<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 2000.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RSL COMMUNICATIONS, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RSL COMMUNICATIONS PLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RSL COM U.S.A., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CERTIFICATE OF INCORPORATION)
<TABLE>
<S> <C> <C>
BERMUDA 4813 N/A
UNITED KINGDOM 4813 N/A
DELAWARE 4813 11-3044583
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
--------------------------------- ------------------------------------ -------------------------------
RSL COMMUNICATIONS PLC RSL COMMUNICATIONS, LTD. RSL COM U.S.A., INC.
VICTORIA HOUSE, LONDON SQUARE CLARENDON HOUSE 430 PARK AVENUE
CROSS LANES CHURCH STREET NEW YORK, NY 10022
GUILFORD, SURREY GU1 7UN HAMILTON HM CX BERMUDA (212) 588-3600
UNITED KINGDOM (441) 295-2832
(44-148) 345-7300
</TABLE>
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
ITZHAK FISHER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RSL COMMUNICATIONS, N. AMERICA, INC.
810 SEVENTH AVENUE, 39TH FLOOR
NEW YORK, NY 10019
TELEPHONE: (212) 445-7400
FAX: (212) 445-7531
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPY TO:
GEORGE E.B. MAGUIRE, ESQ.
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, NY 10022
TELEPHONE: (212) 909-6072
FAX: (212) 909-6836
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1)
------------------------------ ---------- ---------------- -----------------
<S> <C> <C> <C>
12 7/8% Senior Dollar Exchange Notes due 2010.......... $100,000,000 100% $100,000,000
principal amount
Guarantees of 12 7/8% Senior Dollar Exchange Notes due
2010...................................................
Guarantees of 12 7/8% Senior Dollar Exchange Notes due
2010...................................................
12 7/8% Senior Euro Exchange Notes due 2010............ (U)100,000,000 100% (U)100,000,000
principal amount ($91,660,000)
Guarantees of 12 7/8% Senior Euro Exchange Notes due
2010...................................................
Guarantees of 12 7/8% Senior Euro Exchange Notes due
2010...................................................
Total..............................................................................................................
<CAPTION>
TITLE OF EACH CLASS AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTRATION FEE
------------------------------ ----------------
<S> <C>
12 7/8% Senior Dollar Exchange Notes due 2010.......... $26,400.00(2)
Guarantees of 12 7/8% Senior Dollar Exchange Notes due
2010................................................... (3)
Guarantees of 12 7/8% Senior Dollar Exchange Notes due
2010................................................... (3)
12 7/8% Senior Euro Exchange Notes due 2010............ $24,198.24(2)
Guarantees of 12 7/8% Senior Euro Exchange Notes due
2010................................................... (3)
Guarantees of 12 7/8% Senior Euro Exchange Notes due
2010................................................... (3)
Total.................................................. $50,598.24
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933. The translation of
euros into U.S. dollars has been made at the noon buying rate on May 1, 2000
of 1=$0.9166.
(2) Based on the principal amount of new notes offered pursuant to Rule
457(f)(2) under the Securities Act of 1933.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, no registration
fee is payable with respect to the guarantees.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION Dated May 5, 2000
PROSPECTUS
OFFER TO EXCHANGE FOR
ALL $100,000,000 OUTSTANDING 12 7/8% SENIOR DOLLAR NOTES DUE 2010
AND ALL (U)100,000,000 OUTSTANDING 12 7/8% SENIOR EURO NOTES DUE 2010
[LOGO] RSL COMMUNICATIONS PLC
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
RSL COMMUNICATIONS, LTD.
AND
RSL COM U.S.A., INC.
----------------------
We are offering to exchange:
o $100,000,000 new 12 7/8% senior dollar exchange notes due 2010 for our
outstanding $100,000,000 12 7/8% senior dollar notes due 2010, and
o (U)100,000,000 new 12 7/8% senior euro exchange notes due 2010 for our
outstanding (U)100,000,000 12 7/8% senior euro notes due 2010.
INVESTING IN THE NEW NOTES INVOLVES RISKS. YOU SHOULD READ THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 11 AND THE RISK FACTORS SET FORTH IN OUR
ANNUAL REPORT ON FORM 10-K INCORPORATED IN THIS PROSPECTUS BY REFERENCE.
The new notes:
The terms of the new notes we will issue in the exchange offers are
identical to the terms of the old notes except that:
o The new notes will be free of transfer restrictions for most investors.
o The new notes will not contain provisions relating to additional
interest.
The new notes guarantees:
o Like the old notes, the new notes will be guaranteed as to payments of
principal, interest and other amounts by RSL Communications, Ltd., the
parent company of the issuer, and by RSL COM U.S.A., Inc., or RSL USA, a
subsidiary of the issuer.
o The new notes guarantees of RSL USA may be released without your consent
if we sell all of the capital stock or substantially all the assets of
RSL USA or if Standard & Poor's Corporation advises us that the release
of RSL USA's guarantee would not result in a downgrade of the rating of
the new notes or the placement of the new notes on creditwatch with
negative implications.
The exchange offers:
o Each exchange offer will expire at 5:00 p.m., New York City time, on
, 2000, unless extended.
o We will exchange new notes for all old notes validly tendered to us and
not withdrawn.
o If you tender old notes, you may withdraw your tender at any time prior
to the expiration of the exchange offer for those notes.
o If you fail to tender your old notes, you will continue to hold
unregistered securities and your ability to transfer them will be
adversely affected.
o We will not receive any proceeds from the exchange offers.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------
The date of this prospectus is , 2000.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the Commission. This permits us to disclose important information to you by
referencing these filed documents. We incorporate by reference in this
prospectus the following documents which have been filed with the Commission:
o our annual report on Form 10-K for our fiscal year ended December 31,
1999, as amended; and
o our current reports on Form 8-K dated January 25, 2000, February 10,
2000, March 2, and March 16, 2000.
We incorporate by reference all documents filed pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and
prior to the termination of the exchange offers.
We will provide promptly without charge to you, upon written or oral
request, a copy of any or all of the documents incorporated by reference in this
prospectus, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents. Requests should be
directed to RSL Communications, Ltd., Clarendon House, Church Street, Hamilton
HM CX Bermuda, telephone number (441) 295-2832. YOU SHOULD REQUEST ANY SUCH
INFORMATION AT LEAST FIVE BUSINESS DAYS IN ADVANCE OF THE DATE ON WHICH YOU
EXPECT TO MAKE YOUR DECISION WITH RESPECT TO THIS OFFER. IN ANY EVENT, YOU MUST
REQUEST SUCH INFORMATION PRIOR TO , 2000.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934 and, accordingly, files reports, proxy statements and other
information with the SEC. You may read and copy the reports, proxy statements
and other information we file with the SEC at its Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Copies of these materials can be obtained at prescribed rates. Our filings with
the SEC are also available on the SEC's home page on the Internet at
http://www.sec.gov.
We have filed with the SEC a Registration Statement on Form S-4. This
prospectus, which is a part of the registration statement, omits certain
information contained in the registration statement. Statements made in this
prospectus as to the contents of any contract, agreement or other document are
not necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the registration statement, we refer you to such
exhibit for a more complete description of the matter involved, and each such
statement is deemed qualified in its entirety to such reference.
CERTAIN UK RELATED REGULATORY ISSUES
Persons in the United Kingdom will be eligible to receive the new notes
issued in the exchange offers only if the ordinary activities of such persons
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 do not constitute an offer to the public in the UK for
purposes of the Public Offers of Securities Regulations of 1995.
This prospectus is being distributed on the basis that each person in the
UK to whom this prospectus is issued is reasonably believed to be a person 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 the document may
otherwise lawfully be issued or passed on and, accordingly, by accepting
delivery of this prospectus the recipient warrants and acknowledges that it is a
person falling within any such exemption.
The exchange offers are not being made, nor will we accept surrenders for
exchange from holders of old notes, in any jurisdiction in which the exchange
offer or the acceptance thereof would not be in compliance with the securities
or "Blue Sky" laws of such jurisdiction.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus and the consolidated
financial statements and related notes and other information incorporated in
this prospectus by reference. See the Section in this prospectus entitled
"Incorporation of Certain Documents by Reference." Industry data used in this
prospectus were obtained from industry publications and we have not
independently verified it. The information contained in this prospectus,
including information with respect to our plans and strategy for our business
and related financing, contain forward-looking statements. For a discussion of
important factors that could cause actual results to differ materially from the
forward-looking statements, see the section in this prospectus entitled "Risk
Factors" and the section of our annual report for the year ended December 31,
1999 on Form 10-K entitled "Risk Factors."
THE EXCHANGE OFFERS
On February 22, 2000, we issued the old 12 7/8% dollar notes in an
aggregate principal amount of $100,000,000 and the old 12 7/8% euro notes in an
aggregate principal amount of (U)100,000,000. The offering of old notes was
exempt from registration under the Securities Act of 1933.
We have agreed to use our best efforts to complete the exchange offers for
the old notes by September 19, 2000. The terms of the exchange offers, which are
specified in greater detail in the main body of this prospectus and the
accompanying letter of transmittal, include the following:
EXCHANGE OFFERS
<TABLE>
<S> <C>
New Dollar Notes.......................... We are offering up to $100,000,000 principal amount of 12 7/8% senior
dollar exchange notes due 2010 in exchange for a like principal
amount of old 12 7/8% dollar notes.
New Euro Notes............................ We are offering up to (U)100,000,000 principal amount of 12 7/8% senior
euro exchange notes due 2010 in exchange for a like principal amount
of old 12 7/8% euro notes.
Exchange Procedures....................... The procedures that you must follow to tender old notes in the
exchange offers are specified in the section of this prospectus
titled "The Exchange Offers."
Consequence of Failure to Exchange Old
Notes................................... You will continue to hold old notes which will remain subject to
their existing transfer restrictions if you do not tender your old
notes or you tender your old notes and they are not accepted for
exchange. We will have no obligation to register the old notes after
we consummate the exchange offers. See "The Exchange Offers--
Consequences of Failure to Exchange."
Expiration Date........................... Each exchange offer will expire at 5:00 p.m. New York City time, on
, 2000 unless we extend it to a later date and time.
Withdrawal................................ You may withdraw your tender of old notes at any time prior to the
expiration of the exchange offer for those notes. If for any reason
we do not accept any old note that you tender for exchange we will
return that old note to you at our expense as promptly as practicable
after the expiration or termination of the related exchange offer.
Conditions to the Exchange Offer.......... We can terminate or amend the exchange offers if at any time prior to
5:00 p.m., New York City time on the expiration date, we determine
that either exchange offer violates any applicable law or
governmental order. In addition, we will not accept for exchange any
old notes or issue any new notes if any stop order is threatened
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
or in effect on the qualification of the indenture under the Trust
Indenture Act of 1939 or on the registration statement of which this
prospectus is a part. We are required to use reasonable efforts to
obtain the withdrawal of any stop order.
United States Federal Income Tax
Consequences............................ The exchange of old notes for corresponding new notes will not
constitute a taxable exchange for U.S. federal income tax purposes.
See "Certain United States Federal Income Tax Considerations."
Exchange Agent............................ The Chase Manhattan Bank is serving as exchange agent for the
exchange offer.
Use of Proceeds........................... We will not receive any proceeds from the exchange offers.
</TABLE>
4
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the new notes and the terms of the old notes for which they
are offered in exchange are identical in all material respects, except that
(1) the new notes will be free of transfer restrictions for most investors, as
described below opposite the caption "Resales," and (2) the new notes will not
contain provisions related to additional interest. The terms of the new notes,
which are specified in greater detail in the main body of this prospectus,
include the following:
<TABLE>
<S> <C>
Issuer.................................... RSL Communications PLC, or RSL PLC.
Guarantors................................ RSL Communications, Ltd, or RSL COM, and RSL COM U.S.A., Inc., or RSL
USA.
Principal Amount
New Dollar Notes........................ Up to $100,000,000 principal amount of dollar denominated 12 7/8%
senior exchange notes due 2010, or the new dollar notes.
New Euro Notes.......................... Up to (U)100,000,000 principal amount of euro denominated 12 7/8% notes
due 2010, or the new euro notes.
Maturity.................................. March 1, 2010.
Interest.................................. Annual rate: 12 7/8% on the principal amount.
Payment frequency: Every six months on each March 1 and September 1,
beginning on September 1, 2000.
Accrual of Interest....................... Interest on each new note will accrue from the last interest payment
date on which interest is paid on the old note surrendered in
exchange therefor or, if no interest has been paid on such old note,
from the date of the original issue of such old note. You will not
receive interest on any old note we accept for exchange that would
otherwise be payable on any interest payment date, the record date
for which occurs on or after consummation of the exchange offer for
the old notes.
Resales................................... We believe that you may offer the new notes for resale, resell the
new notes and otherwise transfer the new notes without complying with
the registration and prospectus delivery provisions of the Securities
Act, so long as:
o you acquire the new notes in the exchange offer in the ordinary
course of your business;
o you are not participating in any distribution of the new notes that
you obtain in the exchange offer and you do not intend to
participate and have no arrangement or understanding with any
person to participate in any such distribution; and
o you are not affiliated with us.
New Notes Guarantees...................... Each of RSL COM and RSL USA has unconditionally guaranteed the
payment of principal, interest and any other amounts owed with
respect to the new notes. If RSL PLC cannot make payments on the new
notes when they are due then RSL COM and RSL USA will be required to
make those payments. RSL USA's guarantee of the new notes is subject
to release without note holder consent if we sell 100% of RSL USA's
capital stock or substantially all of its assets, or if Standard &
Poor's Corporation advises us that the release of RSL USA's guarantee
would not result in a downgrade of the rating of the new notes or a
placement of the new notes on creditwatch with negative implications
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Ranking................................... The new notes and the new notes guarantees will rank equally with our
other unsecured senior indebtedness. Our principal operations are
conducted through subsidiaries. Accordingly, the new notes
and the new notes guarantees will effectively rank behind all
indebtedness of RSL COM's subsidiaries other than RSL PLC and RSL
USA. In addition, holders of our secured obligations will have claims
that rank ahead of the claims of the holders of the new notes and the
new notes guarantees with respect to the assets securing those other
obligations. As of December 31, 1999, on a pro forma basis after
giving effect to the issuance of the old notes and RSL USA's
guarantee of RSL PLC's previously issued notes:
o the total amount of our outstanding liabilities (excluding those of
our subsidiaries), including trade payables, would have been
approximately $1.6 billion; and
o the total amount of outstanding liabilities of RSL COM's
subsidiaries (other than RSL PLC and RSL USA), including trade
payables, would have been approximately $448.1 million.
Additional Amounts;
Tax Redemption.......................... Payments we make pursuant to the new notes or the new notes
guarantees will be made without withholding or deduction for taxes
unless required by law. If withholding is required as a result of
(1) a change to current law or the interpretation or administration
thereof, or (2) a listing failure (as defined in the section
"Description of the New Notes and the New Notes Guarantees" under the
heading "Additional Amounts"), we will pay, subject to certain
exceptions, additional amounts as may be necessary so that net
payments will be no less than the amounts provided for in the new
notes. In the event that (A) we have become or will become obligated
to pay any additional amounts as a result of such change (or, in
certain cases, such listing failure) and (B) we are unable to avoid
such obligation to pay additional amounts by taking reasonable
measures available to us, then we may redeem all, but not less than
all, either or both series of new notes at any time at 100% of their
principal amount plus accrued interest.
Change of Control......................... If we sell certain assets or if we experience specific kinds of
changes of control, we must offer to repurchase the new notes at a
purchase price equal to 101% of their principal amount plus accrued
interest, if any, to the date of purchase.
Basic Covenants........................... Each of the new dollar notes and the new euro notes is governed by
indentures that we have established with an indenture trustee. Each
indenture restricts our ability to:
o borrow money,
o pay dividends or make distributions on our capital stock,
o make investments or certain other restricted payments,
o use assets as security in other transactions,
o sell assets,
o issue or sell capital stock of restricted subsidiaries (as
defined), or effect a consolidation or merger.
</TABLE>
For more details, see the section "Description of the New Notes and the New
Notes Guarantees" under the heading "Covenants."
6
<PAGE>
ABOUT OUR COMPANY
We are a rapidly growing facilities-based communications company that
provides a broad range of voice, data/Internet and value-added product and
service solutions primarily to small and medium-sized businesses and residential
customers in selected markets around the globe. We have built a local presence
in each of the 22 countries in which we currently operate, establishing strong
local management, a direct sales force and other marketing and distribution
channels that have enabled us to grow our customer base rapidly to over
1,000,000 customers as of December 31, 1999. We are continuing to build our
broadband global network (RSL-NET) designed to provide high quality voice, data
and Internet services while reducing our operating costs. As of December 31,
1999 our network included over 108,000 fiber-kilometers of terrestrial and
under-sea fiber optic cable that we own or lease on a long-term basis, and 51
national and international switches. We expect to have approximately 180,000
fiber-kilometers in operation by year-end 2000, based on existing commitments
and transactions currently under negotiation. Through our subsidiary,
deltathree.com, we also own and operate a privately-managed Internet Protocol
(IP) telephony network with 46 points of presence in 29 countries around the
world.
Over our network, we currently offer, or are in the process of launching,
in selected markets, a variety of voice, data/Internet and value-added services,
including:
<TABLE>
<CAPTION>
VOICE DATA/INTERNET VALUE-ADDED
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
o international long distance o Internet services o conference calling
o national long distance o voice-over Internet Protocol o unified messaging
o wireless o Integrated Services Digital o voice-mail
o private line Network (ISDN) o video conferencing
o pre-paid/post-paid calling card o Digital Subscriber Line (DSL)
o toll-free dialing o X.25 (packet data) services
o frame-relay
o Asynchronous Transfer Mode (ATM)
o remote access data services
</TABLE>
RECENT DEVELOPMENTS
On February 22, 2000, in addition to the old notes, we issued 2,000,000 of
our Series A preferred shares and on March 8, 2000, we issued an additional
300,000 of our Series A preferred shares pursuant to the underwriters'
overallotment option with respect to such offering. We realized net proceeds
from our Series A preferred share offerings of approximately $111.0 million.
In connection with our offerings of Dollar and Euro Notes and RSL USA's
guarantee of such notes, we executed supplemental indentures pursuant to which
RSL USA unconditionally guaranteed all of our outstanding indebtedness described
in the section entitled "Description of Certain Indebtedness."
HEADQUARTERS
Our headquarters are located at Clarendon House, Church Street, Hamilton HM
CX Bermuda (telephone number: 441-295-2832). We also maintain executive offices
for some of our operations at 810 Seventh Avenue, 39th Floor, New York, New York
10019 (telephone number: (212) 445-7400). RSL PLC maintains an office at
Victoria House, London Square, Cross Lanes, Guildford, Surrey, GU1 1UN, United
Kingdom (telephone number (44-148) 345-7300). RSL USA maintains an office at
430 Park Avenue, New York, New York 10022 (telephone number (212) 588-3600).
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present selected consolidated financial data derived
from our consolidated financial statements and related notes. The selected
consolidated statements of operations data presented below with respect to the
years ended December 31, 1999, 1998 and 1997 and the balance sheet data as of
December 31, 1999 and 1998 have been derived from the Consolidated Financial
Statements audited by Deloitte & Touche LLP, appearing elsewhere in our Annual
Report on Form 10-K incorporated in this prospectus by reference. The selected
consolidated statement of operations data for the year ended December 31, 1996
and 1995 and balance sheet data as of December 31, 1997, 1996 and 1995 are
derived from audited financial statements not included in this document.
You should read this in conjunction with the Consolidated Financial
Statements and notes thereto and the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in our annual report for the year ended December 31, 1999 on
Form 10-K incorporated in this prospectus by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1995(1) 1996 1997 1998(10) 1999
-------- --------- --------- ----------- -----------
($ AND SHARES IN THOUSANDS, EXCEPT LOSS PER SHARE)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS:
Revenues....................................... $ 18,617 $ 113,257 $ 300,796 $ 885,938 $ 1,469,849
Operating costs and expenses:
Costs of services (exclusive of depreciation
and amortization shown separately below)... (17,510) (98,461) (265,321) (702,602) (1,034,334)
Selling, general and administrative expense.. (9,639) (38,893) (94,712) (238,141) (447,883)
Non-cash compensation expense................ -- -- -- -- (23,562)
Special charge(2)............................ -- -- -- -- (30,143)
Depreciation and amortization................ (849) (6,655) (21,819) (75,445) (177,865)
-------- --------- --------- ----------- -----------
Total operating costs and expenses............. (27,998) (144,009) (381,852) (1,016,188) (1,713,787)
-------- --------- --------- ----------- -----------
Loss from operations........................... (9,381) (30,752) (81,056) (130,250) (243,938)
Interest income................................ 173 3,976 13,826 16,104 20,593
Interest expense............................... (194) (11,359) (39,373) (75,431) (133,244)
Other income--net.............................. -- 470 6,595 (3) 739 764
Foreign exchange transaction (loss) gain....... -- -- -- (11,055) 17,022
Minority interest.............................. -- (180) 210 6,079 (11,365)
Loss in equity interest of unconsolidated
subsidiaries................................. -- -- -- (3,276) (4,718)
Income taxes................................... -- (395) (401) (1,334) (3,341)
-------- --------- --------- ----------- -----------
Loss before extraordinary item................. (9,402) (38,240) (100,199) (198,424) (358,227)
Extraordinary item(4).......................... -- -- -- (20,800) --
-------- --------- --------- ----------- -----------
Net loss....................................... $ (9,402) $ (38,240) $(100,199) $ (219,224) $ (358,227)
======== ========= ========= =========== ===========
Loss per common share before extraordinary
item(5)...................................... $ (1.67) $ (5.13) $ (5.27) $ (4.52) $ (6.63)
Extraordinary item per common share(4)(5)...... -- -- -- (0.47) --
-------- --------- --------- ----------- -----------
Net loss per common share(5)................... $ (1.67) $ (5.13) $ (5.27) $ (4.99) $ (6.63)
======== ========= ========= =========== ===========
Weighted average number of common shares
outstanding(5)............................... 5,641 7,448 19,008 43,913 54,022
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998(10) 1999
-------- --------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
EBITDA (as defined)(6)........................... $ (8,532) $ (24,097) $(59,237) $ (54,805) $ (10,411)
Ratio of fixed charges to earnings(7)............ -- -- -- -- --
Capital expenditures(8).......................... 6,074 23,880 49,417 247,665 256,000
Cash (used in) provided by operating activities.. 3,554 (10,475) (91,812) (82,752) (158,885)
Cash used in investing activities................ (16,537) (225,000) (18,821) (509,438) (226,502)
Cash provided by financing activities............ 18,143 335,031 152,035 815,476 263,602
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------
1995 1996 1997 1998(10) 1999
------- -------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 5,163 $104,068 $144,894 $ 367,823 $ 238,724
Securities available for sale...................... -- 67,828 13,858 111,548 84,154
Restricted marketable securities(9)................ -- 104,370 68,836 20,159 --
Total assets....................................... 53,072 427,969 605,664 1,714,593 1,803,308
Short-term debt, current portion of long-term debt,
and current portion of capital lease
obligations(11).................................. 5,506 6,974 8,033 36,130 23,348
Long-term debt and capital lease obligations(11)... 6,648 314,425 316,608 1,089,375 1,273,961
Shareholders' equity (deficit)..................... 5,705 20,843 126,699 133,484 (83,612)
</TABLE>
- ------------------
(1) Effective with the acquisition of a majority equity interest in RSL North
America, in September 1995, we began to consolidate RSL North America's
operations. From March 1995, the date of our initial investment, to
September 1995, we accounted for our investment in RSL North America using
the equity method of accounting.
(2) In the third quarter of 1999, we recorded a special charge of $32.1 million
for consolidating locations, streamlining operations and exiting certain
product lines and distribution channels, including telemarketing and
certain prepaid calling card plans. The charge is composed of approximately
$13.1 million for terminating various operating leases, $12.4 million for
the severance of 189 employees and $6.6 million for the cost of exiting
certain product lines and other items, of which $2.0 million was associated
with the write-off of inventory which was recorded as part of cost of
services.
(3) Other income--net includes the reversal of certain liabilities accrued in
connection with our obligations under an agreement that required us to meet
a carrier vendor's minimum usage requirements, which agreement was entered
into by one of our subsidiaries prior to our acquisition of that
subsidiary. During May 1997, we renegotiated the contract with this carrier
vendor resulting in the elimination of approximately $7.0 million of
previously accrued charges.
(4) Extraordinary item represents primarily the premium paid to retire
approximately $127.5 million of the original $300.0 million of the notes we
issued in 1996.
(5) Loss per share is calculated by dividing the loss attributable to our
common shares (Class A common shares and Class B common shares) by the
weighted average number of common shares outstanding, and has been
retroactively restated to reflect a 2.19-for-one stock split in 1997.
Shares issuable pursuant to (a) outstanding stock options, (b) unexercised
warrants, (c) warrants to purchase 459,900 Class B common shares at an
exercise price of $.00457 per share, subject to adjustment, issued to
Ronald S. Lauder as consideration for his previous guarantee of a revolving
credit facility, (d) options granted to a number of minority shareholders
of our subsidiaries, exercisable on the occurrence of certain events, to
exchange their shares in the respective subsidiaries for, in certain
circumstances, Class A common shares or, in specific circumstances, cash or
(e) incentive units, which are options granted to some of the employees of
our subsidiaries to acquire shares of those subsidiaries or similar rights,
some of which are exercisable currently
(Footnotes continued on next page)
9
<PAGE>
(Footnotes continued from previous page)
and the right to exchange these incentive units for Class A common shares
or, in other circumstances, at our option, cash, are not included in the
loss per share calculation as their effect is anti-dilutive.
(6) EBITDA, as used herein, consists of loss from operations before
depreciation and amortization and also excludes a special charge and
non-cash compensation recorded in 1999. Specifically, EBITDA excludes a
$2.0 million charge for inventory write-off recorded in cost of services
and a special charge of $30.1 million to reorganize and streamline
operations and $23.6 million of non-cash compensation expense primarily
attributable to deltathree.com. In addition, if the EBITDA loss of
deltathree.com were also excluded from our results, we would have reported
positive EBITDA for 1999 of $1.8 million. EBITDA is provided because it is
a measure commonly used in the telecommunications industry. It is presented
to enhance an understanding of our operating results and is not intended to
represent cash flow or results of operations in accordance with U.S. GAAP
for the periods indicated.
(7) For the years ended December 31, 1995 through 1999, our earnings were
insufficient to cover our fixed charges. The deficiency was approximately
$9.4 million, $37.7 million, $100.0 million, $199.9 million and
$338.8 million for the years ended December 31, 1995 through December 31,
1999, respectively.
(8) Capital expenditures include assets acquired through capital lease
financing and other debt.
(9) Restricted marketable securities held to maturity consist of U.S.
government securities which were pledged for a three year period to secure
the payment of interest on the principal amount of the notes we issued in
1996.
(10) During 1998, we acquired various companies. See footnote 2 to our
consolidated financial statements for information regarding these
acquisitions.
(11) As of December 31, 1999, we had approximately $38 million of available
(undrawn) borrowing capacity under our current bank and vendor facilities.
The availability of these amounts is dependent upon our compliance with
various financial ratios at the time of borrowing.
10
<PAGE>
RISK FACTORS
An investment in the new notes involves risks, some of which could be
substantial and, if they occurred, could adversely affect our business,
financial condition or results of operations. You should carefully consider the
following information about these risks, together with the other information in
this prospectus, annual report for the year ended December 31, 1999 on Form
10-K, including the risk factors applicable to our business in general and other
documents we file with the SEC and incorporate in this prospectus by reference
before exchanging your notes for the new notes.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND
PREVENT US FROM SATISFYING OUR OBLIGATIONS, INCLUDING THE NEW NOTES.
At December 31, 1999, we had total consolidated indebtedness of
approximately $1.2 billion ($1.4 billion after giving effect to our dollar and
euro notes offerings) and shareholders' deficit of approximately $83.6 million.
Subject to our compliance with the limitations contained in our outstanding
indebtedness, we may incur substantial amounts of additional indebtedness.
For the years ended December 31, 1995, 1996, 1997, 1998 and 1999, our
earnings were insufficient to cover our fixed charges. The deficiency was
approximately $9.4 million for the year ended December 31, 1995, $37.7 million
for the year ended December 31, 1996, $100.0 million for the year ended December
31, 1997, $199.9 million for the year ended December 31, 1998 and
$338.8 million for the year ended December 31, 1999.
If our operations do not generate enough revenues or we cannot obtain
sufficient funds at acceptable rates to make our debt payments when they are due
or we fail to comply with the material terms of the legal documents governing
our indebtedness, the value of our securities, including the notes, could be
adversely affected.
THE LEGAL DOCUMENTS GOVERNING OUR INDEBTEDNESS RESTRICT OUR ABILITY TO TAKE
CERTAIN ACTIONS.
The legal documents governing our outstanding indebtedness contain
restrictive covenants which impose limitations on our ability and the ability of
most of our subsidiaries to:
o incur additional indebtedness
o pay dividends or make other distributions
o issue capital stock of some of our subsidiaries
o guarantee debt
o enter into transactions with shareholders and affiliates
o create liens
o enter into sale-leaseback transactions
o sell assets
o make some types of investments
As described above, these restrictions could inhibit us from raising
additional capital to fund our operations and planned expansions, which could
adversely affect our ability to generate cash to service our outstanding
indebtedness, including the notes offered hereby.
OUR ABILITY TO PAY OUR OBLIGATIONS, INCLUDING THE NOTES, DEPENDS UPON OUR
ABILITY TO RECEIVE CASH FROM OUR SUBSIDIARIES.
Each of RSL COM and RSL PLC is a holding company and their only material
assets consist of shares of their subsidiaries and fluctuating cash balances.
RSL COM and RSL PLC have contributed or loaned to their subsidiaries a
substantial majority of the net proceeds from their prior sales of common shares
and notes. Our ability to pay our obligations, including the new notes and the
new notes guarantees, depends upon our ability to
11
<PAGE>
receive cash from our subsidiaries. However, these subsidiaries may face
difficulties distributing cash to us because:
o they are separate and distinct legal entities and may have no obligation
to make funds available to us;
o their ability to make distributions to us is subject to the availability
of funds and the terms of their indebtedness;
o their repayment of loans and advances made to them by us may be subject
to statutory or contractual restrictions or taxation;
o their repayment of loans and advances is contingent upon their earnings;
o their payment of dividends to us may have adverse tax consequences; and
o their ability to declare and pay dividends to us may be subject to legal
restrictions or restrictions contained in organizational documents or
loan agreements.
If a subsidiary is liquidated or reorganized, there may not be sufficient
assets for us to recover our investment in that subsidiary. Any right we have to
receive assets from a subsidiary upon its liquidation or reorganization (and the
consequent right of the holders of the notes and the notes guarantee to those
assets) is secondary to the claims of the subsidiary's creditors, unless we are
independently recognized as a creditor. Even if we are recognized as a creditor,
our claims could be junior to claims held by other creditors.
THE NOTES AND THE NOTES GUARANTEES ARE STRUCTURALLY SUBORDINATED TO THE
OBLIGATIONS OF OUR SUBSIDIARIES.
Because each of RSL COM and RSL PLC is a holding company and their assets
consist primarily of equity interests in their subsidiaries, the notes and the
notes guarantees will be structurally subordinated to all indebtedness and other
liabilities of their subsidiaries other than RSL USA. As of December 31, 1999,
on a pro forma basis after giving effect to the issuance of the old notes and
RSL USA's guarantee of RSL PLC's previously issued and outstanding notes:
o the total of outstanding liabilities of RSL COM, RSL PLC and RSL USA
(excluding liabilities of their subsidiaries), including trade payables,
would have been approximately $1.6 billion; and
o the total amount of outstanding liabilities of the subsidiaries of RSL
COM (other than RSL PLC and RSL USA), including trade payables, would
have been approximately $448.1 million.
In certain circumstances, RSL USA's new notes guarantees could be
unenforceable or claims thereunder could be subordinated to claims of other
creditors of RSL USA.
If, under relevant federal and state fraudulent transfer and conveyance
statutes, in a bankruptcy or reorganization case or a lawsuit by or on behalf of
unpaid creditors of RSL USA, a court were to find that, at the time RSL USA
entered into the old notes guarantees, RSL USA (a) did so with the intent of
hindering, delaying or defrauding current or future creditors or (b) (i)
received less than reasonably equivalent value or fair consideration, as
applicable, in exchange for entering into the old notes guarantees, and
(ii) (A) was insolvent or was rendered insolvent by reason of entering into the
old notes guarantees, (B) was engaged, or about to engage, in a business or
transaction for which its assets constituted unreasonably small capital,
(C) intended to incur, or believed that it would incur, debts beyond its ability
to pay as such debts matured (as all of the foregoing terms are defined in or
interpreted under the relevant fraudulent transfer or conveyance statutes) or
(D) was a defendant in an action for money damages docketed against it (if, in
either case, after final judgment the judgment is unsatisfied), such court could
avoid or subordinate RSL USA's new notes guarantees to presently existing and
future indebtedness of RSL USA and take other action detrimental to the holders
of the new notes, including, under certain circumstances, invalidating RSL USA's
new notes guarantees. The measure of insolvency for purposes of the foregoing
considerations will vary depending upon the law of the jurisdiction that is
being applied in any such proceeding. There can be no assurance as to what
standards a court would use to determine whether RSL USA was solvent at the
relevant time, or whether, whatever standard was used, RSL USA's new notes
guarantees would not be avoided on another of the grounds set forth above.
12
<PAGE>
EFFECTS OF INCORPORATION UNDER UNITED KINGDOM CORPORATE LAW.
RSL PLC, as a United Kingdom corporation, is governed by the Companies Act
1985 of the United Kingdom. This act differs from laws generally applicable to
United States corporations and their shareholders, including regulations
relating to interested directors, mergers and indemnifications of directors.
NO PUBLIC MARKET EXISTS FOR THE NOTES.
The new notes offered hereby are new issuances of securities for which
there is currently no active trading market. If the new notes are traded after
their initial issuance, they may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities and other factors, including general economic conditions and our
financial condition, performance and prospects. Even though we are obligated to
complete exchange offers or shelf registrations for the old notes by September
19, 2000, there can be no assurance that exchanges or shelf registrations will
occur in the required time period or whether, even after exchanges or
registrations are effected, an active trading market will develop for any of the
notes. The SEC has broad discretion to determine whether any registration
statement will be declared effective and may delay or deny the effectiveness of
any registration statement for a variety of reasons. Failure to have old
registration statements declared effective could adversely affect the liquidity
and prices of the notes. If we do not comply with our registration obligations
in a timely manner, we will be obligated to pay additional interest in cash on
the old notes.
IF YOU DO NOT PROPERLY TENDER YOUR OLD NOTES, YOU WILL CONTINUE TO HOLD
UNREGISTERED OLD NOTES; THE OLD NOTES ARE SUBJECT TO TRANSFER RESTRICTIONS, AND
YOUR ABILITY TO TRANSFER OLD NOTES WILL BE ADVERSELY AFFECTED.
As old notes are tendered and accepted in the exchange offer, the trading
market for the remaining untendered or tendered but not accepted old notes will
be adversely affected. We anticipate that most holders of the old notes will
elect to exchange the old notes for new notes due to the absence of restrictions
on the resale of new notes under the Securities Act. Therefore, we anticipate
that the liquidity of the market for any old notes remaining after the
consummation of the exchange offer will be substantially limited.
We will only issue new notes in exchange for old notes that you timely and
properly tender. Therefore, you should allow sufficient time to ensure timely
delivery of the old notes and you should carefully follow the instructions on
how to tender your old notes. Neither we nor the exchange agent are required to
tell you of any defects or irregularities with respect to your tender of the old
notes. If you do not tender your old notes for new notes in the exchange offers,
the old notes you hold will continue to be subject to the existing transfer
restrictions. In general, you may not offer or sell the old notes unless they
are registered under the Securities Act, or are exempt from registration under
the Securities Act and applicable state securities laws. If you do not tender
your old notes or they are not accepted for exchange, you will have no further
rights under the registration rights agreement. See the section "The Exchange
Offers" under the heading "Consequences of Failure to Exchange." We do not
anticipate that we will register old notes under the Securities Act.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Any statements in this prospectus about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.
These statements are often, but not always, made through the use of words or
phrases such as "will likely result," "expect," "will continue," "anticipate,"
"estimate," "intend," "plan," "projection," "would" and "outlook." Accordingly,
these statements involve estimates, assumptions and uncertainties that could
cause actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout this document. The following cautionary statements
identify important factors that could cause our actual results to differ
materially from those projected in the forward-looking statements made in this
document. Among the key factors that have a direct bearing on our results of
operation are:
o general economic and business conditions;
13
<PAGE>
o changes in, or failure to comply with, government regulations;
o changes in marketing and technology in the telecommunications industry;
o changes in political, social and economic conditions;
o competition in the telecommunications industry;
o general risks of the telecommunications industry;
o success of acquisition and operating initiatives;
o management of growth;
o availability, terms and deployment of capital; and
o deregulation of the telecommunications market.
These factors and the risk factors referred to above could cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements we make. You should not place undue reliance on any
such forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which it is made and we undertake no obligation to update
any forward-looking statement to reflect events or circumstances after the date
on which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to
predict them. In addition, we cannot assess the impact of each factor on our
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statements.
For a discussion of important risks of an investment in our securities,
including factors that could cause actual results to differ materially from
results referred to in the forward-looking statements, see the section in this
prospectus entitled "Risk Factors" as well as the section entitled "Risk
Factors" in our annual report for the year ended December 31, 1999 filed on Form
10-K and incorporated in this prospectus by reference. You should carefully
consider the information discussed in those sections. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in or
incorporated by reference in this offering circular might not occur.
Throughout this prospectus we have used industry data obtained from
internal surveys, market research, publicly available information and industry
publications. Industry publications generally state that the information they
contain has been obtained from sources believed to be reliable but that the
accuracy and completeness of that information is not guaranteed. Although these
data have been correctly reproduced in this prospectus from the internal
surveys, market research, publicly available information and industry
publications, we have not independently verified the data.
14
<PAGE>
THE EXCHANGE OFFERS
REGISTRATION RIGHTS AGREEMENT FOR OLD NOTES
We entered into a registration rights agreement in connection with our
issuance of the old notes. This summary of provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement, a copy of which is incorporated by reference into the registration
statement of which this prospectus is a part.
REGISTRATION RIGHTS
We have agreed in the registration rights agreement:
o to file this registration statement with the SEC and use our reasonable
best efforts to complete the exchange offers as soon as practicable, but
no later than September 19, 2000;
o to hold each exchange offer open for at least 30 days and exchange new
notes for all old notes validly tendered and not withdrawn before its
expiration; and
o if the new notes will not be freely transferable in general upon exchange
in the exchange offer because of a change in the SEC's interpretation of
its rules, in lieu of effecting registration of new notes, to use our
reasonable best efforts to effect a shelf registration of the old notes
for resale by holders, and keep the registration effective for a period
of up to two years ending February 22, 2002.
SHELF REGISTRATION
In the event we effect a shelf registration we will provide holders of the
old notes copies of the prospectus that is a part of the registration statement,
notify holders when the resale registration for the old notes has become
effective and take other actions as are required to permit unrestricted resales
of the old notes. A holder that sells old notes pursuant to the resale
registration generally will be required to be named as a selling security holder
in the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
registration rights agreement that are applicable to such a holder (including
certain indemnification obligations).
LIQUIDATED DAMAGES
In the event that:
o the exchange offers are not completed by September 19, 2000 (or, if
applicable, the resale registration is not effective within the required
period) or
o any resale registration required by the registration rights agreement is
filed and declared effective but thereafter ceases to be effective
(except as specifically permitted in the registration rights agreement)
without being succeeded promptly by an additional registration statement
filed and declared effective,
then interest will accrue (in addition to any stated interest on the old notes)
at the rate of 0.5% per annum, determined daily, on the principal amount at
maturity of the old notes that remain unexchanged or unregistered as required
until such notes are exchanged or become registered or their registration is no
longer required.
RESALES OF NEW NOTES ISSUED IN THE EXCHANGE OFFERS
Based on SEC interpretations we believe that the new notes issued in the
exchange offers may be offered for resale, resold and otherwise transferred by
any holder (other than any holder that is a broker-dealer or our "affiliate"
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that:
o the new notes sold are acquired in the ordinary course of business;
o at the time of the commencement of the exchange offers the selling holder
had no arrangement or understanding with any person to participate in a
distribution of the new notes; and
15
<PAGE>
o the selling holder is not engaged in, and does not intend to engage in, a
distribution of the new notes.
We have not sought, and do not intend to seek, a no-action letter from the
Commission with respect to the effects of the exchange offers, and there can be
no assurance that the staff would make a similar determination with respect to
the new notes as it has previously in other similar offerings.
REPRESENTATIONS HOLDERS WILL MAKE WHEN THEY TENDER
By tendering old notes in exchange for new notes and by executing the
letter of transmittal, each holder will represent to us that:
o any new notes to be received by it will be acquired in the ordinary
course of business;
o it has no arrangements or understandings with any person to participate
in the distribution of the old notes or new notes within the meaning of
the Securities Act; and
o it is not our "affiliate," as defined in Rule 405 under the Securities
Act.
Each broker-dealer that receives new notes for its own account in exchange
for old notes, where such old notes were acquired by such broker-dealer as a
result of market-making or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such new notes. Each
holder, whether or not it is a broker-dealer, shall also represent that it is
not acting on behalf of any person that could not truthfully make any of the
foregoing representations contained in this paragraph. Any holder of old notes
who is unable to make the foregoing representations and any broker-dealer who
acquired the old notes directly from us may not rely on the applicable
interpretations of the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act,
including being named as selling security holders, in order to resell the notes.
TERMS OF THE EXCHANGE OFFERS; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying Letter of Transmittal, we will accept for exchange old
notes which are properly tendered on or prior to the expiration date and not
withdrawn as permitted below. As used herein, the term "expiration date" means
5:00 p.m., New York time, on , 2000; provided, however, that if
we, in our sole discretion, have extended the period of time for which the
exchange offer is open, the term "expiration date" means the latest time and
date to which the exchange offer is extended.
