Payment Date) on May 1 and
November 1 of each year, commencing November 1, 2003; PROVIDED that no interest
shall accrue on the principal amount of this Note prior to May 1, 2003 and no
interest shall be paid on this Note prior to November 1, 2003, except as
provided in the next paragraph.
If an exchange offer registered under the Securities Act (the "Exchange
Offer") is not consummated, and a shelf registration statement under the
Securities Act with respect to resales of the Notes (the "Shelf Registration
Statement) is not declared effective by the Commission, on or before November 4,
1998 in accordance with the terms of the Registration Rights Agreement dated May
4, 1998 among the Company, GST USA, GST, Morgan Stanley & Co. Incorporated,
Bear, Stearns & Co., Inc., Credit Suisse First Boston Corporation and SBC
Warburg Dillon Read Inc., interest (in addition to the accrual of original issue
discount during the period ending May 1, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5%, from November 4, 1998 payable in cash semiannually, in arrears on each May
1 and November 1, commencing May 1, 1999 until the Exchange Offer is consummated
or the
A-3
<PAGE>
Shelf Registration Statement is declared effective; PROVIDED that failure to
cause such exchange offer to be consummated or such shelf registration statement
to be declared effective shall be deemed not to be a default or breach of a
covenant for purposes of Section 6.01(c) of the Indenture. The Holder of this
Note is entitled to the benefits of such Registration Rights Agreement. To the
extent there is a conflict between this Note and such Registration Rights
Agreement, such Registration Rights Agreement shall control to the extent
permitted by applicable law.
From and after May 1, 2003, interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from May 1, 2003; PROVIDED that, if there is no existing default in the
payment of interest and this Note is authenticated between a Regular Record Date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such Interest Payment Date. Interest will be computed
on the basis of a 360-day year of 12 30-day months.
The Issuer shall pay interest on overdue principal and premium, if any,
and (to the extent lawful) interest on overdue installments of interest at the
rate per annum borne by the Notes.
2. METHOD OF PAYMENT.
The Issuer will pay principal as provided above and interest (except
defaulted interest) on the principal amount of the Notes as provided above on
each May 1 and November 1 to the persons who are Holders (as reflected in the
Security Register at the close of business on the April 15 and October 15
immediately preceding the Interest Payment Date), in each case, even if the Note
is cancelled on registration of transfer or registration of exchange after such
record date; PROVIDED that, with respect to the payment of principal, the Issuer
will not make payment to the Holder unless this Note is surrendered to a Paying
Agent.
The Issuer will pay principal, premium, if any, and as provided above,
interest in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. If a payment date is a
date other than a Business Day at a place of payment, payment may be made at
that place on the next succeeding day that is a Business Day and no interest
shall accrue for the intervening period.
3. PAYING AGENT AND REGISTRAR.
Initially, the Trustee will act as authenticating agent, Paying Agent
and Registrar. The Issuer may change any authenticating agent, Paying Agent or
Registrar without notice. The Issuer, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.
A-4
<PAGE>
4. INDENTURE; LIMITATIONS.
The Company issued the Notes under an Indenture dated as of May 4, 1998
(the "INDENTURE"), among the Company, GST USA, GST and United States Trust
Company of New York, as trustee (the "TRUSTEE"). Capitalized terms herein are
used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all such
terms, and Holders are referred to the Indenture and the Trust Indenture Act for
a statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
The Notes are general secured, unsubordinated indebtedness of the
Issuer, will rank PARI PASSU in right of payment with all existing and future
secured, unsubordinated indebtedness of the Issuer and will be senior in right
of payment to all existing and future subordinated indebtedness of the Issuer.
5. REDEMPTION.
The Notes will be redeemable, at the Issuer's option, in whole or in
part, at any time and from time to time on or after May 1, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date) if redeemed during the 12-month period commencing on May 1 of the
applicable year set forth below:
YEAR REDEMPTION PRICE
2003 105.250%
2004 103.500%
2005 101.750%
2006 and thereafter 100.0000%
In addition, the Notes may be redeemed as a whole, but not in part, at
the option of GST, at any time after GST USA has become the obligor on the Notes
and GST has guaranteed the Notes, at 100% of their Accreted Value on the
Redemption Date, together with accrued interest thereon, if any, to the
Redemption Date, in the event GST has become or would become obligated to pay,
on the next date on which any amount would be payable with respect to the Note
Guarantee, any Additional Amounts as a result of a change in the laws (including
any regulations promulgated
A-5
<PAGE>
thereunder) of Canada (or any political subdivision or taxing authority thereof
or therein), or change in any official position regarding the application or
interpretation or such laws or regulations, which change is announced or becomes
effective on or after the Closing Date.
If on May 1, 2003, GST USA is prohibited by the Existing Indentures
from assuming all of the indebtedness represented by, and becoming direct
obligor on, the Notes, or GST is prohibited by the Existing Indentures from
issuing the Note Guarantee, the Company will redeem the portion of the Notes
that can not be assumed or guaranteed at 105.250% of their principal amount at
maturity plus accrued and unpaid interest to the applicable Redemption Date.
6. NOTICE OF REDEMPTION.
Notice of any optional redemption will be mailed at least 30 days but
not more than 60 days before the Redemption Date, and notice of any mandatory
redemption will be mailed at least 10 days but not more than 30 days before the
Redemption Date, in each case, to each Holder of Notes to be redeemed at such
Holder's last address as it appears in the Security Register. Notes in original
denominations larger than $1,000 may be redeemed in part; PROVIDED that Notes
will only be issued in denominations of $1,000 principal amount at maturity or
integral multiples thereof. On and after the Redemption Date, interest ceases to
accrue on Notes or portions of Notes called for redemption, unless the Issuer
defaults in the payment of the Redemption Price.
7. REPURCHASE UPON CHANGE IN CONTROL.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Issuer in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (the "CHANGE OF CONTROL PAYMENT").
A notice of such Change of Control will be mailed within 30 days after
any Change of Control occurs to each Holder at his last address as it appears in
the Security Register. Notes in original denominations larger than $1,000 may be
sold to the Issuer in part; PROVIDED that Notes will only be issued in
denominations of $1,000 principal amount at maturity or integral multiples
thereof. On and after the applicable Payment Date, interest ceases to accrue on
Notes or portions of Notes surrendered for purchase by the Issuer, unless the
Issuer defaults in the payment of the Change of Control Payment.
8. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount at maturity and integral multiples thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among
A-6
<PAGE>
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer or exchange of any Notes selected for
redemption. Also, it need not register the transfer or exchange of any Notes for
a period of 15 days before a selection of Notes to be redeemed is made.
9. PERSONS DEEMED OWNERS.
A Holder shall be treated as the owner of a Note for all purposes.
10. UNCLAIMED MONEY.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Issuer. After that, Holders entitled to the money must look to
the Issuer for payment, unless an applicable law designates another Person, and
all liability of the Trustee and such Paying Agent with respect to such money
shall cease.
11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Issuer deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes (a) to redemption or maturity, the
Company, GST USA and GST will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) to the
Stated Maturity, the Company, GST USA and GST will be discharged from certain
covenants set forth in the Indenture.
12. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
13. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of GST and its
Restricted Subsidiaries, among other things, to incur additional indebtedness;
create liens; engage in sale-leaseback transactions; pay dividends or make
distributions in respect of their capital stock; make
A-7
<PAGE>
investments or make certain other restricted payments; sell assets; issue or
sell stock of Restricted Subsidiaries; enter into transactions with stockholders
or affiliates; acquire assets or businesses located outside the continental
United States and Hawaii; or, with respect to GST, GST USA and the Company
consolidate, merge or sell all or substantially all of its assets. Within 90
days after the end of the last quarter of each fiscal year, GST must report to
the Trustee on compliance with such limitations.
14. SUCCESSOR PERSONS.
Generally, when a successor person or other entity assumes all the
obligations of its predecessor under the Notes and the Indenture, the
predecessor person will be released from those obligations.
15. DEFAULTS AND REMEDIES.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; (c) the Company, GST USA or GST defaults in the performance of or breaches
any other covenant or agreement of the Company, GST USA or GST in the Indenture
or under the Notes, the Note Guarantee, the Fee Notes or the Intercompany Notes
and such default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the Notes; (d) there occurs with respect to any issue or
issues of Indebtedness of GST or any Significant Subsidiary having an
outstanding principal amount of $5,000,000 or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (e) any final judgment or order (not
covered by insurance) for the payment of money in excess of $5,000,000 in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company, GST USA, GST or any Significant Subsidiary and
shall not be paid or discharged, and there shall be any period of 30 consecutive
days following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $5,000,000 during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (f) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company, GST
USA, GST or
A-8
<PAGE>
any Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company, GST USA, GST or any Significant
Subsidiary (other than a liquidation of the Company into GST USA in connection
with the assumption of the Notes) or for all or substantially all of the
property and assets of the Company, GST USA, GST or any Significant Subsidiary
or (C) the winding up or liquidation of the affairs of the Company, GST USA, GST
or any Significant Subsidiary (other than a liquidation of the Company into GST
USA in connection with the assumption of the Notes) and, in each case, such
decree or order shall remain unstayed and in effect for a period of 30
consecutive days; or (g) the Company, GST USA, GST or any Significant Subsidiary
(A) commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company, GST USA,
GST or any Significant Subsidiary (other than a liquidation of the Company into
GST USA in connection with the assumption of the Notes) or for all or
substantially all of the property and assets of the Company, GST USA, GST or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors; (h) the Trustee or the Company does not have at all times a first
priority perfected security interest in all Pledged Securities, the Pledge
Account, all Acquired Equipment, the Fee Notes and Intercompany Notes or GST,
GST USA or the Company asserts in writing that the security arrangements under
the Indenture, the Pledge Account, the Fee Notes and the Intercompany Notes are
not in full force and effect; or (i) GST USA shall not have become a direct
obligor on the Notes (other than Notes to be redeemed as described under
"Mandatory Redemption" for which the Company shall have deposited the redemption
price) and GST shall not have become a guarantor of the Notes by May 1, 2003.
If an Event of Default (other than an Event of Default specified in
clause (f) or (g) above that occurs with respect to the Company, GST USA, or GST
or clause (h)) occurs and is continuing under the Indenture, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes, then
outstanding, by written notice to the Company (and to the Trustee if such notice
is given by the Holders), may, and the Trustee at the request of such Holders
shall, declare the Accreted Value of, premium, if any, and accrued interest, if
any, on the Notes to be immediately due and payable. If a bankruptcy or
insolvency default with respect to the Company, GST USA or GST occurs and is
continuing, the Accreted Value of, premium, if any, and accrued interest on the
Notes automatically becomes due and payable. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of at least a majority in
principal amount of the Notes then outstanding may direct the Trustee in its
exercise of any trust or power.
A-9
<PAGE>
16. ADDITIONAL AMOUNTS.
Any payments by GST under or with respect to the Notes may require the
payment of Additional Amounts as may become payable under Section 4.22 of the
Indenture.
17. TRUSTEE DEALINGS WITH COMPANY OR GUARANTOR.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for GST
or the Issuer or their Affiliates and may otherwise deal with GST or the Issuer
or their Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS.
No incorporator or any past, present or future partner, shareholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company, GST USA or GST or of any successor Person shall have any
liability for any obligations of the Company, GST USA or GST under the Notes or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
19. AUTHENTICATION.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
21. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to GST Network Funding,
Inc., 9001 Main Street, Vancouver, Washington 98663, Attention: Chief Financial
Officer.
A-10
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
INSERT TAXPAYER IDENTIFICATION NO.
m
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
___________ appointing attorney to transfer said Note on the books of the
Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES,
PERMANENT OFFSHORE GLOBAL SECURITIES AND
UNLEGENDED OFFSHORE PHYSICAL SECURITIES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[CHECK ONE]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
OR
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
A-11
<PAGE>
If none of the foregoing boxes is checked, the Trustee or other 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 Section 2.08 of the Indenture shall have
been satisfied.
Date: ______________________ ____________________________________
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or
any change whatsoever.
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 of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_____________________ ____________________________________
NOTICE: To be executed by an
executive officer
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.12 or Section 4.14 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.12 or Section 4.14 of the Indenture, state the amount (in
principal amount):
$________________.
Date:_____________
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
A-13
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE
------- --, ----
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
Re: GST Network Funding, Inc. (the "COMPANY")
10 1/2% Senior Secured Discount NotES
DUE 2008 (THE "SECURITIES")
Ladies and Gentlemen:
This letter relates to U.S. $_________ principal amount at maturity of
Securities represented by a Note (the "LEGENDED NOTE") which bears a legend
outlining restrictions upon transfer of such Legended Note. Pursuant to Section
2.02 of the Indenture (the "INDENTURE") dated as of May 4, 1998 relating to the
Securities, we hereby certify that we are (or we will hold such Securities on
behalf of) a person outside the United States to whom the Securities could be
transferred in accordance with Rule 904 of Regulation S promulgated under the
U.S. Securities Act of 1933, as amended. Accordingly, you are hereby requested
to exchange the legended certificate for an unlegended certificate representing
an identical principal amount at maturity of Securities, all in the manner
provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
--------------------------------
Authorized Signature
<PAGE>
EXHIBIT C
Form of Certificate to be Delivered
in Connection with Transfers
Pursuant to Regulation S
------ --, ----
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
Re: GST Network Funding, Inc. (the "COMPANY")
10 1/2% Senior Secured Discount Notes
Due 2008 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of U.S.$__________ aggregate
principal amount at maturity of the Securities, we confirm that such sale has
been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) at the time the buy order 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;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
<PAGE>
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act of 1933.
You and the Company 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
C-2
<PAGE>
EXHIBIT D
Form of Certificate to be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
------ --, ----
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
Re: GST Network Funding, Inc. (the "COMPANY")
10 1/2% Senior Secured Discount NotES
Due 2008 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of $___________ aggregate
principal amount at maturity of the Securities, we confirm that:
1. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture
dated as of May 4, 1998 relating to the Securities (the "INDENTURE") and
the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"SECURITIES ACT").
2. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not
be offered or sold except as permitted in the following sentence. We agree,
on our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities, we will do so
only (A) to GST, the Company or any subsidiary thereof, (B) in accordance
with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) 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 you and to the
<PAGE>
Company a signed letter substantially in the form of this letter, (D)
outside the United States in accordance with Rule 904 of Regulation S under
the Securities Act, (E) pursuant to the provisions of Rule 144 under the
Securities Act or (F) pursuant to an effective registration statement under
the Securities Act, and we further agree to provide to any person
purchasing any of the Securities from us a notice advising such purchaser
that resales of the Securities are restricted as stated herein.
3. We understand that, on any proposed resale of any Securities, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own account
or for one or more accounts (each of which is an institutional "ACCREDITED
INVESTOR") as to each of which we exercise sole investment discretion.
You and the Company 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.
Very truly yours,
[Name of Transferee]
By:
--------------------------
Authorized Signature
D-2
<PAGE>
EXHIBIT E
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (the "SUPPLEMENTAL INDENTURE"), dated as of
_______, ____, among GST USA, INC., a Delaware corporation ("GST USA"), GST
TELECOMMUNICATIONS, INC., a federally chartered Canadian corporation ("GST"),
and UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the "TRUSTEE").
W I T N E S S E T H:
WHEREAS, in accordance with Section 4.23(a) of the Indenture, dated as
of May 4, 1998, among GST Network Funding, Inc., GST USA, GST and the Trustee
(the "INDENTURE"), relating to the 10 1/2% Senior Secured Discount Notes due
2008 of the Company (the "SECURITIES"), GST USA and GST are required to deliver
this Supplemental Indenture providing for GST USA to assume the indebtedness
represented by, and become the direct obligor on, the Securities and for GST to
guarantee (the "SECURITY GUARANTEE") the performance of all of GST USA's
obligations under the Securities and the Indenture;
WHEREAS, the terms of the Existing Indentures do not prohibit GST USA's
assuming the indebtedness represented by, and becoming the direct obligor on,
the Securities or GST's issuance of the Security Guarantee;
WHEREAS, the Boards of Directors of each of GST USA and GST have
authorized and approved delivery of this Supplemental Indenture; and
WHEREAS, all other things necessary to make this Supplemental Indenture
a valid supplement to the Indenture according to its terms and the terms of the
Indenture have been done.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1.1. CERTAIN TERMS DEFINED IN THE INDENTURE. All capitalized
terms used herein without definition herein shall have the meanings ascribed
thereto in the Indenture.
SECTION 1.2. ASSUMPTION OF THE SECURITIES BY GST USA. GST USA hereby,
effective on the date of this Indenture Supplement, unconditionally and
irrevocably assumes the indebtedness represented by, and agrees to become the
direct obligor on, the Securities.
<PAGE>
SECTION 1.3. SECURITY GUARANTEE. Subject to the provisions of this
Indenture Supplement, effective on the date of this Indenture Supplement, GST
hereby fully, unconditionally and irrevocably guarantees to each Holder and to
the Trustee on behalf of the Holders: (i) the due and punctual payment of the
principal of, premium, if any, on and interest on each Security, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest, if any, on the Securities, to the extent lawful, and the due and
punctual performance of all other obligations of GST USA to the Holders or the
Trustee, all in accordance with the terms of such Security and the Indenture and
(ii) in the case of any extension of time of payment or renewal of any
Securities or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, at Stated Maturity, by acceleration or otherwise. GST hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of merger or bankruptcy of GST USA, any right to require a proceeding
first against GST USA, the benefit of discussion, protest or notice with respect
to any such Security or the debt evidenced thereby and all demands whatsoever,
and covenants that this Security Guarantee will not be discharged as to any such
Security except by payment in full of the principal thereof and interest thereon
and as provided in Section 8.01 and Section 8.02 of the Indenture (subject to
Section 8.06 of the Indenture). The maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six of the Indenture for the
purposes of this Security Guarantee. In the event of any declaration of
acceleration of such obligations as provided in Article Six of the Indenture,
such obligations (whether or not due and payable) shall forthwith become due and
payable by GST for the purpose of this Security Guarantee. In addition, without
limiting the foregoing provisions, upon the effectiveness of an acceleration
under Article Six of the Indenture, the Trustee shall promptly make a demand for
payment on the Securities under the Security Guarantee provided for in this
Indenture Supplement.
If the Trustee or the Holder of any Security is required by any court
or otherwise to return to GST USA or GST, or any custodian, receiver,
liquidator, trustee, sequestrator or other similar official acting in relation
to GST USA or GST, any amount paid to the Trustee or such Holder in respect of a
Security, this Security Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect. GST further agrees, to the fullest
extent that it may lawfully do so, that, as between it, on the one hand, and the
Holders and the Trustee, on the other hand, the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six of the Indenture
for the purposes of this Security Guarantee, notwithstanding any stay,
injunction or other prohibition extant under any applicable bankruptcy law
preventing such acceleration in respect of the obligations Guaranteed hereby.
E-2
<PAGE>
GST hereby irrevocably waives any claim or other rights which it may
now or hereafter acquire against GST USA that arise from the existence, payment,
performance or enforcement of its obligations under this Security Guarantee and
the Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, any right to
participate in any claim or remedy of the Holders against GST USA or any
collateral which any such Holder or the Trustee on behalf of such Holder
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including, without limitation, the
right to take or receive from GST USA, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to GST in violation of
the preceding sentence and the principal of, premium, if any, and accrued
interest on the Securities shall not have been paid in full, such amount shall
be deemed to have been paid to GST for the benefit of, and held in trust for the
benefit of, the Holders, and shall forthwith be paid to the Trustee for the
benefit of the Holders to be credited and applied upon the principal of,
premium, if any, and accrued interest on the Securities. GST acknowledges that
it received direct and indirect benefits from the issuance of the Securities
pursuant to the Indenture, and that such Securities were issued, in part, on the
promise that this Security Guarantee would be issued, and that the waivers set
forth in this Indenture Supplement are knowingly made in consideration of such
benefits.
SECTION 1.4. OBLIGATIONS UNCONDITIONAL. Subject to Section 1.7 of this
Indenture Supplement, nothing contained in this Indenture Supplement or
elsewhere in the Indenture or in the Securities is intended to or shall impair,
as among GST and the holders of the Securities, the obligation of GST, which
will be absolute and unconditional, upon failure by GST USA, to pay to the
holders of the Securities the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
holders of the Securities and creditors of GST, nor shall anything herein or
therein prevent the holder of any Security or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default under
the Indenture.
Without limiting the foregoing, nothing contained in this Indenture
Supplement will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Security Guarantee to be due and
payable prior to the Stated Maturity of the Securities pursuant to Section 6.02
of the Indenture or to pursue any rights or remedies hereunder or under the
Indenture.
SECTION 1.5. NOTICE TO TRUSTEE. GST shall give prompt written notice to
the Trustee of any fact known to GST which would prohibit the making of any
payment to or by the Trustee in respect of the Security Guarantee pursuant to
the provisions of this Indenture Supplement.
E-3
<PAGE>
SECTION 1.6. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The failure
to make a payment on account of principal of, premium, if any, or interest on
the Securities by reason of any provision of this Indenture Supplement will not
be construed as preventing the occurrence of an Event of Default.
SECTION 1.7. LIMITATION. Notwithstanding any other provision of this
Indenture Supplement, the Indenture or the Securities, the Security Guarantee
shall not be enforceable against GST in an amount in excess of the maximum
amount which, after giving effect to all other contingent and fixed liabilities
of GST and after giving effect to any collections for or payments made by or on
behalf of any obligor on the Securities under the Indenture, will result in the
obligations of GST under the Security Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under applicable law.
SECTION 2. GOVERNING LAW; SUBMISSION TO JURISDICTION; AGENT FOR
SERVICE. This Indenture Supplement shall be governed by the laws of the State of
New York. GST and GST USA each hereby appoints Olshan Grundman Frome &
Rosenzweig LLP, 505 Park Avenue, New York, New York 10022, Attention: David
Adler, Esq. as its agent for service of process in any suit, action or
proceeding with respect to this Indenture Supplement and for actions brought
under federal or state securities laws brought in any federal or state court
located in The City of New York and each of GST USA and GST agrees to submit to
the jurisdiction of any such court.
SECTION 3. COUNTERPARTS. This Supplemental Indenture may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 4. RATIFICATION. Except that GST USA has become the direct
obligor on the Securities and GST has provided the Security Guarantee, each
provision of the Indenture shall remain in full force and effect and the
Indenture is in all respects agreed to, ratified and confirmed by each of GST
USA, GST and the Trustee.
E-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
GST USA, INC.
By:
-----------------------------------------
Name:
Title:
GST TELECOMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
-----------------------------------------
Name:
Title:
GST TELECOMMUNICATIONS, INC.
GST USA, INC.
GST NETWORK FUNDING, INC.
PLACEMENT AGREEMENT
April 29, 1998
Morgan Stanley & Co. Incorporated,
for itself and the other Placement
Agents named below
1585 Broadway
New York, New York 10036-8293
Ladies and Gentlemen:
GST Network Funding, Inc., a Delaware corporation ("GST Funding"),
proposes to issue and sell to the several Placement Agents named in Schedule I
hereto (the "Placement Agents") $500,000,000 principal amount at maturity
($299,995,000 initial Accreted Value) of GST Funding's 10 1/2% Senior Secured
Discount Notes Due 2008 (the "Notes") to be issued pursuant to the provisions of
an Indenture dated as of May 4, 1998 (the "Indenture") among GST Funding, GST
Telecommunications, Inc., a federally chartered Canadian corporation ("GST"),
GST USA, Inc., a Delaware corporation ("GST USA"), and United States Trust
Company of New York, as trustee (the "Trustee"). GST Funding will use all of the
net proceeds from the offering of the Notes to purchase U.S. Government
Securities (the "Pledged Securities") and pledge the Pledged Securities to the
Trustee for the benefit of the holders of the Notes pursuant to the provisions
of a Collateral Pledge and Security Agreement, dated as of the date of the
Indenture (the "Pledge Agreement"), made by GST Funding in favor of the Trustee.
In addition, on the Closing Date (as defined below), in consideration for GST
Funding making the financing through this Offering available to GST USA and for
GST Funding facilitating the purchase of GST USA's equipment, GST USA, GST and
GST Funding will enter into a Reimbursement and Commitment Fee Agreement in the
form attached hereto as Exhibit A. The Pledged Securities will be sold from time
to time to acquire funds to pay the Acquired Equipment Cost in respect of
Acquired Equipment. All Acquired Equipment will be subject to a first priority
security interest in favor of the Trustee for the benefit of holders of the
Notes. From time to time after the purchase of Acquired
<PAGE>
Equipment, such Acquired Equipment will be sold by GST Funding to GST USA in
exchange for Intercompany Notes (as defined in the Pledge Agreement) from GST
USA. Each Intercompany Note will be guaranteed by GST (the "Note Guarantee"),
will be secured by a security interest in the Acquired Equipment purchased with
such Intercompany Note and will be pledged to the Trustee for the benefit of
holders of the Notes. On May 1, 2003, or earlier if permitted by the terms of
GST USA's and GST's outstanding indebtedness, GST USA will assume and become the
direct obligor on the Notes and GST will guarantee the Notes.
GST Funding, GST and GST USA understand that the Notes will be offered
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), to qualified institutional buyers in compliance with the
exemption from registration provided by Rule 144A under the Securities Act, in
offshore transactions in reliance on Regulation S under the Securities Act
("Regulation S") and to institutional accredited investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that deliver a letter in
the form annexed to the Final Memorandum (as defined below) and, in each case, a
manner exempt from registration or qualification under applicable securities
laws of Canada.
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement, to be dated the
Closing Date and to be substantially in the form attached hereto as Exhibit B.
In connection with the sale of the Notes, GST Funding and GST have
prepared a preliminary private placement memorandum (the "Preliminary
Memorandum") and will prepare a final private placement memorandum (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") setting
forth or including a description of the terms of the Notes, the terms of the
offering and a description of each of GST Funding, GST and GST USA and their
business.
1. REPRESENTATIONS AND WARRANTIES. (i) Each of GST Funding, GST and GST
USA jointly and severally represents and warrants to, and agrees with, each of
the Placement Agents that as of the date hereof:
(a) The Preliminary Memorandum does not contain, and the Final
Memorandum in the form used by the Placement Agents to confirm sales and on the
Closing Date will not contain, any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(i)(a) do not apply to
statements or omissions in either Memorandum based upon information relating to
any Placement Agent furnished to GST Funding or GST in writing by such Placement
Agent through you expressly for use therein.
2
<PAGE>
(b) GST Funding has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and authority to own or lease its property and
to conduct its business as described in each Memorandum and is duly qualified or
licensed to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification or licensing, except to the
extent that the failure to be so qualified or licensed or be in good standing
would not have a material adverse effect on GST and its subsidiaries, taken as a
whole.
(c) GST has been duly incorporated under the laws of Canada,
is validly existing as a corporation in good standing with respect to all
filings of annual returns required to be made under the laws of Canada, has the
corporate power and authority to own or lease its property and to conduct its
business as described in each Memorandum and is duly qualified or licensed to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or licensing, except to the extent that the
failure to be so qualified or licensed or be in good standing would not have a
material adverse effect on GST and its subsidiaries, taken as a whole.
(d) GST USA has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own or lease its property and to conduct its
business as described in each Memorandum and is duly qualified or licensed to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or licensing, except to the extent that the
failure to be so qualified or licensed or be in good standing would not have a
material adverse effect on GST and its subsidiaries, taken as a whole.
(e) Each subsidiary of GST and GST USA listed on Schedule II
hereto (each a "Specified Subsidiary," and together the "Specified
Subsidiaries") has been duly incorporated, is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own or lease property and to conduct its
business as described in each Memorandum and is duly qualified or licensed to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or licensing, except to the extent that the
failure to be so qualified or licensed or be in good standing would not have a
material adverse effect on GST and its subsidiaries, taken as a whole. The only
direct subsidiaries of GST are GST USA and GST Action Telecom, Inc. ("Action
Telecom") and GST owns all of the outstanding capital stock of such
subsidiaries, free and clear of any claims, liens, pledges or other encumbrance.
GST USA owns all of the outstanding capital stock of GST Funding, free and clear
of any claims,
3
<PAGE>
liens, pledges or other encumbrance. The total assets and revenues of GST's
direct and indirect subsidiaries other than the Specified Subsidiaries, in the
aggregate, comprised less than 5% of GST's total consolidated assets and
revenues, respectively, at and for the year ended September 30, 1997 and at and
for the quarter ended December 31, 1997.
(f) This Agreement has been duly authorized, executed and
delivered by each of GST Funding, GST and GST USA.
(g) The Notes have been duly authorized and, when executed,
authenticated and delivered to and paid for by the Placement Agents in
accordance with the terms of the Indenture and this Agreement, will be (i) valid
and binding obligations of GST Funding enforceable against GST Funding in
accordance with their terms, except as (A) the enforceability thereof may be
limited by the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and (B) rights
of acceleration, if applicable, and the availability of equitable remedies may
be limited by equitable principles of general applicability and (ii) entitled to
the benefits of the Indenture.
(h) Each of the Indenture and the Registration Rights
Agreement has been duly authorized, executed and delivered by, and (assuming due
authorization, execution and delivery by the other parties thereto) is a valid
and binding agreement of, each of GST Funding, GST and GST USA, enforceable in
accordance with its terms, except as (i) the enforceability thereof may be
limited by the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and (ii) rights
of acceleration, if applicable, and the availability of equitable remedies may
be limited by equitable principles of general applicability.
(i) The Pledge Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, GST Funding,
enforceable in accordance with its terms, except as (i) the enforceability
thereof may be limited by the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
(j) The execution and delivery by each of GST Funding, GST and
GST USA of, and the performance by each of GST Funding, GST and GST USA of its
obligations under, this Agreement (including the issuance, sale and delivery of
the Notes), the Indenture, the Registration Rights Agreement, the Reimbursement
and Commitment Fee Agreement and the Notes to which it is a party will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of any of GST Funding, GST or GST USA or any agreement or other
instrument binding upon GST Funding, GST or GST USA that is material to GST and
its subsidiaries taken as a whole, or any judgment, order or decree of any
4
<PAGE>
governmental body, agency or court having jurisdiction over GST Funding, GST or
GST USA and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by any of
GST Funding, GST or GST USA of its obligations under this Agreement (including
the issuance, sale and delivery of the Notes), the Indenture, the Registration
Rights Agreement, the Reimbursement and Commitment Fee Agreement or the Notes to
which it is a party, except such as may be required by the securities laws or
Blue Sky laws of the various states in connection with the offer and sale of the
Notes or by the federal and state securities laws in connection with the
registration obligations under the Registration Rights Agreement.
(k) The execution and delivery by GST Funding of, and the
performance by GST Funding of its obligations under, the Pledge Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of GST Funding or any agreement or other instrument
binding upon GST Funding or GST USA that is material to GST and its
subsidiaries, taken as whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over GST Funding or GST
USA, and no consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by GST Funding
of its obligations under the Pledge Agreement.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of GST and
its subsidiaries, taken as a whole, from that set forth in the Preliminary
Memorandum.
(m) There are no legal or governmental proceedings pending or,
to the best of GST Funding's, GST's or GST USA's knowledge, threatened to which
GST Funding, GST, GST USA or any of the Specified Subsidiaries is a party or to
which any of the properties of GST Funding, GST, GST USA or any of the Specified
Subsidiaries is subject other than proceedings accurately described in all
material respects in each Memorandum and proceedings that would not have a
material adverse effect on GST and its subsidiaries, taken as a whole, or on the
power or ability of any of GST Funding, GST or GST USA to perform its
obligations under this Agreement, the Indenture, the Registration Rights
Agreement, the Notes or the Pledge Agreement to which it is a party or to
consummate the transactions contemplated by the Final Memorandum.
(n) None of GST Funding, GST or GST USA or any affiliate (as
defined in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate")
of GST Funding, GST or GST USA has directly or through any agent (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the sale of the Notes in a manner that would require the registration
5
<PAGE>
under the Securities Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering (as such
terms are used in Regulation D under the Securities Act) of the Notes or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(o) None of GST Funding, GST or GST USA is an "investment
company" or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(p) Assuming compliance by the Placement Agents with the terms
of Sections 1(ii), 2 and 6 hereof, it is not necessary in connection with the
offer, sale and delivery of the Notes to the Placement Agents in the manner
contemplated by this Agreement and each Memorandum to register the Notes under
the Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(q) GST Funding, GST, GST USA and the Specified Subsidiaries
have all necessary permits, licenses, authorizations, consents and approvals and
have made all necessary filings required under any federal, state, local or
foreign supranational, national or regional law, regulation or rule, and have
obtained all necessary authorizations, consents and approvals from other
persons, material to the conduct of their respective businesses, in each case
except to the extent that the failure to obtain such permits, licenses,
authorizations, consents or approvals or to make such filings would not, singly
or in the aggregate, have a material adverse effect on the properties, assets,
prospects, condition, financial or otherwise, business or operations of GST and
its subsidiaries, taken as a whole; except as accurately described in all
material respects in each Memorandum, GST Funding, GST, GST USA and their
subsidiaries have not received any notice of proceedings which remain unresolved
relating to the revocation or modification of any such permits, licenses,
authorizations, consents or approvals, nor is GST Funding, GST, GST USA or any
of the Specified Subsidiaries in violation of, or in default under, any such
license, authorization, consent or approval or any federal, state, local or
foreign supranational, national or regional law, regulation or rule or any
decree, order or judgment applicable to GST Funding, GST, GST USA or any of the
Specified Subsidiaries the effect of which could have a material adverse effect
on the properties, assets, prospects, condition, financial or otherwise,
business or operations of GST and its subsidiaries, taken as a whole.
(r) GST Funding, GST, GST USA and the Specified Subsidiaries
(i) are in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions
6
<PAGE>
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, have a
material adverse effect on GST and its subsidiaries, taken as a whole.
(s) Each of GST Funding, GST and GST USA has complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida).