As of the date of this prospectus, $100,000,000 aggregate principal amount
of old dollar notes and (U)100,000,000 aggregate principal amount of old euro
notes are outstanding. We are sending this prospectus, together with the letter
of transmittal, on or about , 2000 to all holders of old notes known
to us. Our obligation to accept old notes for exchange pursuant to the exchange
offers is subject to certain conditions as set forth below under the subsection
"--Conditions."
We expressly reserve the right, at any time or from time to time, to extend
the period of time during which an exchange offer is open, and thereby delay
acceptance for exchange of any old notes pursuant to that exchange offer, by
giving oral or written notice of any extension, amendment, non-acceptance or
termination to you as promptly as practicable, such notice in the case of any
extension to be issued by means of a press release or other public announcement
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
EFFECT OF TENDER
If you tender to us old notes as set forth below, our acceptance of your
tender will constitute a binding agreement between you and us upon the terms and
conditions set forth in this prospectus and in the accompanying letter of
transmittal.
16
<PAGE>
PROCEDURES FOR TENDERING
To tender in an exchange offer, a holder must complete, sign and date the
letter of transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the letter of transmittal, and mail or otherwise
deliver the letter of transmittal or such facsimile, together with any other
required documents, to the exchange agent prior to 5:00 p.m., New York City
time, on the expiration date. A holder may tender old notes only in integral
multiples of $1,000, in the case of the old dollar notes and (U)1,000, in the
case of the old euro notes, in exchange for an equal principal amount,
respectively, of new notes. In addition, either:
o certificates of such old notes must be received by the exchange agent
along with the letter of transmittal; or
o a timely confirmation of a book-entry transfer of such old notes, if such
procedure is available, into the exchange agent's account at The
Depository Trust Company, in the case of the old dollar notes, or
EuroClear or Clearstream, in the case of the old euro notes, under the
procedures for book-entry transfer described below, must be received by
the exchange agent prior to the expiration date with the letter of
transmittal; or
o the holder must comply with the guaranteed delivery procedures described
below.
The method of delivery of old notes, letter of transmittal and all other
required documents is at the election and risk of the holders. If such delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used. In all cases, sufficient time should be
allowed to assure timely delivery. No old notes, letters of transmittal or other
required documents should be sent to us. Delivery of all old notes, if
applicable, letters of transmittal and other documents must be made to the
exchange agent at its address set forth below. Holders may also request their
respective brokers, dealers, commercial banks, trust companies or nominees to
effect such tender for such holders.
The tender by a holder of old notes will constitute an agreement between
such holder and us in accordance with the terms and subject to the conditions
set forth herein and in the letter of transmittal. Any beneficial owner whose
old notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender should contact such registered
holder promptly and instruct such registered holder to tender on his behalf.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act unless the old notes tendered are tendered:
o by a registered holder of old notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal; or
o for the account of an eligible guarantor institution.
If the letter of transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such person should so indicate
with signing, and unless waived by us, evidence satisfactory to us of their
authority to so act must be submitted with the letter of transmittal.
All questions as to the validity, form, eligibility, time of receipt and
withdrawal of the tendered old notes will be determined by us in our sole
discretion, which determination will be final and binding. We reserve the
absolute right to reject any and all old notes not properly tendered or any old
notes which, if accepted, would, in the opinion of our counsel, be unlawful. We
also reserve the absolute right to waive any irregularities or conditions of
tender as to particular old notes. Our interpretation of the terms and
conditions of the exchange offers, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of old notes must be cured
within such time as we shall determine. Neither we, the exchange agent nor any
other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of old notes, nor shall any of them incur
any liability for failure
17
<PAGE>
to give such notification. Tenders of old notes will not be deemed to have been
made until such irregularities have been cured or waived.
In addition, we reserve the right in our sole discretion, subject to the
provisions of the indentures for the old notes:
o to purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date or, as set forth under "--Conditions;"
o to terminate the exchange offers;
o to redeem old notes as a whole or in part at any time and from time to
time, as set forth under "Description of the New Notes and the New Notes
Guarantee--Optional Redemption;" and
o to the extent permitted under applicable law, to purchase old notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers could differ from the terms of
the exchange offers.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to an exchange offer,
all old notes validly tendered pursuant to the exchange offer and not withdrawn
prior to 5:00 pm, New York City time, on the expiration date will be accepted
promptly after the expiration date, and the new notes will be issued promptly
after acceptance of the old notes. For purposes of the exchange offers, old
notes shall be deemed to have been accepted as validly tendered for exchange
when, as and if we have given oral or written notice thereof to the exchange
agent. For each old note accepted for exchange, the holder of such old note will
receive a new note having a principal amount equal to that of the surrendered
old note. In all cases, issuance of new notes for old notes that are accepted
for exchange in an exchange offer will be made only after timely receipt by the
exchange agent of the required documents.
If any tendered old notes are not accepted for any reason, such unaccepted
or such nonexchanged old notes will be returned without expense to the tendering
holder (if in certificated form) or credited to an account maintained with The
Depositary Trust Company or Euroclear or Clearstream, as the case may be, as
promptly as practicable after nonacceptance, withdrawal of tender or the
expiration or termination of the relevant exchange offers.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at The Depositary Trust Company, in the case of the old dollar
notes, or Euroclear and Clearstream, in the case of the old euro notes, for
purposes of the exchange offer within two business days after the date of this
prospectus. With respect to the old dollar notes, the exchange agent and The
Depositary Trust Company have confirmed that any financial institution that is a
participant in The Depositary Trust Company may utilize The Depositary Trust
Company Automated Tender Offer Program procedures to tender old notes.
With respect to the old dollar notes, any participant in The Depositary
Trust Company may make book-entry delivery of old dollar notes by causing The
Depositary Trust Company to transfer the old dollar notes into the exchange
agent's account in accordance with The Depositary Trust Company's Automated
Tender Offer Program procedures for transfer. With respect to the old euro
Notes, any participant in Euroclear and Clearstream may make book-entry delivery
of old euro Notes by causing Euroclear and Clearstream to transfer the old euro
Notes into the exchange agent's account in accordance with established Euroclear
and Clearstream procedures for transfer. However, the exchange for the old
dollar notes and the old euro Notes so tendered will only be made after a
book-entry confirmation of such book-entry transfer of old dollar notes or the
old euro Notes, as the case may be, into the exchange agent's account, and
timely receipt by the exchange agent of an agent's message and any other
documents required by the Letter of Transmittal. The term "agent's message"
means a message, transmitted by The Depositary Trust Company or Euroclear and
Clearstream, as the case may be, and received by the exchange agent and forming
part of a book-entry confirmation, which states that The Depositary Trust
Company or Euroclear and Clearstream, as the case may be, has received an
express acknowledgment from a
18
<PAGE>
participant tendering old notes that are the subject of the book-entry
confirmation that the participant has received and agrees to be bound by the
terms of the letter of transmittal, and that we may enforce that agreement
against the participant.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if:
o the tender is made through an eligible institution;
o prior to the expiration date, the exchange agent receives by facsimile
transmission, mail or hand delivery from such eligible institution a
properly completed and duly executed Letter of Transmittal and notice of
guaranteed delivery, substantially in the form provided by us that:
1. sets forth the name and address of the holder of old notes and the
amount of old notes tendered;
2. states that the tender is being made thereby; and
3. guarantees that within three New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery, the
certificates for all physically tendered old notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, and any other
documents required by the letter of transmittal will be deposited by the
eligible institution with the exchange agent; and
4. the certificates for all physically tendered old notes, in proper
form for transfer, or a book-entry confirmation, as the case may be, and
all other documents required by the Letter of Transmittal are received by
the exchange agent within three New York Stock Exchange trading days after
the date of execution of the notice of guaranteed delivery.
WITHDRAWAL OF TENDERS
Tenders of old notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the expiration date of the exchange offer for those old
notes.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent prior to 5:00 p.m., New York City time on the
expiration date at one of the addresses set forth below under "--Exchange
Agent." Any such notice of withdrawal must:
o specify the name of the person having tendered the old notes to be
withdrawn;
o identify the old notes to be withdrawn, including the principal amount of
such old notes;
o in the case of old notes tendered by book-entry transfer, specify the
number of the account at The Depositary Trust Company or Euroclear or
Clearstream, as the case may be, from which the old notes were tendered
and specify the name and number of the account at The Depositary Trust
Company or Euroclear or Clearstream, as the case may be, to be credited
with the withdrawn old notes and otherwise comply with the procedures of
such facility;
o contain a statement that the holder is withdrawing its election to have
the old notes exchanged;
o be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered, including
any required signature guarantees, or be accompanied by documents of
transfer to have the trustee with respect to the old notes register the
transfer of the old notes in the name of the person withdrawing the
tender; and
o specify the name in which the old notes are registered, if different from
the person who tendered the old notes.
All questions as to the validity, form, eligibility and time of receipt of
such notice will be determined by us and our determination shall be final and
binding on all parties. Any old notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the exchange offer. Properly
withdrawn old notes may be retendered by following one of the procedures
described under "--Procedures for Tendering" and
19
<PAGE>
"--Book-Entry Transfer" above at any time on or prior to 5:00 p.m., New York
City time, on the expiration date of the exchange offer for those old notes.
CONDITIONS
The exchange offers are not conditioned upon any minimum principal amount
of old notes being tendered for exchange. Notwithstanding any other provision of
the exchange offers, we shall not be required to accept for exchange, or to
issue new notes in exchange for, any old notes and may terminate or amend the
exchange offer if at any time prior to 5:00 p.m., New York City time, on the
relevant expiration date, we determine that the exchange offer violates
applicable law, any applicable interpretation of the staff of the SEC or any
order of any governmental agency or court of competent jurisdiction.
In addition, we will not accept for exchange any old notes tendered, and no
new notes will be issued in exchange for any such old notes, if at such time any
stop order shall be threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act of 1939. We are required to use
every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of the registration statement at the earliest possible moment.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as the exchange agent for the
exchange offers. All executed Letters of Transmittal should be directed to the
exchange agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
Delivery To The Chase Manhattan Bank, Exchange Agent
For the Dollar Notes:
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION NUMBER: BY HAND:
The Chase Manhattan Bank (212) 638-7380/81 The Chase Manhattan Bank
55 Water Street 55 Water Street
Room 234, North Building Room 234, North Building
New York, NY 10041 New York, NY 10041
Attn: Carlos Esteves Attn: Carlos Esteves
CONFIRM BY TELEPHONE: BY OVERNIGHT COURIER:
(212) 638-0828 The Chase Manhattan Bank
55 Water Street
Room 234, North Building
New York, NY 10041
Attn: Carlos Esteves
</TABLE>
For the Euro Notes:
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION NUMBER: BY HAND:
The Chase Manhattan Bank 44-171- The Chase Manhattan Bank
9 Thomas Moore Street, 5th Floor 9 Thomas Moore Street, 5th Floor
London E1W 1YT London E1W 1YT
U.K. U.K.
Attn: Philip Wilson Attn: Philip Wilson
CONFIRM BY TELEPHONE: BY OVERNIGHT COURIER:
44-171-777-5417 The Chase Manhattan Bank
9 Thomas Moore Street, 5th Floor
London E1W 1YT
U.K.
Attn: Philip Wilson
</TABLE>
20
<PAGE>
Delivery of the Letter of Transmittal to an address other than as set forth
above or transmission of instructions via facsimile other than as set forth
above does not constitute a valid delivery of such Letter of Transmittal.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the exchange offer.
We will pay the estimated cash expenses to be incurred in connection with
the exchange offers, which are estimated in the aggregate to be approximately
$100,000.
TRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
RSL PLC to register new notes in the name of, or request that old notes not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
We will have no obligation to register old notes after we complete the
exchange offers. Holders of old notes who do not exchange their old notes for
new notes in the exchange offers will continue to be subject to the restrictions
on transfer of those old notes as set forth in the legend on the old notes as a
consequence of the issuance of the old notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the old notes may not be
offered or sold, unless registered under the Securities Act, except in an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. We do not anticipate that we will register the
old notes under the Securities Act. To the extent that old notes are tendered
and accepted in the exchange offers, the trading market for untendered and
tendered but unaccepted old notes will be adversely affected.
21
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITIES
One of our primary equipment vendors has provided to certain of our
subsidiaries financing commitments to fund the purchase of additional switches
and related equipment. As of December 31, 1999, such commitments were in the
aggregate limited to approximately $85 million, all of which had been drawn.
Borrowings from this equipment vendor will accrue interest at a rate of LIBOR
plus 3.5% to 5.25%, depending on the equipment purchased and whether the loan is
guaranteed by the Swedish Export Credits Guarantee Board. Through Telegate, we
have $26 million of revolving credit facilities with various banks, all of which
was available at December 31, 1999. Through RSL COM Canada, we also have a $6.9
million revolving credit facility that accrues interest at an annual rate of
8.7%, $1.6 million of which was available at December 31, 1999.
1996 NOTES
GENERAL
On October 3, 1996, RSL PLC issued $300.0 million of 12 1/4% Senior Notes
pursuant to an indenture, dated October 3, 1996, or the 1996 Indenture, among
RSL PLC, RSL COM and The Chase Manhattan Bank, as trustee, which were exchanged
on May 22, 1997 for $300.0 million of substantially identical notes that had
been registered under the Securities Act, or the 1996 Notes, of which
$172.5 million in aggregate principal amount remain outstanding as of the date
of this prospectus. RSL COM, a guarantor of the notes offered hereby, has
unconditionally guaranteed the 1996 Notes.
PRINCIPAL, MATURITY AND INTEREST
The 1996 Notes are limited in aggregate principal amount to $300.0 million
and will mature on October 3, 2006. Interest on the 1996 Notes accrues at
12 1/4% per annum and is payable semiannually in arrears on May 15 and November
15 of each year. Interest is computed on the basis of a 360-day year comprised
of twelve 30-day months. RSL PLC used $102.8 million of the net proceeds of the
1996 Notes to purchase a portfolio of securities, initially consisting of U.S.
government securities, to pledge as security for payment of interest on the
principal of the 1996 Notes. Proceeds from the pledged securities have been used
by RSL PLC to make interest payments on the 1996 Notes through November 15,
1999.
RANKING
The 1996 Notes are unsecured senior obligations of RSL PLC, rank equal in
right of payment with all existing and future senior obligations of RSL PLC, and
rank senior in right of payment to all of the future subordinated obligations of
RSL PLC and RSL COM.
REDEMPTION
The 1996 Notes are not redeemable prior to November 15, 2001. Thereafter,
the 1996 Notes are subject to redemption at the option of RSL PLC, in whole or
in part, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the 12-month period beginning on November 15
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------ -----------
<S> <C>
2001........................................................ 106.125%
2002........................................................ 103.0625%
2003 and thereafter......................................... 100.000%
</TABLE>
COVENANTS
The 1996 Indentures restricts, among other things, the ability of RSL PLC
and RSL COM to incur additional indebtedness, pay dividends or make certain
other restricted payments, incur certain liens to secure equal or subordinated
indebtedness, engage in any sale and leaseback transaction, sell, assign,
transfer, lease, convey or
22
<PAGE>
otherwise dispose of substantially all of the assets of RSL PLC and RSL COM,
enter into certain transactions with affiliates, or incur indebtedness that is
subordinated in right of payment to any senior indebtedness and senior in right
of payment to the 1996 Notes. The 1996 Indentures permits, under certain
circumstances, RSL COM's subsidiaries to be deemed unrestricted subsidiaries and
thus not subject to the restrictions of the 1996 Indenture.
EVENTS OF DEFAULT
The 1996 Indenture contains standard events of default, including:
o defaults in the payment of principal, premium or interest,
o defaults in the compliance with covenants contained in the indenture,
o cross defaults on more than $10 million of other indebtedness,
o failure to pay more than $10 million of judgments that have not been
stayed by appeal or otherwise and o the bankruptcy of either RSL PLC or
RSL COM or certain of their subsidiaries.
U.S. DOLLAR NOTES
GENERAL
On February 27, 1998, RSL PLC issued (1) $200 million of Senior Notes, or
the 1998 Senior Notes, pursuant to an indenture, dated as of February 27, 1998,
or the 1998 Senior Notes Indenture, between RSL PLC, RSL COM and The Chase
Manhattan Bank, as trustee, and (2) $328.1 million principal amount at maturity
of Senior Discount Notes, or the 1998 Discount Notes, pursuant to an indenture,
dated as of February 27, 1998 or the 1998 Senior Discount Notes Indenture and,
together with the 1998 Senior Notes Indenture, the U.S. Dollar Notes Indenture,
among RSL PLC, RSL COM and The Chase Manhattan Bank, as trustee. On June 19,
1998, the 1998 Senior Notes were exchanged for $200 million of substantially
identical notes that had been registered under the Securities Act, or the Senior
Notes, and on June 29, 1998, the 1998 Discount Notes were exchanged for $328.1
million principal amount at maturity of substantially identical notes that had
been registered under the Securities Act, or the Senior Discount Notes and,
together with the Senior Notes, the U.S. Dollar Notes. RSL COM has
unconditionally guaranteed the U.S. Dollar Notes.
PRINCIPAL, MATURITY AND INTEREST
The U.S. Dollar Notes are initially limited in aggregate principal amount
at maturity to $528.1 million and will mature on March 1, 2008. Interest on the
Senior Notes accrues at 9 1/8% per annum and is payable semiannually on March 1
and September 1 of each year, commencing September 1, 1998. No interest will be
payable on the Senior Discount Notes prior to September 1, 2003. From and after
March 1, 2003, interest on the Senior Discount Notes will accrue at 10 1/8% on
the principal amount at maturity of such notes and is payable semiannually on
March 1 and September 1 of each year, commencing September 1, 2003. Interest on
the U.S. Dollar Notes is computed on the basis of a 360-day year comprised of
twelve 30-day months.
RANKING
The U.S. Dollar Notes are the unsecured senior obligations of RSL PLC and
RSL COM, rank equal in right of payment with the 1996 Notes, and all of the
existing and future senior obligations of RSL PLC and RSL COM, and rank senior
in right of payment to all of the future subordinated obligations of RSL PLC and
RSL COM.
REDEMPTION
The U.S. Dollar Notes are not redeemable prior to March 1, 2003.
Thereafter, the U.S. Dollar Notes are subject to redemption at the option of RSL
PLC, in whole or in part, at the redemption prices (expressed as percentages of
stated principal amount) set forth below plus accrued and unpaid interest
thereon to (but
23
<PAGE>
excluding) the applicable redemption date, if redeemed during the 12-month
period beginning on March 1 of the years indicated below:
SENIOR NOTES
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------- ----------------
<S> <C>
2003.................................................... 104.562%
2004.................................................... 103.042%
2005.................................................... 101.521%
2006 and thereafter..................................... 100.000%
</TABLE>
SENIOR DISCOUNT NOTES
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------- ----------------
<S> <C>
2003.................................................... 105.06%
2004.................................................... 103.37%
2005.................................................... 101.68%
2006 and thereafter..................................... 100.00%
</TABLE>
In addition, at any time prior to March 1, 2001, in the event RSL COM
receives net cash proceeds from the public or private sale of its common stock,
RSL PLC may (to the extent it receives such proceeds and has not used them,
directly or indirectly, to redeem or repurchase other securities pursuant to
optional redemption provisions), at its option, apply an amount equal to any
such net cash proceeds or any portion thereof to redeem up to one-third of the
aggregate principal amount at maturity of the U.S. Dollar Notes at a redemption
price equal to 109.125% of the principal amount thereof, in the case of the
Senior Notes, and 110.125% of the accreted value, in the case of the Senior
Discount Notes, plus accrued and unpaid interest thereon, if any, to the date of
redemption, provided that at least two-thirds of aggregate principal amount at
maturity of the Senior Notes or Senior Discount Notes, as applicable, remains
outstanding immediately after such redemption.
COVENANTS
The U.S. Dollar Notes Indentures restrict, among other things, the ability
to incur additional indebtedness, pay dividends or make distributions in respect
of the capital stock of RSL PLC and RSL COM, make investments or certain other
restricted payments, create liens, sell assets, issue or sell capital stock of
certain subsidiaries, enter into transactions with stockholders or affiliates or
effect a consolidation or merger.
EVENTS OF DEFAULT
The U.S. Dollar Notes Indentures contain standard events of default,
including
o failure to pay principal of (or premium, if any, on) any U.S. Dollar Note
when due,
o failure to pay any interest on any U.S. Dollar Note when due, continued
for 30 days,
o failure to perform covenants or agreements under the U.S. Dollar Notes
Indentures or the U.S. Dollar Notes,
o cross-defaults against certain other indebtedness,
o failure to pay more than $10 million of judgments that have not been
stayed by appeal and
o certain events of bankruptcy, insolvency or reorganization affecting RSL
COM, RSL PLC and some of their subsidiaries.
24
<PAGE>
DM NOTES
GENERAL
On March 15, 1998, RSL PLC issued DM 296.0 million principal amount at
maturity of 10% Senior Discount Notes, or the old DM Notes, pursuant to an
indenture, dated as of March 16, 1998, or the DM Notes Indenture, among RSL PLC,
RSL COM, and The Chase Manhattan Bank, as trustee. On June 29, 1998, the old DM
Notes were exchanged for DM 296.0 million principal amount at maturity of
substantially identical notes that had been registered under the Securities Act,
or the DM Notes. RSL COM has unconditionally guaranteed the DM Notes.
PRINCIPAL, MATURITY AND INTEREST
The DM Notes are initially limited in aggregate principal amount at
maturity to DM 296.0 million (approximately $99.1 million initial accreted
value) and will mature on March 15, 2008. No interest is payable on the DM Notes
prior to September 15, 2003. From and after March 15, 2003, interest on the DM
Notes will accrue on the principal amount at maturity of such notes at the rate
of 10% per annum and is payable semiannually on March 15 and September 15 of
each year, commencing September 15, 2003. Interest is computed on the basis of a
360-day year comprised of twelve 30-day months.
RANKING
The DM Notes are the unsecured senior obligations of RSL PLC and RSL COM,
rank equal in right of payment with the 1996 Notes, the U.S. Dollar Notes and
all of the other existing and future senior obligations of RSL PLC and RSL COM,
and rank senior in right of payment to all of the future subordinated
obligations of RSL PLC and RSL COM.
REDEMPTION
The DM Notes are not redeemable prior to March 15, 2003. Thereafter, the DM
Notes are subject to redemption, at the option of RSL PLC, in whole or in part,
at the redemption prices (expressed as percentages of the principal amount
thereof) set forth below plus accrued interest to but excluding the redemption
date, if redeemed during the 12-month period beginning March 15 of the years
indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------- ----------------
<S> <C>
2003.................................................... 105.000%
2004.................................................... 103.333%
2005.................................................... 101.667%
2006 and thereafter..................................... 100.000%
</TABLE>
In addition, at any time prior to March 15, 2001, in the event RSL COM
receives net cash proceeds from the public or private sale of its common stock,
RSL PLC may (to the extent it receives such proceeds and has not used them,
directly or indirectly, to redeem or repurchase other securities pursuant to
optional redemption provisions), at its option, apply an amount equal to any
such net cash proceeds or any portion thereof to redeem, from time to time, DM
Notes in a principal amount at maturity of up to an aggregate amount equal to
one-third of the aggregate principal amount at maturity of the DM Notes,
provided, however, that DM Notes in an amount equal to at least two-thirds of
the aggregate principal amount at maturity of the DM Notes remain outstanding
immediately after such redemption.
COVENANTS; EVENTS OF DEFAULT
The DM Notes Indenture contains covenants and provides for events of
default which are identical in all material respects to the covenants and events
of default contained in the U.S. Dollar Notes Indentures.
12% NOTES
GENERAL
On November 9, 1998, RSL PLC issued the 12% Notes, or the old 12% Notes,
pursuant to an indenture, dated as of November 9, 1998, or the 12% Notes
Indenture, among RSL PLC, RSL COM and The Chase Manhattan Bank, as trustee. On
March 5, 1999, the old 12% Notes were exchanged for $100 million principal
25
<PAGE>
amount at maturity of substantially identical notes that had been registered
under the Securities Act, or the 12% Notes. RSL COM has unconditionally
guaranteed the 12% Notes.
PRINCIPAL, MATURITY AND INTEREST
The 12% Notes are initially limited in aggregate principal amount at
maturity to $100 million (approximately $94.5 million initial accreted value)
and will mature on November 1, 2008. Interest on the 12% Notes will accrue on
the principal amount at maturity of such notes at the rate of 12% per annum and
is payable semiannually on November 1 and May 1 of each year, commencing May 1,
1999. Interest is computed on the basis of a 360-day year comprised of twelve
30-day months.
RANKING
The 12% Notes are our unsecured senior obligations of RSL PLC and RSL COM,
rank equal in right of payment with the 1996 Notes, the U.S. Dollar Notes, the
DM Notes and all of the other existing and future senior obligations of RSL PLC
and RSL COM, and rank senior in right of payment to all of the future
subordinated obligations of RSL PLC and RSL COM.
REDEMPTION
The 12% Notes are not redeemable prior to November 1, 2003. Thereafter, the
12% Notes are subject to redemption, at the option of RSL PLC, in whole or in
part, at the redemption prices (expressed as percentage of the accreted value
thereof) set forth below plus accrued interest to but excluding the redemption
date, if redeemed during the 12-month period beginning November 1 of the years
indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------- ----------------
<S> <C>
2003.................................................... 106%
2004.................................................... 104%
2005.................................................... 102%
2006 and thereafter..................................... 100%
</TABLE>
In addition, at any time prior to November 1, 2001, and in the event RSL
COM receives net cash proceeds from the public or private sale of its common
stock, RSL PLC may (to the extent it receives such proceeds and has not used
them, directly or indirectly, to redeem or repurchase other securities pursuant
to optional redemption provided), at its option, apply an amount equal to any
such net cash proceeds or any portion thereof to redeem, from time to time, 12%
Notes in a principal amount at maturity of up to an aggregate amount equal to
one-third of the aggregate principal amount at maturity of the 12% Notes,
provided, however, that 12% Notes in an amount equal to at least two-thirds of
the aggregate principal amount at maturity of the 12% Notes remain outstanding
immediately after such redemption.
COVENANTS; EVENTS OF DEFAULT
The 12% Notes Indenture contains covenants and provides for events of
default which are identical in all material respects to the covenants and of
default contained in the U.S. Dollar Notes Indentures and the DM Notes
Indenture.
10 1/2% NOTES
GENERAL
On December 8, 1998, RSL PLC issued the 10 1/2% Notes, or the old 10 1/2%
Notes pursuant to an indenture, dated as of December 8, 1998, or the 10 1/2%
Notes Indenture, among RSL PLC, RSL COM and The Chase Manhattan Bank, as
Trustee. On February 25, 1999, the old 10 1/2% Notes were exchanged for $200
million principal amount at maturity of substantially identical notes that had
been registered under the Securities Act, or the 10 1/2% Notes. RSL COM has
unconditionally guaranteed the 10 1/2% Notes.
26
<PAGE>
PRINCIPAL, MATURITY AND INTEREST
The 10 1/2% Notes are limited in aggregate principal amount at maturity to
$200 million and will mature on November 15, 2008. Interest on the 10 1/2% Notes
will accrue on the principal amount at maturity of such notes at the rate of
10 1/2% per annum and is payable semiannually on May 15 and November 15 of each
year. Interest is computed on the basis of a 360-day year comprised of twelve
30-day months.
RANKING
The 10 1/2% Notes are the unsecured senior obligations of RSL PLC and RSL
COM, rank equal in right of payment with the 1996 Notes, the U.S. Dollar Notes,
the DM Notes, the 12% Notes and all of the other existing and future senior
obligations of RSL PLC and RSL COM, and rank senior in right of payment to all
of the future subordinated obligations of RSL PLC and RSL COM.
REDEMPTION
The 10 1/2% Notes are not redeemable prior to November 15, 2003.
Thereafter, the 10 1/2% Notes are subject to redemption, at the option of RSL
PLC, in whole or in part, at the redemption prices (expressed as percentage of
the accreted value thereof) set forth below plus accrued interest to but
excluding the redemption date, if redeemed during the 12-month period beginning
November 15 of the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------- ----------------
<S> <C>
2003.................................................... 105.25%
2004.................................................... 103.50%
2005.................................................... 101.75%
2006 and thereafter..................................... 100.00%
</TABLE>
In addition, at any time prior to November 15, 2001, and in the event RSL
COM receives net cash proceeds from the public or private sale of its common
stock, RSL PLC may (to the extent it receives such proceeds and has not used
them, directly or indirectly, to redeem or repurchase other securities pursuant
to optional redemption provided), at its option, apply an amount equal to any
such net cash proceeds or any portion thereof to redeem, from time to time,
10 1/2% Notes in a principal amount at maturity of up to an aggregate amount
equal to one-third of the aggregate principal amount at maturity of the 10 1/2%
Notes, provided, however, that 10 1/2% Notes in an amount equal to at least
two-thirds of the aggregate principal amount at maturity of the 10 1/2% Notes
remain outstanding immediately after such redemption.
COVENANTS; EVENTS OF DEFAULT
The 10 1/2% Notes Indenture contains covenants and provides for events of
default which are identical in all material respects to the covenants and of
default contained in the U.S. Dollar Notes Indentures and the DM Notes
Indenture.
9 7/8% NOTES
GENERAL
On May 13, 1999, RSL PLC issued the 9 7/8% Notes, or the old 9 7/8% Notes
pursuant to an indenture, dated as of May 13, 1999, or the 9 7/8% Notes
Indenture, among RSL PLC, RSL COM and The Chase Manhattan Bank, as Trustee. On
December 10, 1999, the old 9 7/8% Notes were exchanged for $175 million
principal amount at maturity of substantially identical notes that had been
registered under the Securities Act, or the 9 7/8% Notes. RSL COM has
unconditionally guaranteed the 9 7/8% Notes.
PRINCIPAL, MATURITY AND INTEREST
The 9 7/8% Notes are limited in aggregate principal amount at maturity to
$175 million and will mature on November 15, 2009. Interest on the 9 7/8% Notes
will accrue on the principal amount at maturity of such notes at the rate of
9 7/8% per annum and is payable semiannually on May 15 and November 15 of each
year. Interest is computed on the basis of a 360-day year comprised of twelve
30-day months.
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RANKING
The 9 7/8% Notes are the unsecured senior obligations of RSL PLC and RSL
COM, rank equal in right of payment with the 1996 Notes, the U.S. Dollar Notes,
the DM Notes, the 12% Notes, the 10 1/2% Notes and all of the other existing and
future senior obligations of RSL PLC and RSL COM, and rank senior in right of
payment to all of the future subordinated obligations of RSL PLC and RSL COM.
REDEMPTION
The 9 7/8% Notes are not redeemable prior to November 15, 2004. Thereafter,
the 9 7/8% Notes are subject to redemption, at the option of RSL PLC, in whole
or in part, at the redemption prices (expressed as percentage of the accreted
value thereof) set forth below plus accrued interest to but excluding the
redemption date, if redeemed during the 12-month period beginning November 15 of
the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------------------------------------- ----------------
<S> <C>
2004.................................................... 104.938%
2005.................................................... 103.292%
2006.................................................... 101.646%
2007 and thereafter..................................... 100.000%
</TABLE>
In addition, at any time prior to November 15, 2002, and in the event RSL
COM receives net cash proceeds from the public or private sale of its common
stock, RSL PLC may (to the extent it has not used such proceeds, directly or
indirectly, to redeem or repurchase other securities pursuant to optional
redemption provided), at its option, apply an amount equal to any such net cash
proceeds or any portion thereof to redeem, from time to time, 9 7/8% Notes in a
principal amount at maturity of up to an aggregate amount equal to one-third of
the aggregate principal amount at maturity of the 9 7/8% Notes, provided,
however, that 9 7/8% Notes in an amount equal to at least two-thirds of the
aggregate principal amount at maturity of the 9 7/8% Notes remain outstanding
immediately after such redemption.
COVENANTS; EVENTS OF DEFAULT
The 9 7/8% Notes Indenture contains covenants and provides for events of
default which are identical in all material respects to the covenants and of
default contained in the U.S. Dollar Notes Indentures, the DM Notes Indenture
and the 10 1/2% Indenture.
AMENDMENTS TO INDENTURES
In September 1999, we amended the 1996 Indenture, the U.S. Dollar Notes
Indentures, the DM Notes Indenture, the 12% Notes Indenture, the 10 1/2% Notes
Indenture and the 9 7/8% Indenture to modify exceptions to the limitations on
issuances and sales of capital stock of certain subsidiaries to limitations on
asset dispositions contained in the Indentures to permit the issuance and sale
of capital stock of deltathree.com and our Australian subsidiary in public or
private transactions without restricting use of proceeds solely to investments
in telecommunications assets and to employees, directors and consultants
pursuant to customary equity compensation and incentive plans.
In connection with our Dollar and Euro Notes offerings, RSL USA entered
into supplemental indentures with respect to the 1996 Indenture, U.S. Dollar
Notes Indentures, the DM Notes Indenture, the 12% Notes Indenture, the 10 1/2%
Notes Indenture and the 9 7/8% Indenture, pursuant to which RSL USA guaranteed
the obligations of RSL PLC under those indentures and the related notes. RSL
USA's guarantees will be released in the event of the release of RSL USA's
guarantee of the new notes as described in the section "Description of the New
Notes and the New Notes Guarantees" under the heading "Description of the New
Notes Guarantees."
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DESCRIPTION OF THE NEW NOTES AND THE NEW NOTES GUARANTEES
The new dollar notes and the new euro notes will be issued under
Indentures, each dated as of February 22, 2000, or the Indentures, between RSL
PLC, RSL COM and RSL USA, as guarantors, or the Guarantors, and The Chase
Manhattan Bank, as trustee. The new dollar notes and the new euro notes are
referred to collectively in this prospectus as "the new notes." The statements
under this caption relating to the new notes and the Indentures are summaries
and do not purport to be complete, and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Indenture, including
the definitions of certain terms therein. The Indentures are by their terms
subject to and governed by the Trust Indenture Act of 1939, as amended. Unless
otherwise indicated, references under this caption to sections, "ss." or
articles are references to the Indentures. Where reference is made to particular
provisions of the Indentures or to defined terms not otherwise defined herein,
such provisions or defined terms are incorporated herein by reference. The
definitions of certain capitalized terms used in the following summary are set
forth below under the heading "Certain Definitions."
GENERAL
The new notes will be senior unsecured obligations of RSL PLC and will
mature on March 1, 2010. Interest on each new note will accrue at the rate of
12 7/8% on the principal amount thereof from the last Interest Payment Date on
which interest has been paid on the old note in exchange therefore, or, if no
interest has been paid on such old note, from February 22, 2000. Interest will
be payable semiannually in cash on March 1 and September 1 of each year,
commencing September 1, 2000, to the Book-Entry Depositary (in the case of
Global Notes) or to the Person in whose name the note (or any predecessor note)
is registered (in the case of Definitive Registered Notes) at the close of
business on the preceding February 15 and August 15, as the case may be.
Interest on the notes will be computed on the basis of a 360-day year of twelve
30-day months. (ss.ss. 301, 307 & 310). You will not receive interest on any old
notes we accept for exchange that could otherwise be payable on any Interest
Payment Date, the record date for which occurs on or after consummation of the
exchange offer for the old notes.
The guarantee by the Guarantors of payments in respect of each of the new
dollar notes and the new euro notes or, collectively the "notes guarantees,"
will rank equal in right of payment with the Guarantors' unsecured
unsubordinated obligations.
Principal of and premium, if any, and interest on the new notes may be
presented for registration of transfer and exchange, at the office or agency of
RSL PLC maintained for that purpose in the Borough of Manhattan, The City of New
York, provided that at the option of RSL PLC, payment of interest on the notes
may be made by check mailed to the address of the Person entitled thereto as it
appears in the related Note Register. Until otherwise designated by RSL PLC,
such office or agency will be the corporate trust office of the Trustee, as
Paying Agent and Registrar. (ss.ss. 301, 305 & 1002)
The new notes will be issued without coupons, in denominations of $1,000 in
the case of the new dollar notes and (U)1,000 in the case of the new euro notes,
and any integral multiples of $1,000 or (U)1,000 in excess thereof. (ss. 302) No
service charge will be made for any registration of transfer or exchange of
notes, but RSL PLC may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. (ss. 305)
The new dollar notes are initially limited to $100,000,000 in aggregate
principal amount and the new euro notes are initially limited to (U)100,000,000
in aggregate principal amount. We may issue additional dollar notes or euro
notes (in either case "additional notes") from time to time after the date of
the Indentures, subject to the provisions of the Indentures, as well as the
provisions of our outstanding indebtedness, including the provisions restricting
additional indebtedness under the Indentures and those other obligations.
RANKING
The new notes and the new notes guarantees will be unsecured obligations of
RSL PLC and the Guarantors, respectively, rank equal in right of payment with
all existing and future unsecured obligations of RSL PLC and the Guarantors,
respectively, and rank senior in right of payment to all future subordinated
obligations of RSL PLC and the Guarantors, respectively. Holders of secured
obligations of RSL PLC or the Guarantors, however,
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<PAGE>
will have claims that are prior to the claims of the holders of the new notes or
the new notes guarantees with respect to the assets securing such other
obligations.
RSL PLC is a direct wholly-owned subsidiary of RSL COM. RSL COM's principal
operations are conducted through subsidiaries of RSL PLC and, therefore, RSL COM
and RSL PLC are dependent upon the cash flow of such subsidiaries to meet their
respective obligations. RSL COM's subsidiaries (other than RSL PLC and RSL USA)
have no obligation to guarantee or otherwise pay amounts due under the notes.
Therefore, the new notes are effectively subordinated to all indebtedness and
other liabilities and commitments (including trade payables) of RSL COM's
subsidiaries (other than RSL PLC and RSL USA). Any right of RSL PLC to receive
assets of any of the subsidiaries other than RSL USA upon any liquidation or
reorganization of such subsidiary (and the consequent right of holders of the
notes to participate in those assets) is effectively subordinated to the claims
of the subsidiary's creditors, except to the extent that RSL PLC is itself
recognized as a creditor of the subsidiary. Any recognized claims of RSL PLC as
a creditor of the subsidiary would be subordinate to any prior security interest
held by any other creditor of the subsidiary and obligations of the subsidiary
that are senior to those owing to RSL PLC.
As of December 31, 1999, on a pro forma basis after giving effect to the
issuance of the old notes and RSL USA's guarantee of RSL PLC's previously issued
and outstanding notes:
o the total amount of outstanding liabilities of the Guarantors and RSL PLC
(excluding their subsidiaries), including trade payables, would have been
approximately $1.6 billion; and
o the total amount of outstanding liabilities of the subsidiaries of RSL
COM (other than RSL PLC and RSL USA), including trade payables, would
have been approximately $463.6 million.
BOOK-ENTRY; DELIVERY AND FORM
GENERAL
Each of the new dollar notes and the new euro notes will initially be
represented by one or more global securities in bearer form without interest
coupons, which will be issued in denominations equal to the outstanding
principal amount of the notes represented thereby. Each Restricted Global Note
will be deposited with the Book-Entry Depositary pursuant to the terms of a Note
Deposit Agreement, dated as of February 22, 2000 (the "Deposit Agreement"),
between RSL PLC, for the limited purposes set forth therein, and The Chase
Manhattan Bank, as book-entry depositary (the "Book-Entry Depositary").
In the case of new dollar notes, the Book-Entry Depositary will issue a
certificateless interest for each Global Note, representing a 100% interest in
the respective underlying Global Note in the name of Cede & Co., as a nominee of
The Depository Trust Company ("DTC"). Beneficial interests in the Global Notes
representing new dollar notes will be shown on, and transfers thereof will be
effected only through, records maintained in book-entry form by DTC (with
respect to its participants) and its participants.
In the case of euro notes, the Book-Entry Depositary will issue a
certificated depositary interest for each Global Note, representing a 100%
interest in the respective underlying Global Note, in the name of Euroclear and
Clearstream Banking, societe anonyme ("Clearstream"). Beneficial interests in
the Global Notes representing euro notes will be shown on, and transfers thereof
will be effected only through, records maintained in book-entry form by
Euroclear and Clearstream (with respect to their participants) and their
participants.
All interests in the Global Notes representing new euro notes will be
subject to the procedures and requirements of Euroclear or Clearstream, as the
case may be.
Beneficial interests in each Global Note are referred to herein as
"Book-Entry Interests."
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<PAGE>
DEFINITIVE REGISTERED NEW NOTES
Under the terms of the Deposit Agreement and the Indentures, owners of
Book-Entry Interests in the Global Notes will receive definitive notes in
registered form ("Definitive Registered Notes"):
(1) if DTC, in the case of the dollar notes, or Euroclear and
Clearstream, in the case of the euro notes, notifies RSL PLC or the
Book-Entry Depositary in writing that it (or its nominee) is unwilling or
unable to continue to act as depositary or ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in either case, a successor depositary registered as
a clearing agency under the Exchange Act is not appointed by RSL PLC within
90 days,
(2) at any time if RSL PLC determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Registered Notes,
provided that (x) such exchange is required by (A) any applicable law or
(B) any event beyond RSL PLC's control or (y) payments of interest on any
Global Note, Depositary Interest or Book-Entry Interest are, or would
become, subject to any deduction or withholding for taxes,
(3) at any time after the consummation of the Exchange Offer, if the
owner of a Book-Entry Interest requests such exchange in writing delivered
to DTC, or Euroclear and Clearstream, as applicable and through DTC, or
Euroclear and Clearstream, as applicable to the Book-Entry Depositary and
the Trustee or
(4) if the Book-Entry Depositary is at any time unwilling or unable to
continue as Book-Entry Depositary and a successor Book-Entry Depositary is
not appointed by RSL PLC within 90 days.
In no event will definitive securities in bearer form be issued. Any
Definitive Registered Notes will be issued in fully registered form in
denominations of $1,000 principal amount or (U)1,000 principal amount, as
applicable, and integral multiples thereof. Any Definitive Registered Notes will
be registered in such name or names as DTC, or Euroclear and Clearstream, as
applicable, shall instruct the Trustee, through the Book-Entry Depositary. It is
expected that the instructions will be based upon directions received by DTC, or
Euroclear and Clearstream, as applicable, from the participants reflecting the
beneficial ownership of Book-Entry Interests. To the extent permitted by law,
RSL PLC, the Trustee and any paying agent shall be entitled to treat the person
in whose name any Definitive Registered Note is registered as the absolute owner
thereof. While any Global Note is outstanding, holders of Definitive Registered
Notes may exchange their Definitive Registered Notes for a corresponding
Book-Entry Interest in such Global Note by surrendering their Definitive
Registered Notes to the Book-Entry Depositary and providing the certificates and
opinions required by the Indentures. The Book-Entry Depositary will make the
appropriate adjustments to the Global Note underlying such Book-Entry Interest
to reflect any issue or surrender of Definitive Registered Notes. The Indentures
contain provisions relating to the maintenance by a registrar of a register
reflecting ownership of Definitive Registered Notes, if any, and other
provisions customary for a registered debt security. Payment of principal and
interest on each Definitive Registered Note will be made to the holder appearing
on the register at the close of business on the record date at his address shown
on the register on the record date.
U.S. HOLDERS SHOULD BE AWARE THAT, UNDER CURRENT U.K. LAW, UPON THE
ISSUANCE TO A HOLDER OF DEFINITIVE REGISTERED NOTES, SUCH HOLDER WILL BECOME
SUBJECT TO U.K. INCOME TAX (CURRENTLY 20%) TO BE WITHHELD ON ANY PAYMENTS OF
INTEREST ON THE DEFINITIVE REGISTERED NOTES AS SET FORTH UNDER THE SECTION
"CERTAIN UNITED KINGDOM TAX CONSIDERATIONS FOR U.S. HOLDERS OF NOTES." SEE BELOW
UNDER THE HEADING "ADDITIONAL AMOUNTS." A U.S. HOLDER OF DEFINITIVE REGISTERED
NOTES WILL NOT, UNLESS THERE HAS BEEN A CHANGE IN LAW OR A "LISTING FAILURE" (AS
DEFINED HEREIN) AND CERTAIN OTHER CONDITIONS ARE MET, BE ENTITLED TO RECEIVE
ADDITIONAL AMOUNTS WITH RESPECT TO SUCH DEFINITIVE REGISTERED NOTES. HOWEVER, A
U.S. HOLDER OF DEFINITIVE REGISTERED NOTES MAY BE ENTITLED TO RECEIVE A REFUND
OF WITHHELD AMOUNTS FROM THE INLAND REVENUE IN CERTAIN CIRCUMSTANCES.
DESCRIPTION OF BOOK-ENTRY SYSTEMS
Upon receipt of the Global Notes, the Book-Entry Depositary will issue a
certificateless interest (in the case of the new dollar notes) or a certificated
depositary interest (in the case of the new euro notes) for each such Global
Note, representing a 100% interest in the respective underlying Global Note, in
the name of DTC's nominee (in the case of the new dollar notes) or in the name
of the common depositary for Euroclear and
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Clearstream (in the case of new euro notes). Ownership of Book-Entry Interests
will be limited to persons who have accounts with DTC, including Euroclear and
Clearstream ("participants"), or persons who have accounts through participants
("indirect participants"). Upon such issuance of interests in such Global Notes,
DTC, Euroclear or Clearstream, as applicable, will credit, on its internal
book-entry registration and transfer system, its participants' accounts with the
respective interests owned by such participants. Such accounts initially will be
designated by or on behalf of the initial purchasers. Ownership of Book-Entry
Interests will be shown on, and the transfer of such ownership will be effected
only through, records maintained by DTC, Euroclear or Clearstream, as
applicable, or its nominee (with respect to interests of participants) and the
records of participants (with respect to interests of indirect participants).
The laws of some countries and some states in the United States may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge the Book-Entry Interests in the Global Notes.
So long as the Book-Entry Depositary, or its nominee, is the holder of the
Global Notes, the Book-Entry Depositary or such nominee, as the case may be,
will be considered the sole holder of such Global Notes for all purchases under
the Indentures and the notes. Except as set forth above, participants or
indirect participants will not be entitled to have notes or Book-Entry Interests
registered in their names, will not receive or be entitled to receive physical
delivery of notes or Book-Entry Interests in definitive bearer or registered
form and will not be considered the owners or holders thereof under the
Indentures. Accordingly, each person owning a Book-Entry Interest must rely on
the procedures of the Book-Entry Depositary and DTC, Euroclear and Clearstream
and, if such person is an indirect participant in DTC, the procedures of the
participants through which such person owns its interest, to exercise any rights
and remedies of a holder under the Indentures. If any definitive notes are
issued to participants or indirect participants, they will be issued in
registered form, as described above. Unless and until Book-Entry Interests are
exchanged for Definitive Registered Notes, the certificateless interest held by
DTC and the certificated depositary interest held by the common depositary may
not be transferred except as a whole between DTC (in the case of the dollar
notes) or Euroclear and Clearstream (in the case of the euro notes) and a
nominee between nominees of each of them or any such nominee to a successor of
DTC or Euroclear and Clearstream, as applicable, or a successor of such nominee.
PAYMENTS ON THE GLOBAL NOTES
Payments of any amounts owing in respect of the Global Notes will be made
through one or more paying agents appointed under the Indentures (which
initially will include The Chase Manhattan Bank in New York and The Chase
Manhattan Bank in London, as paying agent for the notes) to the Book-Entry
Depositary as the holder of the Global Notes. All such amounts will be payable
in U.S. dollars in the case of the new dollar notes, and in euros in the case of
the new euro notes. Upon receipt of any such amounts in respect of the Global
Notes, the Book-Entry Depositary will pay such amounts to DTC, Euroclear or
Clearstream in proportion to its respective interests, as shown on the
Book-Entry Depositary's records.
RSL PLC expects that DTC or Euroclear or Clearstream, as applicable or a
nominee, upon receipt of any payment made in respect of the Global Notes, will
credit its participants' accounts with such payments in amounts proportionate to
their respective interest in the principal amount of such Global Note as shown
on the records of DTC or Euroclear or Clearstream, as applicable, or its
nominee. RSL PLC expects that payments by participants to owners of Book-Entry
Interests held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the account of customers in bearer form or registered in "street name,"
and will be the responsibility of such participants. Distribution with respect
to ownership of Book-Entry Interests held through Euroclear or Clearstream will
be credited to the cash accounts of Euroclear participants or Clearstream
participants in accordance with the relevant system's rules and procedures, to
the extent received by its depositary.
None of RSL PLC, the Book-Entry Depositary or any paying agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of Book-Entry Interests or for maintaining, supervising
or reviewing all records relating to such Book-Entry Interests or beneficial
ownership interests.
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REDEMPTION OF GLOBAL NOTES
In the event any Global Note (or any portion thereof) is redeemed, the
Book-Entry Depositary will, through DTC, Euroclear or Clearstream, as
applicable, redeem, from the amount received by it in respect of the redemption
of such Global Note, an equal amount of the Book-Entry Interests in such Global
Note. The redemption price payable in connection with the redemption of such
Book-Entry Interest will be equal to the amount received by the Book-Entry
Depositary in connection with the redemption of such Global Note (or any portion
thereof). RSL PLC understands that under existing DTC, Euroclear and Clearstream
practices, if fewer than all of the notes are to be redeemed at any time, DTC,
Euroclear or Cedelbank, as applicable, will credit participants' accounts on a
proportionate basis (with adjustments to prevent fractions) or by lot or on such
other basis as DTC, Euroclear or Clearstream, as applicable, deems fair and
appropriate; provided that no beneficial interests of less than $1,000 principal
amount (in the case of the new dollar notes) or (U)1,000 (in the case of the new
euro notes) may be redeemed in part.
TRANSFERS
Pursuant to the Deposit Agreement, the Global Notes may be transferred only
to the successor to the Book-Entry Depositary.
All transfers of Book-Entry Interests between participants in DTC,
Euroclear or Clearstream, as applicable, will be effected by DTC, Euroclear or
Clearstream, as applicable, pursuant to customary procedures established by such
entity and its participants.
ACTION BY OWNERS OF BOOK-ENTRY INTERESTS
As soon as practicable after receipt by the Book-Entry Depositary of notice
of any solicitation of consents or request for a waiver of other action by the
holders of notes, or of any offer to purchase the notes with Excess Proceeds or
upon a Change of Control (as defined under the headings "Change of Control" and
"Certain Definitions," respectively), the Book-Entry Depositary will mail to
DTC, Euroclear and Clearstream a notice containing (a) such information as is
contained in the notice received by the Book-Entry Depositary, (b) a statement
that at the close of business on a specified record date DTC, Euroclear and
Clearstream will be entitled to instruct the Book-Entry Depositary as to the
consent, waiver or other action, if any, pertaining to such notes and (c) a
statement as to the manner in which such instructions may be given. In addition,
the Book-Entry Depositary will forward to DTC, Euroclear or Clearstream, as
applicable, all materials pertaining to any such solicitation, request, offer or
other action. Upon the written request of DTC, Euroclear or Clearstream, as
applicable, the Book-Entry Depositary shall endeavor insofar as practicable to
take such action regarding the requested consent, waiver, offer or other action
in respect of such notes in accordance with any instructions set forth in such
request. DTC, Euroclear and Clearstream may grant proxies or otherwise authorize
their respective participants or indirect participants to provide such
instructions to the Book-Entry Depositary so that they may exercise any rights
of a holder or take any other actions which a holder is entitled to take under
the Indentures. Under its usual procedures, DTC would mail an omnibus proxy to
RSL PLC and the Book-Entry Depositary assigning Euroclear's and Clearstream's
consenting or voting rights to those DTC participants to whose accounts such
Book-Entry Interests are credited on a record date as soon as possible after
such record date. Euroclear or Clearstream, as the case may be, will take any
action permitted to be taken by a holder under the Indentures on behalf of a
Euroclear participant or Clearstream participant only in accordance with its
relevant rules and procedures and subject to its depositary's ability to effect
such actions on its behalf. The Book-Entry Depositary will not exercise any
discretion in the granting of consents or waivers or the taking of any other
action relating to the Indentures.
DTC has advised RSL PLC that it will take any action permitted to be taken
by a holder of notes (including the presentation of notes for exchange as
described above) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of notes, as to which such
participant or participants has or have given such direction.
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REPORTS
The Book-Entry Depositary will immediately send to DTC, Euroclear or
Clearstream, as applicable, a copy of any notices, reports and other
communications received relating to RSL PLC, the notes or the Book-Entry
Interests.
ACTION BY BOOK-ENTRY DEPOSITARY
Upon the occurrence of a Default with respect to the new notes, or in
connection with any other right of the holder of a Global Note under the
Indentures, if requested in writing by DTC, Euroclear or Clearstream, as
applicable, the Book-Entry Depositary will take any such action as shall be
requested in such notice; provided that the Book-Entry Depositary has been
offered reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request by the
owners of Book-Entry Interests.
RESIGNATION OF BOOK-ENTRY DEPOSITARY
The Book-Entry Depositary may at any time resign as Book-Entry Depositary
by written notice to RSL PLC and DTC, Euroclear or Clearstream, as applicable,
such resignation to become effective upon the appointment of a successor book
entry depositary, in which case the Global Notes shall be delivered to that
successor. If no such successor has been so appointed by RSL PLC within
90 days, the Book-Entry Depositary may request RSL PLC to issue Definitive
Registered Notes as described above.
If at any time DTC is unwilling or unable to continue as a depositary for
the Book-Entry Interests for the dollar notes and a successor depositary is not
appointed by RSL PLC within 90 days, DTC may request that RSL PLC issue
Definitive Registered Notes in exchange therefor.
EXPENSES OF BOOK-ENTRY DEPOSITARY
RSL PLC has agreed to indemnify the Book-Entry Depositary against certain
liabilities incurred by it and pay the charges of the Book-Entry Depositary as
agreed between RSL PLC and the Book-Entry Depositary.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Deposit Agreement may be amended by RSL PLC and the Book-Entry
Depositary without notice to or consent of DTC, Euroclear or Clearstream or any
owner of a Book-Entry Interest: (a) to cure any ambiguity, defect or
inconsistency, provided that such amendment or supplement does not adversely
affect the rights of DTC or Euroclear or Clearstream, as applicable, or any
holder of Book-Entry Interests, (b) to evidence the succession of another person
to RSL PLC (when a similar amendment with respect to the Indentures is being
executed) and the assumption by any such successor of the covenants of RSL PLC
therein, (c) to evidence or provide for a successor Book-Entry Depositary, (d)
to make any amendment, change or supplement that does not adversely affect DTC
or Euroclear or Clearstream, as applicable, or any owner of Book-Entry
Interests, (e) to add to the covenants of RSL PLC or the Book-Entry Depositary,
(f) to add a guarantor when a guarantor is made a party to the Indentures
pursuant to the Indentures or (g) to comply with the United States federal and
U.K. securities laws. Except as provided in the Deposit Agreement, no amendment
that adversely affects DTC or Euroclear or Clearstream, as applicable, may be
made to the Deposit Agreement without the consent of DTC or Euroclear or
Clearstream, as applicable, and no amendment that adversely affects the holders
of Book-Entry Interests may be made without the consent of a majority of the
aggregate principal amount of Book-Entry Interests outstanding. Upon the
issuance of Definitive Registered Notes in exchange for Book-Entry Interests
constituting the entire principal amount of notes, the Deposit Agreement will
terminate. The Deposit Agreement may be terminated upon the resignation of the
Book-Entry Depositary if no successor has been appointed within 90 days as set
forth above.
INFORMATION CONCERNING DTC, EUROCLEAR AND CLEARSTREAM
RSL PLC understands as follows with respect to DTC, Euroclear and
Clearstream:
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a
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"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created
to hold securities of its participants and to facilitate the clearance and
settlement of transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC
participants include securities brokers and dealers (including the initial
purchasers), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own DTC. Access to
the DTC book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of an owner of a
Book-Entry Interest to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interest, may be limited by the lack of a definitive certificate for such
interest. The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability to transfer
Book-Entry Interests to such persons may be limited. In addition, beneficial
owners of Book-Entry Interests through the DTC system will receive distributions
attributable to the Global Notes only through DTC participants.
Euroclear and Clearstream hold securities for participating organizations
and facilitate the clearance and settlement of securities transactions between
their respective participants through electronic book-entry changes in accounts
of such participants. Euroclear and Clearstream provide to their participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Euroclear and Clearstream interface with some domestic securities
markets. Euroclear and Clearstream participants are mainly financial
institutions such as underwriters, securities brokers and dealers, banks, trust
companies and certain other organizations. Indirect access to Euroclear or
Clearstream is also available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodian relationship with a
Euroclear or Clearstream participant, either directly or indirectly.
GLOBAL CLEARANCE AND SETTLEMENT UNDER BOOK-ENTRY SYSTEM
Initial Settlement. Investors that own their Book-Entry Interest through
DTC (other than through accounts at Euroclear or Clearstream) will follow the
settlement practices applicable to U.S. corporate debt obligations. The
securities custody accounts of investors will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors that own their Book-Entry Interests through Euroclear or
Clearstream accounts will follow the settlement procedures applicable to
conventional eurobonds in registered form. Book-Entry Interests will be credited
to the securities custody accounts of Euroclear and Clearstream holders on the
business day following the settlement date against payment for value on the
settlement date.
Secondary Market Trading. Secondary market trading activity in such
Book-Entry Interests will settle in same-day funds.
Since the purchasers determine the place of delivery, it is important to
establish at the time of trading of any initial Book-Entry Interests where both
the purchaser's and seller's accounts are located to ensure that settlement can
be made on the desired value date.
OPTIONAL REDEMPTION
The new notes are subject to redemption, at the option of RSL PLC, in whole
or in part, at any time on or after March 1, 2005 and prior to maturity, upon
not less than 30 nor more than 60 days' notice mailed to each holder of notes to
be redeemed at such holder's address appearing in the note register, in
principal amounts of $1,000 or (U)1,000, as the case may be, or an integral
multiple of $1,000 or (U)1,000, at the following redemption prices (expressed as
percentages of the principal amount thereof) plus accrued interest to but
excluding the
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redemption date (subject to the right of holders 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 beginning March 1, of the years indicated:
REDEMPTION
<TABLE>
<CAPTION>
YEAR DOLLAR NOTE REDEMPTION PRICE EURO NOTE REDEMPTION PRICE
- --------------------------------------------------------- ---------------------------- --------------------------
<S> <C> <C>
2005..................................................... 106.438% 106.438%
2006..................................................... 104.292% 104.292%
2007..................................................... 102.146% 102.146%
2008 and thereafter...................................... 100.000% 100.000%
</TABLE>
(ss.ss. 203, 1101, 1105 & 1107)
In addition, at any time prior to March 1, 2003, in the event that RSL COM
receives net cash proceeds from the public or private sale of its Common Stock,
RSL PLC (to the extent it receives such proceeds) may, at its option, apply an
amount equal to any such net cash proceeds or any portion thereof to redeem,
from time to time, new dollar notes or new euro notes in a principal amount of
up to an aggregate amount equal to 33 1/3% of the original aggregate principal
amount of each of the new dollar notes and the new euro notes, as applicable
(including any additional notes issued after the closing date) provided,
however, that at least 66 2/3% of the aggregate original principal amount at
maturity of each of the new dollar notes and the new euro notes, as applicable
(including any additional notes issued after the closing date) remain
outstanding after each redemption. Each redemption must occur on a Redemption
Date within 180 days of the related sale and upon not less than 30 nor more than
60 days' notice mailed to each holder of notes to be redeemed at such holder's
address appearing in the Note Register, in amounts of $1,000 or (U)1,000, as the
case may be, or an integral multiple of $1,000 or (U)1,000 at redemption prices
equal to 112.875% and 112.875% of the principal amount of the dollar and the
euro notes redeemed, respectively, plus accrued interest to but excluding the
Redemption Date.
If less than all the notes are to be redeemed, the Trustee shall select, in
such manner as it shall deem fair and appropriate, the particular notes to be
redeemed or any portion thereof that is an integral multiple of $1,000 or
(U)1,000, as the case may be. (ss.1104)
In the event that (1) the Guarantors or RSL PLC has become or would become
obligated to pay any Additional Amounts (as defined herein) as a result of
(x) certain changes in or affecting withholding tax laws or (y) a Listing
Failure (as defined herein) provided that RSL PLC has used reasonable best
efforts to list and maintain a listing of the notes on a "recognized stock
exchange" (within the meaning of Section 841 of the U.K. Income and Corporation
Taxes Act 1988), and (2) the Guarantors and RSL PLC are unable to avoid the
requirement to pay such Additional Amounts by taking reasonable measures
available to them (including, without limitation, the Guarantors making payments
directly to holders under the notes guarantees, unless such payment is likely to
result in adverse consequences to RSL PLC or the Guarantors), then RSL PLC may
redeem all, but not less than all, of the dollar notes or the euro notes or
both, as applicable at any time, at 100% of the principal amount thereof on the
redemption date, together with accrued interest thereon, if any, to but
excluding the redemption date.
Prior to the publication of the notice of redemption in accordance with the
foregoing, RSL PLC shall deliver to the Trustee an officer's certificate stating
that RSL PLC is entitled to effect such redemption based on a written opinion of
independent tax counsel or accounting firm reasonably satisfactory to the
Trustee. See the heading "Additional Amounts."
The new notes do not have the benefit of any sinking fund.
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<PAGE>
COVENANTS
Each Indenture contains, among others, the following covenants:
LIMITATION ON CONSOLIDATED DEBT
RSL COM may not, and may not permit any Restricted Subsidiary to, incur any
Debt unless the ratio of (a) the aggregate consolidated principal amount of Debt
(which is defined in the Indentures to include the accreted value of any Debt
issued at a discount) of RSL COM outstanding as of the most recent available
quarterly or annual balance sheet, after giving pro forma effect to the
Incurrence of such Debt and any other Debt Incurred since such balance sheet
date and the receipt and application of the proceeds thereof, to (b) four (4)
times the Consolidated Cash Flow Available for Fixed Charges for the most recent
fiscal quarter next preceding the Incurrence of such Debt for which consolidated
financial statements are available, determined on a pro forma basis as if any
such Debt had been Incurred and the proceeds thereof had been applied at the
beginning of such recent fiscal quarter, would be less than 7.0 to 1.0 for such
period.
Notwithstanding the foregoing limitation, RSL COM and any Restricted
Subsidiary may Incur the following:
(1) Debt under Credit Facilities in an aggregate principal amount at
any one time not to exceed $200 million, and any renewal, extension,
refinancing or refunding thereof in an amount which, together with any
principal amount remaining outstanding under all Credit Facilities, does
not exceed the aggregate principal amount outstanding under all Credit
Facilities immediately prior to such renewal, extension, refinancing or
refunding;
(2) Debt owed by RSL COM to any Restricted Subsidiary or Debt owed by
a Restricted Subsidiary to RSL COM or a Restricted Subsidiary; provided,
however, that upon either (x) the transfer or other disposition by such
Restricted Subsidiary or RSL COM of any Debt so permitted to a Person other
than RSL COM or another Restricted Subsidiary or (y) such Restricted
Subsidiary ceasing to be a Restricted Subsidiary, the provisions of this
clause (2) shall no longer be applicable to such Debt and such Debt shall
be deemed to have been Incurred at the time of such transfer or other
disposition;
(3) Debt Incurred to renew, extend, refinance or refund (each, a
"refinancing") (x) Debt outstanding at the date of the Indentures or
(y) Incurred pursuant to the first paragraph of this "Limitation on
Consolidated Debt," or clause (6) or (8) of this paragraph or (z) the notes
originally issued on the date of the Indentures or notes exchanged
therefore, in each case, in an aggregate principal amount not to exceed the
aggregate principal amount of and accrued interest on the Debt so
refinanced plus the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the Debt so refinanced or
the amount of any premium reasonably determined by RSL COM as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of RSL COM or the Restricted
Subsidiary effecting such refinancing incurred in connection with such
refinancing; provided, however, that Debt the proceeds of which are used to
refinance the new notes or Debt which is equal in right of payment to the
new notes and the new notes guarantees or Debt which is subordinate in
right of payment to the new notes and the new notes guarantees, shall only
be permitted if (A) in the case of any refinancing of the new notes or Debt
which is equal in right of payment to the new notes and the new notes
guarantees, the refinancing Debt is made equal in right of payment or
subordinated to the new notes and the new notes guarantees and, in the case
of any refinancing of Subordinated Debt, the refinancing Debt constitutes
Subordinated Debt and (B) in any case, the refinancing Debt by its terms,
or by the terms of any agreement or instrument pursuant to which such Debt
is issued, does not have a final stated maturity prior to the final stated
maturity of the Debt being refinanced, and the Average Life of such new
Debt is at least equal to the remaining Average Life of the Debt being
refinanced (assuming that such Debt being refinanced had a final stated
maturity three months later than its actual final stated maturity);
(4) Debt in an aggregate principal amount not in excess of (A) two
(2) times the aggregate amount of RSL COM's Incremental Paid-in Capital
minus (B) $165 million;
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(5) Debt in an aggregate principal amount not in excess of 80% of the
aggregate amount of accounts receivable set forth on the most recent
unaudited quarterly or audited annual financial statements of RSL COM and
its consolidated subsidiaries filed with the Commission;
(6) Purchase Money Debt, which is incurred for the construction,
acquisition or improvement of Telecommunications Assets, provided that the
amount of such Purchase Money Debt does not exceed the cost of the
construction, acquisition or improvement of the applicable
Telecommunications Assets;
(7) Debt consisting of Permitted Interest Rate and Currency Protection
Agreements; and
(8) Debt not otherwise permitted to be Incurred pursuant to clauses
(1) through (7) above, which, together with any other outstanding Debt
Incurred pursuant to this clause (8), has an aggregate principal amount not
in excess of $50 million at any time outstanding.
For purposes of determining compliance with this "Limitation on
Consolidated Debt" covenant, with respect to any item of Debt (x) in the event
that an item of Debt meets the criteria of more than one of the types of Debt
RSL COM or a Restricted Subsidiary is permitted to Incur pursuant to the
foregoing clauses (1) through (8), RSL COM shall have the right, in its sole
discretion, to classify such item of Debt and shall only be required to include
the amount and type of such Debt under the clause permitting the Debt as so
classified and (y) any other obligation of the obligor on such Debt (or of any
other Person who could have Incurred such Debt under this covenant) arising
under any Guarantee, Lien or letter of credit supporting such Debt shall be
disregarded to the extent that such Guarantee, Lien or letter of credit secures
the principal amount of such Debt.
For purposes of determining compliance with the foregoing restriction on
the Incurrence of Debt with respect to Debt denominated in a foreign currency,
the dollar-equivalent principal amount of such foreign-currency-denominated Debt
shall be calculated based on the relevant currency exchange rate in effect on
the date that such foreign-currency-denominated Debt was Incurred, in the case
of term debt, or first committed, in the case of revolving credit debt, provided
that (x) the dollar-equivalent principal amount of any such Debt outstanding on
the Closing Date shall be calculated based on the relevant currency exchange
rate in effect on the Closing Date and (y) if such Debt is Incurred to refinance
other Debt denominated in a foreign currency, and such refinancing would cause
the applicable dollar-denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such refinancing,
such dollar-denominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Debt does not exceed the
principal amount of such Debt being refinanced. The principal amount of any Debt
Incurred to refinance other Debt, if Incurred in a different currency from the
Debt being refinanced, shall be calculated based on the currency exchange rate
applicable to the currencies in which such respective Debt is denominated that
is in effect on the date of such refinancing.
LIMITATION ON RESTRICTED PAYMENTS
RSL COM:
(A) may not, and will not permit any Restricted Subsidiary, directly
or indirectly, to declare or pay any dividend, or make any distribution, in
respect of its Capital Stock or to the holders thereof, excluding (x) any
dividends or distributions payable solely in shares of its Capital Stock
(other than Disqualified Stock) or in options, warrants or other rights to
acquire its Capital Stock (other than Disqualified Stock), (y) any
dividends paid to RSL COM or a Restricted Subsidiary or (z) pro rata
dividends paid on shares of Common Stock of Restricted Subsidiaries;
(B) may not, and may not permit any Restricted Subsidiary to,
purchase, redeem, or otherwise retire or acquire for value (x) any Capital
Stock of RSL COM or any Related Person of RSL COM (other than a permitted
refinancing) or (y) any options, warrants or rights to purchase or acquire
shares of Capital Stock of RSL COM or any Related Person of RSL COM or any
securities convertible or exchangeable into shares of Capital Stock of RSL
COM or any Related Person of RSL COM (other than a permitted refinancing);
(C) may not make, or permit any Restricted Subsidiary to make, any
Investment, except for Permitted Investments; and
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<PAGE>
(D) may not, and may not permit any Restricted Subsidiary to, redeem,
defease, repurchase, retire or otherwise acquire or retire for value, prior
to any scheduled maturity, repayment or sinking fund payment, Debt of the
Guarantors or RSL PLC which is subordinate in right of payment to the notes
or the notes guarantees (each of clauses (A) through (D) being a
"Restricted Payment")
if:
(1) an Event of Default, or an event that with the passing of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and be continuing; or
(2) except with respect to Investments, upon giving effect to such
Restricted Payment, RSL COM could not Incur at least $1.00 of additional
Debt pursuant to the terms of the Indentures described in the first
paragraph of "Limitation on Consolidated Debt" above; or
(3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from the date of the Indentures exceeds the sum of:
(a) (x) Consolidated Cash Flow Available for Fixed Charges since
the end of the last full fiscal quarter prior to the date of the
Indentures through the last day of the last full fiscal quarter ending
immediately preceding the date of such Restricted Payment (the
"Calculation Period") minus (y) 1.5 times Consolidated Interest Expense
for the Calculation Period plus
(b) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments) in any Person resulting from
payments of interest on Debt, dividends, repayments of loans or
advances, or other transfers of assets, in each case to RSL COM or any
Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such payment or
proceeds are included in the calculation of Consolidated Cash Flow
Available for Fixed Charges for the Calculation Period, or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"),
not to exceed, in each case, the amount of Investments previously made
by RSL COM or any Restricted Subsidiary in such Person or Unrestricted
Subsidiary plus
(c) an amount equal to the aggregate net proceeds received after
the date of the Indentures, including the fair market value of property
other than cash (determined in good faith by the Board of Directors as
evidenced by a resolution of the Board of Directors filed with the
Trustee), as capital contributions to RSL COM or from the issuance
(other than to a Subsidiary) of Capital Stock (other than Disqualified
Stock) of RSL COM and warrants, rights or options on Capital Stock
(other than Disqualified Stock) of RSL COM and the principal amount of
Debt of RSL COM or any Restricted Subsidiary that has been converted
into Capital Stock (other than Disqualified Stock and other than by a
Subsidiary) of RSL COM after the date of the Indentures plus
(d) $30 million.
Notwithstanding the foregoing:
(1) RSL COM may pay any dividend on Capital Stock of any class of RSL
COM within 60 days after the declaration thereof if, on the date when the
dividend was declared, RSL COM could have paid such dividend in accordance
with the foregoing provisions;
(2) RSL COM may make acquisitions of a minority equity interest in
entities engaged in the Telecommunications Business; provided that
(a) the acquisition of a majority equity interest in such entities
is not then permitted or practicable under applicable law without
regulatory consent or change of law,
(b) the Board of Directors of RSL COM determines in good faith that
there is a substantial probability that such approval or change of law
will be obtained,
(c) RSL COM or one of its Restricted Subsidiaries has the right to
acquire Capital Stock representing a majority of the voting power of the
Voting Stock of such entity upon receipt of
39
<PAGE>
regulatory consent or change of law and does acquire such Voting Stock
reasonably promptly upon receipt of such consent or change of law, and
(d) in the event that such consent or change of law has not been
obtained within 18 months of funding such Investment, RSL COM or one of
its Restricted Subsidiaries has the right to sell such minority equity
interest to the Person from whom it acquired such interest, for
consideration consisting of the consideration originally paid by RSL COM
and its Restricted Subsidiaries for such minority equity interest;
(3) RSL COM may repurchase any shares of its Common Stock or options
to acquire its Common Stock from Persons who were formerly directors,
officers or employees of RSL COM or any of its Subsidiaries, provided that
the aggregate amount of all such repurchases made pursuant to this clause
(3) shall not exceed $6 million, plus the aggregate cash proceeds received
by RSL COM since the date of the Indentures from issuances of its Common
Stock or options to acquire its Common Stock to directors, officers and
employees of RSL COM or any of its Restricted Subsidiaries;
(4) RSL COM or a Restricted Subsidiary may redeem, defease,
repurchase, retire or otherwise acquire or retire for value Debt of the
Guarantors or RSL PLC which is subordinated in right of payment to the
notes or the notes guarantees, as the case may be, in exchange for, or out
of the proceeds of a substantially concurrent sale (other than to a
Subsidiary) of, Capital Stock (other than Disqualified Stock of RSL COM) or
in a refinancing that satisfies the requirements of clause (3) of the
second paragraph under "Limitation on Consolidated Debt";
(5) RSL COM and its Restricted Subsidiaries may retire or repurchase
any Capital Stock of RSL COM or of any Subsidiary of RSL COM in exchange
for, or out of the proceeds of the substantially concurrent sale (other
than to a Subsidiary of RSL COM) of, Capital Stock (other than Disqualified
Stock) of RSL COM or such Restricted Subsidiary; and
(6) RSL COM or a Restricted Subsidiary may make payments or
distributions to dissenting stockholders pursuant to applicable law or
pursuant to or in connection with a transaction governed by the provisions
described below under "Mergers, Consolidations and Certain Sales of
Assets," provided that the number of shares as to which dissent or
appraisal rights are exercised and such payments or distributions are being
made does not exceed 1% of the total number of shares of all classes for
which such rights are exercisable.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
RSL COM may not, and may not permit any Restricted Subsidiary to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary:
(1) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock owned by RSL COM or any
Restricted Subsidiary or pay any Debt or other obligation owed to RSL COM
or any Restricted Subsidiary;
(2) to make loans or advances to RSL COM or any Restricted Subsidiary;
or
(3) to transfer any of its property or assets to RSL COM or any
Restricted Subsidiary.
Notwithstanding the foregoing, RSL COM may, and may permit any Restricted
Subsidiary to, suffer to exist any such encumbrance or restriction:
(a) pursuant to any agreement in effect on the date of the Indentures;
(b) pursuant to an agreement relating to any Acquired Debt, which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person so acquired and
was not Incurred in anticipation of such Person being acquired;
(c) pursuant to an agreement effecting a renewal, refunding or
extension of Debt Incurred pursuant to an agreement referred to in clause
(a) or (b) above, provided, however, that the provisions contained in such
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<PAGE>
renewal, refunding or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the
provisions contained in the agreement the subject thereof;
(d) in the case of clause (3) above, contained in any security
agreement (including a Capital Lease Obligation) securing Debt of RSL COM
or a Restricted Subsidiary otherwise permitted under the Indentures, but
only to the extent such restrictions restrict the transfer of the property
subject to such security agreement;
(e) in the case of clause (3) above, with respect to customary
nonassignment provisions entered into in the ordinary course of business in
leases and other agreements;
(f) with respect to a Restricted Subsidiary imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted
Subsidiary, provided that
(x) the consummation of such transaction would not result in an
Event of Default or an event that, with the passing of time or the
giving of notice or both, would constitute an Event of Default,
(y) such restriction terminates if such transaction is not
consummated and
(z) the consummation or abandonment of such transaction occurs
within one year of the date such agreement was entered into;
(g) pursuant to applicable law or required by any regulatory authority
having jurisdiction over RSL COM or any Restricted Subsidiary;
(h) pursuant to the Indentures and the new notes;
(i) constituting a Lien otherwise permitted pursuant to "Limitations
on Liens"; and
(j) other encumbrances or restrictions that are not materially more
restrictive than customary provisions in comparable financings provided
that RSL PLC and the Guarantors provide an Officer's Certificate to the
Trustee to the effect that in the opinion of the signers of such
certificate such encumbrances or restrictions will not materially impact
RSL PLC's and Guarantors' ability to make scheduled payments of interest
and principal under the notes.
LIMITATION ON ISSUANCE OF GUARANTEES OF DEBT BY RESTRICTED SUBSIDIARIES
RSL COM will not permit any Restricted Subsidiary, directly or indirectly,
to incur any Guarantee of any Debt of the Guarantors or RSL PLC (other than the
notes) unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture providing for a Guarantee by such Subsidiary of the new
notes; any Subsidiary Guarantee by such Subsidiary of the new notes (x) will be
senior in right of payment to any Guarantee of Subordinated Debt of the
Guarantors or RSL PLC and (y) will be equal with or senior to any Guarantee of
any other Debt of the Guarantors or RSL PLC.
Notwithstanding the foregoing, any Subsidiary Guarantee may provide by its
terms that it shall be automatically and unconditionally released and discharged
upon:
(1) any sale, exchange or transfer, to any Person not an Affiliate of
RSL COM, of all of RSL COM'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 the Indentures); or
(2) 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.
LIMITATION ON LIENS
RSL COM may not, and may not permit any Restricted Subsidiary to, Incur or
suffer to exist any Lien on or with respect to any property or assets now owned
or hereafter acquired to secure any Debt without making, or causing such
Restricted Subsidiary to make, effective provision for securing the notes (x)
equally and ratably with such Debt as to such property for so long as such Debt
will be so secured or (y) in the event such Debt is
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Debt of either Guarantor which is subordinate in right of payment to the notes,
prior to such Debt as to such property for so long as such Debt will be so
secured.
The foregoing restrictions shall not apply to:
(1) Liens existing on the date of the Indentures and securing Debt
outstanding on the date of the Indentures;
(2) Liens securing Debt outstanding or available under all Credit
Facilities to the extent such Debt is permitted under clause (i) of the
"Limitation in Consolidated Debt";
(3) Liens in favor of RSL COM or any Restricted Subsidiary;
(4) Liens on real or personal property of RSL COM or a Restricted
Subsidiary acquired, constructed or constituting improvements made after
the date of original issuance of the notes to secure Purchase Money Debt
which is Incurred for the construction, acquisition and improvement of
Telecommunications Assets and is otherwise permitted under the Indentures,
provided, however, that
(a) the principal amount of any Debt secured by such a Lien does
not exceed 100% of such purchase price or cost of construction or
improvement of the property subject to such Liens,
(b) such Lien attaches to such property prior to, at the time of or
within 180 days after the acquisition, completion of construction or
commencement of operation of such property and
(c) such Lien does not extend to or cover any property other than
the specific item of property (or portion thereof) acquired, constructed
or constituting the improvements made with the proceeds of such Purchase
Money Debt;
(5) Liens to secure Acquired Debt, provided, however, that
(a) such Lien attaches to the acquired asset prior to the time of
the acquisition of such asset and
(b) such Lien does not extend to or cover any other asset;
(6) Liens to secure Debt Incurred to extend, renew, refinance or
refund (or successive extensions, renewals, refinancings or refundings), in
whole or in part, Debt secured by any Lien referred to in the foregoing
clauses (1), (2), (4) and (5) so long as the principal amount of Debt so
secured is not increased except as otherwise permitted under clause (3) of
"--Limitation on Consolidated Debt" and, in the case of Liens to secure
Debt incurred to extend, renew, refinance or refund Debt secured by a Lien
referred to in the foregoing clause (1), (4) or (5), such Liens do not
extend to any other property; and
(7) Permitted Liens.
LIMITATION ON ASSET DISPOSITIONS
RSL COM may not, and may not permit any Restricted Subsidiary to, make any
Asset Disposition in one or more related transactions unless:
(1) RSL COM or the Restricted Subsidiary, as the case may be, receives
consideration for such disposition at least equal to the fair market value
for the assets sold or disposed of as determined by the Board of Directors
in good faith and, in the case of an Asset Disposition in an amount greater
than $5 million, evidenced by a resolution of the Board of Directors filed
with the Trustee; and
(2) at least 75% of the consideration for such disposition consists
of:
(a) cash or readily marketable cash equivalents or the assumption
of Debt of the Guarantors or RSL PLC (other than Debt that is
subordinated to the new notes and the new notes guarantees) or of a
Restricted Subsidiary and release from all liability on the Debt
assumed; or
(b) Telecommunications Assets.
However, none of the provisions of this "Limitation on Asset Dispositions"
shall apply to the issuance or sale of capital stock of (x) deltathree.com,
(y) RSL COM Australia Holdings Pty. Limited or a newly-formed
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parent or subsidiary thereof organized under the laws of Australia ("RSL
Australia") or (z) RSL Communications Spain S.A. or a newly-formed parent or
subsidiary thereof organized under the laws of Spain ("RSL Spain"), in each
case, made in compliance with clause (5) of "Limitation on Issuance and Sales of
Capital Stock of Restricted Securities" below.
In the event and to the extent that the Net Available Proceeds received by
RSL COM or any of its Restricted Subsidiaries from one or more Asset
Dispositions occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Consolidated Tangible Assets (determined as of
the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of RSL COM and its subsidiaries have been filed with
the Commission), then RSL COM or RSL PLC shall or shall cause the relevant
Restricted Subsidiary to:
(1) within twelve months after the date Net Available Proceeds so
received exceed 10% of Consolidated Tangible Assets:
(a) apply an amount equal to such excess Net Available Proceeds to
permanently repay unsubordinated Debt of RSL COM or any Restricted
Subsidiary providing a Subsidiary Guarantee pursuant to the "Limitation
on Issuances of Guarantees by Restricted Subsidiaries" covenant or Debt
of any other Restricted Subsidiary, in each case owing to a Person other
than RSL COM 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 twelve months after the date of such agreement), in
Telecommunications Assets; and
(2) apply (no later than the end of the twelve-month period referred
to in clause (1)) such excess Net Available Proceeds (to the extent not
applied pursuant to clause (1)) as provided in the following paragraph of
this "Limitation on Asset Dispositions" covenant.
The amount of such excess Net Available Proceeds required to be applied (or
to be committed to be applied) during such twelve-month period as set forth in
clause (1) 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
"Limitation on Asset Dispositions" covenant totals at least $10 million, RSL PLC
shall repay any Debt of RSL COM or any Restricted Subsidiary to the extent the
terms of such Debt require repayment prior to an Offer to Purchase being made
hereunder (including by way of an offer to purchase to the holders of such Debt,
if so required). To the extent there are Excess Proceeds after such repayment
(or offer to purchase), RSL PLC must commence, not later than the fifteenth
Business Day of such month (or if later, the fifteenth Business Day after the
expiration of any such required offer to purchase), and consummate an Offer to
Purchase from the holders of the new notes on a pro rata basis an aggregate
principal amount of such new notes on the relevant Payment Date equal to the
Excess Proceeds on such date not applied or to be applied pursuant to the first
sentence of this paragraph, at a purchase price equal to 100% of the principal
amount of the new notes, plus, in each case, accrued interest (if any) to but
excluding the Payment Date and, to the extent required by the terms thereof, any
other Debt of RSL COM that is equal with the new notes at a price no greater
than 100% of the principal amount (or 100% of the accreted value in the case of
original issue discount Debt) thereof plus accrued interest to but excluding the
date of purchase. To the extent there are any remaining Excess Proceeds
following the completion of the Offer to Purchase, RSL PLC must repay such other
Debt of RSL COM or Debt of a Restricted Subsidiary, to the extent permitted
under the terms thereof and, to the extent there are any remaining Excess
Proceeds after such repayment, RSL PLC shall apply such amount to any other use
as determined by RSL PLC which is not otherwise prohibited by the Indentures.