(t) None of GST Funding, GST, GST USA, their Affiliates or any
person acting on its or their behalf (other than the Placement Agents) has
engaged in any directed selling efforts (as such term is defined in Regulation
S) with respect to the Notes and GST Funding, GST, GST USA, their Affiliates and
any person acting on its or their behalf (other than the Placement Agents) have
complied with the offering restrictions requirement of Regulation S.
(u) The terms of the Notes and the Indenture conform in all
material respects to the description thereof contained in the Final Memorandum
under the heading "Description of the Notes."
(v) The financial statements contained in each Memorandum
comply with the requirements of Regulation S-X of the Securities and Exchange
Commission.
(w) Upon delivery to the Trustee of the certificates or
instruments, if any, representing the Pledged Securities and the filing of
financing statements, if any, required by the Uniform Commercial Code in the
appropriate offices in the State of New York, the pledge of and grant of a
security interest in the Pledged Securities for the benefit of the Trustee and
the holders of the Notes will constitute a first priority security interest in
the Pledged Securities, enforceable as against all creditors of GST Funding (and
any persons purporting to purchase any of the Pledged Securities from GST
Funding).
(x) The Reimbursement and Commitment Fee Agreement has been
duly authorized, executed and delivered by, and is a valid and binding agreement
of, GST, GST USA and GST Funding, enforceable in accordance with its terms,
except as (i) the enforceability thereof may be limited by the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability.
(y) The Intercompany Security Agreement, dated as of the
Closing Date, made by GST USA for the benefit of GST Funding (the "Intercompany
Security Agreement") has been duly authorized, executed and delivered by, and is
a valid and binding agreement of,
7
<PAGE>
GST USA, enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) the availability of equitable remedies may be limited
by equitable principles of general applicability.
(z) Schedule A to the Certificate of Responsible Officer dated
the Closing Date and delivered in connection with the opinion of Swidler &
Berlin delivered pursuant to Section 4(c) hereof lists all of the
telecommunications services provided by the Specified Subsidiaries (other than
Wasatch International Network Services, Inc.), other than services which are
not, singly or in the aggregate, material to GST and its subsidiaries, taken as
a whole.
(ii) Each of the Placement Agents represents and warrants to, and
agrees with, GST Funding, GST, GST USA and each of the Specified Subsidiaries
that as of the date hereof:
(a) each of the Placement Agents has the necessary power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
(b) each of the Placement Agents will deliver to each
purchaser, prior to any submission by such person of a written offer
relating to the purchase of Notes, a copy of the Final Memorandum.
2. OFFERING. Each of the Placement Agents has advised GST
Funding, GST and GST USA that it will make an offering of the Notes purchased by
it hereunder on the terms set forth in the Final Memorandum as soon as
practicable after this Agreement is entered into as in its judgment is
advisable.
3. PURCHASE AND DELIVERY. GST Funding hereby agrees to sell to
the several Placement Agents, and the Placement Agents, upon the basis of the
representations and warranties contained herein but subject to the conditions
stated herein, agree, severally and not jointly, to purchase from GST Funding,
the respective principal amount at maturity of Notes set forth in Schedule I
hereto opposite their names at a purchase price of 96.5% of the principal amount
at maturity thereof, plus accrued interest, if any, from May 4, 1998 to the date
of payment and delivery.
Payment for the Notes shall be made against delivery of the
Notes at a closing (the "Closing") to be held at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York, at 9:00 A.M., local time, on
May 4, 1998, or at such other time on the same or such other date, not later
than May 19, 1998, as shall be designated in writing by you. The time and date
of such payment are herein referred to as the "Closing Date." Payment for
8
<PAGE>
the Notes shall be made to GST Funding by wire transfer to an account previously
designated to the Placement Agents by GST Funding in immediately available
funds.
Certificates for the Notes shall be in definitive form and registered
in such names and in such denominations as you shall request in writing not less
than one full business day prior to the Closing Date. The certificates
evidencing the Notes shall be delivered to you on the Closing Date for the
respective accounts of the several Placement Agents, with any transfer taxes
payable in connection with the transfer of the Notes to the Placement Agents
duly paid, against payment of the purchase price therefor.
4. CONDITIONS TO CLOSING. The several obligations of the Placement
Agents under this Agreement to purchase the Notes will be subject to the
following conditions:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of GST
Funding's, GST's or GST USA's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations, of GST and
its subsidiaries, taken as a whole, from that set forth in the
Preliminary Memorandum that, in your judgment, is material and adverse
and that makes it, in your judgment, impracticable to market the Notes
on the terms and in the manner contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing
Date certificates, dated the Closing Date and signed, respectively, by an
executive officer of GST Funding, GST and GST USA, to the effect set forth in
clause (a)(i) of this Section 4 and to the effect that the representations and
warranties of GST Funding, GST and GST USA contained in this Agreement are true
and correct in all material respects as of the Closing Date and that each of GST
Funding, GST and GST USA has complied in all material respects with all of the
agreements and satisfied in all material respects all of the conditions on its
part to be performed or satisfied in connection with the transactions
contemplated hereby or by the Memorandum on or before the Closing Date.
The officers signing and delivering such certificates may rely
upon the best of their knowledge as to proceedings threatened.
9
<PAGE>
(c) You shall have received on the Closing Date an opinion,
dated the Closing Date, of (i) Olshan Grundman Frome & Rosenzweig LLP, counsel
for GST Funding, GST and GST USA, in the form attached hereto as Exhibit C, (ii)
McCarthy Tetrault, Canadian counsel for GST, in the form attached hereto as
Exhibit D, (iii) Thorsteinssons, Canadian tax counsel for GST, in the form
attached hereto as Exhibit E, (iv) Swidler & Berlin, Chartered, special
regulatory counsel for GST Funding, GST and GST USA, in the form attached hereto
as Exhibit F and (v) local regulatory counsel in the forms attached hereto as
Exhibit G.
(d) You shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Placement Agents, dated the Closing Date,
with respect to such matters as you may reasonably request.
(e) You shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof and the Closing Date,
respectively, in form and substance satisfactory to you, from KPMG Peat Marwick
LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Final Memorandum.
(f) GST Funding, GST and GST USA shall have complied with the
provisions of subsection (a) of Section 5 hereof with respect to the furnishing
of Final Memorandum on the business day next following the date of this
Agreement, in such quantities as you shall have reasonably requested.
(g) GST Funding shall have received from GST USA a capital
contribution in cash of at least $2 million.
(h) GST Funding, GST USA and GST shall have entered into the
Reimbursement and Commitment Fee Agreement and such agreement shall be in full
force and effect.
(i) You shall have received such other documents and
certificates as are reasonably requested by you or your counsel.
5. COVENANTS OF GST FUNDING, GST AND GST USA. In further
consideration of the agreements of the Placement Agents contained in this
Agreement, each of GST Funding, GST and GST USA covenants as follows:
(a) To furnish to you, without charge, during the period
mentioned in subsection (c) of this Section 5, as many copies of the
Final Memorandum and any
10
<PAGE>
supplements and amendments thereto as you may reasonably request and to
use its best efforts to deliver as many copies of the Final Memorandum
as you may request to you by 5:00 P.M. (New York City time) on the
business day next following the execution of this Agreement.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Notes shall have been sold by the
Placement Agents, any event shall occur or condition shall exist as a
result of which it is necessary in your reasonable judgment to amend or
supplement the Final Memorandum in order to make the statements
therein, in the light of the circumstances when such Memorandum is
delivered to a purchaser, not misleading, or if, in the reasonable
opinion of counsel to the Placement Agents, it is necessary to amend or
supplement such Memorandum to comply with applicable law, forthwith to
prepare and furnish, at its own expense, to the Placement Agents,
either amendments or supplements to such Memorandum so that the
statements in such Memorandum as so amended or supplemented will not,
in the light of the circumstances when such Memorandum is delivered to
a purchaser, be misleading or omit to state a material fact or so that
such Memorandum, as so amended or supplemented, will comply with
applicable law.
(d) To endeavor to qualify the Notes for offer and sale under
the securities laws or Blue Sky laws of such jurisdictions as you shall
reasonably request; PROVIDED that none of GST Funding, GST USA or GST
shall be required to (A) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph (d), (B) file any general
consent to service of process or (C) subject itself to taxation in any
such jurisdiction if it is not otherwise so subject.
(e) To use the net proceeds received by GST Funding from the
sale of the Notes in the manner specified in the Final Memorandum under
the heading "Use of Proceeds."
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all
costs and expenses incident to the performance of its obligations under
this Agreement, including, without limitation: (i) the preparation of
each Memorandum and all amendments and supplements thereto, (ii) the
preparation, issuance and delivery of the Notes, including any transfer
or other taxes payable thereon, (iii) the fees and disbursements of GST
Funding's, GST's and
11
<PAGE>
GST USA's counsel and accountants required to provide "comfort letters"
hereunder and the Trustee and its counsel, (iv) the qualification of
the Notes under securities laws or Blue Sky laws in accordance with the
provisions of Section 5(d), including filing fees and the fees and
disbursements of counsel for the Placement Agents in connection
therewith and in connection with the preparation of any Blue Sky or
legal investment memoranda, (v) the printing and delivery to the
Placement Agents in quantities as herein stated of copies of the Final
Memorandum and any amendments or supplements thereto, (vi) the costs
and expenses of GST Funding, GST and GST USA relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the Notes, including, without limitation, expenses
associated with the production of the road show slides and graphics,
fees and expenses of any consultants engaged, with the approval of GST
Funding, GST and GST USA, in connection with the road show
presentations, travel and lodging expenses of the representatives and
officers of GST Funding, GST and GST USA and any such consultants, and
the cost of any aircraft chartered in connection with the road show,
(vii) all document production charges and expenses of counsel to the
Placement Agents (but not including their fees for professional
services) in connection with the preparation of this Agreement and the
Pledge Agreement and the documents and agreements contemplated thereby,
(viii) the fees and expenses, if any, incurred in connection with the
admission of the Notes for trading in PORTAL and any other appropriate
market system and (ix) the preparation of the Pledge Agreement and the
Intercompany Security Agreement and the instruments, documents and
agreements contemplated thereby, including the fees and disbursements
of counsel for the Placement Agents in connection therewith.
(g) None of GST Funding, GST and GST USA or any of their
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the Notes in
a manner which would require the registration under the Securities Act
of the Notes.
(h) Not to solicit any offer to buy or offer or sell the Notes
by means of any form of general solicitation or general advertising (as
such terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(i) While any of the Notes remain outstanding, GST Funding,
GST and GST USA shall make available, upon request, to any seller of
such Notes the information specified in Rule 144A(d)(4) under the
Securities Act, unless GST Funding, GST and GST USA, as applicable, is
then subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
12
<PAGE>
(j) To use its best efforts to permit the Notes to be
designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(k) None of GST Funding, GST, GST USA, their Affiliates or any
person acting on its or their behalf (other than the Placement Agents)
will engage in any directed selling efforts (as such term is defined in
Regulation S) with respect to the Notes, and GST Funding, GST, GST USA,
their Affiliates and each person acting on its or their behalf (other
than the Placement Agents) will comply with the offering restrictions
of Regulation S.
(l) As soon as permissible under all agreements of GST in
existence on the date hereof, GST will transfer all of the capital
stock of Action Telecom to GST USA, and thereafter such company will be
a wholly owned subsidiary of GST USA.
6. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with GST Funding, GST and GST USA that (i) it will not solicit offers
for, or offer or sell, the Notes by any form of general solicitation or general
advertising (as such terms are used in Regulation D under the Securities Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act and (ii) it will solicit offers for the Notes only from, and
will offer the Notes only to, persons that it reasonably believes to be (A) in
the case of offers inside the United States, (1) QIBs or (2) other institutional
accredited investors (as defined in Rule 501(a) (1), (2), (3) or (7) under the
Securities Act) ("institutional accredited investors") that, prior to their
purchase of any Notes, deliver to such Placement Agent a letter containing the
representations and agreements set forth in Annex A to the Final Memorandum and
(B) in the case of offers outside the United States, to persons other than U.S.
persons ("foreign purchasers", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) that, in each
case, in purchasing such Notes are deemed to have represented and agreed as
provided in the Final Memorandum under the heading "Transfer Restrictions."
(b) Each Placement Agent, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) it understands that no action has been or will be taken in
any jurisdiction by GST Funding, GST or GST USA that would permit a
public offering of the Notes, or possession or distribution of either
Memorandum or any other offering or publicity
13
<PAGE>
material relating to the Notes, in any country or jurisdiction where
action for that purpose is required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Notes or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Notes have not been and will not be registered under
the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Notes and will offer
and sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or another exemption from the registration requirements of
the Securities Act. Accordingly, no such Placement Agent, nor any
Affiliates of such Placement Agent, nor any persons acting on its or
their behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes,
and any such Placement Agent, its Affiliates and any such persons have
complied and will comply with the offering restrictions requirements of
Regulation S;
(v) each Placement Agent represents and, during the period of
six months from the date hereof, agrees that (i) it has not offered or
sold and will not offer or sell any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer
to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has
complied and will comply with all applicable provisions of the
Financial Services Act 1986 and the Regulations with respect to
anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on
and will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issue of the Notes if
that person is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued
or passed on;
14
<PAGE>
(vi) such Placement Agent understands that the Notes have not
been and will not be registered under the Securities and Exchange Law
of Japan, and represents that it has not offered or sold, and agrees
that it will not offer or sell, any Notes, directly or indirectly in
Japan or to any resident of Japan except (A) pursuant to an exemption
from the registration requirements of the Securities and Exchange Law
of Japan and (B) in compliance with any other applicable requirements
of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases any Notes from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Notes covered hereby have not been registered
under the U.S. Securities Act of 1933 (the "Securities
Act") and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except
in either case in accordance with Regulation S (or Rule
144A, if available) under the Securities Act. Terms used
above have the meaning given to them by Regulation S."
Terms used in this Section 6 have the meanings given to them by
Regulation S.
7. INDEMNIFICATION AND CONTRIBUTION. (a) Each of GST Funding, GST and
GST USA agrees, jointly and severally, to indemnify and hold harmless each
Placement Agent, and each person, if any, who controls such Placement Agent
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, or is under common control with, or is controlled by, such
Placement Agent, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Placement Agent or any such controlling or affiliated
person in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in either Memorandum (as amended or supplemented if GST Funding and
GST shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Placement
Agent furnished to GST Funding or GST in writing by such Placement Agent through
you expressly for use therein.
15
<PAGE>
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless GST Funding, GST and GST USA, their directors, their
officers and each person, if any, who controls GST Funding, GST or GST USA
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from GST Funding,
GST and GST USA to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to GST Funding or GST in writing by
such Placement Agent through you expressly for use in either Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either subsection (a) or (b) of this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by Morgan Stanley & Co. Incorporated in the case of
parties indemnified pursuant to subsection (a) above and by GST Funding, GST and
GST USA in the case of parties indemnified pursuant to subsection (b) above. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this subsection (c), the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (A) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (B)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior
16
<PAGE>
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in
subsection (a) or (b) of this Section 7 is unavailable to an indemnified party
or insufficient in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such subsection, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by GST Funding, GST and GST USA, on the one hand, and the
Placement Agents, on the other hand, from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of GST Funding, GST
and GST USA on the one hand and the Placement Agents on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by GST Funding, GST and GST USA
on the one hand and the Placement Agents on the other hand in connection with
the offering of the Notes shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Notes (before deducting
expenses) received by GST Funding, GST and GST USA and the total discounts and
commissions received by the Placement Agents in respect thereof bear to the
aggregate offering price of the Notes. The relative fault of GST Funding, GST
and GST USA on the one hand and of the Placement Agents on the other hand shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by GST Funding, GST and GST USA
or by the Placement Agents and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Placement Agents' respective obligations to contribute pursuant to this
Section 7 are several in proportion to the respective principal amount at
maturity of Notes they have purchased hereunder, and not joint.
(e) GST Funding, GST and GST USA, and the Placement Agents
agree that it would not be just or equitable if contribution pursuant to this
Section 7 were determined by PRO RATA allocation (even if the Placement Agents
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in subsection (d) of this Section 7. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in subsection (d) of this Section 7 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
17
<PAGE>
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Placement Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the Notes
resold by it in the initial placement of the Notes were offered to investors
exceeds the amount of any damages that such Placement Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The indemnity and contribution provisions contained in this
Section 7 and the representations and warranties of GST Funding, GST and GST USA
and the Placement Agents contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of the Placement Agents or any
person controlling the Placement Agents or by or on behalf of GST Funding, GST
or GST USA, their officers or directors or any person controlling GST Funding,
GST or GST USA and (iii) acceptance of and payment for any of the Notes. The
remedies provided for in this Section 7 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to GST Funding and GST, if (a) after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Vancouver
Stock Exchange, (ii) trading of any securities of GST Funding, GST or GST USA
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities or (iv) there
shall have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv), such event individually or together with any other such event
makes it, in your judgment, impracticable to market the Notes on the terms and
in the manner contemplated in the Final Memorandum.