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LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
RSL COM may not, and may not permit any Restricted Subsidiary to, issue,
transfer, convey, sell or otherwise dispose of any shares of Capital Stock of a
Restricted Subsidiary or securities convertible or exchangeable into, or
options, warrants, rights or any other interest with respect to, Capital Stock
of a Restricted Subsidiary to any Person other than RSL COM or a Wholly-Owned
Restricted Subsidiary except:
(1) a sale of all of the Capital Stock of such Restricted Subsidiary
owned by RSL COM and any Restricted Subsidiary that complies with the
provisions described under "Limitation on Asset Dispositions" above to the
extent such provisions apply;
(2) if required, the issuance, transfer, conveyance, sale or other
disposition of directors' qualifying shares;
(3) Disqualified Stock issued in exchange for, or upon conversion of,
or the proceeds of the issuance of which are used to redeem, refinance,
replace or refund shares of Disqualified Stock of such Restricted
Subsidiary, provided that the amounts of the redemption obligations of such
Disqualified Stock shall not exceed the amounts of the redemption
obligations of, and such Disqualified Stock shall have redemption
obligations no earlier than those required by, the Disqualified Stock being
exchanged, converted, redeemed, refinanced, replaced or refunded;
(4) issuances of not more than 49% of the Voting Stock and equity
interest in a Restricted Subsidiary engaged in the Telecommunications
Business:
(a) in connection with the acquisition of such Restricted
Subsidiary or of Telecommunications Assets acquired or to be acquired by
RSL COM or a Restricted Subsidiary; or
(b) to a Strategic Investor, provided that RSL COM complies with
the provisions described under "Limitation on Asset Dispositions" above
to the extent such provisions apply; and
(5) issuances or sales of capital stock of each of deltathree.com, RSL
Australia and RSL Spain, including pursuant to stock option plans or other
equity compensation and incentive plans established for each of their
respective employees, directors and consultants, so long as immediately
after giving effect to such issuances and sales, RSL PLC of such capital
stock is a Restricted Subsidiary.
LIMITATION ON TRANSACTIONS WITH AFFILIATES AND RELATED PERSONS
RSL COM 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 Related Person or with any Affiliate
of RSL COM or any Restricted Subsidiary, except upon fair and reasonable terms
no less favorable to RSL COM 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 a
Related Person or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions:
(a) approved by a majority of the disinterested members of the
Board of Directors; or
(b) for which RSL COM or a Restricted Subsidiary delivers to the
Trustee a written opinion of a nationally recognized investment banking
firm (or a subsidiary or affiliate thereof) in the United States stating
that the transaction is fair to RSL COM or such Restricted Subsidiary
from a financial point of view;
(2) any transaction solely between RSL COM and any of its Wholly-Owned
Restricted Subsidiaries or solely between Wholly-Owned Restricted
Subsidiaries; and
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(3) any payments or other transactions pursuant to any tax-sharing
agreement between RSL COM and any other Person with which RSL COM files a
consolidated tax return or with which RSL COM is part of a consolidated
group for tax purposes.
Notwithstanding the foregoing, any transaction covered by the first
paragraph of this "Limitation on Transactions with Affiliates and Related
Persons" covenant and not covered by clauses (2) through (3) of this paragraph
must be approved or determined to be fair in the manner provided for in clause
(1) above, unless the aggregate amount of such transaction is less than $5
million in value.
CHANGE OF CONTROL
Unless RSL PLC has theretofore exercised its right to redeem all of the new
notes in accordance with the Indentures, within 30 days of the occurrence of a
Change of Control, RSL PLC will be required to make an Offer to Purchase all
outstanding new notes at a purchase price equal to 101% of their principal
amount plus accrued interest to but excluding the date of purchase. A "Change of
Control" will be deemed to have occurred at such time as either:
(1) 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 more than 35% of the total
voting power of the Voting Stock of RSL COM on a fully diluted basis and
such ownership is greater than the amount of voting power of the Voting
Stock of RSL COM, on a fully diluted basis, held by the Existing
Stockholders and their Affiliates on such date;
(2) individuals who on the Closing Date constitute the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the Guarantor's stockholders
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 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 then in office; or
(3) all of the Common Stock of RSL PLC is not beneficially owned by
RSL COM (other than directors' qualifying shares). (ss.1017)
In the event that RSL PLC makes an Offer to Purchase the notes, RSL PLC and
the Guarantors intend to comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act.
REPORTS
The Guarantors and RSL PLC have agreed that, for so long as any new notes
remain outstanding, each will furnish to the holders of the new notes and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. In addition, the Guarantors and RSL PLC will file with the
Trustee within 15 days after it files them with the Commission copies of the
annual and quarterly reports and the information, documents, and other reports
that either Guarantor or RSL PLC is required to file with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act ("Commission Reports").
In the event either Guarantor or RSL PLC shall cease to be required to file
Commission Reports pursuant to the Exchange Act, the Guarantors and RSL PLC will
nevertheless continue to file such reports with the Commission (unless the
Commission will not accept such a filing) and the Trustee. The Guarantors and
RSL PLC will furnish copies of the Commission Reports to the holders of notes at
the time the Guarantors or RSL PLC is required to file the same with the Trustee
and will make such information available to investors who request it in writing.
(ss. 1018)
MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
Neither RSL COM, RSL PLC nor, so long as its notes guarantees have not been
released as provided below under "Description of New Notes Guarantees," RSL USA
may, in a single transaction or a series of related transactions, (except, in
the case of RSL USA, in any transaction or series of related transactions as a
result of which RSL USA's notes guarantees will be released) (a) consolidate
with or merge into any other Person or
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permit any other Person to consolidate with or merge into either Guarantor or
RSL PLC, or (b) directly or indirectly, transfer, sell, lease or otherwise
dispose of all or substantially all of its assets to any other Person, unless:
(1) in a transaction in which either Guarantor or RSL PLC, as
applicable does not survive or in which either Guarantor or RSL PLC sells,
leases or otherwise disposes of all or substantially all of its assets to
any other Person (other than, in any such case, either Guarantor or RSL
PLC), the successor entity to such Guarantor or RSL PLC is organized under
the laws of Bermuda, the United Kingdom, the United States of America or
any State thereof or the District of Columbia, the British Virgin Islands,
Cayman Islands, The Netherlands, Ireland or Jersey and shall expressly
assume, by a supplemental indenture executed and delivered to the Trustee
in form satisfactory to the Trustee, all of such Guarantor's or RSL PLC's
obligations under the Indentures;
(2) immediately before and after giving effect to such transaction and
treating any Debt which becomes an obligation of the Guarantors or a
Subsidiary as a result of such transaction as having been Incurred by the
Guarantors or such Subsidiary at the time of the transaction, no Event of
Default or event that with the passing of time or the giving of notice, or
both, would constitute an Event of Default shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction, the
Consolidated Net Worth of RSL COM (or other successor entity to RSL COM) is
equal to or greater than that of RSL COM immediately prior to the
transaction;
(4) if, as a result of any such transaction, property or assets of RSL
COM or any Subsidiary would become subject to a Lien prohibited by the
provisions of the Indentures described under "Limitation on Liens" above,
RSL COM or the successor entity to RSL COM shall have secured the notes as
required by said covenant;
(5) in the event that the continuing Person is incorporated in a
jurisdiction other than the United States or the jurisdiction in which such
Person was incorporated immediately prior to such transaction:
(a) RSL PLC delivers to the Trustee an Opinion of Counsel stating
that the obligations of the continuing Person under the Indentures are
enforceable under the laws of the new jurisdiction of its incorporation
to the same extent as the obligations of RSL PLC or such Guarantor, as
the case may be, under the Indentures immediately prior to such
transaction;
(b) the continuing Person agrees in writing to submit to
jurisdiction and appoints an agent for the service of process, each
under terms substantially similar to the terms contained in the
Indentures with respect to RSL PLC or such Guarantor, as the case may
be;
(c) the continuing Person agrees in writing to pay "Additional
Amounts" as provided under the Indentures with respect to RSL PLC or
such Guarantor, as the case may be, except that such "Additional
Amounts" shall relate to any withholding tax whatsoever regardless of
any change of law (subject to exceptions substantially similar to those
contained in the Indentures and described under the heading "Additional
Amounts");
(d) the Board of Directors of such Guarantor determines in good
faith that such transaction will have no material adverse effect on any
holder of the new notes and a Board Resolution to that effect is
delivered to the Trustee; and
(e) the principal purpose of the continuing Person being
incorporated in such jurisdiction is to obtain tax benefits for such
Guarantor, RSL PLC, their direct and indirect stockholders or the
holders of the new notes; and
(6) certain other conditions are met.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indentures. Reference is made to the Indentures for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (ss.ss. 101)
"Acquired Debt" means, with respect to any specified Person:
(1) Debt of any other Person (x) existing at the time such Person
merges with or into or consolidates with or becomes a Subsidiary of such
specified Person or (y) that is assumed by the specified Person as part of
the acquisition by the specified Person from such other Person of property
and assets that constitute substantially all of a division or line of
business of such other Person; and
(2) Debt secured by a Lien encumbering any asset acquired by such
specified Person, which Debt was not Incurred in anticipation of, and was
outstanding prior to, such merger, consolidation or acquisition.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Subsidiaries (including
a consolidation or merger or other sale of any such Subsidiary with, into or to
another Person in a transaction in which such Subsidiary ceases to be a
Subsidiary of the specified Person, but excluding (x) a disposition by a
Subsidiary of such Person to such Person or a Wholly-Owned Subsidiary of such
Person or by such Person to a Wholly-Owned Subsidiary of such Person or by a
Restricted Subsidiary to RSL COM or a Restricted Subsidiary or by RSL COM to a
Restricted Subsidiary and (y) any transaction that is governed by the provisions
described above under "Mergers, Consolidations and Certain Sales of Assets") of:
(1) shares of Capital Stock or other ownership interests of a
Subsidiary of such Person,
(2) substantially all of the assets of such Person or any of its
Subsidiaries representing a division or line of business (other than as
part of a Permitted Investment) or
(3) other assets or rights of such Person or any of its Subsidiaries
outside of the ordinary course of business;
provided in the case of each of the preceding clauses (1), (2) and (3), that the
aggregate consideration for such transfer, conveyance, sale, lease or other
disposition is equal to $2.0 million or more in any 12-month period.
"Average Life" means, at any date of determination with respect to any
Debt, the quotient obtained by dividing (1) 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 and (b) the amount of such principal
payment by (2) the sum of all such principal payments.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with generally accepted accounting
principles (a "Capital Lease"). The stated maturity of such obligation shall be
the date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty. The principal amount of such obligation shall be
the capitalized amount thereof that would appear on the face of a balance sheet
of such Person in accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
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"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" for any period means
the Consolidated Net Income of RSL COM and its Restricted Subsidiaries for such
period increased by the sum of:
(1) Consolidated Interest Expense of RSL COM and its Restricted
Subsidiaries for such period, plus
(2) Consolidated Income Tax Expense of RSL COM and its Restricted
Subsidiaries for such period, plus
(3) the consolidated depreciation and amortization expense included in
the income statement of RSL COM and its Restricted Subsidiaries for such
period, plus
(4) any non-cash expense related to the issuance to employees of RSL
COM or any Restricted Subsidiary of RSL COM of options to purchase Capital
Stock of RSL COM or such Restricted Subsidiary, plus
(5) any charge related to any premium or penalty paid in connection
with redeeming or retiring any Debt prior to its stated maturity;
provided, however, that there shall be excluded therefrom the Consolidated Cash
Flow Available for Fixed Charges (if positive) of any Restricted Subsidiary of
RSL COM (calculated separately for such Restricted Subsidiary in the same manner
as provided above for RSL COM) that is subject to a restriction which prevents
the payment of dividends or the making of distributions to RSL COM or another
Restricted Subsidiary RSL COM to the extent of such restriction.
"Consolidated Income Tax Expense" for any period means the aggregate
amounts of the provisions for income taxes of RSL COM and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the interest expense
included in a consolidated income statement (excluding interest income) of RSL
COM and its Restricted Subsidiaries for such period in accordance with generally
accepted accounting principles, including without limitation or duplication (or,
to the extent not so included, with the addition of):
(1) the amortization of Debt discounts;
(2) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities;
(3) fees with respect to interest rate swap or similar agreements or
foreign currency hedge, exchange or similar agreements;
(4) Preferred Stock dividends of RSL COM and its Restricted
Subsidiaries (other than dividends paid in shares of Preferred Stock that
is not Disqualified Stock) declared and paid or payable;
(5) accrued Disqualified Stock dividends of RSL COM and its Restricted
Subsidiaries, whether or not declared or paid;
(6) interest on Debt guaranteed by RSL COM and its Restricted
Subsidiaries (but only to the extent such interest is actually paid by RSL
COM or a Restricted Subsidiary); and
(7) the portion of any Capital Lease Obligation paid during such
period that is allocable to interest expense;
excluding, however, any premiums, fees and expenses (and any amortization
thereof) payable in connection with the offerings of the new notes, all of the
foregoing as determined on a consolidated basis (without taking into account
Unrestricted Subsidiaries) in conformity with generally accepted accounting
principles.
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"Consolidated Net Income" for any period means the net income (or loss) of
RSL COM and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom:
(1) the net income (or loss) of any Person acquired by RSL COM or a
Restricted Subsidiary in a pooling-of-interests transaction for any period
prior to the date of such transaction,
(2) the net income (or loss) of any Person that is not a Restricted
Subsidiary except to the extent of the amount of dividends or other
distributions actually paid to RSL COM or a Restricted Subsidiary by such
Person during such period,
(3) gains or losses on Asset Dispositions by RSL COM or its Restricted
Subsidiaries,
(4) all extraordinary gains and extraordinary losses, determined in
accordance with generally accepted accounting principles,
(5) the cumulative effect of changes in accounting principles,
(6) non-cash gains or losses resulting from fluctuations in currency
exchange rates and
(7) the tax effect of any of the items described in clauses
(1) through (6) above.
"Consolidated Net Worth" of any Person means the stockholders' equity of
such Person, determined on a consolidated basis in accordance with generally
accepted accounting principles, less amounts attributable to Disqualified Stock
of such Person.
"Consolidated Tangible Assets" of any Person means the total amount of
assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting principles would be included on a
consolidated balance sheet of such Person and its Subsidiaries after deducting
therefrom all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each case under
generally accepted accounting principles would be included on such consolidated
balance sheet.
"Credit Facility" means credit agreements, vendor financings or other
facilities or arrangements made available from time to time to RSL COM and its
Restricted Subsidiaries by banks, other financial institutions and/or equipment
manufacturers for the Incurrence of Debt, including the private or public
issuance of debt securities or the provision of letters of credit and any
related notes, Guarantees, collateral documents, instruments and agreements
executed in connection therewith, as the same may be amended, supplemented,
modified or restated from time to time.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, the amount of:
(1) every obligation of such Person for money borrowed,
(2) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations Incurred in
connection with the acquisition of property, assets or businesses,
(3) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(4) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business which are not overdue or which
are being contested in good faith),
(5) every Capital Lease Obligation of such Person,
(6) all Receivables Sales of such Person, together with any obligation
of such Person to pay any discount, interest, fees, indemnities, penalties,
recourse, expenses or other amounts in connection therewith,
(7) all obligations to redeem Disqualified Stock issued by such
Person,
(8) every obligation under Interest Rate and Currency Protection
Agreements of such Person and
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(9) every obligation of the type referred to in clauses (1) through
(8) of another Person and all dividends of another Person the payment of
which, in either case, such Person has Guaranteed to the extent the same is
Guaranteed by such Person.
The "amount" or "principal amount" of Debt at any time of determination as
used herein represented by:
(a) any Debt issued at a price that is less than the principal amount
at maturity thereof, shall be the amount of the liability in respect
thereof determined in accordance with generally accepted accounting
principles,
(b) any Receivables Sale shall be the amount of the unrecovered
capital or principal investment of the purchaser (other than RSL COM or a
Restricted Subsidiary) thereof to the extent such Person is liable
therefore, excluding amounts representative of yield or interest earned on
such investment or
(c) any Disqualified Stock shall be the maximum fixed redemption or
repurchase price in respect thereof.
"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of such Person, any
Subsidiary of such Person or the holder thereof, in whole or in part, on or
prior to the final stated maturity of the new notes, provided, however, that any
Preferred Stock which would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Preferred Stock upon the occurrence of a Change of Control occurring
prior to the final maturity of the new notes shall not constitute Disqualified
Stock if the change of control provisions applicable to such Preferred Stock are
no more favorable to the holders of such Preferred Stock than the provisions
applicable to the new notes contained in the covenant described under "Change of
Control" and such Preferred Stock specifically provides that such Person will
not repurchase or redeem any such stock pursuant to such provisions prior to
such Person's repurchase of such new notes as are required to be repurchased
pursuant to the covenant described under "Change of Control" (purchases or
redemptions paid in Capital Stock that do not constitute Disqualified Stock are
not restricted under this definition).
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" (or higher) according to Standard &
Poor's Ratings Service or Moody's Investors Service, Inc. at the time as of
which any investment or rollover therein is made.
"Event of Default" has the meaning set forth under "Events of Default"
below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act) and the rules and regulations thereunder.
"Existing Stockholders" means (a) R.S. Lauder, Gaspar & Co., L.P.,
("RSLAG"), (b) partners in RSLAG and Lauder Gaspar Ventures LLC and their
Affiliates, in each case as of the Closing Date, (c) Itzhak Fisher, Ronald S.
Lauder, Leonard A. Lauder, Jacob Z. Schuster, Nir Tarlovsky, Nesim N. Bildirici,
and Eugene Sekulow, (d) family members of any of the foregoing, (e) trusts, the
only beneficiaries of which are persons or entities described in clauses
(a) through (d) above and (f) partnerships which are controlled by the persons
or entities described in clauses (a) through (d) above.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged and
which have a remaining weighted average life to maturity of not less than one
year from the date of Investment therein.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect of guaranteeing, any
Debt of any other Person (the "primary obligor") in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Debt,
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(2) to purchase property, securities or services for the purpose of
assuring the holder of such Debt of the payment of such Debt, or
(3) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Debt (and "Guaranteed" and "Guaranteeing" shall
have meanings correlative to the foregoing);
provided, however, that the Guarantee by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.
"Incremental Paid-in Capital" means as of any date the cumulative aggregate
amount of the increase in paid-in capital (determined in accordance with
generally accepted accounting principles applied on a consistent basis) since
September 30, 1997, as determined based on the most recent unaudited quarterly
or audited annual financial statements of RSL COM and its consolidated
subsidiaries filed with the Commission, as compared with RSL COM's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume, enter
into a Guarantee in respect of or otherwise become liable in respect of such
Debt or other obligation including by acquisition of Subsidiaries or the
recording, as required pursuant to generally accepted accounting principles or
otherwise, of any such Debt or other obligation on the balance sheet of such
Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have
meanings correlative to the foregoing); provided, however, that a change in
generally accepted accounting principles that results in an obligation of such
Person that exists at such time becoming Debt shall not be deemed an Incurrence
of such Debt and that neither the accrual of interest nor the accretion of
original issue discount shall be deemed an Incurrence of Debt.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest rates
or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other property to others or payments for property or services for the account
or use of others, or otherwise), to, or purchase or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidence of Debt issued
by, any other Person, including any payment on a Guarantee of any obligation of
such other Person, but excluding any loan, advance or extension of credit to an
employee of RSL COM or any of its Subsidiaries in the ordinary course of
business and commercially reasonable extensions of trade credit. Without
limiting the foregoing, the term "Investment" shall include:
(1) the designation of a Restricted Subsidiary (other than
deltathree.com and its Subsidiaries) as an Unrestricted Subsidiary; and
(2) the fair market value of the Capital Stock (or any other
Investment), held by RSL COM or any of its Restricted Subsidiaries, of (or
in) any Person (other than deltathree.com and its Subsidiaries) that has
ceased to be a Restricted Subsidiary.
For purposes of the definition of "Unrestricted Subsidiary" and the "Limitation
on Restricted Payments" covenant, (a) "Investment" shall include the fair market
value of the assets (net of liabilities (other than liabilities to RSL COM or
any of its Restricted Subsidiaries)) of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary, (b)
the fair market value of the assets (net of liabilities (other than liabilities
to RSL COM or any of its Restricted Subsidiaries)) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary shall be considered a reduction in outstanding Investments
and (c) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer. Notwithstanding
the foregoing, an acquisition of assets (including, without limitation, Capital
Stock or rights to acquire Capital Stock) by RSL COM or any of its Restricted
Subsidiaries shall be deemed not to be an Investment to the extent that the
consideration therefor consists of Common Stock of RSL COM.
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"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness), encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including, without limitation,
any conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Marketable Securities" means:
(1) Government Securities;
(2) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution;
(3) commercial paper maturing not more than 270 days after the date of
acquisition issued by a corporation (other than an Affiliate of the
Guarantor) with a rating, at the time as of which any investment therein is
made, of "A-1" (or higher) according to Standard & Poor's Ratings Service
or "P-1" (or higher) according to Moody's Investor Service, Inc.;
(4) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution;
(5) time deposits, certificates of deposit, bank promissory notes and
bankers' acceptances maturing not more than 180 days after the acquisition
thereof and guaranteed or issued by any of the ten largest banks (based on
assets as of the immediately preceding December 31), organized under the
laws of any jurisdiction in which one of the Restricted Subsidiaries does
business or any foreign country recognized by the United States and which
are not under intervention, bankruptcy or similar proceeding, not to exceed
$10 million outstanding at any one term; and
(6) any fund investing exclusively in investments of the types
described in clauses (1) through (4) above.
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or readily marketable cash equivalents received (including amounts received
by way of sale or discounting of any note installment receivable or other
receivable, but excluding any other consideration received in the form of
assumption by the acquiror of Debt or other obligations relating to such
properties or assets) therefrom by such Person, net of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred and all federal, state, provincial, foreign and
local taxes required to be accrued as a liability as a consequence of such
Asset Disposition,
(2) all payments made by such Person or its Subsidiaries on any Debt
which is secured by such assets in accordance with the terms of any Lien
upon or with respect to such assets or which must by the terms of such
Lien, or in order to obtain a necessary consent to such Asset disposition
or by applicable law, be repaid out of the proceeds from such Asset
Disposition,
(3) all distributions and other payments made to minority interest
holders in Subsidiaries of such person as a result of such Asset
Disposition and
(4) appropriate amounts to be provided by such Person or any
Subsidiary thereof, as the case may be, as a reserve in accordance with
generally accepted accounting principles against any liabilities associated
with such assets and retained by such Person or any Subsidiary thereof, as
the case may be, after such Asset Disposition including without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each
case as determined by the board of directors of such Person, in its
reasonable good faith judgment;
provided, however, that any reduction in such reserve within twelve months
following the consummation of such Asset Disposition will be treated for all
purposes of the Indentures and the new notes as a new Asset Disposition at the
time of such reduction with Net Available Proceeds equal to the amount of such
reduction.
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"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of RSL PLC by first class mail, postage prepaid, to each holder of new
notes at his address appearing in the Note Register on the date of this offering
to purchase up to the principal amount of new notes specified in such Offer at
the purchase price specified in such Offer (as determined pursuant to the
Indentures). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not less
than 30 days or more than 60 days after the date of such Offer and a settlement
date (the "Purchase Date") for purchase of new notes within five Business Days
after the Expiration Date. RSL PLC shall notify the Trustee at least 15 Business
Days (or such shorter period as is acceptable to the Trustee) prior to the
mailing of the Offer of RSL PLC's obligation to make an Offer to Purchase, and
the Offer shall be mailed by RSL PLC or, at RSL PLC's request, by the Trustee in
the name and at the expense of RSL PLC. The Offer shall contain information
concerning the business of RSL COM its Subsidiaries which the Guarantors and RSL
PLC in good faith believe will enable such holders to make an informed decision
with respect to the Offer to Purchase (which at a minimum will include (a) the
most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the documents required to be filed with the Trustee pursuant to the
Indentures (which requirements may be satisfied by delivery of such documents
together with the Offer), (b) a description of material developments in RSL
COM's business subsequent to the date of the latest of such financial statements
referred to in clause (a) (including a description of the events requiring RSL
PLC to make the Offer to Purchase), (c) if applicable, appropriate pro forma
financial information concerning the Offer to Purchase and the events requiring
RSL PLC to make the Offer to Purchase and (d) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such holders to tender new notes pursuant to
the Offer to Purchase. The Offer shall also state:
(1) the Section of the Indentures pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount at maturity of the outstanding new
notes offered to be purchased by RSL PLC pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such has been determined
pursuant to the Section of the Indentures requiring the Offer to Purchase)
(the "Purchase Amount");
(4) the purchase price to be paid by RSL PLC for each $1,000 aggregate
principal amount of dollar notes (or 1,000 aggregate principal amount of
euro notes, as the case may be) accepted for payment (as specified pursuant
to the Indentures) (the "Purchase Price");
(5) that the holder may tender all or any portion of the new notes
registered in the name of such holder and that any portion of a dollar note
tendered must be tendered in an integral multiple of $1,000 principal
amount (or 1,000 principal amount in the case of a euro note);
(6) the place or places where new notes are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any new note not tendered or tendered but not
purchased by RSL PLC pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each new note being accepted for payment pursuant to the Offer
to Purchase and that interest thereon shall cease to accrue on and after
the Purchase Date;
(9) that each holder electing to tender a note pursuant to the Offer
to Purchase will be required to surrender such note at the place or places
specified in the Offer prior to the close of business on the Expiration
Date (such note being, if RSL PLC or the Trustee so requires, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory
to RSL PLC and the Trustee duly executed by, the holder thereof or his
attorney duly authorized in writing);
(10) that holders will be entitled to withdraw all or any portion of
new notes tendered if RSL PLC (or their Paying Agent) receives, not later
than the close of business on the Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of the new note the
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holder tendered, the certificate number of the new note the holder tendered
and a statement that such holder is withdrawing all or a portion of his
tender;
(11) that (a) if new notes in an aggregate principal amount at
maturity less than or equal to the Purchase Amount are duly tendered and
not withdrawn pursuant to the Offer to Purchase, RSL PLC shall purchase all
such new notes and (b) if new notes in an aggregate principal amount at
maturity in excess of the Purchase Amount are tendered and not withdrawn
pursuant to the Offer to Purchase, RSL PLC shall purchase new notes having
an aggregate principal amount at maturity equal to the Purchase Amount on a
pro rata basis (with such adjustments as may be deemed appropriate so that
only new notes in denominations of $1,000 or ((U)1,000, in the case of the
euro notes) or integral multiples thereof shall be purchased); and
(12) that in the case of any holder whose new notes are purchased only
in part, RSL PLC shall execute, and the Trustee shall authenticate and
deliver to the holder of such note without service charge, a new note or
notes, of any authorized denomination as requested by such holder, in an
aggregate principal amount at maturity equal to and in exchange for the
unpurchased portion of the new notes so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Investment" means:
(1) any Investment in RSL COM or a Restricted Subsidiary;
(2) any Investment in any Person as a result of which such Person
becomes a Restricted Subsidiary of RSL COM or upon the making of which such
Person will be merged or consolidated with or into or transfer all or
substantially all of its assets to RSL COM or a Restricted Subsidiary;
(3) any investment in Marketable Securities;
(4) securities or other investments received in settlement of debts
created in the ordinary course of business and owing to the ordinary course
of business and owing to RSL COM or any Restricted Subsidiary, or as a
result of foreclosure, perfection or enforcement of any Lien, or in
satisfaction of judgments, including in connection with any bankruptcy
proceeding or other reorganization of another Person;
(5) securities or other investments received as consideration in sales
or other dispositions of property or assets, including Asset Dispositions
made in compliance with the "Limitation on Asset Sales" covenant;
(6) any investment in equity securities of a Person engaged in
Telecommunications Business (which term includes any Internet-based
business) received in exchange for equity securities of deltathree.com.;
and
(7) other investments at any time outstanding (measured on the date
each such Investment was made without giving effect to subsequent changes
in value) in an aggregate amount not to exceed 10.0% of RSL COM's total
consolidated assets.
"Permitted Liens" means:
(1) Liens for taxes, assessments, governmental charges or claims which
are not yet delinquent or which are being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if
any, as shall be required in conformity with generally accepted accounting
principles shall have been made therefor;
(2) other Liens incidental to the conduct of RSL COM's and its
Restricted Subsidiaries' business or the ownership of its property and
assets not securing any Debt, and which do not in the aggregate materially
detract from the value of RSL COM's and its Subsidiaries' property or
assets when taken as a whole, or materially impair the use of such assets
and property in the operation of its business;
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(3) Liens with respect to assets of a Subsidiary granted by such
Subsidiary to RSL COM to secure Debt owing to RSL COM;
(4) pledges and deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of statutory obligations;
(5) deposits made to secure the performance of tenders, bids, leases,
and other obligations of like nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money);
(6) zoning restrictions, servitudes, easements, rights-of-way,
restrictions and other similar charges or encumbrances incurred in the
ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or interfere with
the ordinary conduct of the business of RSL COM or its Restricted
Subsidiaries;
(7) Liens on Capital Stock of Restricted Subsidiaries securing
obligations not exceeding $75 million at any time outstanding of RSL COM or
any Restricted Subsidiary to repurchase or redeem shares of Capital Stock
of such Restricted Subsidiary held by Persons who are not Affiliates or
Related Persons of RSL COM;
(8) Liens arising out of judgments or awards against RSL COM or any
Restricted Subsidiary with respect to which RSL COM or such Restricted
Subsidiary is prosecuting an appeal or proceeding for review and RSL COM or
such Restricted Subsidiary is maintaining adequate reserves in accordance
with generally accepted accounting principles; and
(9) any interest or title of a lessor in the property subject to any
lease other than a Capital Lease.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or agency or political subdivision thereof or any other entity.
"Purchase Money Debt" means Debt (including Acquired Debt and Debt
represented by Capital Lease Obligations, mortgage financings and purchase money
obligations) incurred for the purpose of financing all or any part of the cost
of construction, acquisition or improvement by RSL COM or any Restricted
Subsidiary of any Telecommunications Assets of RSL COM or any Restricted
Subsidiary and including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified or restated from time to time.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
"Related Person" of any Person means any other Person directly or
indirectly owning:
(a) 5% or more of the outstanding Common Stock of such Person (or, in
the case of a Person that is not a corporation, 5% or more of the
outstanding equity interest in such Person) or
(b) 5% or more of the combined outstanding voting power of the Voting
Stock of such Person, except that, for purposes of the covenant entitled
"Transactions with Affiliates and Related Persons," Related Person means
any other Person directly or indirectly owning 10% or more of the combined
outstanding voting power of the Voting Stock of such Person (or, in the
case of a Person that is not a corporation, 10% or more of the outstanding
equity interest in such Person).
"Restricted Subsidiary" means any Subsidiary of RSL COM other than an
Unrestricted Subsidiary.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries:
(1) for the most recent fiscal year of RSL COM, accounted for more
than 10% of the consolidated revenues of RSL COM and its Restricted
Subsidiaries; or
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(2) as of the end of such fiscal year, was the owner of more than 10%
of the consolidated assets of RSL COM and its Restricted Subsidiaries, all
as set forth on the most recently available consolidated financial
statements of RSL COM for such fiscal year.
"Strategic Investor" means a corporation, partnership or other entity
engaged in the Telecommunications Business that has, or 80% or more of the
Voting Stock of which is owned by a Person that has, an equity market
capitalization or paid in capital, at the time of any Investment by such
corporation, partnership or other entity in a Restricted Subsidiary pursuant to
clause (4)(b) of "Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries," in excess of $100 million.
"Subordinated Debt" means Debt of RSL COM or its Restricted Subsidiaries as
to which the payment of principal of (and premium, if any) and interest and
other payment obligations in respect of such Debt shall be subordinate to the
prior payment in full of the new notes to at least the following extent:
(1) no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be permitted for so long as any
default in the payment of principal (or premium, if any) or interest on the
new notes exists;
(2) in the event that any other default that with the passing of time
or the giving of notice, or both, would constitute an event of default
exists with respect to the new notes, upon notice by 25% or more in
principal amount of the new notes to the Trustee, the Trustee shall have
the right to give notice to RSL COM or such Restricted Subsidiary and the
holders of such Debt (or trustees or agents therefor) of a payment
blockage, and thereafter no payments of principal of (or premium, if any)
or interest on or otherwise due in respect of such Debt may be made for a
period of 179 days from the date of such notice; and
(3) such Debt may not:
(x) provide for payments of principal of such Debt at the stated
maturity thereof or by way of a sinking fund applicable thereto or by
way of any mandatory redemption, defeasance, retirement or repurchase
thereof by RSL COM or such Restricted Subsidiary (including any
redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each
case prior to the final Stated Maturity of the new notes; or
(y) permit redemption or other retirement (including pursuant to an
offer to purchase made by RSL COM or such Restricted Subsidiary) of such
other Debt at the option of the holder thereof prior to the final Stated
Maturity of the new notes, other than a redemption or other retirement
at the option of the holder of such Debt (including pursuant to an offer
to purchase made by RSL COM or such Restricted Subsidiary) which is
conditioned upon a change of control of RSL COM pursuant to provisions
substantially similar to those described under "Change of Control" (and
which shall provide that such Debt will not be repurchased pursuant to
such provisions prior to RSL COM's or such Subsidiary's repurchase of
the new notes required to be repurchased by RSL COM pursuant to the
provisions described under "Change of Control").
"Subsidiary" of any Person means:
(1) a corporation more than 50% of the combined voting power of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof; or
(2) any other Person (other than a corporation) in which such Person,
or one or more other Subsidiaries of such Person or such Person and one or
more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs
thereof.
"Subsidiary Guarantor" means a Subsidiary of RSL COM that has
unconditionally guaranteed, by supplemental indenture substantially in the form
attached to the Indentures and satisfactory to the Trustee, the payment in full
of the principal of (and premium, if any) and interest on the new notes.
"Telecommunications Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business, including a
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majority of the Voting Stock of a Person engaged in the Telecommunications
Business and a minority equity interest in a Person engaged in a
Telecommunications Business (which term includes any Internet-based business)
received in exchange for equity securities of deltathree.com.
"Telecommunications Business" means the business of:
(1) transmitting, or providing services relating to the transmission
of, voice, video or data through owned or leased transmission facilities;
(2) creating, developing or marketing communications related network
equipment, software and other devices for use in a Telecommunications
Business; or
(3) evaluating, participating or pursuing any other activity or
opportunity that is primarily related to those identified in (1) or
(2) above; provided that the determination of what constitutes a
Telecommunications Business shall be made in good faith by the Board of
Directors of the RSL COM.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of RSL COM that at the time of determination shall
be designated an Unrestricted Subsidiary of RSL COM by the Board of
Directors in the manner provided below and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Restricted Subsidiary (including
any newly acquired or newly formed Subsidiary of RSL COM) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, RSL COM or any Restricted Subsidiary; provided
that:
(a) any Guarantee by RSL COM or any Restricted Subsidiary of any Debt
of the Subsidiary being so designated shall be deemed an "Incurrence" of
such Debt and an "Investment" by RSL COM or such Restricted Subsidiary (or
both, if applicable) at the time of such designation, in each case, to the
extent such Debt is so Guaranteed by RSL COM or such Restricted Subsidiary;
(b) either
(x) the Subsidiary to be so designated has total assets of $1,000
or less or
(y) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under the "Limitation on Restricted
Payments" covenant described herein (provided that this clause
(y) shall not apply in the case of the designation of deltathree.com and
its Subsidiaries as Unrestricted Subsidiaries) and
(c) if applicable, the Incurrence of Debt and the Investment referred
to in clause (A) of this proviso would be permitted under the "Limitation
on Consolidated Debt" and "Limitation on Restricted Payments" covenants
described herein.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that immediately after giving effect to such
designation (x) RSL COM could Incur $1.00 of additional Debt under the first
paragraph of the "Limitation on Debt" covenant described below and (y) no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly-Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Voting Stock or other ownership interests (other than
directors' qualifying shares) of which shall at the, time be owned by such
Person or by one or more Wholly-Owned Subsidiaries of such Person or by, such
Person and one or more Wholly-Owned Subsidiaries of such Person.
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DESCRIPTION OF THE NEW NOTES GUARANTEES
The Guarantors will unconditionally and irrevocably guarantee the due and
punctual payment of the principal of and interest on and other amounts payable
under each of the new dollar notes and the new euro notes, when and as the same
shall become due and payable, whether at the stated maturity, by declaration of
acceleration, upon redemption or otherwise; provided that the new notes
guarantees shall not be enforceable against the Guarantors at the time that
determination of such net worth is, under applicable law, relevant to the
enforceability of such new notes guarantees. The obligations of the Guarantors
under the new notes guarantees will be direct, unsecured and unsubordinated
obligations of the Guarantors and will rank equal in right of payment with other
existing and future direct, unsecured and unsubordinated obligations of the
Guarantors. The new notes guarantees, as applicable, will effectively rank
junior to any secured indebtedness of the Guarantors to the extent of the assets
securing such indebtedness.
RSL USA's new notes guarantees may be released at any time without the
consent of the holders:
(1) upon a sale of 100% of the capital stock of RSL USA or a sale of
all or substantially all assets of RSL USA, or
(2) if Standard & Poor's Corporation advises RSL PLC that the release
of RSL USA's new notes guarantees would not result in a downgrade of the
rating on the new notes or the placement of the new notes on creditwatch
with negative implications.
Upon any release of RSL USA's new notes guarantees, RSL USA's guarantee of
RSL PLC's other outstanding notes would also be released.
EVENTS OF DEFAULT
The following will be Events of Default under the Indentures:
(1) failure to pay principal of (or premium, if any, on) any new note
when due;
(2) failure to pay any interest on any new note when due, continued
for 30 days;
(3) default in the payment of principal and interest on new notes
required to be purchased pursuant to an Offer to Purchase as described
under "Change of Control" when due and payable;
(4) failure to perform or comply with the provisions described under
"Mergers, Consolidations and Certain Sales of Assets" and "Limitation on
Asset Dispositions";
(5) failure to perform any other covenant or agreement of RSL PLC or
either Guarantor under the Indentures or the new notes continued for
60 days after written notice to RSL PLC by the Trustee or holders of at
least 25% in aggregate principal amount at maturity of outstanding new
notes;
(6) default under the terms of any instrument evidencing or securing
Debt of either Guarantor, RSL PLC or any Subsidiary having an outstanding
principal amount of $10.0 million individually or in the aggregate which
default results in the acceleration of the payment of such indebtedness or
constitutes the failure to pay such indebtedness when due;
(7) the rendering of a final judgment or judgments (not subject to
appeal) against either Guarantor, RSL PLC or any Subsidiary of an amount in
excess of $10.0 million (net of indemnities and funds actually received or
to be received within 90 days of such judgment) which remains undischarged
or unstayed for a period of 60 days after the date on which the right to
appeal has expired; and
(8) certain events of bankruptcy, insolvency or reorganization
affecting either Guarantor, RSL PLC or any Significant Subsidiary.
(ss. 501)
Subject to the provisions of the Indentures relating to the duties of the
Trustee in case an Event of Default (as defined) shall occur and be continuing,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indentures at the request or direction of any of the holders of new
notes, unless such holders shall have offered to the Trustee reasonable
indemnity. (ss. 603) Subject to such provisions for the indemnification of the
Trustee, the holders of a majority in aggregate principal amount at maturity of
the
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outstanding new notes will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (ss. 512)
If an Event of Default (other than an Event of Default described in clause
(8) above) shall occur and be continuing, either the Trustee or the holders of
at least 25% in aggregate principal amount at maturity of the outstanding new
notes may accelerate the principal amount of the new notes; provided, however,
that after such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount at
maturity of such outstanding new notes may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the non-payment
of accelerated principal amount have been cured or waived as provided in the
Indentures. If an Event of Default specified in clause (8) above occurs, the
outstanding new notes will ipso facto become immediately due and payable without
any declaration or other act on the part of the Trustee or any holder.
(ss. 502) For information as to waiver of defaults, see the heading
"Modification and Waiver."
No holder of any new note will have any right to institute any proceeding
with respect to the Indentures or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing Event
of Default (as defined) and unless also the holders of at least 25% in aggregate
principal amount at maturity of the outstanding new notes shall have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as trustee, and the Trustee shall not have received from the
holders of a majority in aggregate principal amount at maturity of the
outstanding new notes a direction inconsistent with such request and shall have
failed to institute such proceeding within 60 days. (ss. 507) However, such
limitations do not apply to a suit instituted by a holder of a new note for
enforcement of payment of the principal amount of and premium, if any, or
interest on such new note on or after the respective due dates expressed in such
note. (ss. 508)
The Guarantors and RSL PLC will be required to furnish to the Trustee
quarterly a statement as to the performance by the Guarantors and RSL PLC of
certain of their obligations under the Indentures and as to any default in such
performance. (ss. 1019)
DEFEASANCE
Defeasance and Discharge. The Indentures will provide that RSL PLC will be
deemed to have paid and RSL PLC and the Guarantors will be discharged from any
and all obligations in respect of the new notes on the 123rd day after the
deposit referred to below, and the provisions of the Indentures will no longer
be in effect with respect to the new notes (except for, among other matters,
certain obligations to register the transfer or exchange of the new notes, to
replace stolen, lost or mutilated new notes, to maintain paying agencies and to
hold monies for payment in trust) or the new notes guarantees if, among other
things, (A) RSL PLC has irrevocably deposited or caused to be irrevocably
deposited with the Trustee, in trust, money and/or 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 money 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 state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal amount of,
premium, if any, and accrued interest on the new notes on the stated maturity of
such principal or interest or upon earlier redemption in accordance with the
terms of the Indentures and the new notes, (B) RSL PLC has delivered to the
Trustee either (1) a ruling based on relevant law and practice at the time
directed to the Trustee from the Inland Revenue or other relevant tax authority
to the effect that the holders will not recognize income, gain or loss for U.K.
income tax as a result of RSL PLC's exercise, disregarding U.K. income tax on
any amounts that would have been received but for such exercise of its option
under this "Defeasance" provision and will be subject to U.K. income tax on the
same amount and in the same manner and at the same time as would have been the
case it such option had not been exercised or (2) an Opinion of Counsel to the
same effect as the ruling described in clause (1) above, (C) RSL PLC has
delivered to the Trustee (1) either (x) an Opinion of Counsel to the effect that
holders will not recognize income, gain or loss for U.S. federal income tax as a
result of RSL PLC's exercise of its option under this "Defeasance" provision and
will be subject to U.S. federal income tax on the same amount and in the same
manner and at the same time as would have been the case if such option had not
been exercised, which Opinion of Counsel must be based upon (and accompanied by
a copy of) a ruling published by the Internal
59
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Revenue Service to the same effect unless there has been a change in relevant
U.S. federal income tax law after the Closing Date or (y) a ruling directed to
the Trustee received from the Internal Revenue Service to the same effect as
Opinion of Counsel and (2) an Opinion of Counsel to the effect that the creation
of the defeasance trust does not violate the Investment Issuer Act of 1940 and
after the passage of 123 days following the deposit, the trust fund 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, (D) immediately after giving
effect to such deposit on a pro forma basis, no Default or Event of Default, or
event that after the giving of notice or lapse of time or both would become a
Default or an Event of Default, shall have occurred and be continuing on the
date of such deposit or during the period ending on the 123rd day 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 RSL
PLC or any of its Subsidiaries is a party or by which RSL PLC or any of its
Subsidiaries is bound, (E) if at such time the new notes are listed on a
national securities exchange, RSL PLC has delivered to the Trustee an Opinion of
Counsel to the effect that the new notes will not be delisted as a result of RSL
PLC's exercise of its option under this "Defeasance" provision, and (F) RSL PLC
shall have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, in each case stating that all the above conditions precedent have been
complied with.
Defeasance of Certain Covenants and Certain Events of Default. The
Indentures further will provide that the provisions of the Indentures will no
longer be in effect with respect to clauses (3) and (4) under "Mergers,
Consolidations and Certain Sale of Assets" and all the covenants described
herein under "Covenants" (other than "Mergers, Consolidations and Certain Sales
of Assets"), clauses (c), (f) and (g) under "Events of Default" with respect to
such clauses (3) and (4) under "Mergers, Consolidations and Certain Sale of
Assets" and such covenants and clauses (c), (f) and (g) under "Events of
Default" shall be deemed not to be Events of Default, upon, among other things,
the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations that through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, premium, if any, and accrued interest on the
new notes on the stated maturity of such payments in accordance with the terms
of the Indentures and the new notes, the satisfaction of the provisions
described in clauses (C)(2) and (D) of the preceding paragraph and the delivery
by RSL PLC to the Trustee of an Opinion of Counsel to the effect that, among
other things, the holders will not recognize any income, gain or loss for U.S.
federal income tax purposes as a result of such deposit and defeasance of
certain covenants and Events of Default and will be subject to U.S. 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.
Defeasance and Certain Other Events of Default. In the event RSL PLC
exercises its option to omit compliance with certain covenants and provisions of
the Indentures with respect to the new notes as described in the immediately
preceding paragraph and the new notes are declared due and payable because of
the occurrence of an Event of Default that remains applicable, the amount of
money and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the new notes at the time of their stated
maturity but may not be sufficient to pay amounts due on the new notes at the
time of the acceleration resulting from such Event of Default. However, RSL PLC
will remain liable for such payments and the new notes guarantees with respect
to such payments will remain in effect.
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by RSL PLC, the
Guarantors and the Trustee with the consent of the holders of a majority in
aggregate principal amount of the outstanding new notes; provided, however, that
no such modification or amendment may, without the consent of the holder of each
outstanding new note, affected thereby, (a) change the due date of any
installment of principal or interest on any new notes, (b) reduce the principal
amount of, (or the premium) or interest on, any new notes, (c) change the
currency of payment of principal of, (or premium) or interest on, any new notes,
(d) impair the right to institute suit for the enforcement of any payment on or
with respect to any new notes, (e) reduce the above-stated percentage of
outstanding new notes necessary to modify or amend the Indentures, (f) reduce
the percentage of aggregate principal amount of outstanding new notes necessary
for waiver of compliance with certain provisions of the Indentures or for waiver
of certain defaults, (g) modify any provisions of the Indentures relating to the
modification and amendment of the Indentures or the waiver of past defaults or
covenants, except as otherwise
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<PAGE>
specified, or (h) following the mailing of any Offer to Purchase, modify any
Offer to Purchase for the new notes required under the "Limitation on Asset
Dispositions" and the "Change of Control" covenants contained in the Indentures
in a manner materially adverse to the holders thereof. (ss. 902)
The holders of a majority in aggregate principal amount of the outstanding
new notes, on behalf of all holders of new notes, may waive compliance by the
Guarantors and RSL PLC with certain restrictive provisions of the Indentures.
(ss. 1020) Subject to certain rights of the Trustee, as provided in the
Indentures, the holders of a majority in aggregate principal amount of the
outstanding new notes, on behalf of all holders of new notes, may waive any past
default under the Indentures, except a default in the payment of principal,
premium or interest or a default arising from failure to purchase any note
tendered pursuant to an Offer to Purchase. (ss. 513)
Notwithstanding the foregoing, without the consent of any holder of new
notes, the Guarantors and the Trustee may amend or supplement the Indentures and
the new notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated new notes in addition to or in place
of certificated new notes;
(c) to provide for the assumption of obligations of RSL PLC and the
Guarantors to holders of the new notes in the case of a transaction
governed by the provisions described above under "Mergers, Consolidations
and Certain Sales of Assets" or to secure the new notes;
(d) to make any change that would provide any additional rights or
benefits to the holders of the new notes or that does not adversely affect
the legal rights under the Indentures of any such holder; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indentures under the Trust Indentures
Act. (ss. 901).
THE TRUSTEE
The Indentures provide that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indentures. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indentures and use the
same degree of care and skill in its existence as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
(ss. 601)
The Indentures and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of RSL PLC or either Guarantor, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claim as security or otherwise. The Trustee is permitted to engage in other
transactions with RSL PLC, the Guarantors or any Affiliate, provided, however,
that if it acquires any conflicting interest (as defined in the Indentures or in
the Trust Indenture Act), it must eliminate such conflict or resign.
(ss.ss. 608, 613)
ADDITIONAL AMOUNTS
Payments made by RSL PLC or the Guarantors pursuant to the new notes or the
new notes guarantees will be made without withholding or deduction for taxes
unless required by law. In the event of (1) any change that becomes effective
after the date hereof in the laws of the U.K. or Bermuda or of any political
subdivision or taxing authority thereof or therein or any change in the
interpretation or administration thereof or (2) a failure by RSL PLC to list or
maintain a listing of the new notes on a "recognized stock exchange" (within the
meaning of Section 841 of the U.K. Income and Corporation Taxes Act 1988) (a
"Listing Failure"), the effect of which, in each case, is to require the
withholding or deduction by RSL PLC or the Guarantors pursuant to the new notes
or the new notes guarantees, respectively, of any amount for taxes that would
not have been required to be withheld or deducted absent such event, RSL PLC or
the Guarantors will pay, to the extent it may then lawfully do so, such
additional amounts ("Additional Amounts") as may be necessary in order that
every net payment of the principal of and interest on the new notes, after
deduction for withholding for or on account of any future tax, assessment or
other governmental charge will not be less than the amount provided for in the
notes to be then due
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and payable; provided, however, that the foregoing obligation to pay Additional
Amounts shall not apply in respect of:
(a) any tax, withholding, assessment or other governmental charge
which would not have been imposed but for (x) the existence of any present
or former connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, trust, partnership or corporation) and
the U.K. or Bermuda or any political subdivision or taxing authority
thereof including, without limitation, such holder (or such fiduciary,
settlor, beneficiary, member, shareholder or possessor) being or having
been a citizen or resident thereof or being or having been present or
engaged in trade or business therein or having or having had a permanent
establishment therein or (y) the presentation of a new note or a new notes
guarantee (where presentation is required) for payment on a date more than
30 days after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for, whichever occurs later,
except for Additional Amounts with respect to taxes that would have been
imposed had the holder presented the note for payment within such 30-day
period;
(b) any estate, inheritance, gift, sale, transfer or personal property
tax;
(c) any tax, assessment or other governmental charge that is withheld
by reason of the failure to timely comply by the holder or the beneficial
owner of the new note with a request in writing of RSL PLC or either
Guarantor (which request shall be furnished to the Trustee) (x) to provide
information concerning the nationality, residence or identity of the holder
or such beneficial owner or (y) to make any declaration or other similar
claim or satisfy any information or reporting requirement, which, in the
case of (x) or (y), is required or imposed by a statute, treaty, regulation
or administrative practice of the taxing or domicile jurisdiction as a
precondition to exemption from or reduction of all or part of such tax,
assessment or other governmental charge; provided, however, that this
clause (c) shall not apply to limit RSL PLC's or the Guarantors' obligation
to pay Additional Amounts if the completing and filing of the information
described in subclause (x) or the declaration or other claim described in
subclause (y) would be materially more onerous in form, in procedure or in
substance of information disclosed, in comparison to the information
reporting requirements imposed under U.S. tax law with respect to Forms
1001, W-8 and W-9; or
(d) any tax, withholding, assessment or other governmental charge
resulting from a Listing Failure with respect to any note issued in the
form of a Definitive Registered Note pursuant to the terms of the Deposit
Agreement and the relevant Indentures; or
(e) any combination of items (a), (b),(c) and (d) above; nor shall
Additional Amounts be paid with respect to any payment of the principal of,
or any interest on, any new note or new notes guarantees to any holder who
is not the sole beneficial owner of such new note or new notes guarantees
or is a fiduciary or partnership, but only to the extent that a beneficial
owner, a beneficiary or a settlor with respect to a fiduciary or a member
of the partnership would not have been entitled to the payment of the
Additional Amount had the beneficial owner, beneficiary, settlor or member
of such partnership received directly its beneficial or distributive share
of the payment.
At least 30 days prior to each date on which any payment under or with
respect to the new notes is due and payable, if RSL PLC or the Guarantors will
be obligated to pay Additional Amounts with respect to such payment, RSL PLC or
the Guarantors will deliver to the Trustee an Officer's 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 the
Indentures or in this offering circular there is mentioned, in any context, the
payment of principal (and premium, if any), redemption price, interest or any
other amount payable under or with respect to any new note, 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. See the heading "Optional Redemption."
RSL PLC or the Guarantors, as the case may be, will also (1) make (or cause
to be made) such withholding or deduction and (2) remit (or cause to be
remitted) the full amount deducted or withheld to the relevant authority in
accordance with applicable law. RSL PLC or the Guarantors, as the case may be,
will make reasonable efforts
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<PAGE>
to obtain certified copies of tax receipts evidencing the payment of any taxes
so deducted or withheld from each taxing authority imposing such taxes. RSL PLC
or the Guarantors, as the case may be, will furnish to the Trustee as promptly
as practicable after the payment of any taxes so deducted or withheld is due
pursuant to applicable law, either certified copies of tax receipts evidencing
such payment or, if the receipts are not obtainable, other evidence of such
payments by RSL PLC or the Guarantors.
CONSENT TO JURISDICTION AND SERVICE
RSL COM, RSL USA and RSL PLC have appointed RSL Communications N. America,
Inc. as their agent for service of process in any suit, action or proceeding
with respect to the Indentures or the new notes or the new notes guarantees 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 will agree to submit
to such jurisdiction.
GOVERNING LAW
The Indentures, the new notes and the new notes guarantees are governed by,
and construed in accordance with, the laws of the State of New York.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material U.S. federal income tax
consequences of the exchange of old notes for new notes as of the date hereof.
Such summary is not binding on any taxing authority or the courts, and no U.S.
tax ruling has been or will be sought. The discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations, rulings and judicial decisions as of the date hereof, and such
authorities may be repealed, revoked or modified so as to result in U.S. federal
income tax consequences different from those discussed below. Certain holders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) may be subject to special rules not
discussed below.
The exchange of an old note for a corresponding new note pursuant to the
exchange offer will not be a taxable event for U.S. federal income tax purposes
because such new note will not be considered to differ materially in kind or
extent from the corresponding old note. As a result, there should be no material
U.S. federal income tax consequences to a holder exchanging an old note for a
corresponding new note pursuant to the exchange offer.
Each holder of old notes should consult his, her or its own tax advisor as
to the particular tax consequences of exchanging old notes for new notes,
including the applicability and effect of any state, local or foreign tax laws.
CERTAIN UNITED KINGDOM TAX CONSIDERATIONS
The following summary describes the material U.K. income and capital gains
tax consequences expected to result to holders whose old notes are exchanged for
new notes in the exchange offer. This summary is based on current U.K. law and
U.K. Inland Revenue practice which may change prospectively or retrospectively.
There can be no assurance that the U.K. Inland Revenue would not take a contrary
view and no ruling from the U.K. Inland Revenue has been or will be sought.
For U.K. tax purposes, the exchange of the old notes for the new notes will
have no U.K. capital gains tax consequences for a U.S. holder who is neither
resident nor ordinarily resident in the U.K. (nor has become non-U.K. resident
or ordinarily resident in the last five tax years), nor carries on a trade,
profession or vocation in the U.K. through a branch or agency to which the new
notes are attributable.
U.S. holders should be aware that, under current U.K. law, upon the
issuance to the holder of Definitive Registered Notes, such holder will become
subject to U.K. income tax (currently 20%) to be withheld on any payments of
interest on the Definitive Registered Notes. The U.S. holder of Definitive
Register Notes will not, unless there has been a change in law or a "Listing
Failure" (as defined herein) and certain other conditions are met, be entitled
to receive Additional Amounts (as referred to above) with respect to such
Definitive Registered Notes. However, a U.S. holder of Definitive Registered
Notes may be entitled to receive a refund of part of the withheld amounts from
the Inland Revenue in certain circumstances.
In May 1998, the European Commission presented to the Council of Ministers
of the European Union a proposal to oblige Member States to adopt either a
"withholding tax system" or an "information reporting system" in relation to
interests, discounts and premiums. This proposal was not adopted and it is
uncertain whether or not it will be reconsidered. If it is subsequently adopted,
it is not clear whether it will be adopted in its original form. The
"withholding tax system" would require a paying agent established in a Member
State to withhold tax at a minimum rate of 20 per cent from any discount paid to
an individual resident in another Member States unless such an individual
presents a certificate obtained from the tax authorities of the Member State in
which he is resident confirming that those authorities are aware of the payment
due to that individual. Difficulties in establishing who is beneficially
entitled to the income might result in a payment being subject to withholding
tax where the income is collected by an agent in a Member State. The
"information reporting system" would require a Member State to supply, to the
other Member States, details of any discount made by the paying agents within
its jurisdiction to an individual resistant in another Member State. For these
purposes, the term "paying agent" is widely defined and includes an agent who
collects discounts on behalf of an individual beneficially entitled thereto.
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PLAN OF DISTRIBUTION
A broker-dealer that is the holder of old notes that were acquired for the
account of such broker-dealer as a result of market-making or other trading
activities (other than old notes acquired directly from RSL PLC or any affiliate
of RSL PLC) may exchange such old notes for new notes pursuant to the exchange
offer, provided, that each broker-dealer that receives new notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of new notes received in exchange for
old notes where such old notes were acquired as a result of market-making
activities or other trading activities. RSL PLC has agreed to keep the
Registration Statement effective for a period of 90 days following the closing
of the exchange offer.
RSL PLC will not receive any proceeds from any sale of new notes by
broker-dealers or any holder of new notes. New notes received by broker-dealers
for their own account pursuant to the exchange offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the new notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of new notes. Any broker-dealer that
resells new notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
such new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of new notes and any
commissions or concessions received by any such persons may be deemed to be an
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
RSL PLC has agreed to pay all expenses incident to the exchange offer and
to RSL PLC's performance of, or compliance with, the registration rights
agreement (other than commissions or concessions of any brokers or dealers) and
will indemnify the holders of the new notes (including any broker-dealers)
against any liabilities under the Securities Act.
Following consummation of the exchange offer, RSL PLC may, in its sole
discretion, commence one or more additional exchange offers to holders of old
notes who did not exchange their old notes for new notes in the exchange offer
on terms which may differ from those contained in the registration rights
agreement. This prospectus, as it may be amended or supplemented from time to
time, may be used by RSL PLC in connection with any such additional exchange
offers. Such additional exchange offers will take place from time to time until
all outstanding old notes have been exchanged for new notes pursuant to the
terms and conditions contained herein.
LEGAL MATTERS
Certain matters relating to the new notes are being passed upon for us by
Field Fisher Waterhouse, London, United Kingdom. Certain matters relating to the
new notes and the new notes guarantees are being passed upon for us by Debevoise
& Plimpton, New York, New York and by Conyers, Dill & Pearman, Hamilton,
Bermuda.
EXPERTS
The consolidated financial statements included in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and elsewhere in this Registration Statement and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
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SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES
RSL COM is a Bermuda corporation and RSL PLC is a United Kingdom
corporation. Certain of their directors and officers, and certain of the experts
named herein, are not residents of the United States. All or a substantial
portion of the assets of such persons are or may be located outside the United
States. As a result, it may not be possible for investors to effect service of
process within the United States upon such persons or to enforce against them
judgments obtained in the United States courts. RSL COM has been advised by its
legal counsel in Bermuda, Conyers, Dill & Pearman, that there is doubt as to the
enforcement in Bermuda, in original actions or in actions for enforcement of
judgments of United States courts, or liabilities predicated upon U.S. Federal
securities laws, although Bermuda courts will enforce foreign judgments for
liquidated amounts in civil matters, subject to certain conditions and
exceptions. RSL PLC has been advised by its legal counsel in the United Kingdom,
Field Fisher Waterhouse, that there is doubt as to the enforceability of certain
civil liabilities under U.S. Federal securities laws in original actions of
English courts, but that, subject to certain exceptions and time limitations,
English courts may treat a final and conclusive judgment of a U.S. court for a
liquidated amount as a debt enforceable by fresh proceedings in the English
courts. Such counsel has expressed no opinion, however, as to whether an
enforcement by an English court of any judgment would be in pounds sterling or
as of which date, if any, the determination of the applicable exchange rate from
U.S. dollars to pounds sterling may be made.
Each of RSL PLC, RSL COM and RSL USA has appointed RSL Communications N.
America, with an address at 810 Seventh Avenue, 39th Floor, New York, New York
10019, as its agent for services for this offering of the new notes.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RSL COMMUNICATIONS, LTD.
Independent Auditors' Report............................................................................... F-2
Consolidated Balance Sheets as of December 31, 1998 and December 31, 1999.................................. F-3
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 1997,
December 31, 1998 and December 31, 1999.................................................................. F-4
Consolidated Statements of Shareholders' Equity (Deficit) for the Years Ended December 31, 1997,
December 31, 1998 and December 31, 1999.................................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, December 31, 1998 and
December 31, 1999........................................................................................ F-7
Notes to Consolidated Financial Statements................................................................. F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
RSL Communications, Ltd.
We have audited the accompanying consolidated balance sheets of RSL
Communications, Ltd., a Bermuda corporation, and its subsidiaries (together, the
"Company"), as of December 31, 1999 and 1998, and the related consolidated
statements of operations and comprehensive loss, shareholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the Company and
its subsidiaries at December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
March 2, 2000 (May 1, 2000 as to the summarized financial information of RSL COM
U.S.A. appearing in Note 19)
F-2
<PAGE>
RSL COMMUNICATIONS, LTD.
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................................................... $ 367,823 $ 238,724
Accounts receivable--net........................................................... 181,845 258,983
Marketable securities--available for sale.......................................... 98,637 72,813
Prepaid expenses and other current assets.......................................... 77,772 116,929
---------- ----------
Total current assets................................................................. 726,077 687,449
---------- ----------
Restricted marketable securities--held to maturity................................... 20,159 --
---------- ----------
Marketable securities--available for sale............................................ 12,911 11,341
---------- ----------
Property and Equipment:
Telecommunications equipment....................................................... 300,647 488,383
Furniture, fixtures and information systems........................................ 68,861 121,712
---------- ----------
369,508 610,095
Less accumulated depreciation...................................................... (45,785) (134,559)
---------- ----------
Property and equipment--net........................................................ 323,723 475,536
---------- ----------
Investment in unconsolidated subsidiaries............................................ 8,446 16,872
---------- ----------
Goodwill and other intangible assets--net of accumulated amortization................ 589,517 606,039
---------- ----------
Deposits and other assets............................................................ 33,760 6,071
---------- ----------
Total assets......................................................................... $1,714,593 $1,803,308
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable................................................................... $ 170,135 $ 186,354
Accrued expenses................................................................... 191,234 262,880
Notes payable...................................................................... 11,537 1,190
Deferred revenue................................................................... 23,647 19,412
Capital lease obligations--current portion......................................... 24,593 22,158
Other liabilities.................................................................. 49,781 31,725
---------- ----------
Total current liabilities............................................................ 470,927 523,719
---------- ----------
Other liabilities--noncurrent........................................................ 9,239 15,986
---------- ----------
Long-term debt--less current portion................................................. 12,643 4,386
---------- ----------
Senior notes--net.................................................................... 998,868 1,186,904
---------- ----------
Capital lease obligations--less current portion...................................... 77,864 82,671
---------- ----------
Total liabilities.................................................................... 1,569,541 1,813,666
---------- ----------
Minority interest.................................................................... 11,568 73,254
---------- ----------
Commitments and contingencies Shareholders' Equity (Deficit):
Common Stock, Class A--par value $0.00457; 26,529,479 and 31,017,249 issued and
outstanding at December 31, 1998 and 1999, respectively.......................... 121 141
Common Stock, Class B--par value $0.00457; 26,245,315 and 24,267,283 issued and
outstanding at December 31, 1998 and 1999, respectively.......................... 120 111
Common Stock, Class C--par value $0.00457; 0 shares issued......................... -- --
Preferred stock--par value $0.00457; 65,700,000 shares authorized, 0 shares
issued........................................................................... -- --
Warrants--Common Stock, exercise price of $0.00457................................. 4,597 3,993
Additional paid-in capital......................................................... 501,239 645,336
Deferred compensation.............................................................. -- (8,348)
Accumulated deficit................................................................ (367,163) (725,390)
Accumulated other comprehensive (loss) gain........................................ (5,430) 545
---------- ----------
Total shareholders' equity (deficit)................................................. 133,484 (83,612)
---------- ----------
Total Liabilities and Shareholders' Equity (Deficit)................................. $1,714,593 $1,803,308
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
RSL COMMUNICATIONS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
($ AND SHARES IN THOUSANDS, EXCEPT LOSS PER SHARE)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenues................................................................. $ 300,796 $ 885,938 $1,469,849
---------- ---------- ----------
Operating costs and expenses:
Cost of services (exclusive of depreciation and amortization
shown separately below)............................................. 265,321 702,602 1,034,334
Selling, general and administrative expenses........................... 94,712 238,141 447,883
Non-cash compensation expense.......................................... -- -- 23,562
Special charge......................................................... -- -- 30,143
Depreciation and amortization.......................................... 21,819 75,445 177,865
---------- ---------- ----------
381,852 1,016,188 1,713,787
---------- ---------- ----------
Loss from operations..................................................... (81,056) (130,250) (243,938)
Interest income.......................................................... 13,826 16,104 20,593
Interest expense......................................................... (39,373) (75,431) (133,244)
Other income--net........................................................ 6,595 739 764
Foreign exchange transaction gain (loss)................................. -- (11,055) 17,022
Minority interest........................................................ 210 6,079 (11,365)
Loss in equity interest of unconsolidated subsidiaries................... -- (3,276) (4,718)
Income taxes............................................................. (401) (1,334) (3,341)
---------- ---------- ----------
Loss before extraordinary item........................................... (100,199) (198,424) (358,227)
Extraordinary item....................................................... -- (20,800) --
---------- ---------- ----------
Net loss................................................................. (100,199) (219,224) (358,227)
Other Comprehensive Income gain (loss):
Foreign exchange translation adjustment................................ (4,666) 897 7,583
Unrealized loss on securities.......................................... -- (1,039) (1,608)
---------- ---------- ----------
Comprehensive loss....................................................... $ (104,865) $ (219,366) $ (352,252)
========== ========== ==========
Loss per share of common stock before extraordinary item................. $ (5.27) $ (4.52) $ (6.63)
Extraordinary item per share of common stock............................. $ -- $ (0.47) $ --
Net loss per share of common stock....................................... $ (5.27) $ (4.99) $ (6.63)
Weighted average number of shares of common stock outstanding............ 19,008 43,913 54,022
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
RSL COMMUNICATIONS, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/(DEFICIT)
($ AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CLASS B PREFERRED COMMON STOCK
COMMON STOCK COMMON STOCK STOCK WARRANTS ADDITIONAL
---------------- ---------------- ---------------- ---------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
------ ------ ------ ------ ------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE
December 31, 1996.......... -- $ -- 10,529 $ 48 9,244 $ 93 1,652 $5,544 $ 63,520
Initial Public Offering of
Class A Common Stock....... 8,280 38 -- -- -- -- -- -- 167,504
Issuance of Class A Common
Stock for acquisition of
certain minority interests,
warrants and options
exercised.................. 2,593 11 -- -- -- -- (39) (133) 41,757
Conversion of Preferred Stock
in exchange for Class B
Common Stock............... -- -- 20,232 93 (9,244) (93) -- -- --
Foreign Currency Translation
Adjustment................. -- -- -- -- -- -- -- -- --
Amortization of deferred
financing costs............ -- -- -- -- -- -- -- -- 1,544
Net loss..................... -- -- -- -- -- -- -- -- --
------ ---- ------ ---- ------ ---- ------ ------ --------
BALANCE
December 31, 1997.......... 10,873 49 30,761 141 -- -- 1,613 5,411 274,325
Secondary offering of
Class A Common Stock....... 7,544 34 -- -- -- -- -- -- 169,955
Issuance of Class A Common
Stock for acquisition of
certain minority interests,
distribution rights,
warrants and options
exercised.................. 3,596 17 -- -- -- -- (243) (814) 57,063
Conversion of Class B Common
Stock in exchange for
Class A Common Stock....... 4,516 21 (4,516) (21) -- -- -- -- --
Change in minority interest
from step acquisition...... -- -- -- -- -- -- -- -- (104)
Foreign Currency Translation
Adjustment................. -- -- -- -- -- -- -- -- --
Unrealized loss on
securities................. -- -- -- -- -- -- -- -- --
Net loss..................... -- -- -- -- -- -- -- -- --
------ ---- ------ ---- ------ ---- ------ ------ --------
BALANCE
December 31, 1998.......... 26,529 $121 26,245 $120 -- $ -- 1,370 $4,597 $501,239
<CAPTION>
ACCUMULATED
DEFERRED OTHER
COMPENSATION ACCUMULATED COMPREHENSIVE
EXPENSE DEFICIT LOSS TOTAL
------------ ----------- ------------- ---------
<S> <C> <C> <C> <C>
BALANCE
December 31, 1996.......... $ -- $ (47,740) $ (622) $ 20,843
Initial Public Offering of
Class A Common Stock....... -- -- -- 167,542
Issuance of Class A Common
Stock for acquisition of
certain minority interests,
warrants and options
exercised.................. -- -- -- 41,635
Conversion of Preferred Stock
in exchange for Class B
Common Stock............... -- -- -- --
Foreign Currency Translation
Adjustment................. -- -- (4,666) (4,666)
Amortization of deferred
financing costs............ -- -- -- 1,544
Net loss..................... -- (100,199) -- (100,199)
-------- --------- ------- ---------
BALANCE
December 31, 1997.......... -- (147,939) (5,288) 126,699
Secondary offering of
Class A Common Stock....... -- -- -- 169,989
Issuance of Class A Common
Stock for acquisition of
certain minority interests,
distribution rights,
warrants and options
exercised.................. -- -- -- 56,266
Conversion of Class B Common
Stock in exchange for
Class A Common Stock....... -- -- -- --
Change in minority interest
from step acquisition...... -- -- -- (104)
Foreign Currency Translation
Adjustment................. -- -- 897 897
Unrealized loss on
securities................. -- -- (1,039) (1,039)
Net loss..................... -- (219,224) -- (219,224)
-------- --------- ------- ---------
BALANCE
December 31, 1998.......... -- $(367,163) $(5,430) $ 133,484
</TABLE>
(Continued on next page)
F-5
<PAGE>
RSL COMMUNICATIONS, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/(DEFICIT)
($ AND SHARES IN THOUSANDS) (CONTINUED)
<TABLE>
<CAPTION>
CLASS A CLASS B PREFERRED COMMON STOCK
COMMON STOCK COMMON STOCK STOCK WARRANTS ADDITIONAL
---------------- ---------------- ---------------- ---------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
------ ------ ------ ------ ------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE
December 31, 1998.......... 26,529 $121 26,245 $120 -- $ -- 1,370 $4,597 $501,239
Issuance of Common Stock by
subsidiaries............... -- -- -- -- -- -- -- -- 89,097
Issuance of Class A Common
Stock for acquisition of
certain minority interests,
warrants and options
exercised.................. 2,510 11 -- -- -- -- (180) (604) 36,116
Conversion of Class B Common
Stock in exchange for
Class A Common Stock....... 1,978 9 (1,978) (9) -- -- -- -- --
Deferred Compensation
Expense.................... -- -- -- -- -- -- -- -- 25,694
Amortization of Deferred
Compensation Expense....... -- -- -- -- -- -- -- -- --
Costs incurred to obtain
noteholders' consent for
security offerings......... -- -- -- -- -- -- -- -- (6,810)
Foreign Currency Translation
Adjustment................. -- -- -- -- -- -- -- -- --
Unrealized loss on
securities................. -- -- -- -- -- -- -- -- --
Net loss..................... -- -- -- -- -- -- -- -- --
------ ---- ------ ---- ------ ---- ------ ------ --------
BALANCE
December 31, 1999.......... 31,017 $141 24,267 $111 -- $ -- 1,190 $3,993 $645,336
====== ==== ====== ==== ====== ==== ====== ====== ========
<CAPTION>
ACCUMULATED
DEFERRED OTHER
COMPENSATION ACCUMULATED COMPREHENSIVE
EXPENSE DEFICIT LOSS TOTAL
------------ ----------- ------------- ---------
<S> <C> <C> <C> <C>
BALANCE
December 31, 1998.......... -- $(367,163) $(5,430) $ 133,484
Issuance of Common Stock by
subsidiaries............... -- -- -- 89,097
Issuance of Class A Common
Stock for acquisition of
certain minority interests,
warrants and options
exercised.................. -- -- -- 35,523
Conversion of Class B Common
Stock in exchange for
Class A Common Stock....... -- -- -- --
Deferred Compensation
Expense.................... (25,694) -- -- --
Amortization of Deferred
Compensation Expense....... 17,346 -- -- 17,346
Costs incurred to obtain
noteholders' consent for
security offerings......... -- -- -- (6,810)
Foreign Currency Translation
Adjustment................. -- -- 7,583 7,583
Unrealized loss on
securities................. -- -- (1,608) (1,608)
Net loss..................... -- (358,227) -- (358,227
-------- --------- ------- ---------
BALANCE
December 31, 1999.......... $ (8,348) $(725,390) $ 545 $ (83,612)
======== ========= ======= =========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
RSL COMMUNICATIONS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows used in operating activities:
Net loss................................................................... $ (100,199) $ (219,224) $ (358,227)
Adjustments to reconcile net loss to net cash used in operating
activities, net of effects of purchase of subsidiaries:
Depreciation and amortization.......................................... 21,819 75,445 177,865
Accretion of interest expense on senior discount notes................. -- 25,706 34,482
Non-cash compensation.................................................. -- -- 23,562
Provision for losses on accounts receivable............................ 10,908 9,043 18,021
Foreign currency transaction (gain) loss............................... -- 6,441 (17,288)
Equity loss on investment in unconsolidated subsidiaries............... -- 3,276 4,718
Extraordinary loss..................................................... -- 20,800 --
Accretion of interest income on restricted marketable securities....... (5,504) (2,727) (973)
Loss (gain) on sales of assets......................................... -- 367 (537)
Reversal of accrued liabilities........................................ (7,000) -- --
Changes in assets and liabilities:
Increase in accounts receivable........................................ (45,069) (49,321) (103,213)
Decrease (increase) in deposits and other assets....................... (2,929) (48,869) 5,565
(Increase) in prepaid expenses and other current assets................ (13,196) (65,842) (43,996)
Increase in accounts payable and accrued expenses...................... 56,354 123,813 76,087
Increase (decrease) in deferred revenue and other current
liabilities.......................................................... (2,155) 38,018 13,807
Increase (decrease) in other long-term liabilities..................... (4,841) 322 11,242
---------- ---------- ----------
Net cash used in operating activities...................................... (91,812) (82,752) (158,885)
---------- ---------- ----------
Cash flows used in investing activities:
Purchase of property and equipment....................................... (36,357) (181,937) (207,667)
Acquisition of subsidiaries.............................................. (77,813) (287,044) (66,442)
Net redemptions (purchases) of marketable securities for sale............ 54,167 (74,834) 25,796
Proceeds from maturities of restricted marketable securities............. 41,038 29,141 21,132
Proceeds from sales of property and equipment............................ 144 5,236 679
---------- ---------- ----------
Net cash used in investing activities...................................... (18,821) (509,438) (226,502)
---------- ---------- ----------
Cash flows provided by financing activities:
Proceeds from issuance of Notes.......................................... -- 791,992 170,835
Proceeds from sales of subsidiaries stock................................ -- -- 143,952
Proceeds from notes payable.............................................. -- 1,306 10,850
Proceeds from long-term debt............................................. -- 13,386 5,231
Payment of long-term debt and notes payable.............................. (12,750) (1,548) (43,657)
Principal payments under capital lease obligations....................... (2,757) (5,241) (16,253)
Proceeds from issuance of common and preferred stock and warrants........ 182,160 180,807 2,124
Payment of offering costs and fees....................................... (14,618) (21,071) (2,670)
Payment for consent solicitation......................................... -- -- (6,810)
Payment of premium and principal on the 1996 Notes......................... -- (144,155) --
---------- ---------- ----------
Net cash provided by financing activities.................................. 152,035 815,476 263,602
---------- ---------- ----------
Increase (decrease) in cash and cash equivalents........................... 41,402 223,286 (121,785)
Effects of foreign currency exchange rates on cash......................... (576) (357) (7,314)
Cash and cash equivalents at beginning of year............................. 104,068 144,894 367,823
---------- ---------- ----------
Cash and cash equivalents at end of year................................... $ 144,894 $ 367,823 $ 238,724
========== ========== ==========
Supplemental disclosure of cash flows information:
Cash paid for:
Interest............................................................... $ 41,285 $ 46,930 $ 97,111
========== ========== ==========
Income tax............................................................. $ 401 $ 1,334 $ 5,807
========== ========== ==========
Supplemental schedule of noncash investing and financing activities:
Assets acquired under capital lease obligations.......................... $ 13,060 $ 65,728 $ 48,333
========== ========== ==========
Issuance of Class A Common Stock......................................... $ 41,635 $ 54,524 $ 33,399
========== ========== ==========
Acquisition costs included in current liabilities........................ $ 17,929 $ 1,900 --
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
1. BUSINESS DESCRIPTION
RSL Communications, Ltd. ("RSL"), a Bermuda corporation, is the successor
in interest to RSL Communications Inc., a British Virgin Islands corporation,
which is the successor in interest to RSL Communications, Inc., a Delaware
corporation. RSL, together with its direct and indirect subsidiaries are
referred to herein as the "Company." We are a rapidly growing facilities-based
communications company that provides a broad range of the voice, data/Internet
and value-added product and service solutions primarily to small and medium
sized businesses and residential customers in selected markets around the globe.
The Company currently has revenue producing operations and provides services in
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong
Kong, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Portugal, Spain,
Sweden, Switzerland, Mexico, the United Kingdom, United States, and Venezuela.
2. ACQUISITIONS
1999 Acquisitions
Multilink
In January 1999, our subsidiary RSL COM Italia acquired 51% of Multilink
s.r.l. a reseller of long distance telecommunications services in Italy for $1.1
million and recorded a similar amount as goodwill.
Access Communication
In May 1999, our subsidiary RSL COM Canada acquired 100% of Access
Communications Inc., for approximately $1.3 million in cash and recorded the
same amount as goodwill. Access offers local access and long distance
telecommunications services to small and medium size businesses.
Cisneros Group
During 1997,we formed a joint venture with entities controlled by the
Cisneros Group of Companies to pursue our Latin American expansion and through
June of 1999 we owned 51% of this joint venture. In June, 1999 we acquired the
minority interest from the Cisneros Group in exchange for 1.03 million shares of
our common stock and recorded goodwill of $23.9 million representing the fair
market value of the shares plus $4 million cash.
Advanced Telecom
In October 1999, our subsidiary RSL COM UK Ltd. purchased 100% of Advanced
Telecom Plc, a UK telecommunications reseller for approximately $14.4 million
and recorded approximately the same amount as goodwill.
Cetel
During 1999, our subsidiary RSL COM Spain acquired a 33% interest of
Consoricao Europeo para las Telecomunicaciones S.A. (Cetel) for approximately
$9.6 million. Cetel is a nationwide telecommunications services provider in
Spain. We account for our investment in Cetel under the equity method.
VIP
In December, 1999 our subsidiary RSL COM Finland Oy, purchased 51% of the
equity of VIP Tietoverkot Oy ("VIP") for a cash purchase price of approximately
$0.9 million. VIP offers internet access, web hosting and value-added
application services in all major cities in Finland. In connection with this
acquisition, we recorded approximately $0.8 million as goodwill.
In addition, during 1999 we acquired minority interests of several
subsidiaries primarily in Australia, Austria, Finland and the U.S. for cash and
common stock of $33.9 million.
F-8
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
2. ACQUISITIONS--(CONTINUED)
1998 Acquisitions
Telecenter OY
In January, 1998 our subsidiary RSL COM Finland Oy, purchased 90% of the
equity of Telecenter OY, an independent sales agent in Finland. We paid
approximately $14.4 million and recorded approximately $8.1 million as goodwill.
First Direct Communications Pty. Limited and Link Telecommunications Pty Ltd.
In March 1998, our subsidiary RSL COM Australia Pty. Ltd. acquired the
customer base of First Direct Communications Pty. Limited and Link
Telecommunications Pty Ltd., two switchless mobile telecommunications resellers,
for approximately $19.6 million and recorded the same amount as a customer base.
Tele 2001
In May, 1998 our subsidiary RSL COM Sweden AB, purchased 100% of the equity
of Tele 2001, a Swedish Telecommunications reseller, for approximately
$1.0 million and recorded the same amount as goodwill.
Westinghouse Communications
In July, 1998 we acquired the business of Westinghouse Communications
("WestComm"), a division of CBS Corporation, for a cash purchase price of
approximately $91.2 million plus the assumption of certain liabilities amounting
to $38.3 million. WestComm provides both voice telephony and data services to a
customer base consisting primarily of small to medium size businesses in the
United States. In connection with this purchase, we recorded approximately
$129.5 million as goodwill.
Westel Telecommunications Ltd.
In July, 1998 we acquired 100% of Westel Telecommunications Ltd. ("Westel")
from British Columbia Railway Company for a cash purchase price of approximately
$37.6 million (the "Westel Acquisition"). Westel offers a broad range of
enhanced telecommunications services (including long distance, data, private
line and Internet access) to a customer base consisting primarily of commercial
and residential customers located in British Columbia. In connection with this
purchase, we recorded approximately $9.0 million as goodwill.
MK Telecom Network Inc.
In connection with the Westel Acquisition and in compliance with the
Canadian Telecommunications Act (the "Telecom Act"), we agreed to transfer (the
"MK Network Transfer") Westel's "telecommunications facilities" (as defined in
the Telecom Act) to MK Telecom Network Inc. ("MK Network"), an entity in which
the Company owns a 46.7% beneficial interest, for a purchase price of
approximately $6.5 million, the net realizable value of the assets transferred
to MK Network (such assets were purchased in the Westel acquisition). The MK
Network Transfer was effective as of July 31, 1998. We recorded our investment
in MK Network as an equity investment which was completed through a transfer of
assets, which we recorded at our historical cost basis (which also approximates
net realizable value). The assets transferred consist of telecommunications
microwave facilities. Westel, MK Network and their respective owners are not
related parties.
Comesa
In July 1998, our subsidiary RSL COM Italia S.r.l. ("RSL Italy"), acquired
75% of the equity of Comesa, a telecommunications company located in Northern
Italy. We paid approximately $1.0 million and recorded approximately
$1.5 million as goodwill.
F-9
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
2. ACQUISITIONS--(CONTINUED)
Geovox SARL
In July 1998, our subsidiary RSL COM France S.A., purchased 100% of the
equity of Geovox SARL, a prepaid calling card company operating in Paris, France
for approximately $1.9 million in cash plus the assumption of certain
liabilities amounting to $2.8 million. In connection with this purchase we
recorded approximately $4.7 million as goodwill.
TC Telecom GmbH
In July 1998, our subsidiary RSL COM Austria AG, acquired 100% of the
equity of TC Telecom GmbH, a telecommunications reseller located in Austria, for
approximately $1.1 million and recorded the same amount as goodwill.
Motorola Tel.co
In August 1998 we acquired the business of Motorola Tel.co ("Motorola
Tel.co") in the United Kingdom and Germany from Motorola Inc. Motorola Tel.co
resells wireless services and related products in these countries to a base of
over 350,000 subscribers. We paid approximately $68.1 million plus the
assumption of certain liabilities amounting to $10.6 million and recorded
approximately $78.7 million as goodwill.
One Step Billing Inc.
In October 1998, we acquired a customer base from One Step Billing Inc. in
the United States for approximately $15.1 million and recorded an equal amount
as customer base.
TDL
In December 1998, we acquired the business of TDL, a reseller of
telecommunications services based in the United Kingdom. We paid approximately
$2.1 million plus the assumption of certain liabilities amounting to $1.7
million and recorded approximately $3.8 million as goodwill.
Telegate Holding GmbH
In May 1998, we acquired a 49.86% ownership interest in Telegate Holding
GmbH ("Telegate Holding"), which holds a 54.55% ownership interest in Telegate
AG ("Telegate"), resulting in a 27.19% economic interest in Telegate. Telegate
is a directory information provider in Germany. In December 1998, we increased
our shareholdings in Telegate Holding to 50.2%; no additional contribution was
paid related to this increment. We paid $33.6 million and recorded approximately
$35.6 million as goodwill.
1997 Acquisitions/New Operations
deltathree.com
During 1997, we acquired a majority interest in deltathree.com an internet
telephony service provider. We paid approximately $8.8 million for approximately
72% ownership of deltathree.com We acquired the remaining 28% interest during
1998 for approximately $2.9 million in cash and $8.7 million through the
issuance of stock. In connection with this transaction, we recorded
approximately $15.4 million as goodwill. In November, 1999 deltathree.com
completed an initial public offering and our equity interest was decreased to
68%. We recorded our share of the net proceeds from the sale of deltathree.com's
shares as an increase in our paid in capital.