9. MISCELLANEOUS. (a) If, on the Closing Date, any one
Placement Agent shall fail or refuse to purchase Notes that it agreed to
purchase hereunder on such date, and the principal amount of Notes which such
defaulting Placement Agent agreed but failed or refused to purchase is not more
than one-tenth of the total principal amount of the Notes to be purchased on
such date, the other Placement Agents shall be obligated to purchase the Notes
which such defaulting Placement Agent agreed but failed or refused to purchase
on such date; PROVIDED that in no event shall the principal amount of Notes that
any Placement Agent has
18
<PAGE>
agreed to purchase pursuant to Section 3 be increased pursuant to this Section 9
by an amount in excess of one-ninth of such principal amount of Notes without
the written consent of such Placement Agent. If, on the Closing Date any
Placement Agent or Placement Agents shall fail or refuse to purchase Notes which
it or they have agreed to purchase hereunder on such date and the principal
amount of Notes with respect to which such default occurs is more than one-tenth
of the principal amount of Notes to be purchased on such date and arrangements
satisfactory to you and GST Funding and GST for the purchase of such Notes are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Placement Agent or of GST
Funding, GST and GST USA. In any such case either you or GST Funding and GST
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Final
Memorandum or in any other documents or arrangements may be effected. Any action
taken under this subsection shall not relieve any defaulting Placement Agent
from liability in respect of any default of such Placement Agent under this
Agreement.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(b) If this Agreement shall be terminated by the Placement
Agents, or any of them, because of any failure or refusal on the part of GST
Funding, GST or GST USA to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason GST Funding, GST or GST USA
shall be unable to perform its obligations under this Agreement, GST Funding,
GST and GST USA will reimburse such Placement Agents as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Placement Agents in connection with this Agreement or the offering
contemplated hereunder.
(c) Each of GST Funding, GST, and GST USA hereby (i)
acknowledges that it has irrevocably designated and appointed Olshan Grundman
Frome & Rosenzweig LLP, 505 Park Avenue, New York, New York 10022, Attention:
David J. Adler, Esq. (together with any successor, the "Process Agent"), as its
authorized agent upon which process may be served in any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated herein, the Indenture, the Registration Rights Agreement, the
Pledge Agreement, the Reimbursement and Commitment Fee Agreement, the Notes, the
Fee Notes, the Note Guarantee or the guarantee of the Fee Notes (the "Fee
Guarantee") that may be instituted in any federal or state court in the State of
New York, or brought under federal or state securities laws, and acknowledges
that the Process Agent has accepted such designation, (ii) agrees that service
of process upon the Process Agent and written notice of such service to GST
Funding, GST or GST USA, as the case may be (mailed or delivered to GST's Chief
Executive Officer at GST's principal office at 4001 Main Street, Vancouver,
Washington
19
<PAGE>
98663), shall be deemed in every respect effective service of process upon GST
Funding, GST or GST USA, as the case may be, in any suit, action or proceeding
and (iii) agrees to take any and all action, including the execution and filing
of any and all such documents and instruments as may be necessary to continue
such designation and appointment of the Process Agent in full force and effect
so long as any of the Notes shall be outstanding. Each of GST Funding, GST and
GST USA hereby agrees to submit to the nonexclusive jurisdiction of any federal
or state court in the State of New York in any such suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
herein, the Indenture, the Registration Rights Agreement, the Pledge Agreement,
the Notes or the Note Guarantee.
(d) To the extent that GST has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, it hereby
irrevocably waives such immunity in respect of its obligations under this
Agreement, the Indenture, the Registration Rights Agreement or the Note
Guarantee, to the extent permitted by law.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(f) The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
(g) Any notice required or permitted to be given hereunder
shall be given in writing and shall be deemed effective three days after deposit
in the United States mail (certified or registered, return receipt requested),
postage prepaid, or when received if personally delivered, addressed as follows:
To the Placement Agents: To GST Funding, GST or GST USA:
Morgan Stanley & Co. GST Telecommunications, Inc.
Incorporated 4001 Main Street
1585 Broadway Vancouver, Washington 98663
New York, New York 10036 Attention: Chief Executive Officer
Attention: James Avery
with a copy to: with a copy to:
Shearman & Sterling Olshan Grundman Frome &
599 Lexington Avenue Rosenzweig LLP
20
<PAGE>
New York, New York 10022 505 Park Avenue
Attention: Jerry V. Elliott, Esq. New York, New York 10022-1170
Attention: Stephen Irwin, Esq.
or to such other address of which written notice is given to the other.
21
<PAGE>
Please confirm your agreement to the foregoing by signing in
the space provided below for that purpose and returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.
Very truly yours,
GST NETWORK FUNDING, INC.
By: /s/ Stephen Irwin
--------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST TELECOMMUNICATIONS, INC.
By: /s/ Stephen Irwin
--------------------------------
Name: Stephen Irwin
Title: Vice Chairman and
Secretary
GST USA, INC.
By: /s/ Stephen Irwin
--------------------------------
Name: Stephen Irwin
Title: Senior Vice President
Agreed as of the date first above written
MORGAN STANLEY & CO. INCORPORATED
Acting severally on behalf of itself and the several
Placement Agents named herein.
By Morgan Stanley & Co. Incorporated
By: James Avery
----------------------
Name: James Avery
Title: Principal
<PAGE>
SCHEDULE I
Principal Amount at Maturity
Placement Agent To Be Purchased
Morgan Stanley & Co. Incorporated................... $200,000,000
Bear, Stearns & Co. Inc............................. $200,000,000
Credit Suisse First Boston Corporation.............. $50,000,000
SBC Warburg Dillon Read Inc......................... $50,000,000
-----------
Total...................... $500,000,000
============
<PAGE>
SCHEDULE II
Specified Subsidiaries
GST Telecom Inc., a Delaware corporation
GST Pacific Lightwave, Inc., a Washington corporation
GST Telecom Hawaii, Inc., a Hawaii corporation
GST Tucson Lightwave, Inc., an Arizona corporation
GST Telecom New Mexico, Inc., a New Mexico corporation
GST Telecom California, Inc., a Delaware corporation
NACT Telecommunications, Inc., a Delaware corporation
Wasatch International Network Services, Inc., a Utah corporation
GST Net Inc., a Delaware corporation
International Telemanagement Group, Inc., an Ohio corporation
TotalNet Communications, Inc., a Texas corporation
GST Call America, Inc., a California corporation
GST USA, Inc., a Delaware corporation
TriStar Residential Communications Corp., a Washington corporation
GST EquipCo, Inc., a Washington corporation
GST Internet, Inc., a Delaware corporation
GST Action Telecom, Inc., a Delaware corporation
GST Equipment Funding, Inc., a Delaware corporation
GST Telecom Washington, Inc., a Delaware corporation
GST Government Systems, Inc., a Delaware corporation
GST Home, Inc., a Delaware corporation
- --------------------
In accordance with Item 601 of Regulation S-K, the Registrant has not filed the
exhibits to this Agreement with the Securities and Exchange Commission. The
Registrant undertakes to supplementally provide a copy of such exhibits to the
Securities and Exchange Commission upon request.
REGISTRATION RIGHTS AGREEMENT
Dated May 4, 1998
among
GST NETWORK FUNDING, INC.
GST USA, INC.
GST TELECOMMUNICATIONS, INC.,
and
MORGAN STANLEY & CO. INCORPORATED,
BEAR, STEARNS & CO. INC.,
CREDIT SUISSE FIRST BOSTON CORPORATION
and
SBC WARBURG DILLON READ INC.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into May 4, 1998 among GST NETWORK FUNDING, INC., a Delaware corporation
("GST Funding"), GST USA, INC., a Delaware corporation ("GST USA"), GST
TELECOMMUNICATIONS, INC., a Canadian corporation ("GST"), and MORGAN STANLEY &
CO. INCORPORATED, BEAR, STEARNS & CO. INC., CREDIT SUISSE FIRST BOSTON
CORPORATION and SBC WARBURG DILLON READ INC. (collectively referred to as the
"Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated April
29, 1998 (the "Placement Agreement"), among GST Funding, GST USA, GST and the
Placement Agents, which provides for the sale by GST Funding to the Placement
Agents of $500,000,000 principal amount at maturity of GST Funding's 10 1/2%
Senior Secured Discount Notes Due 2008 (the "Notes") to be issued by GST Funding
pursuant to the provisions of an Indenture dated as of the date hereof (the
"Indenture") among GST Funding, GST USA, GST and United States Trust Company of
New York, as trustee (the "Trustee"). In order to induce the Placement Agents to
enter into the Placement Agreement, GST Funding, GST USA and GST have agreed to
provide to the Placement Agents and their direct and indirect transferees the
registration rights with respect to the Notes set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Placement
Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"CLOSING DATE" shall mean the Closing Date as defined in the Placement
Agreement.
"EXCHANGE DATE" shall have the meaning set forth in Section 2(a)(ii)
hereof.
"EXCHANGE NOTES" shall mean securities issued under the Indenture by
GST Funding or by GST USA, as the case may be, containing terms identical
to the Notes (except that the Exchange Notes will not contain terms with
respect to transfer restrictions) to be offered to Holders of Notes in
exchange for Notes pursuant to the Exchange Offer.
<PAGE>
"EXCHANGE OFFER" shall mean the exchange offer by GST Funding or GST
USA, as the case may be, of Exchange Notes for Registrable Notes pursuant
to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"GST" shall have the meaning set forth in the preamble and shall also
include GST's successors.
"GST FUNDING" shall have the meaning set forth in the preamble and
shall also include GST Funding's successors.
"GST USA" shall have the meaning set forth in the preamble and shall
also include GST USA's successors.
"HOLDER" shall mean the Placement Agents, for so long as they own any
Registrable Notes, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Notes
under the Indenture; PROVIDED that for purposes of Sections 4 and 5 hereof,
the term "Holder" shall include Participating Broker-Dealers.
"INDENTURE" shall have the meaning set forth in the preamble.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes; PROVIDED that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by GST
Funding or any of its affiliates (as such term is defined in Rule 405 under
the 1933 Act) (other than the Placement Agents or subsequent holders of
Registrable Notes if such subsequent holders are deemed to be such
affiliates solely by reason of their holding of such Registrable Notes)
shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage or amount.
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
Section 4(a) hereof.
2
<PAGE>
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"PLACEMENT AGENTS" shall have the meaning set forth in the preamble.
"PLACEMENT AGREEMENT" shall have the meaning set forth in the preamble.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Notes covered by a Shelf Registration Statement,
and by all other amendments and supplements to such prospectus, and in each
case including all material incorporated by reference therein.
"REGISTRABLE NOTES" shall mean the Notes; PROVIDED, HOWEVER, that the
Notes shall cease to be Registrable Notes (i) when a Registration Statement
with respect to such Notes shall have been declared effective under the
1933 Act and such Notes shall have been disposed of or exchanged pursuant
to such Registration Statement, (ii) when such Notes have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but
not Rule 144A) under the 1933 Act or (iii) when such Notes shall have
ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by GST Funding, GST USA and GST with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any Underwriters or Holders in connection with
blue sky qualification of any of the Exchange Notes or Registrable Notes),
(iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency
fees, if any, (v) all fees and disbursements relating to the qualification
of the Indenture under applicable securities laws, (vi) the fees and
disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for GST Funding, GST USA and GST and, in the case
of a Shelf Registration Statement, the fees and disbursements of one
counsel for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Placement Agents) and
(viii) the fees and disbursements of the independent public accountants of
GST Funding, GST USA and GST, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
3
<PAGE>
compliance, but excluding fees and expenses of counsel to the Underwriters
(other than fees and expenses set forth in clause (ii) above) or the
Holders and underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Notes by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement of GST
Funding, GST USA or GST that covers any of the Exchange Notes or
Registrable Notes pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of GST Funding, GST USA or GST pursuant to the provisions of
Section 2(b) hereof which covers all of the Registrable Notes (but no other
securities unless approved by the Holders whose Registrable Notes are
covered by such Shelf Registration Statement) on an appropriate form under
Rule 415 under the 1933 Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"TRUSTEE" shall have the meaning set forth in the preamble and its
successors under the Indenture.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a
registration in which Registrable Notes are sold to an Underwriter for
reoffering to the public.
"UNDERWRITERS" shall have the meaning set forth in Section 3 hereof.
2. REGISTRATION UNDER THE 1933 ACT.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, GST Funding, GST USA and GST shall cause
to be filed an Exchange Offer Registration Statement covering the offer by GST
Funding or GST USA, as the case may
4
<PAGE>
be, to the Holders to exchange all of the Registrable Notes for Exchange Notes,
to have such Registration Statement remain effective until the closing of the
Exchange Offer and to consummate the Exchange Offer on or prior to the date that
is six months after the Closing Date. GST Funding or GST USA, as the case may
be, shall commence the Exchange Offer promptly after the Exchange Offer
Registration Statement has been declared effective by the SEC and use its best
efforts to have the Exchange Offer consummated not later than 60 days after such
effective date. GST Funding or GST USA, as the case may be, shall commence the
Exchange Offer by mailing the related exchange offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Registrable Notes validly tendered will be
accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (each such date being an "Exchange Date");
(iii) that any Registrable Note not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Agreement;
(iv) that Holders electing to have a Registrable Note
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Note, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Notes delivered for
exchange and a statement that such Holder is withdrawing his election
to have such Notes exchanged.
As soon as practicable after the last Exchange Date, GST Funding or GST
USA, as the case may be, shall:
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by GST Funding or GST
5
<PAGE>
USA, as the case may be, and issue, and cause the Trustee to promptly
authenticate and mail, to each Holder an Exchange Note of equal
principal amount.
GST Funding, GST USA and GST shall use their best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
GST Funding or GST USA, as the case may be, shall inform the Placement Agents of
the names and addresses of the Holders to whom the Exchange Offer is made, and
the Placement Agents shall have the right, subject to applicable law, to contact
such Holders and otherwise facilitate the tender of Registrable Notes in the
Exchange Offer.
(b) In the event that (i) GST Funding, GST USA or GST
determines that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be consummated as soon as practicable after
the last Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by November 4, 1998 or (iii) the Exchange Offer has
been completed and in the opinion of counsel for the Placement Agents, a
Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable Notes,
GST Funding, GST USA and GST shall use their best efforts to cause to be filed
as soon as practicable after such determination, date or notice of such opinion
of counsel is given to GST Funding, GST USA or GST, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Notes and to have such Shelf Registration Statement declared
effective by the SEC. In the event GST Funding, GST USA or GST, as the case may
be, is required to file a Shelf Registration Statement solely as a result of the
matters referred to in clause (iii) of the preceding sentence, GST Funding, GST
USA or GST, as the case may be, shall file and have declared effective by the
SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with
respect to all Registrable Notes and a Shelf Registration Statement (which may
be a combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Notes held by the
Placement Agents after completion of the Exchange Offer. GST Funding, GST USA
and GST agree to use their best efforts to keep the Shelf Registration Statement
continuously effective until the expiration of the period referred to in Rule
144(k) for the Registrable Notes covered by such Shelf Registration Statement or
such shorter period that will terminate when all of the Registrable Notes
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement. GST Funding, GST USA and GST further agree to supplement
or amend the Shelf Registration Statement if required by the rules, regulations
or instructions applicable to the registration form used by GST Funding or GST
USA, as the case may be, for such Shelf Registration Statement or by the 1933
Act or by any other rules and regulations thereunder for shelf registration or
if reasonably requested by a Holder with respect to information
6
<PAGE>
relating to such Holder, and to use their best efforts to cause any such
amendment to become effective and such Shelf Registration Statement to become
usable as soon as thereafter practicable. GST Funding, GST USA and GST agree to
furnish to the Holders of Registrable Notes copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(c) GST Funding, GST USA and GST shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) or Section
2(b) hereof. Each Holder shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Notes pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been declared
effective, the offering of Registrable Notes pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Notes pursuant to
such Registration Statement may legally resume. As provided for in the
Indenture, in the event the Exchange Offer is not consummated and the Shelf
Registration Statement is not declared effective on or prior to November 4,
1998, interest (in addition to the accrual of original issue discount or
interest otherwise due on the Notes) on the Notes will accrue, at an annual rate
of 0.5%, from accrual of original issue discount or November 4, 1998 and be
payable in cash until the Exchange Offer is consummated or a shelf Registration
Statement is declared effective.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, GST Funding, GST USA and GST acknowledge that any
failure by GST Funding, GST USA and GST to comply with their obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Placement Agents or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agents or any Holder
may obtain such relief as may be required to specifically enforce GST Funding's,
GST USA's and GST's obligations under Section 2(a) and Section 2(b) hereof.
(f) During any consecutive 365-day period, GST Funding, GST
USA and GST may suspend availability of any Shelf Registration Statement for no
more than two periods of up to 45 consecutive days (except for the consecutive
45-day period immediately prior to the maturity of the Notes) and for no more
than an aggregate of 60 days during any 365-day period, if GST's Board of
Directors determines in good faith that there is a valid purpose for such
suspension.