F-10
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
2. ACQUISITIONS--(CONTINUED)
Maxitel
In April 1997, our subsidiary RSL Com Europe Ltd ("RSL Europe") acquired a
30.4% interest in Maxitel Servicos e Gestao de Telecommunicacoes, S.A.
("Maxitel"), a Portuguese international telecommunications carrier for
$2.1 million, and in 1998 increased its ownership interest in Maxitel to 39% for
an additional $1.3 million.
Pacific Star Communications Limited
In April 1997, we acquired substantially all of the commercial customer
contracts of Pacific Star Communications Limited, an Australian based company.
We paid approximately $1.5 million in cash and recorded this amount as a
customer base.
Newtelco
In August 1997, our subsidiary RSL Europe purchased 90% of the stock of
Newtelco Telekom AG, an Austrian start-up telecommunications company for an
$800,000 investment in the company.
RSL Com Italia S.r.l
In August 1997, our subsidiary RSL Europe acquired 85% of the stock in RSL
Italy, an Italian telecommunications reseller. We paid approximately $1.7
million for our investment in RSL Italy.
EZI Phonecard Holdings Pty. Limited
In October 1997, our subsidiary RSL Australia acquired 85% of EZI Phonecard
Holdings Pty. Limited for approximately $200,000 in cash and the assumption of
net liabilities of $1.3 million. In connection with this purchase, RSL Australia
recorded approximately $1.5 million as goodwill.
Call Australia Group
In October 1997, RSL Australia acquired 100% of the issued capital of each
of Call Australia Pty. Ltd., Associated Service Providers Pty. Limited, Digiplus
Pty. Limited, Power Serve Communications Consultants Pty. Limited, Talk 2000
Networks Pty. Limited and Telephone Bill Pty. Limited (collectively the "Call
Australia Group"), leading Australian switchless resellers, for approximately
$24.5 million. In 1998, we made a final payment of $1.0 million plus an
assumption of liabilities of approximately $2.9 million. In connection with this
purchase, RSL Australia recorded approximately $28.4 million as goodwill.
LDM Systems, Inc.
In October 1997, we acquired 100% of the outstanding common stock of LDM
Systems, Inc. ("LDM"). In connection with this acquisition, we paid
approximately $14.9 million in 1997 and recorded a purchase price adjustment of
approximately $4.0 million in 1998. In connection with this transaction, we
recorded approximately $18.9 million as goodwill.
Callcom AG fur TeleKommunikation
In December 1997, RSL Europe acquired a 78.5% interest in Callcom AG fur
TeleKommunikation ("RSL Switzerland") for $2.1 million in cash.
European Telecom S.A./N.V.
In December 1997, RSL Europe acquired 90% of European Telecom S.A./N.V.
("RSL Belgium") which in turn owns 100% of European Telecom SARL ("RSL
Luxemburg"). We paid approximately $18.6 million in 1997 and $0.3 million in
1998 for this acquisition and recorded approximately $19.1 million as goodwill.
F-11
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
2. ACQUISITIONS--(CONTINUED)
Accounting Treatment
Acquisitions, unless otherwise stated, have been accounted for by the
purchase method of accounting and, accordingly, the purchase prices have been
allocated to the assets acquired, primarily fixed assets, accounts receivable
and customer bases, and liabilities assumed based on their estimated fair values
at the dates of acquisition. The excess of the purchase price over the estimated
fair values of the net assets acquired has primarily been recorded as goodwill,
which is amortized over five to twenty years. The valuation of our acquired
assets and liabilities for the 1999 acquisitions are preliminary and as a
result, the allocation of the acquisition costs among the tangible and
intangible assets may change.
The following presents our unaudited pro forma consolidated statements of
operations data for the years ended December 31, 1997 and 1998 as though the
acquisitions of Westinghouse, Westel, LDM, Call Australia Group, and EZI had
occurred on January 1, 1997. All other acquisitions had insigificant operations
prior to the date of acquisition. The unaudited pro forma consolidated
statements do not necessarily represent what our results of operations would
have been had such acquisitions actually occurred on such date.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
Revenues................................................................... $ 556,500 $ 1,015,422
========= ===========
Net loss................................................................... $(102,891) $ (223,588)
========= ===========
Net loss per share......................................................... $ (5.41) $ (5.09)
========= ===========
</TABLE>
Marketing Agreement
In June 1998, we entered into a marketing and distribution services
agreement with Metro Holding AG ("Metro Holding"), the management holding
company for Metro AG, one of the largest retailers in Europe. Under this
agreement, Metro Holding will assist us in promoting, marketing, selling and
distributing our services through Metro AG's wholesale and retail operations in
Europe. This arrangement is designed to provide us access to Metro AG's
extensive distribution network and customer base (which includes a large number
of small and medium-sized businesses). In connection with its alliance with us,
Metro Holding initially acquired in April 1998 a 12.5% equity interest in RSL
Europe. In June 1998, Metro Holding converted all of its interest in RSL Europe
into 1,607,142 shares of our Class A Common Stock (based on value for value) and
purchased an equal number of Class A Common Stock from certain of our
shareholders. In the aggregate at December 31, 1999, Metro Holding holds
approximately 5.8% of our outstanding stock, which it is required to hold until
at least April 1, 2001. We have recorded in the consolidated financial
statements the issuance of such equity at fair market value, $45 million, based
on the quoted market value of our stock at the time of the transaction, and have
recorded the distribution rights as an intangible asset in a like amount which
is being amortized over the five-year life of the agreement.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation--The consolidated
financial statements include the accounts of RSL Communications, Ltd. and its
majority-owned subsidiaries from the date of acquisition or commencement of
operations. All significant intercompany transactions have been eliminated in
consolidation.
We have majority ownership of all of our subsidiaries except for Maxitel,
MK Network and Cetel which we account for under the equity method of accounting.
Management Assumptions--The preparation of the consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities and the reported amounts of revenues and expenses. Such
estimates primarily relate to
F-12
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
reserves recorded for doubtful accounts and accruals for other claims. Actual
results could differ from these estimates.
Foreign Currency Translation and Transaction--Local currencies are
considered the functional currencies of our foreign operating entities. Assets
and liabilities of foreign entities have been translated into United States
dollars using the exchange rates in effect at the balance sheet dates. Results
of operations of foreign entities are translated using the average exchange
rates prevailing throughout the period. We utilize a net settlement process with
our correspondents comprised of special drawing rights ("SDRs"). SDRs are the
established method of settlements among international telecommunications
carriers. The SDRs are valued based upon the values of a basket of foreign
currencies. Translation effects are accumulated as part of other comprehensive
loss in equity. Gains and losses from foreign currency transactions are included
in the consolidated statements of operations and comprehensive loss. Foreign
currency transaction gains for the year ended December 31,1999 were $17 million
as compared to losses for the year ended December 31, 1998 of $11 million
primarily as a result of the decrease in the Deutsche mark against the U.S.
dollar in 1999 as compared with an increase in the Deutsche mark against the
U.S. dollar in 1998 in connection with our 1998 Deutsche mark denominated Senior
Discount Notes.
Cash and Cash Equivalents--We consider all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
Accounts Receivable--Accounts receivable are stated net of the allowance
for doubtful accounts of approximately $26,000,000 and $37,000,000 at December
31, 1998 and 1999, respectively. We recorded bad debt expense of approximately
$10,900,000, $9,000,000 and $18,000,000 for the years ended December 31, 1997,
1998 and 1999, respectively.
Accrued Expenses--Accrued expenses for the years ended December 31, 1998
and 1999 consist primarily of accrued interest, accrued acquisition costs and
accrued transmission costs.
Marketable Securities--Marketable securities consist principally of U.S.
Treasury bills, commercial paper and corporate notes with a maturity date
greater than three months when purchased. Available for sale securities are
stated at the lower of amortized cost or market value, and the held to maturity
securities are stated at amortized cost. Gains and losses, both realized and
unrealized, are measured using the specific identification method. Market value
is determined by the most recently traded price of the security at the balance
sheet date. Marketable securities are defined as either available for sale or
held to maturity securities under the provisions of SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," depending on the
security.
Property and Equipment and Related Depreciation--Property and equipment are
stated at cost or fair value at the date of acquisition, and in the case of
equipment under capital leases, the present value of the future minimum lease
payments, less accumulated depreciation and are amortized over the remainder of
the life. Depreciation is calculated using the straight-line method over the
estimated useful lives of the depreciable assets, which range from three to
fifteen years. Improvements are capitalized, while repair and maintenance costs
are charged to operations as incurred. Depreciation expense was $9,794,000,
$32,439,000 and $90,477,000 for the years ended December 31, 1997, 1998 and
1999, respectively.
Impairment of Assets--Our long-lived assets and identifiable intangibles
are reviewed for impairment whenever events or changes in circumstances indicate
that the net carrying amount may not be recoverable. When such events occur, we
measure impairment by comparing the carrying value of the long-lived asset to
the estimated undiscounted future cash flows expected to result from the use of
the assets and their eventual disposition. If the sum of the expected
undiscounted future cash flows is less than the carrying amount of the assets,
we would recognize an impairment loss. The impairment loss, if determined to be
necessary, would be measured as the amount by which the carrying amount of the
asset exceeds the fair value of the asset. We determined that, as of December
31, 1998 and 1999, there had been no impairment in the carrying value of the
long-lived assets.
F-13
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Goodwill and Related Amortization--Goodwill represents the excess of cost
over the fair value of the net assets of acquired entities, and is being
amortized using the straight-line method over five to twenty years. We
periodically review the value of our goodwill to determine if an impairment has
occurred. We measure the potential impairment of recorded goodwill by the
undiscounted value of expected future cash flows in relation to our net goodwill
in our subsidiary. Based on our review, we do not believe that an impairment of
our goodwill has occurred as of December 31, 1998 and 1999.
Other Intangible Assets--Other intangible assets acquired through purchase
acquisitions include distribution rights, customer bases and operating licenses
which are being amortized over lives ranging from two to five years using the
straight-line method. Deferred financing costs incurred in connection with the
Senior Notes are being amortized on a straight-line basis over ten years.
Deposits and Other Assets--Deposits consist principally of amounts paid to
our carrier vendors.
Revenue Recognition and Deferred Revenue--We record revenue based on
minutes (or fractions thereof) of customer usage. We record payments received in
advance for prepaid calling card services and services to be supplied under
contractual agreements as deferred revenue until such related services are
provided.
Other Liabilities--Other liabilities consists primarily of value-added tax
and payroll and related benefits obligations.
Cost of Services--Cost of services is comprised primarily of transmission
costs.
Selling Expenses--Selling costs such as recurring commissions and marketing
costs are treated as period costs. Customer acquisition costs, primarily related
to our cellular businesses, are amortized over the average lives of the
contracts of approximately twelve months. Such costs are recorded in selling,
general and administrative expenses in our consolidated statements of operations
and comprehensive loss.
Income Taxes--We account for income taxes under the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes". SFAS No. 109 establishes financial accounting and reporting standards
for the effect of income taxes that result from activities during the current
and preceding years. SFAS No. 109 requires an asset and liability approach for
financial reporting for income taxes. Our foreign subsidiaries file separate
income tax returns in the jurisdiction of their operations. Our United States
subsidiaries file stand-alone United States income tax returns.
Loss per Common Share--Our loss per common share is calculated by dividing
the loss attributable to common shares by the weighted average number of shares
outstanding. Outstanding common stock options and warrants are not included in
the loss per common share calculation as their effect is antidilutive.
Sales of Subsidiary Stock--During 1999 our subsidiaries Telegate AG and
deltathree.com issued common shares in connection with their initial public
offerings raising $144.0 million in the aggregate. We recorded our share of the
net proceeds of these sales as additional paid in capital.
Effects of Recently Issued Accounting Standards
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments and hedging activities. Generally, it
requires that an entity recognize all derivatives as either an asset or
liability and measure those instruments at fair value, as well as identify the
conditions for which a derivative may be specifically designed as a hedge. SFAS
No. 133 is effective for fiscal years beginning after June 15, 2000. We have not
participated in any hedging activities in connection with foreign currency
exposure.
F-14
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Reclassification
Certain previously reported amounts have been reclassified to conform with
the current period presentation.
4. SPECIAL CHARGE
During the third quarter of 1999, we recorded a special charge of
approximately $32.1 million, primarily for consolidating locations, streamlining
operations, discontinuing certain prepaid calling card plans and exiting the
telemarketing business. The special charge is comprised of approximately
$13.1 million for terminating various operating leases, $12.4 million for the
severance of 74 telemarketing employees, as well as world-wide staff reductions
of 115 employees, and $6.6 million for the write down of certain telemarketing
and prepaid calling card assets of which $2.0 million was associated with the
write-off of inventory. These expenses appear in the accompanying year ended
December 31, 1999 income statement as $30.1 million in the special charge line
item and $2.0 million in the cost of services line item. During the fourth
quarter of 1999, we incurred $3.0 million for terminating leases, $5.8 million
for the severance of 76 telemarketing employees and 104 other staff employees
and $6.6 million for asset write downs including inventory. As of December 31,
1999 the reserve balance was $16.7 million, of which $10.1 million is for
terminating leases and $6.6 million is for severance payments to be paid out
primarily to former employees who have already been severed, during the first
three quarters of 2000 in accordance with local country requirements.
5. CONCENTRATION OF CREDIT RISK
We are subject to significant concentrations of credit risk which consist
principally of trade accounts receivable, cash and cash equivalents, and
marketable securities. Our U.S. subsidiaries sell a significant portion of their
services to other carriers and, as a result, maintain significant receivable
balances with certain carriers. If the financial condition and operations of
these customers deteriorate below critical levels, our operating results could
be adversely affected.
We maintain our cash with high quality credit institutions, and our cash
equivalents and marketable securities are in high quality securities.
6. MARKETABLE SECURITIES
A summary of our available for sale marketable securities at December 31,
1998 and December 31, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1999
--------------------- --------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------- -------- --------- -------
<S> <C> <C> <C> <C>
Corporate Notes.......................................... $ 6,651 $ 6,640 $ -- $ --
Medium-Term Notes........................................ 5,023 5,006 -- --
Commercial Paper......................................... 86,963 86,997 50,203 50,210
Federal Agency Notes..................................... -- -- 22,640 22,603
--------- -------- ------- -------
98,637 98,643 72,843 72,813
Mutual Funds--Long-Term.................................. 13,950 12,911 13,950 11,341
--------- -------- ------- -------
$ 112,587 $111,554 $86,793 $84,154
========= ======== ======= =======
</TABLE>
We have recorded our available for sale marketable securities at the lower
of amortized cost or market value. The difference between amortized cost and
market value has been recorded as unrealized loss on securities within
shareholders' equity (deficit).
F-15
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
6. MARKETABLE SECURITIES--(CONTINUED)
The carrying value of the available for sale marketable securities by
maturity date at December 31, 1998 and December 31, 1999 is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Matures in one year............................................... $ 98,637 $72,813
Matures after one year through three years........................ 12,911 11,341
--------- -------
Total............................................................. $ 111,548 $84,154
========= =======
</TABLE>
Proceeds from the sale of available for sale marketable securities for the
years ended December 31, 1997, 1998 and 1999 were $27,675,000, $35,757,000 and
$41,840,000, respectively. Gross gains (losses) of $(2,000), $(367,000) and
$11,000 were realized on these sales for the years ended December 31, 1997, 1998
and 1999.
7. INCOME TAXES
We have incurred consolidated losses since inception for both book and tax
purposes. Several of our subsidiaries which are profitable have recorded income
tax expense in the aggregate of approximately $401,000, $1,334,000 and
$3,341,000 for the years ended December 31, 1997, 1998 and 1999, respectively.
As of December 31, 1997, 1998 and 1999, we had net operating loss carryforwards
generated primarily in the United States and the United Kingdom of approximately
$148 million, $367 million and $725 million, respectively. The net operating
loss carryforwards will expire at various dates beginning in 2010 through 2014
if not utilized. The utilization of the net operating loss carryforwards is
subject to certain limitations.
In accordance with SFAS No. 109, we have computed the components of
deferred income taxes as of December 31, 1998 and 1999 as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1999
--------- ---------
<S> <C> <C>
Deferred tax assets................................................. $ 147,000 $ 290,000
Less valuation allowance............................................ (147,000) (290,000)
--------- ---------
Net deferred tax assets............................................. $ -- $ --
========= =========
</TABLE>
Our net operating losses generated the deferred tax assets. At
December 31, 1998 and 1999, a valuation allowance of $147,000,000 and
$290,000,000, respectively, is provided as the realization of the deferred tax
assets is not assured.
8. NOTES PAYABLE AND LONG-TERM DEBT
Senior Notes
On October 3, 1996, RSL Communications PLC ("RSL PLC"), a wholly-owned
subsidiary of RSL Communications, Ltd. (apart from its subsidiaries, the
"Guarantor"), issued (the "Debt Offering") 300,000 Units, each consisting of an
aggregate of one $1,000 Senior Note (collectively, the "1996 Notes") due 2006
bearing interest at the rate of 12 1/4% and one warrant to purchase 3.975 Class
A common shares which expire in ten years (collectively, the "Warrants"). The
exercise price of such Warrants is $0.00457.
The value ascribed to the Warrants was $4,000,000. The unamortized discount
is recorded as a reduction against the face value of the 1996 Notes, and is
amortized over the life of the 1996 Notes.
Such unamortized discount was $1,783,000 and $1,553,000 at December 31,
1998 and December 31, 1999, respectively.
The 1996 Notes, which are guaranteed by the Guarantor, are redeemable, at
RSL PLC's option, subsequent to November 15, 2001, initially at 106.1250% of
their principal amount, declining to 103.0625% of their
F-16
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
8. NOTES PAYABLE AND LONG-TERM DEBT--(CONTINUED)
principal amount for the calendar year subsequent to November 15, 2002, and at
100% of their principal amount subsequent to November 15, 2003. The 1996 Notes,
or a portion thereof, may also be redeemed upon the consummation of a public
equity offering which yields proceeds in excess of a specified amount.
In April 1998, we used approximately $101.0 million of the net proceeds
from our initial public offering of shares of Class A Common Stock (the "IPO")
in 1997 to redeem (the "Equity Clawback") $90.0 million of the 1996 Notes at a
premium of $11.0 million, as permitted under the 1996 Indenture. In April 1998,
we used approximately $43.1 million to redeem (the "Buyback") $37.5 million of
the 1996 Notes at a premium of $5.6 million, as permitted under the 1996
Indenture. The redemption premiums, and part of the discount and offering costs
were expensed in the amount of $20.8 million in the second quarter of 1998 as an
extraordinary item.
In connection with the issuance of the 1996 Notes, we were required to
maintain restricted marketable securities in order to make the first six
scheduled interest payments on the 1996 Notes. Such restriction was ended with
the sixth semi--annual payment made in November 1999 and the securities matured.
On February 27, 1998, RSL PLC completed concurrent offerings (the "1998
U.S. Offerings") of $200.0 million principal amount of 9 1/8% Senior Notes due
2008 and $328.1 million principal amount at maturity ($200.0 million initial
accreted value) of 10 1/8% Senior Discount Notes due 2008 (together, the "1998
U.S. Notes"). The 1998 U.S. Offerings generated gross proceeds to us of $400.0
million. On March 16, 1998, RSL PLC completed an offering (the "1998 DM
Offering," and together with the 1998 U.S. Offerings, the "1998 Offerings") of
182.0 million Deutsche mark denominated 10% Senior Discount Notes due 2008 (the
"1998 DM Notes," and together with the 1998 U.S. Notes, the "1998 Notes"). The
1998 DM Offering generated gross proceeds to us of $99.0 million.
In November 1998, RSL PLC issued (the "12% Notes Offering") $100 million
aggregate principal amount at maturity of 12% Senior Notes due 2008 (the "12%
Notes"). The 12% Notes generated gross proceeds to us of approximately $94.5
million.
In December 1998, RSL PLC issued (the "10 1/2% Notes Offering" and,
together with the 12% Notes Offering, the "New Notes Offerings") $200 million
aggregate principal amount of 10 1/2% Senior Notes due 2008 (the "10 1/2% Notes"
and, together with the 12% Notes, the "New Notes"). The 10 1/2% Notes generated
gross proceeds to us of approximately $198.5 million.
In May, 1999 RSL PLC issued (the "9 7/8% Notes Offering") $175 million
aggregate principal amount at maturity of 9 7/8% Senior Notes due 2009. The
9 7/8% Notes generated gross proceeds to us of approximately $170.8 million.
In September, 1999, pursuant to a consent solicitation, we obtained the
consent of holders of our outstanding debt and amended our indentures governing
our debt. These amendments were to permit the issuance and sale of capital stock
of deltathree.com and our Australian subsidiary in public or private
transactions without restricting the use of proceeds solely to investments in
telecommunications assets. In connection with the consent solicitation, total
fees paid were approximately $6.8 million. We recorded these fees as a reduction
in paid in capital received by deltathree.com in connection with its initial
public offering.
In connection with the New 1998 Notes Offerings, RSL PLC entered into
registration rights agreements for the benefit of the holders of the New Notes
(the "New Notes Registration Rights Agreements"), pursuant to which RSL PLC
agreed to offer to exchange the New Notes for substantially identical notes
registered under the Securities Act. In February and March of 1999, in
accordance with the New Notes Registration Rights Agreements, RSL and RSL PLC
offered for exchange the New Notes for substantially identical notes registered
under the Securities Act. The Company's Registration Statement on Form S-4
(Registration No. 333-70023) filed with the Commission with respect to such
offering was declared effective by the Commission on January 26, 1999.
F-17
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
8. NOTES PAYABLE AND LONG-TERM DEBT--(CONTINUED)
The 1996 Notes, the 1998 Notes, the New 1998 Notes and the 1999 Notes are
collectively referred to herein as the "Notes." The Notes are fully and
unconditionally guaranteed as to payment of principal, interest and any other
amounts thereof by us and RSL COM U.S.A.
The indentures pursuant to which the Notes were issued contains certain
restrictive covenants which impose limitations on RSL and certain of its
subsidiaries ability to, among other things: (i) incur additional indebtedness,
(ii) pay dividends or make certain other distributions, (iii) issue capital
stock of certain subsidiaries, (iv) guarantee debt, (v) enter into transactions
with shareholders and affiliates, (vi) create liens, (vii) enter into
sale-leaseback transactions, and (viii) sell assets. Notwithstanding the
foregoing, these indentures do not impose restrictions on our ability to obtain
funds by dividends or loans from our subsidiaries.
At December 31, 1998 and 1999, we were in compliance with the above
restrictive covenants.
Credit Facilities
Through LDM, we have a $10.0 million revolving credit facility all of which
was available at December 31,1999. This facility accrues interest at the prime
rate plus 2.5% per annum.
At December 31, 1999, Telegate had $26 million of revolving credit
facilities with various banks that accrue interest at a rate of 6.0%, all of
which was available.
Through RSL COM Canada, we have a $6.9 million revolving credit facility of
which $5.3 million was used for the lease of telecommunications equipment. The
lease terms provide for monthly payments through February 2006 at an interest
rate of 8.7% per annum.
Vendor Financing
One of our primary equipment vendors has provided some of our subsidiaries
approximately $85 million in vendor financing to fund the purchase of additional
switching and related telecommunications capital equipment. At December 31,
1999, all available amounts were utilized under this facility. Borrowings from
this equipment vendor accrue interest at a rate of LIBOR, plus 3.50% to 5.25% or
STIBOR plus 3.50% depending on the equipment purchased and whether the loan is
guaranteed by the Swedish Export Credits Guarantee Board. We repaid
approximately $30 million of the outstanding balance by the end of the first
quarter of 2000.
Long-term debt maturities at December 31, 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
- --------------------------------------------------------------------------------
<S> <C>
2000............................................................................ $ 1,190
2001............................................................................ 1,150
2002............................................................................ 3,237
2003............................................................................ --
2004............................................................................ --
2005 and thereafter............................................................. 1,327,862
----------
Total........................................................................... 1,333,439
Less Discount................................................................... (140,959)
Less Current Maturities......................................................... (1,190)
----------
Long-Term Debt.................................................................. $1,191,290
==========
</TABLE>
At December 31, 1999, the Notes had a fair value of approximately $1,099
million. The decline in the fair value is primarily due to changes in the
interest rate environment. The remainder of our long-term debt had fair values
which approximated their carrying amounts.
Interest expense on the above notes was approximately $37,136,000,
$70,860,000 and $118,379,000 for the years ended December 31, 1997, 1998 and
1999, respectively.
F-18
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets at December 31, 1998 and 1999 consist
of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1999
-------- ---------
<S> <C> <C>
Goodwill............................................................. $513,068 $ 601,573
Customer base........................................................ 49,822 52,924
Deferred financing costs............................................. 19,902 22,572
Distribution right................................................... 47,281 47,459
Other intangibles.................................................... 13,837 19,195
-------- ---------
643,910 743,723
Less accumulated amortization........................................ (54,393) (137,684)
-------- ---------
Goodwill and Other Intangible Assets--Net............................ $589,517 $ 606,039
======== =========
</TABLE>
Amortization expense for the years ended December 31, 1997, 1998 and 1999
was $9,980,000 $43,006,000, and $87,388,000, respectively.
10. SHAREHOLDERS' EQUITY
Common Stock
On September 30, 1997, we revised our capital structure (the
"Recapitalization"), in part to (i) effect a 2.19-for-one stock split for each
outstanding share of each class of common shares and each outstanding share of
Preferred Stock, (ii) increase the number of authorized shares of its Class A
Common Stock and Class B Common Stock to an aggregate of 438,000,000 shares and
(iii) increase the number of authorized shares of its Preferred Stock to
65,700,000. The holders of the Class A Common Stock are entitled to one vote per
share, and the holders of the Class B Common Stock are entitled to ten votes per
share. During 1998, 4,515,411 shares were converted from Class B Common Stock in
exchange for Class A Common Stock.
On September 30, 1997, we commenced an initial public offering of 8,280,000
shares of its Class A Shares. The aggregate offering price of the 8,280,000
shares of Class A Common Stock sold in the equity offering to the public was
$182,160,000 (at $22.00 per share), with net proceeds to us of $167,542,000.
On November 30, 1998, we commenced a secondary public offering of 7,544,278
shares of its Class A Shares. The aggregate offering price of the 7,544,278
shares of Class A Common Stock sold in the equity offering to the public was
$180,120,000 (at $23.875 per share), with net proceeds to us of $169,989,000.
In June 1997, RSL North America's founder and former Chairman elected to
exchange his shares in RSL North America, a subsidiary of the Company, for
shares in the Company. Accordingly, we issued 1,457,094 of the Class A Common
Stock, par value $0.00457 per share, of the Company in exchange for 15,619
shares of common stock of RSL North America and recorded approximately
$32,575,000 as additional paid in capital and an equal amount as goodwill.
In March 1998, we registered 1,152,715 shares of Class A Common Stock to be
issued pursuant to the terms of the warrant agreement governing the Warrants
(the "Warrant Registration") and 300,000 shares of Class A Common Stock to be
sold by a corporation wholly owned by a former Vice Chairman of the Company, and
members of his family (the "Selling Shareholder") (which necessarily assumes the
conversion by the Selling Shareholder of an identical number of shares of Class
B Common Stock). The Warrant Registration was required pursuant to a
registration rights agreement entered into in connection with the private
offering (the "1996 Units Offering") of 300,000 units (the "Units") each
consisting of (i) $1,000 principal amount of 12 1/4% Senior Notes due 2006 and
(ii) one warrant to purchase 3.975 shares of Class A Common Stock of RSL (each a
"Warrant"). During 1997, 1998 an 1999 we issued 39,740, 242,943 and 179,445
shares of Class A Common Stock upon the exercise of warrants, respectively.
F-19
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
10. SHAREHOLDERS' EQUITY--(CONTINUED)
In connection with the marketing and distribution services agreement
entered into with Metro Holding in June 1998, as mentioned in Note 2, we issued
1,607,142 shares of Class A Common Stock.
During 1998 and 1999, we issued 1,232,339 and 798,475 shares of Class A
Common Stock upon the exercise of options, respectively. In addition, we issued
54,750 shares in both 1998 and in 1999 of Class A Common Stock upon the vesting
of restricted stock.
During 1998 and 1999, in connection with the acquisition of certain
minority interests, we issued 428,272 and 1,492,314 shares of Class A Common
Stock, respectively.
Preferred Stock
During 1995, we issued 9,243,866 shares of our preferred stock to the
holders of our Class B Common Stock for cash of $13,354,000. The preferred stock
ranked senior to our common stock as to dividends and a liquidation preference
of $1.00 per share. Each share was convertible at the holder's option into 2.19
shares of Class B Common Stock. All preferred shares were automatically
converted into our Class B Common Stock in 1997 as the public offering yielded
proceeds in excess of $25,000,000, in accordance with the terms of the Preferred
Stock agreement. Dividends, at the rate of 8%, were cumulative. Upon conversion
of the shares of the preferred stock, the cumulative dividends were deemed to be
canceled and waived upon conversion. The cumulative amount of such dividends was
approximately $16,000. As of December 31, 1998 and 1999, there was no preferred
stock outstanding.
11. CAPITAL LEASE OBLIGATIONS
Future minimum annual payments applicable to assets held under capital
lease obligations for years subsequent to December 31, 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
- ----------------------------------------------------------------------------------
<S> <C>
2000.............................................................................. $ 26,287
2001.............................................................................. 24,152
2002.............................................................................. 18,596
2003.............................................................................. 12,841
2004.............................................................................. 10,726
2005 and thereafter............................................................... 23,880
--------
Total minimum lease obligations................................................... 116,482
Less interest..................................................................... (11,653)
--------
Present value of future minimum lease obligations................................. 104,829
Less current portion.............................................................. (22,158)
--------
Long-term lease obligations....................................................... $ 82,671
========
</TABLE>
The assets and liabilities under capital leases are recorded at the present
value of the minimum lease payments using effective interest rates ranging from
9% to 11% per annum.
Assets held under capital leases aggregated $76,087,000 and $109,020,000 at
December 31, 1998 and 1999, respectively. At December 31, 1998 and 1999, the
related accumulated depreciation was $4,895,000 and $18,512,000 respectively.
12. RELATED PARTY TRANSACTIONS
During 1999 RSL Management Corporation ("RSL Management"), which is wholly
owned by Ronald S. Lauder, the Chairman of the Board of the Company and our
principal shareholder, sublet an aggregate of 7,500 square feet of office space
to us at an annual rent of $591,000 per annum. RSL Management sublet such space
from The Estee Lauder Companies Inc. ("Estee Lauder"). Ronald S. Lauder is also
a principal shareholder
F-20
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
12. RELATED PARTY TRANSACTIONS--(CONTINUED)
of Estee Lauder and Leonard A. Lauder, a director of the Company, is the
Chairman of the Board of Directors of Estee Lauder. Fred Langhammer, a director,
is the President and Chief Executive Officer of Estee Lauder. This sublease
agreement was terminated without penalty on March 31, 2000. In addition, RSL
Management provides payroll and benefit services to the Company for an annual
fee of $6,000, $9,000 and $12,000 for the years ended December 31, 1997, 1998
and 1999, respectively.
We have employment contracts with certain of our executive officers. These
agreements expire beginning December 2000 through January, 2003 unless
terminated earlier by the executive or by us, and provide for annual salaries,
and bonuses based on our performance. Salary expense for executive officers was
approximately $1.6 million, $2.1 million and $2.3 million for the years ended
December 31, 1997, 1998 and 1999, respectively. The aggregate commitment for
annual future salaries pursuant to the employment agreements at December 31,
1999, excluding bonuses, is approximately $2.1 million, $2.2 million and $2.3
million for 2000, 2001 and 2002, respectively.
13. EMPLOYEE BENEFIT PLANS
In 1996, we instituted a defined 401(k) contribution plan which provides
retirement benefits for most of our U.S. employees. Our contributions to the
defined contribution plan, which are based on a percentage of the employee's
annual compensation subject to certain limitations, were not significant for the
years ended December 31, 1997, 1998 and 1999. Our subsidiary, Telegate,
established a defined benefit pension plan covering the members of Telegate's
board of directors effective December 31, 1998. Telegate did not make any
contributions to the plan nor did the plan pay any benefits in the year ended
December 31, 1999.
14. STOCK OPTION PLANS
1995 Stock Option Plan
In April 1995, we established an Incentive Stock Option Plan (as amended
and restated, the "1995 Plan") to reward employees, nonemployee consultants and
directors for service to us and to provide incentives for future service and
enhancement of shareholder value. The 1995 Plan is administered by the
Compensation Committee of our Board of Directors (the "Committee"). The
Committee consists of three members of the Board of Directors. The Plan provides
for awards of up to 2,847,000 shares of our Class A Common Stock.
The options granted under the 1995 Plan terminate on the tenth anniversary
of the date of grant. As of December 31, 1999 a total of 2,716,617 options have
been granted of which 444,868 were outstanding (and 327,703 were outstanding and
exercisable) under this plan. In connection with the initial public offering of
our Class A Common Shares in 1997, this plan was replaced by our other existing
plans. We will not grant further options under the 1995 Plan.
1997 Stock Incentive Plan
The 1997 Stock Incentive Plan (the "1997 Stock Plan") was adopted in
conjunction with the initial public offering of our Class A common shares in
1997 to attract, retain and motivate our key employees. The 1997 Stock Plan is
administered by the Committee. The 1997 Stock Plan provides for the grant of the
incentive and non-incentive stock options, stock appreciation rights, restricted
stock, and various combinations thereof. The maximum number of shares of
Class A Common Stock available under the 1997 Stock Plan is 8,100,000, with no
more than 500,000 options or stock appreciation rights to be granted to any one
participant in a calendar year. In March, 1999 the Committee determined that
with respect to awards previously granted and awards granted in the future, in
the event of a change in control, 100% of the awards granted will immediately
become fully vested and excercisable or, at the Committee's sole discretion, the
award may be exchanged for a payment to a participant in cash of an amount equal
to the excess of the change in control price over the exercise price for the
award, provided certain conditions are met. The options vest over a three-year
period and terminate on the seventh
F-21
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
14. STOCK OPTION PLANS--(CONTINUED)
anniversary of the date of grant, unless a different vesting schedule is
designated by the Committee. As of December 31, 1999, a total of 4,605,617
options and 164,250 shares of restricted stock have been granted under this
plan.
1997 Performance Incentive Compensation Plan
During 1997, we established the 1997 Performance Incentive Compensation
Plan (the "1997 Performance Plan") to reward employees for superior performance.
The 1997 Performance Plan is effective through and including the year 2000,
unless extended or earlier terminated by the Board of Directors. Awards under
the 1997 Performance Plan may be made to key employees recommended by the Chief
Executive Officer, selected by the Committee and approved by the Board of
Directors, and may be paid in cash, in shares of Class A Common Stock or in any
combination thereof, provided that at least 50% of such award is required to be
paid in cash. The 1997 Performance Plan provides for the grant of up to 400,000
shares of Class A Common Stock. No shares have been granted under the 1997
Performance Plan.
1997 Directors' Compensation Plan
During 1997, we adopted the 1997 Directors' Compensation Plan (the "1997
Directors' Plan"). Under the 1997 Directors' Plan, each non-employee Director
will be granted options annually to acquire a number of Class A Common Stock
with an aggregate fair market value on the date of grant equal to $50,000,
except for the Chairman and the Vice Chairman of the Board, whose grants have a
fair market value of $150,000 and $75,000, respectively. The 1997 Directors'
Plan provides for the grant of up to 250,000 shares of Class A Common Stock. The
options have a ten-year term and vest over a five-year period, subject to
certain acceleration provisions. A total of 103,365 options have been granted
under this plan.
The exercise price of stock options granted under the 1997 Stock Plan, the
1997 Performance Plan and the 1997 Directors' Plan (collectively, the "1997
Plans") will equal the fair market value of the Class A Common Stock on the date
of the grant. We record stock option grants under the 1997 Plans based on the
fair market value of the underlying security on the date of grant. We used the
expected life of the underlying security to calculate the fair market value of
such security.
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF RANGE OF AVERAGE
OPTIONS EXERCISE PRICES EXERCISE PRICE
---------- --------------- --------------
<S> <C> <C> <C>
Outstanding at December 31, 1996.................................... 1,707,324 $ .000457-2.06 $ 0.82
Granted........................................................... 1,459,195 .00457-26.15 9.675
Exercised......................................................... (712,142) .000457 .000457
Rescinded/Canceled................................................ -- -- --
---------- --------------- --------
Outstanding at December 31, 1997.................................... 2,454,377 .000457-26.15 5.94
Granted........................................................... 675,822 .043-26.15 21.974
Exercised......................................................... (1,232,339) .000457-18.625 1.32
Rescinded/Canceled................................................ (20,929) 12.142-22.00 13.747
---------- --------------- --------
Outstanding at December 31, 1998.................................... 1,876,931 .000457-26.15 14.655
Granted........................................................... 3,583,258 0.043-31.44 20.96
Exercised......................................................... (798,475) .000457-18.265 1.459
Rescinded/Canceled................................................ (235,459) 24.26 24.26
---------- --------------- --------
Outstanding at December 31, 1999.................................... 4,426,255 .000457-31.44 21.633
---------- --------------- --------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED
SHARES AVERAGE
EXERCISABLE EXERCISE PRICE
----------- --------------
<S> <C> <C>
December 31, 1997............................................................ 459,607 $ 0.44
December 31, 1998............................................................ 397,115 $ 4.11
December 31, 1999............................................................ 754,522 $12.40
</TABLE>
F-22
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
14. STOCK OPTION PLANS--(CONTINUED)
The following table summarizes information concerning the remaining options
granted under the 1995 Plan and the 1997 Plans outstanding as of December 31,
1999.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ------------------------------------------------------------ OPTIONS EXERCISABLE
WEIGHTED ------------------------
WEIGHTED AVERAGE WEIGHTED
NUMBER AVERAGE REMAINING NUMBER OF AVERAGE
RANGE OF OF SHARES EXERCISE CONTRACTUAL SHARES EXERCISE
EXERCISE PRICES OUTSTANDING PRICE LIFE EXERCISABLE PRICE
- ---------------- ----------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.000457 174,293 $ 0.00 5.3 174,293 $ 0.00
0.00457 121,978 0.00 7.5 48,978 0.00
0.01 54,750 0.01 9.6 54,750 0.01
2.05 29,600 2.05 6.6 29,600 2.05
12.14-17.00 88,687 12.36 6.9 49,060 12.37
18.26-26.15 3,556,947 23.25 6.0 397,841 21.84
28.88-31.44 400,000 29.74 6.1 0 0
- ---------------- --------- ------ --- ------- ------
$0.000457-31.44 4,426,255 $21.63 6.1 754,522 $12.40
================ ========= ====== === ======= ======
</TABLE>
At December 31, 1999, we have authorized and reserved the following amounts
for future grants: approximately 3,514,842 shares of Class A Common Stock under
the 1997 Stock Plan, 400,000 under the 1997 Performance Plan and 150,044 under
the 1997 Directors' Plan.
SFAS Statement No. 123, "Accounting for Stock Based Compensation" ("SFAS
No. 123") was issued by the FASB in 1995 and if fully adopted, changes the
methods for recognition of costs on plans similar to those we have. Adoption of
the recognition provisions of SFAS No. 123 is optional; however, pro forma
disclosures as if we adopted the cost recognition requirements under SFAS No.
123 are presented below.
Under SFAS No. 123, for options granted, the fair value at the date of
grant was estimated using the Black-Scholes option pricing model. The fair value
was estimated using the minimum value method. Under this method, a volatility
factor of approximately 0.7 was used for options granted on or after the date of
the initial public offering and the minimum value method was used for options
granted prior to the date of the initial public offering, as there was no market
for our common stock in which to measure the stock price volatility.
The following weighted average assumptions were used in calculating the
fair value of the options granted in the years ended December 31, 1997, 1998 and
1999, respectively: risk-free interest rates between 4.54% and 5.95%; no
dividends are expected to be declared; expected life of the options are between
39 and 51 months, between 18 and 42 months and between 18 and 42 months,
respectively; and a maximum contractual life of 10 years.
F-23
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
14. STOCK OPTION PLANS--(CONTINUED)
For purposes of the pro forma disclosures, the estimated fair value of the
options granted is amortized to compensation expense over the options' vesting
period. Our pro forma information is as follows:
<TABLE>
<CAPTION>
($ IN THOUSANDS, EXCEPT LOSS PER
COMMON SHARE AND WEIGHTED AVERAGE
FAIR VALUE OF OPTIONS GRANTED)
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net loss:
As reported........................................................... $(100,199) $(219,224) $(358,227)
Pro forma............................................................. (118,176) (224,197) (380,929)
Net loss per common share:
As reported........................................................... (5.27) (4.99) (6.63)
Pro forma............................................................. (6.22) (5.11) (7.05)
Weighted average fair value of options granted during the period........ $ 12.32 $ 7.36 $ 12.01
</TABLE>
We also granted restricted units ("Restricted Units") under the 1997 Stock
Plan. All grants of Class A Common Stock and Restricted Units vest over a
three-year period and were made at the fair market value on the date of grant.
Restricted Units granted under the 1997 Plan to certain employees generally are
convertible into shares of Class A Common Stock or cash, at our discretion.
As of December 31, 1999, the approximate total number of shares of Class A
Common Stock into which all outstanding Restricted Units may be converted, based
on the valuations attributed to our subsidiaries is estimated to be
approximately 1,099,000. As of December 31, 1999, vested and exercisable
Restricted Units which may be converted, based on the valuations attributed to
the Company's subsidiaries is estimated to be 447,000 at a weighted average
exercise price of $2.47 per share.
Upon completion of deltathree.com's initial public offering, shares of its
Class A common stock were issued in exchange for vested restricted units on a
one-for-one basis upon payment of the related exercise price. In addition,
options were issued to purchase shares of deltathree.com's Class A common stock
in exchange for unvested restricted units on a one-for-one basis, with the same
exercise prices and vesting schedules as the corresponding restricted units.
Pursuant to generally accepted accounting principles, the restricted units were
considered variable grants. Consequently, the changes in the fair value of the
underlying shares at each balance date affected the aggregate amount of deferred
compensation recorded by deltathree.com and by us.
In April 1999, deltathree.com granted options to purchase an aggregate of
1.1 million shares of its common stock to executive officers of deltathree.com,
subject to completion of its initial public offering. Such options vest over a
three-year period from the date of grant and are exercisable for a period of
seven years from the date of grant. We recorded deferred compensation expense of
$23.6 million in 1999 primarily related to the deltathree.com restricted units
and options. As of December 31, 1999 $8.3 million was deferred and is included
as a reduction of stockholders' equity and is being amortized by charges to
operations over the three-year vesting period.
In addition, in November 1999, deltathree.com adopted the 1999 Stock
Incentive Plan ("the Plan"). Under the Plan, 4,000,000 shares were reserved for
issuance upon the exercise of awards to be granted. In addition,
deltathree.com's compensation committee may grant both incentive and
non-incentive stock options for common stock of deltathree.com. The options
generally have a term of seven years and become exercisable in three equal
installments commencing on the first anniversary of the date of the grant. The
purchase price per share payable upon exercise of an option is no less than the
fair market value of the share at the date of grant. As of December 31, 1999,
options to purchase 502,800 shares of deltathree.com were outstanding with
exercise prices of $15 and $25 per share.
F-24
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
15. COMMITMENTS AND CONTINGENCIES
At December 31, 1999, we were committed to unrelated parties for the rental
of office space under operating leases. Minimum annual lease payments with
respect to the leases is as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended
- -----------------------------------------------------------------------------------
<S> <C>
2000............................................................................... $11,769
2001............................................................................... 8,539
2002............................................................................... 6,458
2003............................................................................... 5,445
2004 and Thereafter................................................................ 5,419
-------
$37,630
=======
</TABLE>
Rent expense on the above leases for the years ended December 31, 1997,
1998 and 1999 was $3,842,000, $4,724,000 and $8,668,000 respectively.
We are also committed to pay for transmission capacity under certain
operating leases. The minimum annual lease payments with respect to these
agreements is as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended
- ----------------------------------------------------------------------------------
<S> <C>
2000.............................................................................. $135,286
2001.............................................................................. 43,653
2002.............................................................................. 29,678
2003 and Thereafter............................................................... 3,220
--------
$211,837
========
</TABLE>
We recorded expenses in connection with such commitments for the years
ended December 31, 1997, 1998 and 1999 of approximately $9,100,000, $81,997,000
and $141,781,000 respectively.
Commitments and Contingencies--On October 8, 1999, Aerotel, Ltd. and
Aerotel U.S.A. commenced a suit against us, deltathree.com and one of our U.S.
subsidiaries in the United States District Court for the Southern District of
New York. Aerotel alleges that we are infringing on a patent issued to Aerotel
in November 1987 by making, using, selling and offering for sale prepaid
telephone card products in the United States. Aerotel seeks an injunction to
stop us from using technology covered by this patent, monetary damages in an
unspecified amount and reimbursement of attorneys' fees. We have answered the
complaint and the parties are currently engaged in pre-trial discovery. As we
continue to evaluate these claims, we believe that we have meritorious defenses
to the claims and intend to defend the lawsuit vigorously. However, the outcome
of the litigation is inherently unpredictable and an unfavorable result may have
a material adverse effect on us. Regardless of the ultimate outcome, the
litigation could result in substantial expenses to us and significant diversion
of efforts by our managerial and other personnel.
We are, from time to time, a party to litigation that arises in the normal
course of our business operations. Except as previously described, we are not
presently a party to any litigation that we believe could reasonably be expected
to have a material adverse effect on our business or results of operations.
We are involved in various claims that arose in the ordinary course of our
businesses. The expected settlements from certain of these matters have been
accrued and are recorded as Other Liabilities. In our opinion,
F-25
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
15. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
the settlement of such claims would not have a material adverse effect on our
consolidated financial position or results of our operations.
In connection with the acquisition of one of our United States
subsidiaries, we recorded what we believed to be our best estimate of the
unfavorable portion related to certain transmission capacity agreements. During
1997, we successfully amended such transmission capacity agreements. The
resulting settlement of approximately $7,000,000 was recorded as Other
Income--Net in the statements of operations and comprehensive loss.
We are a party to separate stockholder agreements with certain minority
stockholders of our subsidiaries, pursuant to which we have granted put rights
with roll-up right provisions ("put rights"). These agreements restrict the sale
of the minority stockholders' interest to any person or entity other than us and
in certain cases require us to purchase these interests in certain of our
subsidiaries. Certain of the minority stockholders have the option to require us
to purchase their interests at any time in exchange for cash or Class A Common
Stock (in most instances, at our sole discretion) and have the right to require
us to purchase their interests in whole or in part at various times through
December 31, 2005 or upon cessation of such stockholder's employment with us for
any reason. Generally, the minority stockholder remains employed by us and
receives a salary and a performance based bonus. We have issued put rights to
substantially all of our subsidiaries' minority stockholders at the time we
acquired a majority shareholding in the entity acquired or formed. Such put
rights were issued to create an incentive for our minority shareholders to
maximize the long term value of their respective subsidiaries and to provide
liquidity to the shareholders at the time of exercise.
Our issuance of put rights did not at the time of grant provide the
recipient of such rights with any tangible value other than the right to put
their minority shares to us, in a value for value exchange (fair value of the
minority shares of the subsidiary for fair value of Class A Common Stock or
cash), in most instances, at our sole discretion. Solely for the purpose of
illustration, if all such options were in effect on December 31, 1999, our
aggregate purchase obligation is estimated to be approximately $50.3 million at
that date.
16. SIGNIFICANT CUSTOMER
For the years ended December 31, 1997, 1998 and 1999 no customer accounted
for more than 10% of our revenues.
17. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
General Information
We have four reportable segments: three regional segments in, Europe, North
America and Asia/Pacific and other operations (which include immaterial
operations in Latin America) and deltathree.com, our global internet telephony
subsidiary. Revenues from deltathree.com have been immaterial to us. However
with the proceeds of deltathree.com's initial public offering in November 1999,
it will incur significant marketing and infrastructure costs as it executes its
expansion plans. The Company's three regional segments are strategic business
units that offer primarily identical products and services. They are managed
separately because each business within the regions is naturally aligned to its
geographic neighbors. Similar operating segments that operate in different
countries are managed separately, and, in accordance with the provisions of SFAS
131, we have aggregated similar operating segments into the three regional
segments.
(a) Information about Operating Profit or Loss and Total Assets
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. We evaluate performance based on
the profit or loss from operations.
F-26
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
17. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION--(CONTINUED)
We account for inter-segment sales and transfers as if the sales or
transfers were inter-company and accordingly, no profit or loss is included
among the segments. We do not systematically allocate assets or a proportionate
allocation of indebtedness to the divisions of the subsidiaries constituting our
consolidated group.
General corporate expenses are included within selling, general and
administrative expenses in the statements of operations and comprehensive loss.
The following table provides certain segment data on our operations for the
years ended December 31, 1997, 1998 and 1999 (in thousands).
<TABLE>
<CAPTION>
OPERATING
REVENUE LOSS TOTAL ASSETS
---------- --------- ------------
<S> <C> <C> <C>
Year Ended December 31, 1997
Europe................................................................... $ 73,653 $ (35,905) $ 106,746
North America............................................................ 194,129 (24,954) 109,960
Asia/Pacific and Other................................................... 32,625 (3,430) 58,030
deltathree.com........................................................... 389 (1,166) 8,403
---------- --------- ----------
$ 300,796 $ (65,455) $ 283,139
========== ========= ==========
Year Ended December 31, 1998
Europe................................................................... $ 306,289 $ (56,391) $ 450,596
North America............................................................ 448,232 (14,746) 399,843
Asia/Pacific and Other................................................... 129,675 (14,163) 90,073
deltathree.com........................................................... 1,742 (6,415) 25,676
---------- --------- ----------
$ 885,938 $ (91,715) $ 966,188
========== ========= ==========
Year Ended December 31, 1999
Europe................................................................... $ 736,274 $ (60,873) $ 774,193
North America............................................................ 546,615 (59,220) 433,548
Asia/Pacific and Other................................................... 183,338 (36,442) 155,769
deltathree.com........................................................... 3,622 (38,334) 126,833
---------- --------- ----------
$1,469,849 $(194,869) $1,490,343
========== ========= ==========
</TABLE>
F-27
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
17. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION--(CONTINUED)
(b) Reconciliations (in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998 1999
-------- --------- ---------
<S> <C> <C> <C>
Loss from Operations
Total loss from operations for reportable segments.............. $(65,455) $ (91,715) $(194,869)
Unallocated amounts:
Loss from operations of corporate headquarters............... (15,601) (38,535) (49,069)
-------- --------- ---------
Total consolidated loss from operations......................... $(81,056) $(130,250) $(243,938)
======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1998 1999
---------- ----------
<S> <C> <C>
Assets
Total assets for reportable segments...................................... $ 966,188 $1,490,343
Other operational segment assets.......................................... 30,371 --
Unallocated amounts:
Net assets of corporate headquarters................................... 718,034 312,965
---------- ----------
Total consolidated assets................................................. $1,714,593 $1,803,308
========== ==========
</TABLE>
18. SUMMARIZED FINANCIAL INFORMATION
The following presents summarized financial information of RSL PLC, as of
December 31, 1998 and 1999 and for the years ended December 31, 1997, 1998 and
1999. RSL PLC is a wholly owned subsidiary of ours. RSL PLC had no independent
operations other than serving solely as a foreign holding company for certain of
our U.S. and European operations. The Notes issued by RSL PLC are fully and
unconditionally guaranteed by us and RSL COM U.S.A. Our financial statements
are, except for our capitalization, corporate overhead expenses, certain
operations and available credit facilities, identical to the financial
statements of RSL PLC (in thousands).
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1999
----------------- -----------------
<S> <C> <C>
Current Assets................................................... $ 686,727 $ 520,411
Non-current Assets............................................... 877,696 972,319
Current Liabilities.............................................. 411,667 453,089
Non-current Liabilities.......................................... 1,479,159 1,635,765
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenue................................................. $ 266,142 $ 754,970 $ 1,282,889
Loss Before Extraordinary Item.......................... (95,824) (169,372) (269,870)
Extraordinary Item...................................... -- (20,800) --
Net Loss................................................ (95,824) (190,172) (269,870)
</TABLE>
19. SUBSEQUENT EVENT
In February, 2000 we issued 2.3 million Series A Cumulative Convertible
Preferred Shares (preferred shares) at a price of $50 per share, and received
net proceeds of $111.0 million. The preferred shares are convertible at any time
by the holders into our Class A Common shares at a conversion rate of 2.2584
shares for each preferred share subject to adjustments under certain
circumstances. Dividends accrue at the rate of 7 1/2 % per year and are payable
quarterly. Beginning in February, 2005 we will have the right to redeem some or
all of the preferred shares at a predetermined redemption price plus accrued
dividends, if any. We will be required to
F-28
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
19. SUBSEQUENT EVENT--(CONTINUED)
redeem any preferred shares still outstanding on February 1, 2012 at a
redemption price of $50 per share plus accrued dividends. Holders of the
preferred shares are generally not entitled to any voting rights. The preferred
shares, which have a liquidation value of $50 per share, rank junior to all of
our existing and future debts and obligations.
Concurrent with the issuance of the preferred shares, RSL PLC issued
$100 million and 100 million Euro-denominated Senior Notes due 2010 (the "2000
Notes"). The notes, which are guaranteed by us and by RSL COM U.S.A., a wholly
owned subsidiary of RSL PLC, bear interest at an annual rate of 12 7/8 %. The
debt issuances generated combined proceeds to us of approximately $192.2
million. In connection with the guarantee of the 2000 Notes, RSL COM U.S.A. also
became a guarantor of RSL PLC's previously issued and outstanding Notes.
The following presents summarized financial information of RSL COM U.S.A. as of
December 31, 1998 and 1999 and for the years ended December 31, 1997, 1998 and
1999:
<TABLE>
<CAPTION>
December 31,1998 December 31,1999
---------------- ----------------
<S> <C> <C>
Current Assets........................................ $113,591 $104,951
Non-current Assets.................................... 270,961 272,169
Current Liabilities................................... 212,884 155,446
Non-current Liabilities............................... 171,668 221,674
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1997 December 31, 1998 December 31, 1999
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenue.................... $192,489 $432,042 $498,084
Net Loss................... (19,718) (20,108) (58,577)
</TABLE>
20. SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
The following table sets forth selected unaudited quarterly financial
information for the years ended December 31, 1997, 1998 and 1999.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
-------- -------- --------- ---------
(IN THOUSANDS, EXCEPT LOSS PER SHARE)
<S> <C> <C> <C> <C>
Year Ended December 31, 1997
Revenues....................................................... $ 42,168 $ 67,193 $ 83,243 $ 108,192
======== ======== ========= =========
Net loss....................................................... $(19,147) $(21,570) $ (27,342) $ (32,140)
======== ======== ========= =========
Net loss per share of Common Stock............................. $ (1.82) $ (1.90) $ (2.28) $ (0.77)
======== ======== ========= =========
Weighted average number of shares of Common Stock
outstanding.................................................. 10,541 11,378 11,998 41,633
======== ======== ========= =========
Year Ended December 31, 1998
Revenues....................................................... $131,635 $166,567 $ 265,916 $ 321,820
======== ======== ========= =========
Loss before extraordinary item................................. $(35,334) $(41,176) $ (58,941) $ (62,973)
Extraordinary item............................................. -- (20,800) -- --
-------- -------- --------- ---------
Net loss....................................................... $(35,334) $(61,976) $ (58,941) $ (62,973)
======== ======== ========= =========
Loss per share of Common Stock before extraordinary item....... $ (0.85) $ (0.97) $ (1.34) $ (1.33)
======== ======== ========= =========
Net loss per share of Common Stock............................. $ (0.85) $ (1.47) $ (1.34) $ (1.33)
======== ======== ========= =========
Weighted average number of shares of Common Stock
outstanding.................................................. 41,777 42,295 44,124 47,392
======== ======== ========= =========
Year Ended December 31, 1999
Revenues....................................................... $340,281 $367,700 $ 368,831 $ 393,037
======== ======== ========= =========
Net loss....................................................... $(56,965) $(72,855) $(118,897) $(109,510)
======== ======== ========= =========
Net loss per share of Common Stock............................. $ (1.08) $ (1.36) $ (2.17) $ (2.00)
======== ======== ========= =========
Weighted average number of shares of Common Stock
outstanding.................................................. 52,930 53,394 54,702 54,891
======== ======== ========= =========
</TABLE>
F-29
<PAGE>
------------------------------------------------------
------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND
THE INFORMATION TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANY PERSON
TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THE INFORMATION CONTAINED IN THIS
PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL AND IT DOES NOT SEEK AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE AN OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE SECURITIES.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by
Reference.................................... 2
Where You Can Find More Information............ 2
Certain UK Related Regulatory Issues........... 2
Summary........................................ 3
Risk Factors................................... 11
The Exchange Offers............................ 15
Description of Certain Indebtedness............ 22
Description of The New Notes and The New Notes
Guarantees................................... 29
Certain United States Federal Income Tax
Considerations............................... 64
Certain United Kingdom Tax
Considerations............................... 64
Plan of Distribution........................... 65
Legal Matters.................................. 65
Experts........................................ 65
Service of Process and Enforcement of
Liabilities.................................. 66
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
$100,000,000
(U)100,000,000
RSL COMMUNICATIONS PLC
12 7/8% Senior Exchange Notes due 2010
------------------------
PROSPECTUS
------------------------
Guaranteed as to payment of principal
and interest by
RSL COMMUNICATIONS, LTD.
AND
RSL COM U.S.A., INC.
, 2000
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Bermuda law and the Registrant's Memorandum of Association and
bye-laws, the directors, secretary and other officers for the time being of the
Registrant and the liquidator or trustees (if any) for the time being acting in
relation to any of the affairs of the Registrant and every one of them, and
their heirs, executors and administrators, shall be indemnified and secured
harmless out of the assets of the Registrant from and against all actions,
costs, charges, losses, damages and expenses which they or any of them, their
heirs, executors or administrators, shall or may incur or sustain by or by
reason of any act done, concurred in or omitted in or about the execution of
their duty, or supposed duty, or in their respective offices or trusts, and none
of them shall be answerable for the acts, receipts, neglects or defaults of the
others of them or for joining in any receipts for the sake of conformity, or for
any bankers or other persons with whom any moneys or effects belonging to the
Registrant shall or may be lodged or deposited for safe custody, or for
insufficiency or deficiency of any security upon which any moneys of or
belonging to the Registrant shall be placed out on or invested, or for any other
loss, misfortune or damage which may happen in the execution of their respective
offices or trusts, or in relation thereto, provided that this indemnity shall
not extend to any matter in respect of any fraud or dishonesty which may attach
to any of said persons.
Under the laws of the United Kingdom and RSL PLC's Articles of Association,
except in the case of fraud or misconduct, the directors and officers of RSL PLC
are indemnified out of the assets of RSL PLC against all losses or liabilities
which they may sustain or incur in or about the execution of the duties of their
office or otherwise and no director or officer of RSL PLC shall be liable for
any loss, damage or misfortune which may happen to or be incurred by RSL PLC in
the execution of the duties of their office or in relation thereto.
RSL COM U.S.A., Inc. is incorporated under the laws of the State of
Delaware. Section 145 of the Delaware Corporation Law, as amended, and Article
SEVENTH of RSL USA's Restated Certificate of Incorporation provide for the
indemnification, except in the case of fraud or misconduct, of officers,
directors, employees and agents of RSL USA for certain expenses incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative, and for
the purchase and maintenance of insurance by RSL USA on behalf of officers,
directors, employees and agents of RSL USA against any liability asserted
against, and incurred by, any such officer, director, employee or agent in such
capacity.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------------------------------------------------------
<S> <C>
3.1 Restated Certificate of Incorporation of RSL COM U.S.A., Inc. as filed with the Secretary of State of the
State of Delaware on January 15, 1997
3.2 By-Laws of RSL COM U.S.A., Inc. (as amended to date).
4.1 Note Deposit Agreement, dated as of February 22, 2000, among RSL Communications PLC, RSL Communications,
Ltd. and The Chase Manhattan Bank, as Book-Entry Depositary.
4.2 Dollar Note Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL Communications, Ltd.
and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee.
4.3 Euro Note Indenture, dated as of February 22, 2000, among RSL Communications PLC, RSL Communications,
Ltd. and RSL COM U.S.A., Inc. to the Chase Manhattan Bank, as Trustee
4.4 Exchange and Registration Rights Agreement, dated as of February 22, 2000, among RSL Communications PLC,
RSL Communications, Ltd. and Goldman Sachs & Co.
**5.1 Opinion of Conyers, Dill & Pearman.
**5.2 Opinion of Field Fisher Waterhouse.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------------------------------------------------------
<S> <C>
**5.3 Opinion of Debevoise & Plimpton.
10.1 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 10 1/2%
Senior Notes due 2008
10.2 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 9 1/8%
Senior Notes due 2008
10.3 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 12 1/4%
Senior Notes due 2006
10.4 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 12%
Senior Notes due 2008
10.5 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 10 1/8%
Senior Discount Notes due 2008
10.6 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 10%
Senior Discount Notes due 2008
10.7 Second Supplemental Indenture, dated as of February 22, 2000, by RSL Communications PLC, RSL
Communications, Ltd. and RSL COM U.S.A., Inc. to The Chase Manhattan Bank, as Trustee, regarding 9 7/8%
Senior Notes due 2009
12 Ratio of Earnings to Fixed Charges (included on page 10).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Conyers, Dill & Pearman (included in Exhibit 5.1).
23.3 Consent of Field Fisher Waterhouse (included in Exhibit 5.2).
23.4 Consent of Debevoise & Plimpton (included in Exhibit 5.3).
24.1 Powers of Attorney (included in the signature pages to the Registration Statement).
**25.1 Statement of Eligibility and Qualification under the U.S. Trust Indenture Act of 1939 (Form T-1) of The
Chase Manhattan Bank as trustee with respect to the 12 7/8% Senior Dollar Exchange Notes due 2010 and
12 2/8% Senior Euro Exchange Notes due 2010 of RSL Communications PLC.
*27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal with respect to the 12 7/8% Senior Exchange Notes due 2010 of RSL
Communications PLC.
99.2 Form of Notice of Guaranteed Delivery with respect to the 12 7/8% Senior Exchange Notes due 2010 of RSL
Communications PLC.
99.3 Form of Letter to Beneficial Holders with respect to the 12 7/8% Senior Exchange Notes due 2010 of RSL
Communications PLC.
</TABLE>
- ------------------
* Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1999.
** To be filed by amendment.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
(1) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(3) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(4) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on May 5, 2000.
RSL COMMUNICATIONS, LTD.
By: /s/ ITZHAK FISHER
----------------------------------
Itzhak Fisher
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Itzhak Fisher and Donald R. Shassian his
true and lawful attorney-in-fact and agent, each acting alone, with full power
of substitution and resubstitution, for him and in his name, place, and stead,
in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
SEC, granting unto each said attorney-in-fact and agent full power and authority
to do and reform each and every act and thing requisite or necessary to be done
in and about the premises, as person, hereby ratifying and conforming all that
either said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------------------- ---------------
<S> <C> <C>
/s/ RONALD S. LAUDER Director and Chairman of the Board of Directors May 5, 2000
- ------------------------------------------
(Ronald S. Lauder)
/s/ ITZHAK FISHER Director, President and Chief Executive Officer May 5, 2000
- ------------------------------------------ (Principal Executive Officer)
(Itzhak Fisher)
/s/ STEVEN F. SCHIFFMAN Chief Financial Officer May 5, 2000
- ------------------------------------------ (Principal Financial Officer)
(Steven F. Schiffman)
/s/ NESIM BILDIRICI Director May 5, 2000
- ------------------------------------------
(Nesim Bildirici)
/s/ JACOB Z. SCHUSTER Director May 5, 2000
- ------------------------------------------
(Jacob Z. Schuster)
/s/ EUGENE SEKULOW Director May 5, 2000
- ------------------------------------------
(Eugene Sekulow)
/s/ NIR TARLOVSKY Director May 5, 2000
- ------------------------------------------
(Nir Tarlovsky)
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on May 5, 2000.
RSL COMMUNICATIONS, LTD.
By: /s/ ITZHAK FISHER
-------------------------------
Itzhak Fisher
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Itzhak Fisher and Donald R. Shassian his
true and lawful attorney-in-fact and agent, each acting alone, with full power
of substitution and resubstitution, for him and in his name, place, and stead,
in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
SEC, granting unto each said attorney-in-fact and agent full power and authority
to do and reform each and every act and thing requisite or necessary to be done
in and about the premises, as person, hereby ratifying and conforming all that
either said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------------------- ---------------
<S> <C> <C>
/s/ RONALD S. LAUDER Director and Chairman of the Board of Directors May 5, 2000
- ------------------------------------------
(Ronald S. Lauder)
/s/ ITZHAK FISHER Director, President and Chief Executive Officer May 5, 2000
- ------------------------------------------ (Principal Executive Officer)
(Itzhak Fisher)
/s/ STEVEN F. SCHIFFMAN Chief Financial Officer May 5, 2000
- ------------------------------------------ (Principal Financial Officer)
(Steven F. Schiffman)
/s/ JOEL BECKOFF Global Controller (Controller and Principal May 5, 2000
- ------------------------------------------ Accounting Officer)
(Joel Beckoff)
/s/ GUSTAVO A. CISNEROS Director May 5, 2000
- ------------------------------------------
(Gustavo A. Cisneros)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------------------- ---------------
<S> <C> <C>
/s/ FRED H. LANGHAMMER Director May 5, 2000
- ------------------------------------------
(Fred H. Langhammer)
/s/ LEONARD A. LAUDER Director May 5, 2000
- ------------------------------------------
(Leonard A. Lauder)
/s/ JACOB Z. SCHUSTER Director May 5, 2000
- ------------------------------------------
(Jacob Z. Schuster)
/s/ EUGENE SEKULOW Director May 5, 2000
- ------------------------------------------
(Eugene Sekulow)
/s/ NICOLAS G. TROLLOPE Director May 5, 2000
- ------------------------------------------
(Nicolas G. Trollope)
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on May 5, 2000.
RSL COMMUNICATIONS, LTD.
By: /s/ ITZHAK FISHER
----------------------------------
Itzhak Fisher
Director and Chairman of the Board
of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Itzhak Fisher and Donald R. Shassian his
true and lawful attorney-in-fact and agent, each acting alone, with full power
of substitution and resubstitution, for him and in his name, place, and stead,
in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
SEC, granting unto each said attorney-in-fact and agent full power and authority
to do and reform each and every act and thing requisite or necessary to be done
in and about the premises, as person, hereby ratifying and conforming all that
either said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------------------- ---------------
<S> <C> <C>
/s/ ITZHAK FISHER Director and Chairman of the Board of Directors May 5, 2000
- ------------------------------------------
(Itzhak Fisher)
/s/ MICHAEL MARINO Director, President and Chief Executive May 5, 2000
- ------------------------------------------ Officer (Principal Executive Officer)
(Michael Marino)
/s/ PATRICIA D. MAZON Chief Financial Officer May 5, 2000
- ------------------------------------------ (Principal Financial Officer)
(Patricia D. Mazon)
/s/ DONALD R. SHASSIAN Director May 5, 2000
- ------------------------------------------
(Donald R. Shassian)
/s/ JOEL BECKOFF Director May 5, 2000
- ------------------------------------------
(Joel Beckoff)
</TABLE>
II-7
<PAGE>
Exhibit 3.1
Page 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"RSL COM USA, INC.", CHANGING ITS NAME FROM "RSL COM USA, INC." TO "RSL COM
U.S.A., INC.", FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF JANUARY, A.D. 1997,
AT 2 O'CLOCK P.M.
2230995 8100 [SEAL /s/ Edward J. Freel
OF THE -----------------------------------------
001073915 STATE OF Edward J. Freel, Secretary of State
DELAWARE] 0257226
AUTHENTICATION:
02-15-00
DATE:
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 02:00 PM 01/15/1997
971015987 - 2230995
RESTATED CERTIFICATE OF INCORPORATION
OF
RSL COM USA, Inc.
We, the undersigned, being the President and Assistant Secretary of RSL
COM USA, Inc. (formerly Intenational Telecommunications Corporation), a
corporation organized and existing under the laws of the State of
Delaware, pursuant to the provisions of Sections 252 and 255 of the
General Corporation Law of Delaware, do hereby certify as follows:
1. The original name of the Corporation was International
Telecommunications Corporation. By a Restated Certificate of
Incorporation filed January 8, 1997, the name of the corporation was
changed to RSL COM U.S.A., Inc.
2. The original Certificate of Incorporation was filed in the
office of the Secretary of State of Delaware on May 18, 1990.
3. This Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the original Certificate
of Incorporation to change the name of the corporation to RSL COM USA,
Inc. (Article First).
5. This Restated Certificate of Incorporation has been approved
by a majority of the outstanding shareholders of the corporation in
accordance with the provisions of Sections 252 and 255 of the General
Corporation Law of the State of Delaware.
5. The text of the Certificate of Incorporation, as restated
and integrated and as further amended hereby, is restated to read as
herein set forth in full:
RESTATED CERTIFICATE OF INCORPORATION
OF
RSL COM U.S.A., Inc.
FIRST. The name of this corporaton is RSL COM U.S.A., Inc.
SECOND. Its registered office in the state of Delaware is to be located at
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle. The registered agent in charge thereof if The Corporation Trust
Company at "same as above."
THIRD. The nature of the business and the objects and purposes to be
transacted, promoted and carried on, are to do any or all the things mentioned,
as fully and to the same extent as natural persons might or could do, and in any
part of the world, viz:
<PAGE>
-2-
"The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law
of Delaware."
FOURTH. 1. The total nuber of shares of all classes of stock which the
Corporation shall have the authority to issue is One Million (1,000,000) shares
of common stock, of the par value of One Cent ($.01) per share and of the
aggregate par value of Ten Thousand Dollars ($10,000). The common stock of the
Corporation is divided into 950,000 shares of Class A Voting Common Stock and
50,000 shares of Class B Non-Voting Common Stock.
2. The holders of Class A Voting Common Stock shall be entitled to vote on
all matters submitted to a vote of stockholders of the Corporation and shall not
be subject to redemption. Notwithstanding any other provision of this
Certificate of Incorporation or the By-Laws of the Corporation or the General
Laws of the State of Delaware, the number of authorized shares of any class of
stock of the Corporation may be increased or decreased (but not below the number
of shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the shares of Class A Voting Common Stock.
3. The holders of Class B Non-Voting Common Stock shall not be entitled to
vote on any matter submitted to a vote of the stockholders of the Corporation,
except as otherwise may be required by the laws of Delaware. Such shares shall
be subject to other qualifications and limitations, including, but not limited
to, the right of the Corporation to redeem certain shares of Class B Non-Voting
Common Stock at the redemption price of such shares as determined by the Board
of Directors of the Corporation and such shares shall be subject to restrictions
on transferability, all in accordance with the terms and conditions of the
documents by which the shares were issued and by which the ownership of such
shares is governed, as executed by the Corporation and the stockholder of such
shares. The shares of Class B Non-Voting Common Stock shall be converted
automatically on a one-to-one basis to shares of Class A Voting Common Stock
contemporaneous with the offer for sale of any capital stock of the Corporation
on a national securities exchange or the designation of any capital stock of the
Corporation as national market system securities on an interdealer quotation
system by the National Association of Securities Dealers, Inc. Any such
conversion of each share of Class B Non-Voting Common Stock to a share of Class
A Voting Common Stock shall be self-executing upon the occurrence of such offer
for sale of designation without any further action by the Board of Directors,
stockholders or subsequent filing with the Delaware Secretary of State.
Notwithstanding the above qualifications and restrictions on shares of Class B
Non-Voting Common Stock, no holder of such shares shall be entitled to any other
conversion rights or preemptive rights. With the exception of the right to share
equally with all holders of all shares of all classes and series of the
Corporation in any dividends and/or distributions properly declared and effected
by the Board of Directors of the Corporation and the right to share ratably in
the distribution of assets of the Corporation upon its dissolution, the holders
of Class B Non-Voting Common stock shall have no other rights or privileges as a
consequence of their ownership of such shares.
FIFTH. The powers of the incorporator are to terminate upon filing of the
certificate of incorporation, and the name(s) and mailing address(es) of persons
who are to serve as director(s) until the first annual meeting of stockholders
or until their successors are elected and qualify are as follows:
<PAGE>
-3-
Charles M. Piluso
60 Hudson Street
New York, New York 10013
SIXTH. The stockholders of the Corporation shall have sole power and right
to make and to alter or amend the By-Laws. The Board of Directors of the
Corporation shall have power to fix the amount to be reserved as working
capital, and to authorize and cause to be executed, mortgages and liens without
limit as to the amount, upon the property and franchise of the Corporation.
With consent in writing and pursuant to a vote of the holders of a majority
of the capital stock issued and outstanding, the Board of Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholders, and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law or the
By-Laws, or by resolution of the stockholders.
The stockholders and the Board of Directors shall have power to hold their
meetings and keep the books, documents and papers of the Corporation outside of
the State of Delaware, at such places as may be from time to time designated by
the By-Laws or by resolution of the stockholders or directors, except as
otherwise required by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in the
Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from the
terms of any other clause or paragraph in this certificate of incorporation, but
that the objects, purposes and powers specified in this Third paragraph and in
each of the clauses of paragraphs of this charter shall be regarded as
independent objects, purposes and powers.
SEVENTH. The Board of Directors of the corporation shall not be liable to
either the corporation or its stockholders for monetary damages for a breach of
fiduciary duties unless the breach involves: (1) a director's duty of loyalty to
the corporation or its stockholdrs; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments or dividends or unlawful stock purchases or
redemption by the corporation; or (5) a transaction from which the director
derived an improper personal benefit.
<PAGE>
-5-
IN WITNESS WHEREOF, the undersigned being the President and Assistant
Secretary hereinabove named, do hereby further certify that the facts
hereinabove stated are truly set forth and accordingly have hereunto set
their hand and seal.
Dated at Rosslyn, Virginia
January 15, 1997
ITZHAK FISHER
-------------
Itzhak Fisher
President
/s/ Eric Fishman
----------------------------------
Eric Fishman
Assistant Secretary
<PAGE>
Page 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF OWNERSHIP,
WHICH MERGES:
"CYBERLINK, INC.", A CALIFORNIA CORPORATION,
WITH AND INTO "RSL COM U.S.A., INC." UNDER THE NAME OF "RSL COM U.S.A.,
INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE NINTH DAY OF FEBRUARY, A.D.
1998, AT 5:30 O'CLOCK P.M.
2230995 8100M [SEAL /s/ Edward J. Freel
OF THE -----------------------------------------
001073915 STATE OF Edward J. Freel, Secretary of State
DELAWARE] 0257227
AUTHENTICATION:
02-15-00
DATE:
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 05:30 PM 02/09/1998
981052075 - 2230995
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
CYBERLINK, INC.
(a California corporation)
INTO
RSL COM U.S.A., INC.
(a Delaware corporation)
(Under Section 253 of the General Corporation Law)
RSL COM U.S.A., Inc. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That the Corporation was incorporated on the 18th day of May, 1990,
pursuant to the General Corporation Laws of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of the
capital stock of Cyberlink, Inc. (the "Subsidiary"), a corporation incorporated
on the 15th day of March, 1993 pursuant to the General Corporation Law of the
State of California.
THIRD: That the Corporation, by the following resolutions of its Board of
Directors, duly adopted by the unanimous written consent of its members, filed
with the minutes of the Board, on the 15th day of January 1998, determined to
and did merge into itself the Subsidiary:
RESOLVED, that the Corporation merge and it hereby does merge into
itself Cyberlink, Inc., a California corporation, and assumes all of its
obligations;
RESOLVED, that the Delaware Certificate of Merger and Ownership, in or
substantially in the form presented to the Board of Directors, hereby is
authorized and approved in all respects and the appropriate officers of the
Corporation be and each of them hereby is, authorized, empowered and
directed in the name and on behalf of the Corporation, to execute said
Delaware Certificate of Merger and Ownership, with such changes therein and
modifications thereof as the officers executing the same may approve, their
execution to be conclusive evidence of such approval, and to cause said
Delaware Certificate of Merger and Ownership to be filed with the Secretary
of State of the State of Delaware;
<PAGE>
RESOLVED, that the California Certificate of Ownership, in or
substantially in the form presented to the Board of Directors, hereby is
authorized and approved in all respects and the appropriate officers of the
Corporation be, and each of them hereby is, authorized, empowered and
directed in the name and on behalf of the Corporation, to execute said
California Certificate of Ownership, with such changes therein and
modifications thereof as the officers excuting the same may approve, their
execution to be conclusive evidence of such approval, and to cause said
California Certificate of Ownership to be filed with the Secretary of State
of the State of California; and
RESOLVED, that the appropriate officers of the Corporation be, and each
of them hereby is, authorized, empowered and directed to take all such
further action and to execute, deliver, certify and file all such further
instruments and documents, in the name and on behalf of the Corporation,
under its corporate seal or otherwise, and to pay all such costs and
expenses as such officers shall approve as necessary or advisable to carry
out the intent and accomplish the purpose of the foregoing resolutions and
the transactions contemplated thereby, the taking of such actions and the
execution, delivery, certification and filing of such further instruments
and documents to be conclusive evidence of such approval.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed
by Itzhak Fisher, its Chief Executive Officer, this 28th day of January, 1998.
RSL COM U.S.A., INC.
By: /s/ Itzhak Fisher
-----------------------------
Name: Itzhak Fisher
Title: Chief Executive Officer
<PAGE>
Page 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF OWNERSHIP,
WHICH MERGES:
"CYBERLINK-CALIFORNIA, INC.", A CALIFORNIA CORPORATION,
"CYBERLINK-NEADA, INC.", A NEVADA CORPORATION,
"CYBERLINK-NEW YORK, INC.", A DELAWARE CORPORATION,
WITH AND INTO "RSL COM U.S.A., INC." UNDER THE NAME OF "RSL COM U.S.A.,
INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE THIRD DAY OF APRIL, A.D.1998,
AT 5 O'CLOCK P.M.
2230995 8100M [SEAL /s/ Edward J. Freel
OF THE -----------------------------------------
001073915 STATE OF Edward J. Freel, Secretary of State
DELAWARE] 0257228
AUTHENTICATION:
02-15-00
DATE:
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 05:00 PM 05/03/1998
981130922 - 2230995
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
CYBERLINK-NEW YORK, INC.
(a Delaware corporation),
CYBERLINK-CALIFORNIA, INC.
(a California corporation),
AND
CYBERLINK-NEVADA, INC.
(a Nevada corporation)
INTO
RSL COMM U.S.A., INC.
(a Delaware corporation)
(Under Section 253 of the General Corporation Law)
RSL COM U.S.A., Inc. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That the Corporation was incorporated on the 18th day of May, 1990,
pursuant to the General Corporation Laws of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of the
capital stock of (a) Cyberlink-New York, Inc., a corporation incorporated on the
31st day of May, 1995 pursuant to the General Corporation Laws of the State of
Delaware, (b) Cyberlink-California, Inc., a corporation incorporated on the
15th day of January, 1995 pursuant to the General Corporation Law of the State
of California, and (c) Cyberlink-Nevada, Inc. (together with Cyberlink-New York,
Inc. and Cyberlink-California, Inc., the "Subsidiaries"), a corporation
incorporated on the 22nd day of September, 1993 pursuant to the laws of
the State of Nevada.
THIRD: That the Corporation, by the following resolutions of its Board of
Directors, duly adopted by the unanimous written consent of its members, filed
with the minutes of the Board, on the 15th day of January 1998, determined to
and did merge into itself the Subsidiaries:
<PAGE>
RESOLVED, that the Corporation merge and it hereby does merge into itself
Cyberlink-New York, Inc., a Delaware corporation ("Cyberlink-New York"),
Cyberlink-California, Inc., a California corporation ("Cyberlink-California"),
and Cyberlink-Nevada, Inc., a Nevada corporation ("Cyberlink-Nevada"), and
assumes all of their respective obligations;
RESOLVED, that the Agreement and Plan of Merger by and among the
Corporation, Cyberlink-New York, Cyberlink-California and Cyberlink-Nevada, in
or substantially in the form presented to the Board of Directors, hereby is
authorized and approved in all respects and the appropriate officers of the
Corporation be, and each of them hereby is, authorized, empowered and directed
in the name and on behalf of the Corporation, to execute said Agreement and Plan
of Merger, with such changes therein and modifications thereof as the officers
executing the same may approve, their execution to be conclusive evidence of
such approval;
RESOLVED, that the Delaware Certificate of Merger and Ownership, in or
substantially in the the form presented to the Board of Directors, hereby is
authorized and approved in all respects and the appropriate officers of the
Corporation be, and each of them hereby is, authorized, empowered and directed
in the name and on behalf of the Corporation, to execute the Delaware
Certificate of Merger and Ownership, with such changes therein and
modifications thereof as the officers executing the same may approve, their
execution to be conclusive evidence of such approval, and to cause the Delaware
Certificate of Merger and Ownership to be filed with the Secretary of State of
the State of Delaware;
RESOLVED, that the California Certificate of Ownership, in or substantially
in the form presented to the Board of Directors, hereby is authorized and
approved in all respects and the appropriate officers of the Corporation be, and
each of them hereby is, authorized, empowered and directed in the name and on
behalf of the Corporation, to execute the California Certificate of Ownership,
with such changes therein and modifications thereof as the officers executing
the same may approve, their execution to be conclusive evidence of such
approval, and to cause the California Certificate of Ownership to be filed with
the Secretary of State of the State of California;
RESOLVED, that the Nevada Articles of Merger, in or substantially in the
form presented to the Board of Directors, hereby is authorized and approved in
all respects and the appropriate officers of the Corporation be, and each of
them hereby is, authorized, empowered and directed in the name and on behalf of
the Corporation, to execute the Nevada Articles of Merger, with such changes
therein and modifications thereof as the officers executing the same may
approve, their execution to be conclusive evidence of such approval, and to
cause the Nevada Articles of Merger to be filed with the Secretary of State of
the State of Nevada; and
2
<PAGE>
RESOLVED, that the appropriate officers of the Corporation be, and
each of them hereby is, authorized, empowered and directed to take all such
further action and to execute, deliver, certify and file all such further
instruments and documents, in the name and on behalf of the Corporation, under
its corporate seal or otherwise, and to pay all such costs and expenses
as such officers shall approve as necessary or advisable to carry out the
intent and accomplish the purpose of the foregoing resolutions and the
transactions contemplated thereby, the taking of such actions and the
execution, delivery, certification and filing of such further instruments and
documents to be conclusive evidence of such approval.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Itzhak Fisher, its Chief Executive Officer, this 30th, day of January,
1998.
RSL COM U.S.A., INC.
By: /s/ Itzhak Fisher
--------------------------
Name: Itzhak Fisher
Title: Chief Executive Officer
3
<PAGE>
Page 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF CHANGE OF REGISTERED AGENT OF "RSL COM U.S.A., INC.",
FILED IN THIS OFFICE ON THE ELEVENTH DAY OF JUNE, A.D. 1999, AT 9
O'CLOCK A.M.
2230995 8100 [SEAL /s/ Edward J. Freel
OF THE -----------------------------------------
001073915 STATE OF Edward J. Freel, Secretary of State
DELAWARE] 0257229
AUTHENTICATION:
02-15-00
DATE:
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/11/1999
991237599 - 2230995
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED
OFFICE AND/OR REGISTERED AGENT
OF
RSL COM U.S.A., INC.
The Board of Directors of RSL COM U.S.A., INC., a corporation of Delaware
on this 10th day of May A.D., 1999, does hereby resolve and order that the
location of the Registered office of this Corporation within the State be and
the same hereby is 11th Floor, Rodney Square North, 11th & Market Streets, in
the City of Wilmington, County of New Castle Zip Code 19801.
The name of the Registered Agent herein and in charge thereof upon whom
process against this Corporation may be served, is CORPORATION GUARANTEE AND
TRUST COMPANY.
RSL COM U.S.A., INC., a corporation of Delaware, does hereby certify that
the foregoing is a true copy of a resolution adopted by the Board of Directors
at a meeting held as herein stated.
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by its President and attested by its Secretary, the 10th day of May,
A.D., 1999.