7
<PAGE>
3. REGISTRATION PROCEDURES.
In connection with the respective obligations of GST Funding,
GST USA and GST with respect to the Registration Statements pursuant to Section
2(a) and Section 2(b) hereof, GST Funding, GST USA and GST shall, as
expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form shall (i) be
selected by GST Funding or GST USA, (ii) in the case of a Shelf
Registration, be available for the sale of the Registrable Notes by the
selling Holders thereof and (iii) comply as to form in all material
respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith, and use
their best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; and keep each Prospectus
current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Notes, to counsel for the Placement Agents, to
counsel for the Holders and to each Underwriter of an Underwritten
Offering of Registrable Notes, if any, without charge, as many copies
of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder
or Underwriter may reasonably request, in order to facilitate the
public sale or other disposition of the Registrable Notes; and GST
Funding, GST USA and GST consent to the use of such Prospectus and any
amendment or supplement thereto in accordance with applicable law by
each of the selling Holders of Registrable Notes and any such
Underwriters in connection with the offering and sale of the
Registrable Notes covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with
applicable law;
(d) use their best efforts (i) to register or qualify, by the
time the applicable Registration Statement is declared effective by the
SEC, the Registrable Notes under all applicable state securities laws
or blue sky laws of such jurisdictions as any Holder of Registrable
Notes covered by a Registration Statement shall reasonably request in
writing and (ii) to cooperate with such Holder in connection with any
filings required to be made
8
<PAGE>
with the National Association of Securities Dealers, Inc. and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each
such jurisdiction of such Registrable Notes owned by such Holder;
PROVIDED, HOWEVER, that none of GST Funding, GST USA or GST shall be
required to (A) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(d), (B) file any general consent to
service of process or (C) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Notes covered
thereby, the representations and warranties of GST Funding, GST USA or
GST contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to
be true and correct in all material respects or if GST Funding, GST USA
or GST receives any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or
the initiation of any proceeding for such purpose, (v) of the happening
of any event during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement
or the related Prospectus untrue in any material respect or which
requires the making of any changes in such Registration Statement or
Prospectus in order to make the statements therein not misleading and
(vi) of any determination by GST Funding, GST USA or GST that a
post-effective amendment to a Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment and provide immediate notice to each
Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Notes, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
9
<PAGE>
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Notes to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold and not bearing any restrictive legends and enable such
Registrable Notes to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the
selling Holders may reasonably request at least one business day prior
to the closing of any sale of Registrable Notes;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use their best
efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Notes, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. GST Funding, GST USA and GST agree to notify the
Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to
suspend use of the Prospectus until GST Funding, GST USA or GST, as the
case may be, has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) within a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document
which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement,
provide copies of such document to the Placement Agents and its counsel
(and, in the case of a Shelf Registration Statement, the Holders and
their counsel) and make such of the representatives of GST Funding, GST
USA and GST as shall be reasonably requested by the Placement Agents or
its counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) available for discussion of such document,
and shall not at any time file or make any amendment to the
Registration Statement, any Prospectus or any amendment of or
supplement to a Registration Statement or a Prospectus or any document
which is to be incorporated by reference into a Registration Statement
or a Prospectus, of which the Placement Agents and its counsel (and, in
the case of a Shelf Registration Statement, the Holders and their
counsel) shall not have previously been advised and furnished a copy
or, other than with respect to documents filed pursuant to the 1934
Act, to which the Placement Agents or their counsel (and, in the case
of a Shelf Registration Statement, the Holders or their counsel) shall
reasonably object, except for any amendment or supplement or document,
a copy of which has been previously furnished to the Placement Agents
and its counsel (and, in the case of a Shelf Registration Statement,
the Holders and their counsel), which counsel for GST Funding, GST USA
and GST shall
10
<PAGE>
advise GST Funding, GST USA and GST, in the form of a written legal
opinion, is required in order to comply with applicable law;
(k) obtain a CUSIP number for all Exchange Notes or
Registrable Notes, as the case may be, not later than the effective
date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Notes or Registrable Notes, as the case
may be, cooperate with the Trustee and the Holders to effect such
changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and execute, and use
their best efforts to cause the Trustee to execute all documents as may
be required to effect such changes and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable Notes,
any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the
Holders, at reasonable times and in a reasonable manner, all financial
and other records, pertinent documents and properties of GST Funding,
GST USA and GST, and cause the respective officers, directors and
employees of GST Funding, GST USA and GST to supply all information
reasonably requested by any such representative, Underwriter, attorney
or accountant in connection with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, use their best
efforts to cause all Registrable Notes to be listed on any securities
exchange or any automated quotation system on which similar securities
issued by GST USA or GST are then listed if requested by the Majority
Holders, to the extent such Registrable Notes satisfy applicable
listing requirements;
(o) use their best efforts to cause the Exchange Notes or
Registrable Notes, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in
Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable Notes
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as GST Funding, GST
USA or GST has received notification of the matters to be incorporated
in such filing; and
11
<PAGE>
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the Registrable Notes being sold) in order to expedite or facilitate
the disposition of such Registrable Notes including, but not limited
to, an Underwritten Offering and in such connection, (i) to the extent
possible, make such representations and warranties to the Holders and
any Underwriters of such Registrable Notes with respect to the business
of GST Funding, GST USA and GST and their subsidiaries, the
Registration Statement, Prospectus and documents incorporated by
reference or deemed incorporated by reference, if any, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to GST Funding, GST USA and
GST (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Notes, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "cold comfort"
letters from the independent certified public accountants of GST
Funding, GST USA and GST (and, if necessary, any other certified public
accountant of any subsidiary of GST Funding, GST USA and GST, or of any
business acquired by GST Funding, GST USA or GST for which financial
statements and financial data are or are required to be included in the
Registration Statement) addressed to each selling Holder and
Underwriter of Registrable Notes, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings, and (iv) deliver
such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Notes
being sold or the Underwriters, and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of GST Funding, GST USA and GST made
pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, GST Funding, GST USA or
GST may require each Holder of Registrable Notes to furnish to GST Funding, GST
USA or GST such information regarding the Holder and the proposed distribution
by such Holder of such Registrable Notes as GST Funding, GST USA or GST may from
time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from GST Funding, GST USA or GST of the happening of
any event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Notes pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by GST Funding, GST USA or GST, such Holder will deliver to GST
Funding, GST USA or GST (at its expense) all copies in its possession, other
than permanent file copies then in
12
<PAGE>
such Holder's possession, of the Prospectus covering such Registrable Notes
current at the time of receipt of such notice. If GST Funding, GST USA or GST
shall give any such notice to suspend the disposition of Registrable Notes
pursuant to a Registration Statement, GST Funding, GST USA and GST shall extend
the period during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such notice to and including the date when
the Holders shall have received copies of the supplemented or amended Prospectus
necessary to resume such dispositions.
The Holders of Registrable Notes covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or investment
bankers and manager or managers (the "Underwriters") that will administer the
offering will be selected by the Majority Holders of the Registrable Notes
included in such offering.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) GST Funding, GST USA and GST understand that the Staff of the SEC
has taken the position that any broker-dealer that receives Exchange Notes for
its own account in the Exchange Offer in exchange for Notes that were acquired
by such broker-dealer as a result of market-making or other trading activities
(a "Participating Broker-Dealer"), may be deemed to be an "underwriter" within
the meaning of the 1933 Act and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such Exchange
Notes.
GST Funding, GST USA and GST understand that it is the Staff's position
that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange Notes,
without naming the Participating Broker-Dealers or specifying the amount of
Exchange Notes owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Notes for their own accounts, so long
as the Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of this
Agreement, GST Funding, GST USA and GST agree that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agent or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Notes by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; PROVIDED that:
13
<PAGE>
(i) GST Funding, GST USA and GST shall not be required to
amend or supplement the Prospectus contained in the Exchange Offer
Registration Statement, as would otherwise be contemplated by Section
3(i) hereof, for a period exceeding 180 days after the last Exchange
Date (as such period may be extended pursuant to the penultimate
paragraph of Section 3 hereof) and Participating Broker-Dealers shall
not be authorized by GST Funding, GST USA or GST to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 hereof to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the
1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to GST Funding, GST USA and GST
by the Placement Agents or with the reasonable request in writing to
GST Funding, GST USA and GST by one or more broker-dealers who certify
to the Placement Agents, GST Funding, GST USA and GST in writing that
they anticipate that they will be Participating Broker-Dealers; and
PROVIDED FURTHER that, in connection with such application of the Shelf
Registration procedures set forth in Section 3 hereof to an Exchange
Offer Registration, GST Funding, GST USA and GST shall be obligated (A)
to deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless
it elects not to act as such representative, (B) to pay the fees and
expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless
such counsel elects not to so act and (C) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in
the form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
(c) The Placement Agents shall have no liability to GST
Funding, GST USA, GST or any Holder with respect to any request that it may make
pursuant to Section 4(b) above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of GST Funding, GST USA and GST agrees, jointly and severally,
to indemnify and hold harmless the Placement Agents, each Holder and each
Person, if any, who controls the Placement Agents or any Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or
is under common control with, or is controlled by, the Placement Agents or any
Holder, from and against all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by the
Placement Agents, any Holder or any such controlling or affiliated Person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which Exchange
Notes or Registrable Notes were registered under the 1933 Act, including all
14
<PAGE>
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if GST Funding, GST USA or GST shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Placement Agents or any Holder
furnished to GST Funding, GST USA or GST in writing by the Placement Agents or
any selling Holder expressly for use therein. In connection with any
Underwritten Offering permitted by Section 3 hereof, GST Funding, GST USA and
GST will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the 1933 Act and the 1934 Act) to the same extent as provided
above with respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless GST Funding, GST USA and GST, the Placement Agents and the other
selling Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls GST Funding, GST
USA or GST, the Placement Agents and any other selling Holder within the meaning
of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same
extent as the foregoing indemnity from GST Funding, GST USA and GST to the
Placement Agents and the Holders, but only with reference to information
relating to such Holder furnished to GST Funding, GST USA or GST in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate
15
<PAGE>
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Placement Agents and all Persons, if any, who control the Placement Agents
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act, (b) the fees and expenses of more than one separate firm (in addition
to any local counsel) for GST Funding, GST USA and GST, their directors, their
officers who sign the Registration Statement and each Person, if any, who
controls GST Funding, GST USA or GST within the meaning of either such Section
and (c) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Holders and all Persons, if any, who control any Holders
within the meaning of either such Section, and that all such fees and expenses
shall be reimbursed as they are incurred. In such case involving the Placement
Agents and Persons who control the Placement Agents, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated. In such case
involving the Holders and such Persons who control Holders, such firm shall be
designated in writing by the Majority Holders. In all other cases, such firm
shall be designated by GST. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but, if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of GST Funding, GST USA, GST and the Holders
16
<PAGE>
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by GST Funding, GST
USA, GST or by the Holders and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this Section 5(d)
are several in proportion to the respective principal amount of Registrable
Notes of such Holder that were registered pursuant to a Registration Statement.
(e) GST Funding, GST USA, GST, and each Holder agree that it would not
be just or equitable if contribution pursuant to this Section 5 were determined
by PRO RATA allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Notes were sold by such Holder exceeds the amount of any damages
that such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. The remedies provided for in this Section 5
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Placement Agents, any Holder or any person controlling the Placement Agents
or any Holder, or by or on behalf of GST Funding, GST USA, GST, their officers
or directors or any person controlling GST Funding, GST USA or GST, (iii)
acceptance of any of the Exchange Notes and (iv) any sale of Registrable Notes
pursuant to a Shelf Registration Statement.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. None of GST Funding, GST USA or GST has
entered into, and on or after the date of this Agreement will enter into, any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of GST
17
<PAGE>
Funding's, GST USA's or GST's other issued and outstanding securities under any
such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless GST Funding, GST USA and GST have obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification, supplement, waiver
or consent; PROVIDED, HOWEVER, that no amendment, modification, supplement,
waiver or consents to any departure from the provisions of Section 5 hereof
shall be effective as against any Holder of Registrable Notes unless consented
to in writing by such Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
GST Funding, GST USA and GST by means of a notice given in accordance with the
provisions of this Section 6(c), which address initially is, with respect to the
Placement Agents, the address set forth in the Placement Agreement; and (ii) if
to GST Funding, initially at GST Funding's address set forth in the Indenture
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 6(c); and if to GST USA, initially at GST
USA's address set forth in the Indenture and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section 6(c);
and if to GST, initially at GST's address set forth in the Indenture and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and on the next
business day if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; PROVIDED that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Notes in
violation of the terms of the Placement Agreement. If any transferee of any
Holder shall acquire Registrable Notes, in any manner, whether by operation of
law or otherwise, such Registrable Notes shall be held subject to all of the
terms of this Agreement, and by taking
18
<PAGE>
and holding such Registrable Notes such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such person shall be entitled to receive the benefits hereof.
The Placement Agents (in their capacity as Placement Agents) shall have no
liability or obligation to GST Funding, GST USA or GST with respect to any
failure by a Holder to comply with, or any breach by any Holder of, any of the
obligations of such Holder under this Agreement.
(e) PURCHASES AND SALES OF NOTES. GST Funding, GST USA and GST shall
not, and shall use their best efforts to cause their affiliates (as defined in
Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise
transfer any Notes.
(f) RATING OF NOTES. GST Funding, GST USA and GST shall cause the Notes
or the Exchange Notes, as the case may be, to be rated by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Services within 18 months of the
Closing Date.
(g) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between GST Funding, GST USA and
GST, on the one hand, and the Placement Agents, on the other hand, and each
Holder shall have the right to enforce such agreements directly to the extent it
deems such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) DESIGNATION OF PROCESS AGENT; SUBMISSION TO JURISDICTION. Each of
GST Funding, GST USA and GST hereby (i) acknowledges that it has irrevocably
designated and appointed Olshan Grundman Frome & Rosenzweig LLP, 505 Park
Avenue, New York, New York 10022, Attention: David J. Adler, Esq. (together with
any successor, the "Process Agent"), as its authorized agent upon which process
may be served in any suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated herein that may be instituted in
any federal or state court in the State of New York, or brought under federal or
state securities laws, and acknowledges that the Process Agent has accepted such
designation, (ii) agrees that service of process upon the Process Agent and
written notice of such service to GST Funding, GST USA or GST, as the case may
be (mailed or delivered to GST's Chief Executive Officer at its principal office
at 4001 Main Street, Vancouver, Washington 98663), shall be deemed in every
respect effective service of process upon GST Funding, GST USA or GST, as the
case may be,
19
<PAGE>
in any such suit, action or proceeding and (iii) agrees to take any and all
action, including the execution and filing of any and all such documents and
instruments as may be necessary to continue such designation and appointment of
the Process Agent in full force and effect so long as any of the Notes shall be
outstanding. Each of GST Funding, GST USA and GST hereby agrees to submit to the
nonexclusive jurisdiction of any federal or state court in the State of New York
in any such suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated herein.
(k) WAIVER OF IMMUNITY. To the extent that GST has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.
(l) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.
(m) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
GST TELECOMMUNICATIONS, INC.
By /s/ Daniel Trampush
------------------------------------------
Name: Daniel Trampush
Title: Senior Vice President
GST USA, INC.
By /s/ Daniel Trampush
------------------------------------------
Name: Daniel Trampush
Title: Senior Vice President
GST NETWORK FUNDING, INC.
By /s/ Daniel Trampush
------------------------------------------
Name: Daniel Trampush
Title: Senior Vice President
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
SBC WARBURG DILLON READ INC.
By Morgan Stanley & Co. Incorporated
By /S/ James B. Avery
---------------------------------
Name: James B. Avery
Title: PRINCIPAL
COLLATERAL PLEDGE
AND SECURITY AGREEMENT
Dated as of May 4, 1998
from
GST NETWORK FUNDING, INC.,
AS PLEDGOR
to
UNITED STATES TRUST COMPANY
OF NEW YORK,
AS TRUSTEE
<PAGE>
T A B L E O F C O N T E N T S
SECTION PAGE
SECTION 1. Definitions; Appointment; Deposit and Investment..............2
1.1. Definitions...................................................2
1.2. Appointment of the Trustee....................................3
1.3. Pledge and Grant of Security Interest.........................3
1.4. Deposit of Proceeds of Offering...............................6
SECTION 2. Security for Obligation.......................................6
SECTION 3. Delivery of Collateral........................................6
SECTION 4. Maintaining the Collateral Accounts...........................6
SECTION 5. Investing of Amounts in the Collateral Investments Account....7
SECTION 6. Delivery of Collateral Investments; Filing....................7
SECTION 7. Disbursements Relating to Collateral..........................8
SECTION 8. Representations and Warranties................................9
SECTION 9. Further Assurances...........................................12
SECTION 10. Covenants....................................................12
SECTION 11. As to Acquired Equipment.....................................13
SECTION 12. Insurance....................................................13
SECTION 13. Power of Attorney............................................14
SECTION 14. No Assumption of Duties; Reasonable Care.....................15
SECTION 15. Indemnity....................................................15
SECTION 16. Remedies upon Event of Default...............................16
SECTION 17. Expenses.....................................................17
SECTION 18. Security Interest Absolute...................................17
<PAGE>
SECTION PAGE
SECTION 19. Voting Rights; Dividends; Etc................................17
SECTION 20. Miscellaneous Provisions.....................................18
20.1. Notices......................................................18
20.2. No Adverse Interpretation of Other Agreements................19
20.3. Severability.................................................19
20.4. Headings.....................................................19
20.5. Counterpart Originals........................................19
20.6. Benefits of Pledge Agreement.................................19
20.7. Amendments, Waivers and Consents.............................19
20.8. Interpretation of Agreement..................................20
20.9. Continuing Security Interest; Termination; Release...........20
20.10. Survival Provisions..........................................21
20.11. Waivers......................................................21
20.12. Authority of the Trustee.....................................21
20.13. Final Expression.............................................22
20.14. Rights of Holders............................................22
21.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES................................22
SCHEDULES
Schedule I - Locations of Collateral
EXHIBITS
Exhibit A - Form of Fee Note
Exhibit B - Trustee's Officer Certificate
Exhibit C - Form of Acknowledgement of Control of Collateral
Investment Account
Exhibit D - Form of Consent and Agreement
Exhibit E - Form of Intercompany Note
Exhibit F - Form of Intercompany Security Agreement
Exhibit G - Form of GST Guaranty
<PAGE>
COLLATERAL PLEDGE
AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "PLEDGE AGREEMENT")
is made and entered into as of May 4, 1998 by and among GST NETWORK FUNDING,
INC., a Delaware corporation (the "PLEDGOR"), having its principal office at
4001 Main Street, Vancouver, Washington 98663, in favor of United States Trust
Company of New York ("U.S. TRUST"), a banking and trust company duly organized
and existing under the laws of the State of New York, having an office at 114
West 47th Street, New York, N.Y. 10036, as trustee (the "TRUSTEE") for the
holders (the "HOLDERS") of the Notes (as defined herein) issued by the Pledgor
under the Indenture referred to below.
W I T N E S S E T H
WHEREAS, the Pledgor, GST Telecommunications, Inc., a corporation
organized under the federal laws of Canada ("GST"), GST USA, Inc., a Delaware
corporation ("GST USA"), and the Trustee have entered into that certain
indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "INDENTURE"), pursuant to which the
Pledgor is initially issuing $500,000,000 in aggregate principal amount at
maturity of its 10 1/2% Senior Secured Discount Notes due 2008 (the "NOTES") on
the date hereof (the "OFFERING");
WHEREAS, in consideration for the Pledgor making the financing from the
Offering available to GST USA and for the Pledgor facilitating the purchase of
equipment for GST USA, GST USA, GST and the Pledgor have entered into a
Reimbursement and Commitment Fee Agreement pursuant to which GST USA and GST
have agreed to pay any fees or expenses incurred by the Pledgor in connection
therewith (the "REIMBURSEMENT OBLIGATION") and to pay GST Network a commitment
fee (the "COMMITMENT FEE") in an amount equal to 4.5% per annum of the amount by
which the aggregate principal amount of the Notes exceeds the aggregate
principal amount of the Intercompany Notes (as defined below) then held as
security for the Notes and such Commitment Fee may be paid by the issuance of
indebtedness ("FEE NOTES") of GST USA in a principal amount equal to such
Commitment Fee in the form attached hereto as Exhibit A;
WHEREAS, the Pledgor is required to apply the net proceeds of the
Offering to acquire Collateral Investments (as defined below) which will be
pledged to the Trustee on the Closing Date, to be held by the Trustee for the
benefit of the Holders to secure the Pledgor's obligations under the Indenture
and the Notes;
WHEREAS, the Pledgor is permitted to use the proceeds of the Collateral
Investments (as defined below) from time to time pay the cost (including,
without limitation, the cost of design, development, construction, acquisition,
installation and integration) (the
<PAGE>
"ACQUIRED EQUIPMENT COST") of the Acquired Equipment (as defined below) and sell
the Acquired Equipment to GST USA in exchange for indebtedness of GST USA in a
principal amount equal to the Acquired Equipment Cost to be evidenced by one or
more promissory notes in the form attached hereto as Exhibit D (the
"INTERCOMPANY NOTES");
WHEREAS, the Pledgor has agreed to pledge all Intercompany Notes and
Fee Notes (collectively, the "PLEDGED DEBT") it receives to the Trustee for the
benefit of the Holders to secure the Pledgor's obligations under the Indenture
and the Notes;
WHEREAS, the Pledgor has opened a securities account (the "COLLATERAL
INVESTMENTS ACCOUNT") with Bear, Stearns Asset Management, Inc. ("BSAM") at its
office at 1221 Avenue of the Americas, New York, NY 10020, Account No.
[__________] in the name of the Pledgor but under the sole dominion and control
of the Trustee and subject to the terms of this Pledge Agreement; and
WHEREAS, to secure the obligations of the Pledgor now or hereafter
existing under the Indenture and the Notes whether for principal, premium,
interest, fees, expenses or otherwise (the "OBLIGATIONS"), the Pledgor has
agreed to (i) pledge to the Trustee for its benefit and the ratable benefit of
the Holders, a security interest in the Collateral (as hereinafter defined) and
(ii) execute and deliver this Pledge Agreement in order to secure the payment
and performance by the Pledgor of all the Obligations. Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in the Indenture.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained, and
in order to induce the Holders to purchase the Notes, the Pledgor and the
Trustee hereby agree, for the benefit of the Trustee and for the ratable benefit
of the Holders, as follows:
SECTION 1. DEFINITIONS; APPOINTMENT; DEPOSIT AND INVESTMENT.
1.1. DEFINITIONS.
"AMENDED BOOK-ENTRY REGULATIONS" means 31 C.F.R. Part 357 as amended by
the amendments thereto promulgated at 61 Fed. Reg. 43626-43638 (August 23,
1996).
"CASH EQUIVALENTS" means U.S. Government Securities, as defined in the
Indenture.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the Chairman
of the Board, the President or any Vice President of the Pledgor (i) stating (A)
the amount of
2
<PAGE>
funds needed by the Pledgor to pay the Acquired Equipment Cost of any Acquired
Equipment to be purchased by the Pledgor and confirming that the cost of design,
development, construction, installation and integration of all Acquired
Equipment will not exceed 50% of the aggregate Acquired Equipment Cost of such
Acquired Equipment; (B) that GST USA has entered into a legally binding and
enforceable agreement (a "PURCHASE AGREEMENT") with the Pledgor to purchase
promptly, but in no event later than the earliest date such Acquired Equipment
can be commercially operational, such Acquired Equipment in exchange for
indebtedness with a principal amount equal to the Acquired Equipment Cost and
that bears interest at 200 basis points above the rate equal to that of the
Notes and evidenced by an Intercompany Note in the form of Exhibit D hereto,
guaranteed by GST under a Guaranty in the form of Exhibit F; and (C) that the
Pledgor will pledge the Intercompany Note to the Trustee for the benefit of the
Holders, and (ii) having attached thereto, an invoice or other appropriate
documentation for the Acquired Equipment stating the Acquired Equipment Cost to
be paid.
"QUALIFIED FINANCIAL INSTITUTION" shall mean any person meeting the
minimum requirements imposed upon the Trustee pursuant to Section 7.10 of the
Indenture.
"REVISED ARTICLE 8" has the meaning set forth in ss.357.2 of the
Amended Book- Entry Regulations.
"TRUSTEE" shall mean the Person named as the "Trustee" in the first
paragraph of this Agreement until a successor Trustee shall have become such,
and thereafter "Trustee" shall mean the Person who is then the Trustee
hereunder.
All defined terms used herein without definition shall have the
respective meanings ascribed to them in the Indenture. Unless otherwise defined
herein or in the Indenture, terms used in Articles 8 or 9 of the Uniform
Commercial Code as in effect in the State of New York (the "U.C.C."), Revised
Article 8 and the Amended Book-Entry Regulations are used herein as therein
defined.
1.2. APPOINTMENT OF THE TRUSTEE. The Pledgor hereby appoints the
Trustee as Trustee in accordance with the terms and conditions set forth herein
and the Trustee hereby accepts such appointment.
1.3. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby assigns
and pledges to the Trustee for its benefit and the ratable benefit of the
Holders, and hereby grants to the Trustee for its benefit and the ratable
benefit of the Holders a security interest in, the following (collectively, the
"COLLATERAL"):
3
<PAGE>
(a) all of the Pledgor's right, title and interest, whether
now owned or hereafter acquired, in and to all equipment in all of its
forms, wherever located, now or hereafter existing (including, but not
limited to, all telecommunications equipment of every type), all
fixtures and all parts thereof and all accessions thereto (any and all
such equipment, fixtures, parts and accessions being the "ACQUIRED
EQUIPMENT");
(b) all of the Pledgor's right, title and interest, whether
now owned or hereafter acquired, in and to all accounts, contract
rights, chattel paper, instruments, deposit accounts, general
intangibles and other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale
or lease of Acquired Equipment or other goods or the rendering of
services, and all rights now or hereafter existing in and to all
security agreements, leases and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles or obligations (any
and all such accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and obligations, to the extent
not referred to in clause (d), (e) or (f) below, being the
"RECEIVABLES", and any and all such leases, security agreements and
other contracts being the "RELATED CONTRACTS");
(c) all of the following (the "SECURITY COLLATERAL"):
(i) the Pledged Debt and the instruments evidencing
the Pledged Debt and GST's guarantee thereof, and all
interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged
Debt; and
(ii) all additional indebtedness from time to time
owed to the Pledgor and the instruments evidencing such
indebtedness, and all interest, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of such indebtedness;
(d) all of the Pledgor's right, title and interest in and to
each of the Purchase Agreements entered into by the Pledgor from time
to time, and the Intercompany Security Agreement and the Reimbursement
and Commitment Fee Agreement, as such agreements may be amended or
otherwise modified from time to time (collectively, the "ASSIGNED
AGREEMENTS"), including, without limitation, (i) all rights of the
Pledgor to receive moneys due and to become due
4
<PAGE>
under or pursuant to the Assigned Agreements, (ii) all claims of the
Pledgor for damages arising out of or for breach of or default under
the Assigned Agreements and (iii) the right of the Pledgor to terminate
the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (all such
Collateral being the "AGREEMENT COLLATERAL");
(e) all of the following (collectively, the "ACCOUNT
COLLATERAL"):
(i) the Collateral Investments Account, all funds
held therein and all certificates and instruments, if any,
from time to time representing or evidencing the
Collateral Investments Account;
(ii) all other deposit accounts of the Pledgor, all
funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing such
deposit accounts;
(iii) all Collateral Investments (as hereinafter
defined) from time to time and all certificates and
instruments, if any, from time to time representing or
evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by BSAM for
or on behalf of the Pledgor in substitution for or in
addition to any or all of the then existing Account
Collateral; and
(v) all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of the then existing Account Collateral; and
(f) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of
the types described in clauses (a) - (e) of this Section 1.3) and, to
the extent not otherwise included, all (i) payments under insurance
(whether or not the Trustee is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral and (ii)
cash.
5
<PAGE>
1.4. DEPOSIT OF PROCEEDS OF OFFERING. The Pledgor shall deposit the net
proceeds of the Offering and all other cash on hand on the date hereof into the
Collateral Investments Account and direct BSAM to purchase Cash Equivalents to
be held in the Collateral Investments Account.
SECTION 2. SECURITY FOR OBLIGATION. This Pledge Agreement secures the
payment of all Obligations of the Pledgor now or hereafter existing under the
Indenture and the Notes, whether for principal, premium, interest, fees,
expenses or otherwise (all such Obligations being the "SECURED OBLIGATIONS").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by the Pledgor to the Trustee or the Holders under the Indenture but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Pledgor.
SECTION 3. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Security Collateral or Account Collateral shall
be delivered to and held by or on behalf of the Trustee pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Trustee or shall be credited to the Collateral
Investments Account. For the better perfection of the Trustee's rights in and to
the Security Collateral and Account Collateral, the Pledgor shall forthwith,
upon the pledge of any Security Collateral or Account Collateral hereunder,
cause all such Security Collateral or Account Collateral, including the
Collateral Investments Account and all other accounts representing a security
entitlement to or containing any Collateral (including, without limitation, any
Collateral Investments) to be registered in the name "United States Trust
Company of New York for the benefit of the holders of the 10 1/2% Senior Secured
Discount Notes of GST Network Funding, Inc. Due 2008" and to be under the sole
dominion and control of the Trustee, which dominion and control shall be agreed
to and acknowledged by BSAM or any other securities intermediary holding any
such account in an acknowledgement in the form of Exhibit B hereto, subject only
to the revocable rights specified in Section 7. In addition, the Trustee or
BSAM, as the case may be, shall have the right at any time to exchange
certificates or instruments representing or evidencing any Security Collateral
or Account Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. MAINTAINING THE COLLATERAL ACCOUNTS. (a) So long as any
Obligation shall remain unpaid, the Pledgor will maintain the Collateral
Investments Account.
(b) It shall be a term and condition of the Collateral Investments
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the Collateral Investments Account and except as otherwise
provided by the provisions of Section 7 and Section 16, that no amount
(including interest on Collateral Investments) shall be
6
<PAGE>
paid or released to or for the account of, or withdrawn by or for the account
of, the Pledgor or any other Person from the Cash Collateral Account.
(c) The Collateral Investments Account shall be subject to such
applicable laws, and such applicable regulations of the Board of Governors of
the Federal Reserve System and of any other appropriate banking or governmental
authority, as may now or hereafter be in effect.
(d) Notwithstanding the provisions of this Section 4 or any other term
of this Agreement, the Trustee shall relocate the Account Collateral to accounts
at a Qualified Financial Institution designated by the Pledgor upon receipt of
the following documentation: (i) written instructions from a duly authorized
officer of the Pledgor (A) authorizing such relocation of the Collateral; and
(B) designating the account at the Qualified Financial Institution to which the
Collateral is to be relocated; (ii) a letter agreement in the form of Exhibit C,
duly executed by the Qualified Financial Institution; and (iii) an opinion of
counsel to the Pledgor, in form and substance satisfactory to the Trustee,
stating that the Trustee has a valid and perfected first priority security
interest in the Collateral relocated pursuant to this Section 4(d). In the event
of the relocation of an Account Collateral pursuant to this Section 4(d), the
accounts to which such Account Collateral is relocated shall for all purposes
under this Agreement thereafter be the Collateral Investment Account.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL INVESTMENTS ACCOUNT.
The Pledgor will, subject to the provisions of Section 7 and Section 16, from
time to time (a) invest amounts on deposit in the Collateral Investments Account
in such Cash Equivalents in the name of the Trustee as the Pledgor may select
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents, as the Pledgor may select
(the Cash Equivalents referred to in clauses (a) and (b) above being
collectively "COLLATERAL INVESTMENTS"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided above shall be
deposited and held in the Collateral Investments Account.
SECTION 6. DELIVERY OF COLLATERAL INVESTMENTS; FILING. (a) Subject to
the other terms and conditions of this Pledge Agreement, all Collateral
Investments under this Pledge Agreement shall be held in the Collateral
Investments Account, subject (except as expressly provided in subsections 7(a)
and 7(b) hereof) to the exclusive dominion and control of the Trustee and
exclusively for the benefit of the Trustee and for the ratable benefit of the
Holders and segregated from all other funds or other property otherwise held by
the Trustee.
(b) All Account Collateral shall be retained in the Collateral
Investments Account pending disbursement pursuant to the terms hereof and upon
request from the
7
<PAGE>
Pledgor, the Trustee shall report to the Pledgor the amount and type of assets
contained in each such account.
(c) Concurrently with the execution and delivery of this Agreement,
BSAM is delivering to the Pledgor a duly executed certificate, in the form of
Exhibit B hereto, of an officer of BSAM, confirming BSAM's establishment and
maintenance of the Collateral Investment Account and its receipt and holding of
the Collateral Investments or a security entitlement thereto and the crediting
of the Collateral Investments or such security entitlement to the Collateral
Investment Account, all in accordance with this Pledge Agreement.
(d) Concurrently with the execution and delivery of this Agreement, the
Pledgor is delivering to the Trustee duly executed financing statements, in
proper form for filing under the Uniform Commercial Code of the State of New
York and each state listed on Schedule I hereto covering the Collateral
described in this Pledge Agreement.
SECTION 7. DISBURSEMENTS RELATING TO COLLATERAL. The assets in the
Collateral Investments Account shall be released only as follows:
(a) Three business days prior to the due date of any scheduled
cash interest payments on the Notes, any Payment Date with respect to
an Offer to Purchase the Notes under the Indenture or a Redemption Date
with respect to the Notes, the Pledgor may, pursuant to written
instructions executed by the Pledgor (an "ISSUER ORDER"), direct the
Trustee to direct BSAM to release from the Collateral Investments
Account and, if necessary, to liquidate the Collateral Investments
indicated on the Issuer Order and pay to the Holders proceeds
sufficient to provide for payment in full of such principal, premium or
interest then due on the Notes. Upon receipt of an Issuer Order, the
Trustee will take any action necessary to provide for the payment of
the principal, premium or interest on the Notes in accordance with the
payment provisions of the Indenture to the Holders from (and to the
extent of) proceeds of the Collateral Investments Account. Nothing in
this Section 7 shall affect the Trustee's rights to apply the
Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) Upon receipt by the Trustee of an Issuer Order and an
Officer's Certificate with respect to the payment of any Acquired
Equipment Cost, the Trustee shall direct BSAM to immediately release
proceeds from the Collateral Investments Account and if necessary
liquidate the Collateral Investments indicated in the Officer's
Certificate or Issuer Order in such amount as will be sufficient to
provide for payment in full of the Acquired Equipment Cost. The Pledgor
agrees to use the disbursed proceeds to pay such Acquired Equipment
Cost on the date of such release, and any
8
<PAGE>
such released funds will be disbursed directly to the supplier of the
Acquired Equipment pursuant to the invoice attached to the Officer's
Certificate.
(c) Nothing contained in Section 1, Section 5, this Section 7,
or any other provision of this Agreement shall (i) afford the Pledgor
any right to issue entitlement orders with respect to any security
entitlement to the Collateral Investments or any securities account in
which any such security entitlement may be carried, or otherwise afford
the Pledgor control of any such security entitlement or (ii) otherwise
give rise to any rights of Pledgor with respect to the Collateral
Investments, any security entitlement thereto or any securities account
in which any such security entitlement may be carried, other than the
Pledgor's rights under this Pledge Agreement as the beneficial owner of
collateral pledged to and subject to the exclusive dominion and control
(except as expressly provided in Sections 7(a) and (b) hereof) of the
Trustee in its capacity as such (and not as a securities intermediary).
The Pledgor acknowledges, confirms and agrees that the Trustee holds a
security entitlement to the Collateral Investments solely as trustee
for the Holders and not as a securities intermediary.
(d) The Pledgor shall prepare and deliver to the Trustee or
shall provide the Trustee with all information necessary for the
Trustee to prepare and deliver to BSAM, instructions to BSAM for the
release of funds from the Collateral Investments Account in accordance
with the terms of Section 7.
SECTION 8. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants, and in connection with each purchase or sale of
Acquired Equipment will be deemed to represent and warrant, that:
(a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge
Agreement will not contravene any provision of applicable law or the
Certificate of Incorporation of the Pledgor or any material agreement
or other material instrument binding upon the Pledgor or any of its
subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on
any assets of the Pledgor, except for the security interests granted
under this Pledge Agreement; no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required (i) for the performance by the Pledgor of its obligations
under this Pledge Agreement, (ii) for the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement or (iii) except for any
such consents, approvals, authorizations or orders required to be
obtained by the Trustee (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Trustee of
the rights provided for in this Pledge
9
<PAGE>
Agreement or the remedies in respect of the Collateral pursuant to this
Pledge Agreement.
(b) The Pledgor is the beneficial owner of the Collateral,
free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Pledge Agreement). No
financing statement covering the Pledgor's interest in the Collateral
is on file in any public office other than the financing statements, if
any, filed pursuant to this Pledge Agreement. The Pledgor has no trade
names.
(c) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and (assuming the due
authorization and valid execution and delivery of this Pledge Agreement
by the Trustee and enforceability of the Pledge Agreement against the
Trustee in accordance with its terms) constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as (i) the enforceability hereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting creditors' rights or remedies generally, (ii)
the availability of equitable remedies may be limited by equitable
principles of general applicability and the discretion of the court
before which any proceeding therefor may be brought, and (iii) the
exculpation provisions hereunder may be limited by public policy
considerations.
(d) Upon the delivery to the Trustee of the certificates or
instruments, if any, representing or evidencing the Collateral, the
filing of financing statements, if any, required by the UCC in the
appropriate offices in the State of New York and each state listed on
Schedule 1 hereto, and the transfer and pledge to the Trustee of the
Account Collateral and the acquisition by the Trustee of a security
entitlement thereto, in accordance with Section 3, the pledge of and
grant of a security interest in the Collateral securing the payment of
the Secured Obligations for the benefit of the Trustee and the Holders
will constitute a first priority perfected security interest in such
Collateral, enforceable as such against all creditors of the Pledgor
(and any persons purporting to purchase any of the Collateral from the
Pledgor).
(e) There are no legal or governmental proceedings pending or,
to the best of the Pledgor's knowledge, threatened to which the Pledgor
or any of its subsidiaries is a party or to which any of the properties
of the Pledgor or any such subsidiary is subject that would materially
adversely affect the power or ability of the Pledgor to perform its
obligations under this Pledge Agreement or to consummate the
transactions contemplated hereby.
10
<PAGE>
(f) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System) applicable to the Pledgor.
(g) All of the Acquired Equipment is or will be located at the
places specified in Schedule I hereto. The chief place of business and
chief executive office of the Pledgor and the office where the Pledgor
keeps its records concerning the Receivables, and the original copies
of each Assigned Agreement and all originals of all chattel paper that
evidence Receivables, are located at the address first specified above
for the Pledgor. Original copies of each Assigned Agreement and all
originals of all chattel paper that evidence Receivables have been
delivered to the Trustee. None of the Receivables or Agreement
Collateral is evidenced by a promissory note or other instrument. The
Pledgor has exclusive possession and control of the Acquired Equipment.
(h) Each Intercompany Note issued to the Pledgor hereunder and
each Fee Note issued to the Pledgor under the Reimbursement and
Commitment Fee Agreement will be duly authorized, executed or issued
and delivered by GST USA and will be the legal, valid and binding
obligation of GST USA.
(i) Each guaranty of an Intercompany Note and a Fee Note
issued to the Pledgor will be duly authorized, executed and delivered
by GST and will be the legal valid and binding obligation of GST.
(j) The Intercompany Security Agreement, a true and complete
copy of which has been furnished to the Trustee, has been duly
authorized, executed and delivered by all parties thereto, has not been
amended or otherwise modified, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance
with its terms. GST USA has executed and delivered to the Pledgor a
consent, in substantially the form of Exhibit D, to the assignment of
the Intercompany Security Agreement and all related Agreement
Collateral to the Trustee pursuant to this Agreement.
(k) Each Purchase Agreement delivered to the Pledgor will be
duly authorized, executed and delivered by GST USA and will be the
legal, valid and binding obligation of GST USA enforceable in
accordance with its terms.
(l) No Event of Default (as defined below) exists.
11
<PAGE>
SECTION 9. FURTHER ASSURANCES. The Pledgor will, promptly upon request
by the Trustee (which request the Trustee may submit at the direction of the
Holders of a majority in principal amount of the Notes then outstanding),
execute and deliver or cause to be executed and delivered, or use its reasonable
best efforts to procure, all assignments, instruments and other documents, all
in form and substance reasonably satisfactory to the Trustee, deliver any
instruments to the Trustee and take any other actions that are necessary or
desirable to perfect, continue the perfection of, or protect the first priority
of the Trustee's security interest in and to the Collateral, to protect the
Collateral against the rights, claims, or interests of third persons (other than
any such rights, claims or interests created by or arising through the Trustee)
or to effect the purposes of this Pledge Agreement. The Pledgor also hereby
authorizes the Trustee to file any financing or continuation statements in the
United States with respect to the Collateral without the signature of the
Pledgor (to the extent permitted by applicable law). The Pledgor will promptly
pay all reasonable costs incurred in connection with any of the foregoing within
45 days of receipt of an invoice therefor. The Pledgor also agrees, whether or
not requested by the Trustee, to take all actions that are necessary to perfect
or continue the perfection of, or to protect the first priority of, the
Trustee's security interest in and to the Collateral, including the filing of
all necessary financing and continuation statements, and to protect the
Collateral against the rights, claims or interests of third persons (other than
any such rights, claims or interests created by or arising through the Trustee).
SECTION 10. COVENANTS. The Pledgor covenants and agrees with the
Trustee and the Holders that from and after the date of this Pledge Agreement
until the earlier of payment in full in cash of all Secured Obligations due and
owing under the Indenture and the Notes:
(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Collateral and at times will be the sole beneficial owner of
the Collateral, except as contemplated by this Agreement or the
Indenture or (ii) it will not create or permit to exist any Lien upon
or with respect to any of the Collateral (except for the security
interests granted under this Pledge Agreement, the Intercompany
Security Agreement and any Lien created by or arising through the
Trustee under the Indenture);
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or
inhibit the Trustee's rights or remedies hereunder, including, without
limitation, the Trustee's right to sell or otherwise dispose of the
Collateral or (ii) fail to pay or discharge any tax, assessment or levy
of any nature with respect to the Collateral not later than five days
prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to the Collateral;
12
<PAGE>
(c) in the event the Pledgor is required to make an Offer to
Purchase the Notes under the Indenture, it will fund such Offer to
Purchase (i) first from funds (or the proceeds of Collateral
Investments) held in the Collateral Investments Account, (ii) second
from the proceeds of Intercompany Offers (as defined in the
Intercompany Notes) under the Intercompany Notes and (iii) third from
the proceeds of a Fee Note Offer (as defined in the Fee Notes). The
Pledgor covenants that it will not accept any Intercompany or Fee Note
Offer except and to the extent required to fund an Offer to Purchase in
accordance with the terms of the preceding sentence; and
(d) it will deliver to the Trustee, true and complete copies
of each Purchase Agreement, promptly after each such agreement is
entered into by GST USA and the Pledgor, and will require as a
condition to its entry into any such Purchase Agreement that GST USA
execute and deliver to the Pledgor a consent, in substantially the form
of Exhibit C, to the assignment of the Purchase Agreement and all
related Agreement Collateral to the Trustee pursuant to this Agreement;
(e) Subject to the terms and conditions of this Agreement, the
Pledgor shall at its expense perform and observe all the terms and
provisions of the Assigned Agreements to be performed or observed by
it, maintain the Assigned Agreements in full force and effect, enforce
the Assigned Agreements in accordance with their respective terms and
take all such action to such end as may be from time to time requested
by the Trustee; and
(f) Subject to the terms and conditions of this Agreement, the
Pledgor shall not:
(i) cancel or terminate any Assigned Agreement or consent to
or accept any cancellation or termination thereof;
(ii) amend or otherwise modify any Assigned Agreement or give
any consent, waiver or approval thereunder;
(iii) waive any default under or breach of any Assigned
Agreement;
(iv) consent to or permit or accept any prepayment of amounts
to become due under or in connection with any Assigned Agreement,
except as expressly provided therein; or
(v) take any other action in connection with any Assigned
Agreement that would impair the value of the interest or rights of the
Pledgor thereunder or that would impair the interest or rights of the
Trustee.
13
<PAGE>
SECTION 11. AS TO ACQUIRED EQUIPMENT. (a) The Pledgor shall keep the
Acquired Equipment at the places therefor specified in Section 8(g) or, upon 30
days' prior written notice to the Trustee, at such other places in a
jurisdiction where all action required by Section 8(g) or 9 or shall have been
taken with respect to the Acquired Equipment to perfect, continue the perfection
of or protect the first priority of the Trustee's security interest in and to
such Collateral.
(b) The Pledgor shall cause the Acquired Equipment to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or in the case of any loss or damage to any of the
Acquired Equipment as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end. The Pledgor
shall promptly furnish to the Trustee a statement respecting any loss or damage
to any of the Acquired Equipment.
(c) The Pledgor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Acquired Equipment.
SECTION 12. INSURANCE. (a) The Pledgor shall, at its own expense,
maintain insurance with respect to the Acquired Equipment in such amounts,
against such risks, in such form and with such insurers, as is reasonable and
customary for persons in the telecommunications business. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Trustee and the Pledgor as their interests may appear, and each policy for
property damage insurance shall provide for all losses (except for losses of
less than $1,000,000 per occurrence) to be paid directly to the Trustee. Each
such policy shall in addition (i) name the Pledgor and the Trustee as insured
parties thereunder (without any representation or warranty by or obligation upon
the Trustee) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to the Trustee notwithstanding
any action, inaction or breach of representation or warranty by the Pledgor,
(iii) provide that there shall be no recourse against the Trustee for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Trustee by the insurer. The Pledgor shall deliver to the Trustee original or
duplicate policies of such insurance and, on each anniversary of the Closing
Date, a report of a reputable insurance broker with respect to such insurance.
Further, the Pledgor shall, at the request of the Trustee, duly exercise and
deliver instruments of assignment of such insurance policies to comply with the
requirements of Section 9 and cause the insurers to acknowledge notice of such
assignment.
14
<PAGE>
(b) Reimbursement under any liability insurance maintained by
the Pledgor pursuant to this Section 12 may be paid directly to the Person who
shall have suffered a loss covered by such insurance. In case of any loss
involving damage to Acquired Equipment, the Pledgor shall make or cause to be
made the necessary repairs to or replacements of such Acquired Equipment, and
any proceeds of insurance maintained by the Pledgor which are received by the
Trustee pursuant to this Section 12 shall be paid to the Pledgor as
reimbursement for the costs of such repairs or replacements.
SECTION 13. POWER OF ATTORNEY. In addition to all of the powers granted
to the Trustee pursuant to the Indenture, the Pledgor hereby appoints and
constitutes the Trustee as the Pledgor's attorney-in-fact (with full power of
substitution) to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Trustee in its sole reasonable discretion, and such
payments made by the Trustee to become part of the Secured Obligations of the
Pledgor to the Trustee, due and payable immediately upon demand. The Trustee's
authority under this Section 13 shall include, without limitation, the authority
to endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Pledgor, execute and give receipt for any
certificate of ownership or any document constituting Collateral, transfer title
to any item of Collateral, sign the Pledgor's name on all financing statements
(to the extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or perfect the
security interest in the Collateral and to file the same, prepare, file and sign
the Pledgor's name on any notice of Lien, and to take any other actions arising
from or incident to the powers granted to the Trustee in this Pledge Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 14. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Trustee hereunder are being granted in order to preserve
and protect the security interest of the Trustee and the Holders in and to the
Collateral granted hereby and shall not be interpreted to, and shall not impose
any duties on the Trustee in connection therewith other than those expressly
provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee as
collateral agent or other similar capacity, it being understood that the Trustee
in its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other
15
<PAGE>
matters relative to any Collateral, whether or not the Trustee has or is deemed
to have knowledge of such matters, (b) taking any necessary steps to preserve
rights against any parties with respect to any Collateral or (c) investing or
reinvesting any of the Collateral, PROVIDED, HOWEVER, that nothing contained in
this Agreement shall relieve the Trustee of any responsibilities as a securities
intermediary under applicable law. The Trustee shall have no duty (a) to see to
any recording, filing, or depositing of this Agreement, any Indenture or any
agreement referred to herein or therein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (b) to see to any insurance or (c) to
see to the payment or discharge of any tax assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Collateral. The Trustee makes no representations
as to the validity or sufficiency of any Collateral, the Indenture or this
Agreement. The Trustee shall not be accountable for the use or application by
the Pledgor of any of the proceeds of the Collateral Investments Account or the
Interest Account. The Trustee shall not be responsible for the legality or
validity of this Agreement or the validity, priority, perfection or sufficiency
of the Collateral.
SECTION 15. INDEMNITY. The Pledgor shall indemnify, hold harmless and
defend the Trustee and its directors, officers, agents and employees, from and
against any and all claims, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs, and
reasonable legal fees and damages arising from the Trustee's performance as
Trustee under this Pledge Agreement, except to the extent that such claim,
action, obligation, liability or expense is directly attributable to the bad
faith, gross negligence or wilful misconduct of such indemnified person.
SECTION 16. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
under the Indenture or the Notes or default hereunder (any such Event of Default
or default being referred to in this Pledge Agreement as an "EVENT OF DEFAULT")
shall have occurred and be continuing:
(a) The Trustee and the Holders shall have, in addition to all
other rights given by law or by this Pledge Agreement or the Indenture,
all of the rights and remedies with respect to the Collateral of a
secured party under the UCC in effect in the State of New York at that
time. In addition, with respect to any Collateral that shall then be in
or shall thereafter come into the possession or custody of the Trustee,
the Trustee may sell or cause the same to be sold at any broker's board
or at public or private sale, in one or more sales or lots, at such
price or prices as the Trustee may deem best, for cash or on credit or
for future delivery, without assumption of any credit risk. The
purchaser of any or all Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created
16
<PAGE>
by or through the Pledgor. Unless any of the Collateral threatens, in
the reasonable judgment of the Trustee, to decline speedily in value or
is or becomes of a type sold on a recognized market, the Trustee will
give the Pledgor reasonable notice of the time and place of any public
sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Collateral
conducted in conformity with reasonable commercial practices of banks,
insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Collateral shall be
deemed to be commercially reasonable. Any requirements of reasonable
notice shall be met if such notice is mailed to the Pledgor as provided
in Section 20.1 hereof at least ten (10) days before the time of the
sale or disposition. The Trustee or any Holder may, in its own name or
in the name of a designee or nominee, buy any of the Collateral at any
public sale and, if permitted by applicable law, at any private sale.
All expenses (including court costs and reasonable attorneys' fees,
expenses and disbursements) of, or incident to, the enforcement of any
of the provisions hereof shall be recoverable from the proceeds of the
sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its reasonable best
efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the
Collateral pursuant to this Section 16 valid and binding and in
compliance with any and all other applicable requirements of law. The
Pledgor further agrees that a breach of any of the covenants contained
in this Section 16 will cause irreparable injury to the Trustee and the
Holders, that the Trustee and the Holders have no adequate remedy at
law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 16 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and
agrees not to assert any defenses against the remedy of specific
performance for the breach of any such covenants except for a defense
that no Event of Default has occurred.
(c) All cash proceeds received by the Trustee in respect of
any sale of, or other realization upon all or any part of the
Collateral may, in the discretion of the Trustee, be held by the
Trustee as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Trustee pursuant
to Section 15) in whole or in part by the Trustee against all or any
part of the Secured Obligations in such order as the Trustee shall
elect. Any surplus of such cash or cash proceeds held by the Trustee
and remaining after payment in full of all the Secured Obligations
shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
(d) All payments received by the Pledgor in respect of the
Collateral shall be received in trust for the benefit of the Trustee,
shall be segregated from other funds of
17
<PAGE>
the Pledgor and shall be forthwith paid over to the Trustee in the same
form as so received (with any necessary indorsement).
SECTION 17. EXPENSES. The Pledgor will upon demand pay to the Trustee
the amount of any and all reasonable fees and expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Trustee, that the Trustee may incur in
connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders hereunder or (d)
the failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 18. SECURITY INTEREST ABSOLUTE. All rights of the Trustee and
the Holders and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Indenture;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral for all or any of the Secured
Obligations; or
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, the Pledgor in respect of the Secured Obligations or
of this Pledge Agreement.
SECTION 19. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Default
under the Indenture shall have occurred and be continuing, the Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Security Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Indenture and the Notes; PROVIDED,
HOWEVER, that the Pledgor shall not exercise or refrain from exercising any such
right if such action would have a material adverse effect on the value of the
Security Collateral or any part thereof; and PROVIDED FURTHER that the Pledgor
shall give the Trustee at least five days' written notice of the manner in which
it intends to exercise, or the reasons for refraining from exercising, any such
right.
18
<PAGE>
(b) Upon the occurrence and during the continuance of a
Default under the Indenture: all rights of the Pledgor to exercise or refrain
from exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 19(a) shall, upon notice to the
Pledgor by the Trustee, cease.
(c) All dividends and interest payments that are received by
the Pledgor in respect of Security Collateral shall be received in trust for the
benefit of the Trustee, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Trustee as Security Collateral in the same
form as so received (with any necessary indorsement).
SECTION 20. MISCELLANEOUS PROVISIONS.
20.1. NOTICES. Any notice or communication shall be sufficiently given
if in writing and delivered in person or mailed by first class mail, commercial
courier service or telecopier communication, addressed as follows:
IF TO THE PLEDGOR:
GST Network Funding, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: Chief Executive Officer
and
GST Telecommunications Inc.
4001 Main Street
Vancouver, WA 98663
Attention: Chief Executive Officer
WITH A COPY TO:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attention: David J. Adler
19
<PAGE>
IF TO THE TRUSTEE:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Mr. Louis Young
20.2. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Pledge
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
20.3. SEVERABILITY. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
20.4. HEADINGS. The headings in this Pledge Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
20.5. COUNTERPART ORIGINALS. This Pledge Agreement may be signed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
20.6. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge Agreement,
express or implied, shall give to any person, other than the parties hereto and
their successors hereunder, and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Pledge Agreement.
20.7. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of any
provision of this Pledge Agreement and any consent to any departure by the
Pledgor from any provision of this Pledge Agreement shall be effective only if
made or duly given in compliance with all of the terms and provisions of the
Indenture, and neither the Trustee nor any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Trustee or any
Holder to exercise, or delay in exercising, any right, power or privilege
hereunder shall not preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A
20
<PAGE>
waiver by the Trustee or any Holder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that the Trustee
or such Holder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
20.8. INTERPRETATION OF AGREEMENT. All terms not defined herein or in
the Indenture shall have the meaning set forth in the applicable UCC, except
where the context otherwise requires. To the extent a term or provision of this
Pledge Agreement conflicts with the Indenture, the Indenture shall control with
respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Pledge Agreement
shall not be relevant to determine the meaning of this Pledge Agreement even
though the accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
20.9. CONTINUING SECURITY INTEREST; TERMINATION; RELEASE. (a) This
Pledge Agreement shall create a continuing security interest in and to the
Collateral and shall, unless otherwise provided in the Indenture or in this
Pledge Agreement, remain in full force and effect until the payment in full in
cash of the Secured Obligations. This Pledge Agreement shall be binding upon the
Pledgor, its transferees, successors and assigns, and shall inure, together with
the rights and remedies of the Trustee hereunder, to the benefit of the Trustee,
the Holders and their respective successors, transferees and assigns.
(b) This Pledge Agreement shall terminate upon the earlier of (i) the
payment in full in cash of the Secured Obligations and (ii) the assumption by
GST USA of all the Obligations of Funding pursuant to Section 4.23 of the
Indenture, the execution by GST USA of documentation and the taking of all other
actions necessary to provide the Trustee, for its benefit and the ratable
benefit of the Holders, with a perfected, first priority security interest
(subject only to the liens granted to the Trustee, for its benefit and the
benefit of the Holders, under this Agreement) in the Collateral, including any
collateral securing the Pledged Debt, to secure all of GST USA's obligations
under the Indenture and the Notes and the delivery by counsel to the Pledgor of
an opinion confirming the existence, perfection and priority of such security
interest. At such time, the Trustee shall, pursuant to an Issuer Order, execute
and deliver all documentation necessary or desirable to release its security
interest hereunder and under the Intercompany Security Agreement, reassign and
redeliver to the Pledgor all of the Collateral hereunder that has not been sold,
disposed of, retained or applied by the Trustee in accordance with the terms of
this Pledge Agreement and the Indenture. Such reassignment and redelivery shall
be without warranty by or recourse to the Trustee in its capacity as such,
except as to the absence of any Liens on the Collateral created by or arising
through the Trustee, and shall be at the reasonable expense of the Pledgor.
21
<PAGE>
(c) Upon any sale of Acquired Equipment to GST USA in
accordance with the terms of this Agreement, the Trustee will, at the Pledgor's
expense, execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence the release of such item of Acquired Equipment
from the assignment and security interest granted hereby; PROVIDED, HOWEVER,
that (i) at the time of such request and such release no Default shall have
occurred and be continuing, (ii) the Pledgor shall have delivered to the
Trustee, at least five Business Days prior to the date of the proposed release,
a written request for release describing the item of Acquired Equipment together
with a form of release for execution by the Trustee and a certification by the
Pledgor to the effect that the transaction is in compliance with this Agreement
and as to such other matters as the Trustee may request, which written release
shall state that the price to be paid is at least equal to the Acquired
Equipment Cost, payable in the form an Intercompany Note with a principal amount
equal to the Acquired Equipment Cost and bearing interest at a rate at least
equal to the rate of interest on the Notes, and (iii) the Pledgor shall have
pledged and delivered to the Trustee such Intercompany Note and an opinion of
counsel that such Intercompany Note is secured by a perfected first priority
security interest in such Acquired Equipment (subject only to the liens granted
to the Trustee, for its benefit and the benefit of the Holders, under this
Agreement) and an opinion of counsel that the Pledgor has granted a valid and
perfected first priority security interest in the Intercompany Note to the
Trustee for its benefit and the benefit of the Holders.
20.10. SURVIVAL PROVISIONS. All representations, warranties and
covenants of the Pledgor contained herein shall survive the execution and
delivery of this Pledge Agreement, and shall terminate only upon the termination
of this Pledge Agreement. The obligations of the Pledgor under Section 16 hereof
shall survive the termination of this Agreement.
20.11. WAIVERS. The Pledgor waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
the Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
20.12. AUTHORITY OF THE TRUSTEE. (a) The Trustee shall have and be
entitled to exercise all powers hereunder that are specifically granted to the
Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Indenture, neither the Trustee nor any director,
officer, employee, attorney or agent of the Trustee shall be liable to the
Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or
22
<PAGE>
sufficiency hereof or of any document or security furnished pursuant hereto. The
Trustee and its directors, officers, employees, attorneys and agents shall be
entitled to rely on any communication, instrument or document reasonably
believed by it or them to be genuine and correct and to have been signed or sent
by the proper person or persons.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with respect to any
action taken by the Trustee or the exercise or non-exercise by the Trustee of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Trustee and the Holders, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Trustee and the Pledgor, the Trustee shall be conclusively
presumed to be acting as trustee for the Holders with full and valid authority
so to act or refrain from acting, and the Pledgor shall not be obligated or
entitled to make any inquiry respecting such authority.
20.13. FINAL EXPRESSION. This Pledge Agreement, together with the
Indenture and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Pledge Agreement and is intended as
a complete and exclusive statement of the terms and conditions thereof.
20.14. RIGHTS OF HOLDERS. No Holder shall have any independent rights
hereunder other than those rights granted to individual Holders pursuant to
Section 6.07 of the Indenture; PROVIDED that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture.
20.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PLEDGOR HAS APPOINTED OLSHAN GRUNDMAN FROME &
ROSENZWEIG LLP, 505 PARK AVENUE, NEW YORK, NY 10022, ATTENTION: DAVID J. ADLER
AS ITS AGENT FOR SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH
RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS BROUGHT UNDER U.S. FEDERAL OR
STATE SECURITIES LAWS
23
<PAGE>
BROUGHT IN ANY FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK AND AGREES
TO SUBMIT TO THE JURISDICTION OF ANY SUCH COURT.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS
THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY OF NEW YORK
ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE TRUSTEE IN ITS
CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE AGREEMENT, OR ANY ACT, OMISSION
OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL
AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH
HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDERS, AS THE CASE MAY BE,
CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER
IN CONNECTION WITH ANY JUDICIAL PROCESS OR
24
<PAGE>
PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS
PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE
TRUSTEE OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR ON THE ONE HAND AND THE
TRUSTEE AND/OR THE HOLDERS ON THE OTHER HAND.
25
<PAGE>
IN WITNESS WHEREOF, the Pledgor, and the Trustee have each caused this
Pledge Agreement to be duly executed and delivered as of the date first above
written.
Pledgor:
GST NETWORK FUNDING, INC.
By: /S/ Stephen Irwin
----------------------------------------
Name: Stephen Irwin
Title: Senior Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By: /S/ Louis Young
----------------------------------------
Name: Louis Young
Title: Vice President
<PAGE>
SCHEDULE I
LOCATIONS OF ACQUIRED EQUIPMENT
California
- --------------------
In accordance with Item 601 of Regulation S-K, the Registrant has not filed the
exhibits to this Agreement with the Securities and Exchange Commission. The
Registrant undertakes to supplementally provide a copy of such exhibits to the
Securities and Exchange Commission upon request.
REIMBURSEMENT AND COMMITMENT FEE AGREEMENT
REIMBURSEMENT AND COMMITMENT FEE AGREEMENT dated May 4, 1998 among GST
TELECOMMUNICATIONS, INC., a federally chartered Canadian corporation ("GST"),
GST USA, INC., a Delaware corporation ("GST USA"), and GST NETWORK FUNDING,
INC., a Delaware corporation ("GST Funding"). Capitalized terms used and not
defined in this Agreement have the meanings set forth or referred to in the
Indenture (as defined below).
WHEREAS, GST Funding shall issue on the date hereof $500,000,000
principal amount at maturity of its 10 1/2% Senior Secured Discount Notes due
2008 (the "Notes") pursuant to the terms of an Indenture (the "Indenture") dated
the date hereof among GST, GST Funding, GST USA, and United States Trust Company
of New York (the "Trustee");
WHEREAS, the net proceeds to GST Funding from the sale of the Notes
(the "Offering") must be used to purchase U.S. Government Securities (the
"Pledged Securities") and the Pledged Securities must be pledged by GST Funding
to the Trustee for the benefit of the holders of the Notes;
WHEREAS, upon written request from GST Funding to the Trustee, the
Pledged Securities will be released from the Pledge Account in order to finance
the cost of Acquired Equipment;
WHEREAS, immediately upon the acquisition of any Acquired Equipment,
(i) GST Funding must grant a first priority security interest in such Acquired
Equipment to the Trustee for the benefit of the holders of the Notes, (ii) GST
USA must purchase the Acquired Equipment from GST Funding for an amount equal to
the Acquired Equipment Cost and (iii) GST USA must issue a senior secured
promissory note guaranteed by GST in an amount equal to the Acquired Equipment
Cost payable to GST Funding (each, an "Intercompany Note").
WHEREAS, the Notes will be secured by a first priority security
interest in the Pledged Securities, the Pledge Account, the Intercompany Notes,
the Fee Notes (as defined below) and this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
GST Funding to offer the Notes in the Offering, GST and GST USA hereby agree
with GST Funding as follows:
1. GST and GST USA hereby jointly and severally agree to (i) reimburse
GST Funding for all expenses incurred by GST Funding in connection with the
Offering and the purchase of Acquired Equipment and the transactions
contemplated by the Indenture and the Pledge Agreement and (ii) pay to GST
Funding a commitment fee (the "Commitment Fee") in an amount equal to 4.5% per
annum of the amount by which the aggregate principal amount at
<PAGE>
maturity of the Notes exceeds the aggregate principal amount of all the
Intercompany Notes then held as security for the Notes.
2. The Commitment Fee shall be paid semi-annually, in arrears, on each
May 1 and November 1, commencing November 1, 1998 and shall be paid by GST USA
issuing to GST Funding unsubordinated promissory notes (each a "Fee Note")
guaranteed by GST on a senior basis; PROVIDED that the aggregate principal
amount of the Fee Notes shall be reduced to the extent such principal amount
exceeds the aggregate principal amount of the Notes less (x) the aggregate
principal amount of Pledged Securities and cash then held in the Pledge Account,
together with accrued interest thereon and (y) the aggregate principal amount of
all Intercompany Notes then held as security for the Notes plus the amount of
interest that will accrue on such Intercompany Notes by May 1, 2003. The Fee
Notes will mature on May 1, 2003 and there will not be any payment of interest
prior to maturity.
3. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. None of GST Funding, GST USA or GST
has entered into, and on or after the date of this Agreement will enter into,
any agreement that conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented in a manner that adversely affects the rights of GST Funding, and
waivers or consents to departures from the provisions hereof may not be given
unless GST Funding, GST USA and GST have obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding Notes.
(c) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(d) DESIGNATION OF PROCESS AGENT; SUBMISSION TO JURISDICTION. Each
of GST Funding, GST USA and GST hereby (i) acknowledges that it has irrevocably
designated and appointed Olshan Grundman Frome & Rosenzweig LLP, 505 Park
Avenue, New York, New York 10022, Attention: David J. Adler, Esq. (together with
any successor, the "Process Agent"), as its authorized agent upon which process
may be served in any suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated herein that may be instituted in
any federal or state court in the State of New York, or brought under federal or
state securities laws, and acknowledges that the Process Agent has accepted such
designation, (ii) agrees that service of process upon the Process Agent and
written notice of
2
<PAGE>
such service to GST Funding, GST USA or GST, as the case may be (mailed or
delivered to GST's Chief Executive Officer at its principal office at 4001 Main
Street, Vancouver, Washington 98663), shall be deemed in every respect effective
service of process upon GST Funding, GST USA or GST, as the case may be, in any
such suit, action or proceeding and (iii) agrees to take any and all action,
including the execution and filing of any and all such documents and instruments
as may be necessary to continue such designation and appointment of the Process
Agent in full force and effect so long as any of the Notes shall be outstanding.
Each of GST Funding, GST USA and GST hereby agrees to submit to the nonexclusive
jurisdiction of any federal or state court in the State of New York in any such
suit, action or proceeding arising out of or relating to this Agreement or the
transactions contemplated herein.
(e) WAIVER OF IMMUNITY. To the extent that GST has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.
(f) GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(h) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder among GST Funding, GST USA and
GST, and each Holder shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of Holders hereunder.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
GST TELECOMMUNICATIONS, INC.
By /s/ Stephen Irwin
-----------------------------------
Name: Stephen Irwin
Title: Vice Chairman and Secretary
GST USA, INC.
By /s/ Stephen Irwin
-----------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST NETWORK FUNDING, INC.
By /s/ Stephen Irwin
-----------------------------------
Name: Stephen Irwin
Title: Senior Vice President
NEWS RELEASE GST TELECOMMUNICATIONS
FOR IMMEDIATE RELEASE MAY 4, 1998
GST TELECOMMUNICATIONS ANNOUNCES PRIVATE PLACEMENT OF SENIOR SECURED
DISCOUNT NOTES OF WHOLLY-OWNED SUBSIDIARY
(VANCOUVER, Wash.) - GST Telecommunications, Inc. (NASDAQ:GSTX) announced today
that GST Network Funding, Inc., an indirect wholly-owned subsidiary of GST
Telecommunications, Inc., has privately placed $300.0 million (gross proceeds)
of 10-1/2 percent senior secured discount notes. The net proceeds of such
offering will be used to finance the purchase of telecommunications equipment
for the continued expansion of the Company's infrastructure, including the
development and construction of additional networks and long haul fiber optic
facilities.
The senior secured discount notes have not been registered under the Securities
Act and may not be offered or sold in the United States absent registration or
an applicable exemption from such registration.
For more information, please contact:
GST Telecommunications
Dan Trampush (360) 906-7152
Lisa Miles (360) 906-7140
# # #