BY: /s/ Ed Thomas ATTEST: /s/ Mark Hirschhorn
------------------------------------ -----------------------------
President Secretary
Ed Thomas Mark Hirschhorn
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/11/1999
991237599 - 2230995
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED
OFFICE AND/OR REGISTERED AGENT
OF
RSL COM U.S.A., INC.
The Board of Directors of RSL COM U.S.A., INC., a corporation of Delaware
on this 10th day of May A.D., 1999, does hereby resolve and order that the
location of the Registered office of this Corporation within the State be and
the same hereby is 11th Floor, Rodney Square North, 11th & Market Streets, in
the City of Wilmington, County of New Castle Zip Code 19801.
The name of the Registered Agent herein and in charge thereof upon whom
process against this Corporation may be served, is CORPORATION GUARANTEE AND
TRUST COMPANY.
RSL COM U.S.A., INC., a corporation of Delaware, does hereby certify that
the foregoing is a true copy of a resolution adopted by the Board of Directors
at a meeting held as herein stated.
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by its President and attested by its Secretary, the 10th day of May,
A.D., 1999.
BY: /s/ Ed Thomas ATTEST: /s/ Mark Hirschhorn
------------------------------------ -----------------------------
President Secretary
Ed Thomas Mark Hirschhorn
<PAGE>
Exhibit 3.2
BY-LAWS
RSL COMM U.S.A., Inc.
(formerly INTERNATIONAL TELECOMMUNICATIONS CORPORATION)
ARTICLE I - OFFICES
Section 1. The registered office of the corporation in the State of
Delaware shall be at Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware. The registered agent in charge thereof shall be The Corporation Trust
Company.
Section 2. The corporation may also have offices at such other places
as the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stock holders shall be held at the registered
office of the corporation in this state or at such place, either within or
without this state, as may be selected from time to time by the Board of
Directors.
Section 2. Annual Meetings: The annual meeting of the stockholders
shall be held on the 3rd of September in each year if not a legal holiday, and
if a legal holiday, then on the next secular day following at 11 o'clock A.M.,
when they shall elect a Board of Directors and transact such other business as
may properly be brought before the meeting. If the annual meeting for election
of directors is not held on the date designated therefor, the directors shall
cause the meeting to be held as soon thereafter as convenient.
Section 3. Election of Directors: Elections of the directors of the
corporation may be by written ballot.
Section 5. Special Meetings: Special meetings of the stockholders
may be called at any time by the President, or the Board of Directors, or
stockholders entitled to cast at least one-fifth of the votes which all
stockholders are entitled to cast at the particular meeting. At any time, upon
written request of any person or persons who have duly called a special meeting,
it shall be the duty of the Secretary to fix the date of the meeting, to be held
not more than sixty days after receipt of the request, and to give due notice
thereof. If the Secretary shall neglect or refuse to fix the date of the meeting
and give notice thereof, the person or persons calling the meeting may do so.
<PAGE>
2
Business transacted at al special meetings shall be confined to the objects
stated in the call and matters germane thereto, unless all stockholders entitled
to vote are present and consent.
Written notice of a special meeting of stockholders stating the time and
place and object thereof, shall be given to each stockholder entitled to vote
thereat at least ten days before such meeting, unless a greater period of notice
is required by statute in a particular case.
Section 5. Quorum: A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders. If less than a majority of the outstanding shares
entitled to vote is represented at a meeting, a majority of the shares to
represented may adjourn the meeting from time to time without further notice. At
such adjourned meetings at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 6. Proxies: Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. All
proxies shall be filed with the Secretary of the meeting before being voted
upon.
Section 7. Notice of Meetings: Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called.
Unless otherwise provided by law, written notice of any meeting shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting.
Section 8. Consent in Lieu of Meetings: Any action required to be taken at
any annual or special meeting of stockholders or a corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to entitled to vote thereon were present and voted. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who
<PAGE>
3
have not consented in writing.
Section 9. List of Stockholders: The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
No share of stock upon which any installment is due and unpaid shall be voted at
any meeting. The list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time thereof, and may be
inspected by any stockholder who is present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation shall be managed
by its Board of Directors, three in number. The directors need not be residents
of this state or stockholders in the corporation. They shall be elected by the
stockholders at the annual meeting of stockholders of the corporation, and each
director shall be elected for the term of one year, and until his successor
shall be elected and shall qualify or until his earlier resignation or removal.
Section 2. Regular Meetings: Regular meetings of the Board shall be held
without notice as needed at the registered office of the corporation, or at such
other time and place as shall be determined by the Board.
Section 3. Special Meetings: Special Meetings of the Board may be called
by the President on fourteen days notice to each director, either personally or
by mail or by telegram; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the directors in office.
Section 5. Quorum: A majority of the total number of directors shall
constitute a quorum for the transaction of business.
Section 5. Consent in Lieu of Meeting: Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
The Board of Directors may hold its meetings, and have an office or offices,
outside of this state.
Section 6. Conference Telephone: One or more directors may participate
in a meeting of the Board, of a committee of the Board or of the stockholders,
by means of conference
<PAGE>
5
telephone or similar communications equipment by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other; participation in this manner shall
constitute presence in person at such meeting.
Section 7. Compensation: Directors as such, shall not receive any stated
salary for their services, but by resolution of the Board, a fixed sum and
expenses of attendance at each regular or special meeting of the Board PROVIDED,
that nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 8. Removal: Any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, except that when cumulative voting
is permitted, if less than the entire Board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire Board of
Directors, or, if there be class of directors, at an election of the class of
directors of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall be chosen by the
directors and shall be a President, Secretary and Treasurer. The Board of
Directors may also choose a Chairman, one or more Vice Presidents and such other
officers as it shall deem necessary. Any number of offices may be held by the
same person.
Section 2. Salaries: Salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 3. Term of Office: The officers of the corporation shall hold
office for one year and until their successors are chosen and have qualified.
Any officer or agent elected or appointed by the Board may be removed by the
Board of Directors whenever in its judgment the best interest of the corporation
will be served thereby.
Section 5. President: The President shall be the chief executive officer of
the corporation; he shall preside at all meetings of the stockholders and
directors; he shall have general and active management of the business of the
corporation, shall see that all orders and resolutions of the Board are carried
into effect, subject, however, to the right of the directors to delegate any
specific powers, except such as may be by statute exclusively conferred on the
President, to any other officer or officers of the corporation. He shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation. He shall be EX-OFFICIO a member of all committees, and shall have
the general power and duties of supervision and management usually vested in the
office of President of a corporation.
<PAGE>
5
Section 5. Secretary: The Secretary shall attend all sessions of the
Board and all meetings of the stockholders and act as clerk thereof, and record
all the votes of the corporation and the minutes of all its transactions in a
book to be kept for that purpose, and shall perform like duties for all
committees of the Board of Directors when required. He shall give, or cause to
be given, notice of all meetings of the stockholders and of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, and under whose supervision he shall be. He shall
keep in safe custody the corporate seal of the corporation, and when authorized
by the Board, affix the same to any instrument requiring it.
Section 6. Treasurer: The Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in separate account to the credit of the corporation. He
shall disburse the funds of the corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render to the President
and directors, at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the corporation by
death, resignation, removal or otherwise, shall be filled by the Board of
Directors. Vacancies and newly created directorships resulting from any increase
in the authorized number of directors may be filled by a majority of the
directors then in office, although not less than a quorum, or by a sole
remaining director. If at any time, by reason of death or resignation or other
cause, the corporation should have no directors in office, then any officer or
any stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of stockholder, may call a special meeting of stockholders in
accordance with the provisions of these By-Laws.
Section 2. Resignations Effective at Future Date: When one or more
directors shall resign from the Board, effective at a future date, a majority of
the directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
ARTICLE VII - CORPORATION RECORDS
Section 1. Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof, have
the right during the usual hours for business to inspect for any proper purpose
the corporation's stock ledger, a list of its stockholders, and its other books
and records, and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholders.
In every instance where
<PAGE>
6
an attorney or other agent shall be the person who seeks to right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall be numbered and
registered in the share ledger and transfer books of the corporation as they are
issued. They shall bear the corporate seal and shall be signed by the Secretary
and President.
Section 2. Transfers: Transfers of shares shall be made on the books of
the corporation upon surrender of the certificates therefor, endorsed by the
person named in the certificate or by attorney, lawfully constituted in writing.
No transfer shall be made which is inconsistent with law.
Section 3. Lost Certificate: The corporation may issue a new certificate
of stock in the place of any certificate theretofore signed by it, alleged to
have been lost, stolen or destroyed, and the corporation may require the owner
of the lost, stolen or destroyed certificate, or his legal representative to
give the corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
Section 5. Record Date: In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or the express consent to corporate acton in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which
the which the meeting is held.
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
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7
(c) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 5. Dividends: The Board of Directors may declare and pay
dividends upon the outstanding shares of the corporation from time to time and
to such extent as they deem advisable, in the manner and upon the terms and
conditions provided by the statute and the Certificate of Incorporation.
Section 6. Reserves: Before payment of any dividend there may be set
aside out of the net profits of the corporation such sum or sums as the
directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was directed.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. Checks: All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
Section 2. Fiscal Year: The fiscal year shall begin on the first day of
May.
Section 3. Notice: Whenever written notice is required to be given to
any person, it may be given to such person, either personally or by sending a
copy thereof through the mail, or by telegram, charges prepaid, to his address
appearing on the books of the corporation, or supplied by him to the corporation
for the purpose of notice. If the notice is sent by mail or by telegraph, it
shall be deemed to have been given to the person entitled thereto when deposited
in the United States mail or with a telegraph office for transmission to such
person. Such notice shall specify the place, day and hour of the meeting and, in
the case of a special meeting of stockholders, the general nature of the
business to be transacted.
Section 5. Waiver of Notice: Whenever any written notice is required by
statute, or by the Certificate or the By-Laws of this corporation a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Except in the case of a special meeting of
stockholders, neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such meeting. Attendance of
a person either in person or by proxy, at any meeting shall
<PAGE>
8
constitute a waiver of notice of such meeting, except where a person attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened.
Section 5. Disallowed Compensation: Any payments made to an officer or
employee of the corporation as a salary, commission, bonus, interest, rent,
travel or entertainment expense incurred by him, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Service, shall
be reimbursed by such officer or employee to the corporation to the full extent
of such disallowance. It shall be the duty of the directors, as a Board, to
enforce payment of each such amount disallowed. In lieu of payment by the
officer or employee, subject to the determination of the directors,
proportionate amounts may be withhold from his future compensation payments
until the amount owed to the corporation has been recovered.
Section 6. Resignations: Any director or other officer may resign at any
time, such resignation to be in writing, and to take effect from the time of its
receipt by the corporation, unless some time be fixed in the resignation and
then from that date. The acceptance of a resignation shall not be required to
make it effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and Board of Directors shall present at each
annual meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
ARTICLE XI - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the vote of
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast thereon, at any regular or special meeting of
the stockholders, duly convened after notice to the stockholders of that
purpose.
ARTICLE XII - SPECIAL ACTIONS
Section 1. Notwithstanding any other provisions of these By-Laws to the
contrary, the following actions may be taken by corporation only with the
consent of a majority of the shares of corporation's common stock outstanding
(the "Common Stock"): (1) authorizing, issuing, assuming or guaranteeing any
debt in excess of an aggregate of $250,000 at one time outstanding, authorizing
or issuing new shares of equity securities with an aggregate fair market value
of in excess of $500,000 or authorizing any shares of preferred stock or other
stock with rights senior to those of the Common
<PAGE>
9
Stock; (2) merging with or acquiring another entity or its substantial assets,
or selling substantially all of the assets of the coporation; (3) engaging in
any business other than the business engaged in by the corporation at the date
hereof; (5) paying dividends on or making other distributions with respect to
any equity securities; (5) repurchasing or redeeming any securities; (6) the
authorization of any of the corporation's assets for personal use and of any
transactions between the corporation or any subsidiaries of the corporation and
any officers of the corporation; (7) approval of the budget for each fiscal
year; (8) compensation of Charles M. Piluso ("Piluso"), including any amendments
to his Employment Agreement and any options or other "perks" for Piluso or other
of the corporation's officers; and (9) any amendment of the corporation's
Certificate of Incorporation or its By-Laws or the adoption of any Certificate
of Designation of any series of preferred stock.
<PAGE>
EXHIBIT 5.1
EXECUTION COPY
================================================================================
RSL COMMUNICATIONS PLC
as Issuer, with RSL Communications, Ltd., of
$100,000,000, 12 7/8% Senior Discount Notes Due 2010
of RSL Communications PLC and
(U)100,000,000 12 7/8% Senior Discount Notes Due 2010
of RSL Communications PLC
and
THE CHASE MANHATTAN BANK
as Book-Entry Depositary
NOTE DEPOSIT AGREEMENT
Dated as of February 22, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER GENERAL PROVISIONS.......................................1
SECTION 1.1 Definitions.........................................1
SECTION 1.2 Rules of Construction...............................5
ARTICLE II
GLOBAL NOTES, DEPOSITARY INTERESTS.............................................5
SECTION 2.1 Deposit of the Global Notes.........................6
SECTION 2.2 Book-Entry System...................................6
SECTION 2.3 Registration of Transfer of Depositary
Interests...........................................7
SECTION 2.5 Transfer of Global Notes and Depositary
Interests; Termination..............................7
SECTION 2.5 Cancellation........................................9
SECTION 2.6 Payments in Respect of the Global Notes.............9
SECTION 2.7 Changes in Principal Amount of the Global
Notes..............................................10
SECTION 2.8 Record Date........................................11
SECTION 2.9 Action in Respect of the Depositary
Interests..........................................12
SECTION 2.10 Changes Affecting the Global Notes.................13
SECTION 2.11 Surrender of the Global Notes......................15
SECTION 2.12 Reports............................................15
ARTICLE III
THE BOOK-ENTRY DEPOSITARY.....................................................15
SECTION 3.1 Certain Duties and Responsibilities................15
SECTION 3.2 Notice of Default..................................15
SECTION 3.3 Certain Rights of Book-Entry Depositary............16
SECTION 3.5 Not Responsible for Recitals or Issuance
of Notes...........................................17
SECTION 3.5 Money Held in Trust................................18
SECTION 3.6 Compensation and Reimbursement.....................18
SECTION 3.7 Book-Entry Depositary Required:
Eligibility........................................19
SECTION 3.8 Resignation and Removal, Appointment of
Successor..........................................19
SECTION 3.9 Acceptance of Appointment by Successor.............21
SECTION 3.10 Merger, Conversion, Consolidation or
Succession to Business.............................22
SECTION 3.11 Compliance with Letter of
Representations....................................22
ARTICLE IV
MISCELLANEOUS PROVISIONS......................................................22
SECTION 5.1 Notices to Book-Entry Depositary or
Issuer.............................................22
SECTION 5.2 Notice to DTC; Waiver..............................23
i
<PAGE>
SECTION 5.3 Effect of Headings and Table of
Contents...........................................25
SECTION 5.5 Successors and Assigns.............................25
SECTION 5.5 Separability Clause................................25
SECTION 5.6 Benefits of Agreement..............................25
SECTION 5.7 GOVERNING LAW......................................25
SECTION 5.8 Jurisdiction.......................................25
SECTION 5.9 Counterparts.......................................25
SECTION 5.10 Inspection of Agreement............................25
SECTION 5.11 Satisfaction and Discharge.........................25
SECTION 5.12 Amendments.........................................26
SECTION 5.13 Book-Entry Depositary To Sign
Amendments.........................................26
ii
<PAGE>
THIS NOTE DEPOSIT AGREEMENT is made as of this 22nd day of
February, 2000 by and between RSL Communications PLC, a United Kingdom
corporation (the "Issuer") and The Chase Manhattan Bank, a New York banking
corporation, as book-entry depositary (the "Book-Entry Depositary").
ARTICLE I
DEFINITIONS AND OTHER GENERAL PROVISIONS
SECTION 1.1 Definitions. The following terms, as used herein,
have the following meanings:
"155A Depositary Interest" means (i) in the case of the Dollar
Notes, the certificateless book-entry interest representing a 100% beneficial
interest in the principal of, premium, if any, and interest on the underlying
155A Global Note, and issued to DTC by the Book-Entry Depositary and (ii) in the
case of the Euro Notes, the certificated depositary interest representing a 100%
beneficial interest in the principal of, premium, if any, and interest on the
underlying 155A Global Note, and issued by the Book-Entry Depositary to the
Common Depositary, in the name of the Common Depositary.
"155A Global Note" means one or more global bearer bonds
issued by the Issuer to the Book-Entry Depositary and bearing the Restricted
Legend representing the total aggregate principal amount of the Notes sold in
reliance on Rule 155A under the Securities Act.
"Asset Disposition" has the meaning set forth in the
Indentures.
"Board Resolution" means a duly adopted resolution of the
Board of Directors of the Issuer in full force and effect on the date of
certification, certified by any Director, Secretary or Assistant Secretary of
the Issuer.
"Book-Entry Depositary" means The Chase Manhattan Bank or, in
the event that The Chase Manhattan Bank is succeeded as Book-Entry Depositary
hereunder, the Person designated as its successor pursuant to Section 3.8
hereof.
"Book-Entry Notes" means an indirect certificate less
beneficial interest in a Global Note held through a corresponding Depositary
Interest.
"Book-Entry Register" has the meaning set forth in Section 2.3
hereof.
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<PAGE>
"Change of Control" has the meaning set forth in the
Indenture.
"Clearstream" means Clearstream Banking, societe anonyme (or
any successor).
"Common Depositary" means The Chase Manhattan Bank, or its
nominee, as common depositary for Euroclear and Clearstream, or in the event The
Chase Manhattan Bank is succeeded as Common Depositary, the Person designated as
its successor).
"Corporate Trust Office" means the office of the Book-Entry
Depositary in the Borough of Manhattan, The City of New York, from which at any
particular time its corporate trust business shall be principally administered,
which at the date hereof is located at 550 West 33rd Street, New York, New York
10001-2697, Attention: Global Trust Services.
"Depositary Interests" means each of the 155A Depositary
Interests and the Regulation S Depositary Interests.
"Dollar Notes" means the $100,000,000 aggregate principal
amount at maturity of the Issuer's 12 7/8% Senior Notes due 2010 issued under
the Dollar Notes Indenture.
"Dollar Notes Indenture" means the indenture dated as of
February 22, 2000 among the Issuer, Holdings, RSL U.S.A. and the Trustee
relating to the Dollar Notes, as originally executed or as it may be
supplemental, modified or amended from time to time.
"DTC" means The Depository Trust Company and its nominees (or
any successor).
"Euro Notes" means the (U)100,000,000 aggregate principal
amount at maturity of the Issuer's 12 7/8% Senior Notes due 2010 issued under
the Euro Notes Indenture.
"Euro Notes Indenture" means the indenture dated as of
February 22, 2000 among the Issuer, Holdings, RSL U.S.A. and the Trustee
relating to the Euro Notes, as originally executed or as it may be supplemented,
modified or amended from time to time.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear system (or any successor).
"Event of Default" shall have the meaning set forth in the
Indentures.
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<PAGE>
"Exchange Act" means the United States Securities Exchange Act
of 1935, as amended, and the rules and regulations promulgated thereunder.
"Global Notes" means each of the 155A Global Note and the
Regulation S Global Note.
"Holdings" means RSL Communications, Ltd., an initial
guarantor of the Notes pursuant to the Indentures until a successor replaces it
pursuant to the applicable provisions of the Indenture and, thereafter, means
such successor.
"Indentures" means the Dollar Notes Indenture and the Euro
Notes Indenture.
"Issuer" means RSL Communications PLC until a successor
replaces it pursuant to the applicable provisions of the Indenture and,
thereafter, means such successor.
"Issuer Order" or "Issuer Request" means a written order or
request signed in the name of the Issuer by two Officers thereof.
"Letter of Representations" means the Letter of
Representations to DTC dated as of February 17, 2000 from the Issuer, the
Trustee and the Book-Entry Depositary.
"Notes" means the Dollar Notes and the Euro Notes.
"Offer to Purchase" has the meaning set forth in the
Indentures.
"Officer" means, with respect to the Issuer, (i) the Chairman
of the Board, the Chief Executive Officer and other Directors and (ii) the
Treasurer or any Assistant Treasurer, or the Secretary or any Assistant
Secretary.
"Officers' Certificate" means a certificate signed by two
Officers, at least one of which must be an Officer listed in clause (i) of the
definition thereof.
"Opinion of Counsel" means a written opinion from legal
counsel, who may be an employee of or counsel to the Issuer, and who shall be
reasonably acceptable to the Book-Entry Depositary.
"Participants" means (i) with respect to DTC, Persons who have
accounts with DTC, including Euroclear and Clearstream and (ii) with respect to
Euroclear or Clearstream, any Person who has an account with Euroclear or
Clearstream, respectively.
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<PAGE>
"Paying Agent" means The Chase Manhattan Bank in New York and
the Chase Manhattan Bank in London and any successor paying agent hereunder.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Registered Notes" means certificated Notes registered in the
name of the holder thereof issued pursuant to the Indentures in substantially
the form set forth in Section 2.02 of the Indentures.
"Regulation S Depositary Interest" means (i) in the case of
the Dollar Notes, the certificateless book-entry interest representing a 100%
beneficial interest in the principal of, premium, if any, and interest on the
underlying Regulation S Global Note, and issued to DTC by the Book-Entry
Depositary and (ii) in the case of the Euro Notes, the certificated depositary
interest representing a 100% beneficial interest in the principal of, premium,
if any, and interest on the underlying Regulation S Global Note, and issued to
Euroclear and Clearstream by the Book-Entry Depositary.
"Regulation S Global Note" means one or more global bearer
bonds issued by the Issuer to the Book-Entry Depositary and bearing the
Regulation S Legend representing the total aggregate principal amount of the
Notes sold in reliance on Regulation S under the Securities Act.
"Regulation S Legend" has the meaning set forth in the
Indentures.
"Responsible Officer", with respect to the Book-Entry
Depositary, means any Vice President, Assistant Vice President, the Secretary,
any Assistant Secretary, the Treasurer, any Assistant Treasurer, or any Trust
Officer or any other officer of the Book-Entry Depositary customarily performing
functions similar to those performed by any of the above-designated officers and
also means, with respect to a particular corporate trust or agency matter, any
other officer to whom such matter is referred because of his or her knowledge
and familiarity with the particular subject.
"Restricted Legend" has the meaning set forth in the
Indentures.
"RSL U.S.A." means RSL COM U.S.A., Inc., an initial guarantor
of the Notes pursuant to the Indentures until a successor replaces it pursuant
to the applicable
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<PAGE>
provisions of the Indentures and, thereafter, means such successor.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Trustee" means The Chase Manhattan Bank acting as trustee
under the Indentures or, in the event The Chase Manhattan Bank is succeeded as
trustee under the Indentures, such Person who shall be appointed to succeed as
trustee pursuant to the applicable provisions of the Indentures.
SECTION 1.2 Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) "including" means including without
limitation;
(5) words in the singular include the plural and
words in the plural include the singular; and
(5) references herein to holders of Depositary Interests shall
mean references to DTC.
ARTICLE II
GLOBAL NOTES, DEPOSITARY INTERESTS
SECTION 2.1 Deposit of the Global Notes. The Book-Entry
Depositary hereby accepts custody of the Global Notes from the Trustee and shall
act as Book-Entry Depositary in accordance with the terms of this Agreement. The
Book-Entry Depositary shall hold each such Global Note at its Corporate Trust
Office or at such place or places as it shall determine with the prior written
consent of the Issuer and shall issue the Depositary Interests (i) in the case
of the Dollar Notes, in accordance with the Letter of Representations and (ii)
in the case of the Euro Notes, in accordance with the rules and procedures of
Euroclear or Clearstream. In the event that the Issuer shall issue and execute,
and the Trustee, upon the order of the Issuer, shall authenticate additional
Global Notes, the Book-Entry Depositary shall hold each such Global Note at its
Corporate Trust Office or at such place or places as it shall determine with the
prior written consent of the Issuer and shall issue the Depositary Interests in
such Global Notes (i) in the case of the Dollar Notes, to DTC in accordance with
the Letter of Representations (ii) in the case of the
vii
<PAGE>
Euro Notes, to the Common Depositary in accordance with the procedures and
requirements of Euroclear or Clearstream.
SECTION 2.2 Book-Entry System. (a) In the case of the Dollar
Notes, upon acceptance by DTC of the Depositary Interests for entry into its
book-entry settlement system in accordance with the terms of the Letter of
Representations, Book-Entry Notes shall be issued by DTC and traded through
DTC's book-entry system, and ownership of such Book-Entry Notes shall be shown
in, and the transfer of such ownership shall be effected only through, a
book-entry system maintained by (i) DTC or its successors or (ii) Participants.
In the case of the Euro Notes, upon acceptance by Euroclear and Clearstream of
the Depositary Interests for entry into their book-entry settlement system in
accordance with the rules and procedures of Euroclear and Clearstream,
Book-Entry Notes shall be issued by Euroclear and Clearstream and traded through
their book-entry system, and ownership of such Book-Entry Notes shall be shown
in, and the transfer of such ownership shall be effected only through, the
book-entry system maintained by (i) Euroclear or Clearstream or their respective
successors or (ii) Participants. DTC, Euroclear or Clearstream, as applicable,
shall treat the holders of Book-Entry Notes and their successors as the absolute
owners of the Depositary Interests for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Issuer, the Trustee, the
Book-Entry Depositary or any agent of the Issuer, the Trustee or the Book-Entry
Depositary from giving effect to any written certification, proxy or other
authorization furnished by DTC, Euroclear or Clearstream, as applicable, or
impair, as between the Book-Entry Depositary and DTC and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note or Depositary
Interest.
(b) The Depositary Interests (i) in the case of the Dollar
Notes, shall be issuable only to DTC, or successors of DTC or their respective
nominees and (ii) in the case of the Euro Notes, shall be issuable only to the
Common Depositary, for the benefit of Euroclear and Clearstream or their
successors or nominees. Except as provided in Section 2.5 hereof and Section
3.05(d) of the Indentures, no owner of beneficial interests in such Depositary
Interests shall be entitled to receive a Registered Note on account of such
beneficial interest, and such beneficial owner's interest therein shall be shown
only in accordance with the procedures of DTC as set forth in the Letter of
Representations or with the procedures and requirements of Euroclear or
Clearstream, as applicable.
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<PAGE>
SECTION 2.3 Registration of Transfer of Depositary Interests.
(a) The Issuer appoints the Book-Entry Depositary as its agent to maintain at
the Book-Entry Depositary's Corporate Trust Office a register (the "Book-Entry
Register") in which the Book-Entry Depositary shall (i) record the right of DTC,
Euroclear or Clearstream, collectively, to receive payment of principal of,
premium, if any, and interest on the Global Notes and (ii) record the
registration and transfer of the Depositary Interests. No Depositary Interest
can be transferred unless such transfer is recorded on the Book-Entry Register.
(b) With respect to any Global Note, clause (a) of this
Section 2.3 shall not (i) impose an obligation on the Book-Entry Depositary to
record the interests in or transfers of Book-Entry Notes held by institutions
that have accounts with DTC or its successors, or with Euroclear or Clearstream
or their successors, or Persons that may hold Book-Entry Notes through such
institutions and (ii) restrict transfers of such Book-Entry Notes held by such
institutions or Persons. The Book-Entry Depositary shall treat DTC or its
nominee, or the Common Depositary (on behalf of Euroclear and Clearstream) or a
nominee, as applicable, as the absolute owner of the Depositary Interests for
all purposes whatsoever and shall not be bound or affected by any notice to the
contrary, other than an order of a court having jurisdiction over the Book-Entry
Depositary.
SECTION 2.5 Transfer of Global Notes and Depositary Interests;
Termination. The Book-Entry Depositary shall hold the Global Notes in custody
for the benefit of DTC or the Common Depositary (on behalf of Euroclear and
Clearstream), as applicable. The Book-Entry Depositary shall not transfer or
lend any Global Note or any interest therein except that (i) the Book-Entry
Depositary shall deliver Global Notes to the Trustee if required in accordance
with Section 3.05(e) of the Indentures so that the Trustee may make such
notations on the Global Notes as may be required to evidence transfers and
exchanges of Book-Entry Notes, (ii) a Global Note may be exchanged in whole or
in part pursuant to Section 3.05(d) of the Indentures, (iii) a Global Note may
be exchanged or replaced pursuant to Sections 3.05 and 3.06 of the Indentures,
(iv) any Global Note may be delivered to the Trustee for cancellation pursuant
to Section 3.09 of the Indentures and (v) the Global Notes may be transferred to
a successor Book-Entry Depositary with the prior written consent of the Issuer.
Notwithstanding the foregoing, neither DTC, the Common Depositary, Euroclear nor
Clearstream may under any circumstances request the Book-Entry Depositary to
surrender or deliver the Global Notes.
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If the Book-Entry Depositary notifies the Issuer and the
Trustee in writing under Section 3.8 hereof that it is unwilling or unable to
continue as Book-Entry Depositary and no successor Book-Entry Depositary has
been appointed by the Issuer within 90 days of such notification, then (i) the
Book-Entry Depositary shall promptly notify the Trustee and request the Trustee
to issue Registered Notes in such names and denominations as, in the case of the
Dollar Notes, DTC shall specify in writing in accordance with Section 3.05 of
the Dollar Notes Indenture, and in the case of the Euro Notes, Euroclear and
Clearstream shall specify in writing in accordance with Section 3.05 of the Euro
Notes Indenture, (ii) the Book-Entry Depositary shall cause the Common
Depositary to deliver to the Book-Entry Depositary for cancelation the
applicable Depositary Interests and (iii) the Book-Entry Depositary agrees that
in such event it shall promptly surrender the Global Notes held by it to the
Trustee in connection with such exchange and that such Global Notes shall be
canceled upon issuance of such Registered Notes.
If DTC notifies the Issuer or the Book-Entry Depositary in
writing that it or its nominee is unwilling or unable to continue as Depositary
with respect to any or all of the Depositary Interests or if at any time it or
its nominee is unable to or ceases to be a clearing agency under the Exchange
Act and, in either case, a successor Depositary registered as a clearing agency
under the Exchange Act is not appointed by the Issuer within 90 days, then (i)
the Book-Entry Depositary shall promptly notify the Trustee and request the
Trustee to issue Registered Notes with respect to the Global Notes representing
the entire principal amount of the Dollar Notes in such names and denominations
as DTC shall specify in writing in accordance with Section 3.05 of the Indenture
and (ii) the Book-Entry Depositary agrees that in such event it shall promptly
surrender the applicable Global Notes held by it to the Trustee in connection
with such exchange and that such Global Notes shall be canceled upon issuance of
such Registered Notes.
If each of Euroclear and Clearstream notifies the Issuer or
the Book-Entry Depositary in writing that it or its nominee is unwilling or
unable to continue to act as, or ceases to be, a clearing agency under the
Exchange Act and, in either case, a successor registered as a clearing agency
under the Exchange Act is not appointed by the Issuer within 90 days, then (i)
the Book-Entry Depositary shall promptly notify the Trustee and request the
Trustee to issue Registered Notes with respect to the Global Notes representing
the entire principal amount of the Euro Notes in such names and denominations as
Euroclear and Clearstream shall specify in writing in accordance with Section
3.05 of the Indenture, (ii) the Book-Entry Depositary shall cause
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the Common Depositary to deliver to the Book-Entry Depositary for cancelation
the applicable Depositary Interests and (iii) the Book-Entry Depositary agrees
that in such event it shall promptly surrender the applicable Global Notes held
by it to the Trustee in connection with such exchange and that such Global Notes
shall be canceled upon issuance of such Registered Notes.
If at any time the Issuer, subject to and in compliance with
Section 3.05(d) of the Indentures, determines that the Global Notes should be
exchanged, in whole but not in part, for Registered Notes, then (i) the Issuer
shall promptly notify the Trustee and the Book-Entry Depositary and request the
Trustee to issue Registered Notes with respect to the Global Notes in such names
and denominations as DTC shall specify in writing in accordance with Section
3.05 of the Indenture, (ii) the Book-Entry Depositary shall cause the Common
Depositary to deliver to the Book-Entry Depositary for cancelation the
applicable Depositary Interests and (iii) the Book-Entry Depositary agrees that
in such event it shall promptly surrender the applicable Global Notes held by it
to the Trustee in connection with such exchange and that such Global Notes shall
be canceled upon issuance of such Registered Notes.
Upon the issuance of Registered Notes in exchange for Global
Notes representing the entire principal amount of Notes, this Agreement will
terminate.
SECTION 2.5 Cancellation. If any Global Note is surrendered
for payment, or for redemption or purchase of Notes evidenced thereby or in
exchange for Registered Notes, then such Global Note shall, if surrendered to
any Person other than the Trustee notwithstanding the first paragraph of Section
2.5 hereof, be delivered to the Trustee for cancellation.
SECTION 2.6 Payments in Respect of the Global Notes. (a)
Except for payments made pursuant to an Offer to Purchase with respect to any
Asset Disposition or Change of Control, whenever the Book-Entry Depositary shall
receive from the Trustee (or other paying agent under the Indentures) any
payment of the principal of, premium, if any, and interest on the Global Notes,
such payments shall be distributed promptly to DTC, Euroclear or Clearstream, in
proportion to their respective interests as shown on the Book-Entry Register, on
the payment date for the Global Notes.
(b) Whenever the Book-Entry Depositary shall receive from the
Trustee (or other paying agent under the Indenture) any payment of the principal
of, premium, if any, and interest on the Global Notes pursuant to an Offer to
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Purchase by the Issuer with respect to any Asset Disposition or Change of
Control, the Book-Entry Depositary shall distribute such payment to DTC,
Euroclear or Clearstream, in proportion to their respective interests as shown
on the Book-Entry Register, for the accounts of holders of Book-Entry Notes who
elected to have Book-Entry Notes repurchased pursuant to such Offer to Purchase.
(c) In the case of the Dollar Notes, so long as DTC or its
nominee own Depositary Interests, payments distributed to DTC pursuant to
Section 2.6(a) and 2.6(b) hereof with respect to the Global Notes shall be made
in accordance with the Letter of Representations. In the event that DTC or its
nominee shall cease to own Depositary Interests, such payments shall be made
according to procedures agreed upon between the Book-Entry Depositary and the
successor Depositary, which shall be reasonably satisfactory to the Issuer. In
the case of the Euro Notes, so long as Euroclear and Clearstream or their
respective nominees own Depositary Interests (through the Common Depositary),
payments distributed to Euroclear and Clearstream pursuant to Section 2.6(a) and
2.6(b) hereof with respect to the Global Notes shall be made in accordance with
the applicable rules and procedures of Euroclear and Clearstream. In the event
that Euroclear and Clearstream or their respective nominees shall cease to own
the Depositary Interests (through the Common Depositary), such payments shall be
made according to procedures agreed upon between the Book-Entry Depositary and
the successor depositary, which shall be reasonably satisfactory to the Issuer.
(d) The Book-Entry Depositary shall forward to the Issuer or
its agents at the Issuer's cost and expense such information from its records as
the Issuer may reasonably request to enable the Issuer or its agents to file
necessary reports with governmental agencies, and the Book-Entry Depositary, the
Issuer or its agents may (but shall not be required to) file any such reports
necessary to obtain benefits under any applicable tax treaties for DTC,
Euroclear, Clearstream or the holders of Book-Entry Notes.
SECTION 2.7 Changes in Principal Amount of the Global Notes.
(a) In the event that the Issuer exercises any right of redemption in respect of
any Notes constituting a part of the Global Notes or purchases any Notes
constituting a part of the Global Notes pursuant to an Offer to Purchase under
Section 10.13 or 10.17 of the Indentures, the Book-Entry Depositary shall,
promptly upon receipt of the redemption price or purchase price, deliver such
Global Notes to the Trustee (i) and request the Trustee to endorse on such
Global Note to reflect the reduction in the principal amount of such Global Note
as a result of such redemption or purchase or (ii) in exchange for a Global Note
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with a principal amount that represents only the portion of such Global Note not
so redeemed or purchased. The redemption price or purchase price in connection
with the redemption of a portion of such Global Note shall be equal to the
amount received by the Book-Entry Depositary in respect of the aggregate
principal amount at maturity of the Notes so redeemed or repurchased.
(b) Pursuant to Section 3.05 of the Indentures, upon written
notice from the Trustee to the Book-Entry Depositary of an increase or decrease
in the aggregate principal amount of any Global Note, the Book-Entry Depositary
shall enter or cause to be entered in the Book-Entry Register a corresponding
increase or decrease in the aggregate principal amount of the Depositary
Interest corresponding to such Global Note.
SECTION 2.8 Record Date. Whenever any payment is to be made in
respect of the Global Notes or the Book-Entry Depositary shall receive written
notice of any action to be taken by DTC, Euroclear or Clearstream, as
applicable, or whenever the Book-Entry Depositary otherwise deems it appropriate
in respect of any other matter, the Book-Entry Depositary shall fix a record
date for the determination of the holders of the Depositary Interests who shall
be entitled to receive payment in respect of the Depositary Interests or to take
any such action or to act in respect of any such matter and such record date
shall be unless otherwise impracticable the record date as would be set under
the Indentures if such securities were Registered Notes. Subject to the
provisions of this Agreement, only DTC or its successor which is registered on
the Book-Entry Register at the close of business on such record date, or
Euroclear and Clearstream or their successors which are registered on the
Book-Entry Register at the close of business on such record date, as applicable,
shall be entitled to receive any such payment, to give instructions as to such
action or to act in respect of any such matter.
DTC, Euroclear and Clearstream shall be entitled to rely on
such record date as the date of determination for purposes of further
distribution of the payments disbursed, and, in the case of the Dollar Notes, so
long as DTC or its nominee own Depositary Interests, such record date applicable
to DTC shall comply with the requirements of the Letter of Representations and,
in the case of the Euro Notes, so long as Euroclear or Clearstream or their
nominee own Depositary Interests (through the Common Depositary), such record
date applicable to Euroclear and Clearstream shall comply with the rules and
procedures of Euroclear and Clearstream.
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SECTION 2.9 Action in Respect of the Depositary Interests. (a)
As soon as practicable after receipt by the Book-Entry Depositary of written
notice from the Issuer of any solicitation of consents or request for a waiver
or other action by DTC, Euroclear or Clearstream under this Agreement or the
Indentures, the Book-Entry Depositary shall mail to DTC, Euroclear or
Clearstream, as applicable, a notice containing (i) such information as is
contained in such notice, (ii) a statement that the holders of Depositary
Interests at the close of business on a specified record date (established in
accordance with Section 2.8 hereof) will be entitled, subject to the provisions
of or governing the Depositary Interests, to instruct the Book-Entry Depositary
as to the consent, waiver or other action, if any, pertaining to the Global
Notes and (iii) a statement as to the manner in which such instructions may be
given. Upon the written request of DTC, Euroclear or Clearstream, received on or
before the date established by the Book-Entry Depositary for such purpose, the
Book-Entry Depositary shall endeavor insofar as practicable and permitted under
the provisions of or governing the Depositary Interests to take such action
regarding the requested consent, waiver or other action in respect of the Global
Notes in accordance with any instructions set forth in such request. The
Book-Entry Depositary shall not itself exercise any discretion in the granting
of consents or waivers or the taking of any other action in respect of the
Global Notes and, as holder of the Global Notes, the Book-Entry Depositary
promptly shall cause such consents or waivers to be granted and such action to
be taken with respect to the Global Notes as DTC, Euroclear or Clearstream had
given or had taken.
(b) As soon as practicable after receipt by the Book-Entry
Depositary of an Offer to Purchase with respect to the Global Notes, the
Book-Entry Depositary shall mail to DTC, Euroclear and Clearstream a notice
containing (i) such information as is contained in such notice, (ii) a statement
that the holders of Depositary Interests at the close of business on a specified
record date (established in accordance with Section 2.8 hereof) will be
entitled, subject to the provisions of or governing the Depositary Interests, to
elect to have all or any portion of their interest in the Global Notes
repurchased in accordance with such Offer to Purchase and (iii) such
documentation provided by the Issuer as is necessary for DTC, Euroclear or
Clearstream, as applicable, to elect to have all or any portion of the
Depositary Interests repurchased pursuant to such Offer to Purchase. In the case
of the Dollar Notes, so long as DTC or its nominee own Depositary Interests,
such notice to DTC or its nominee shall also comply with the Letter of
Representations. In the case of the Euro Notes, so long as Euroclear and
Clearstream own Depositary Interests (through the Common Depositary), such
notice to
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Euroclear and Clearstream shall also comply with the applicable rules and
procedures of Euroclear and Clearstream. Upon receipt of elections relating to
such Offer to Purchase from DTC, Euroclear or Clearstream, as applicable,
received on or before the date established by the Issuer for such purpose, the
Book-Entry Depositary shall endeavor insofar as practicable and permitted under
the provisions of or governing the Depositary Interests and the Global Notes to
tender the Global Notes or portions thereof requested to be tendered by DTC,
Euroclear or Clearstream, as applicable, for repurchase in accordance with such
Offer to Purchase. The Book-Entry Depositary shall not itself exercise any
discretion in the tender of any Global Notes pursuant to an Offer to Purchase.
(c) As soon as practicable after receipt by the Book-Entry
Depositary of any notice of redemption with respect to the Global Notes pursuant
to Section 11.01 of the Indentures, the Book-Entry Depositary shall mail to DTC,
Euroclear and Clearstream a notice containing (i) such information as is
contained in such notice and (ii) a statement that Notes called for redemption
must be surrendered to the Paying Agent in order to collect the Redemption
Price. In the case of the Dollar Notes, so long as DTC or its nominee own
Depositary Interests, such notice shall also comply with the Letter of
Representations. In the case of the Euro Notes, so long as Euroclear and
Clearstream own Depositary Interests (through the Common Depositary) such notice
shall also comply with the applicable rules and procedures of Euroclear and
Clearstream.
(d) DTC, Euroclear and Clearstream may direct in writing the
time, method and place of conducting any proceeding for any remedy available to
the Book-Entry Depositary with respect to the Global Notes or exercising any
power conferred on the Book-Entry Depositary. However, the Book-Entry Depositary
may refuse to follow any direction that conflicts with law, the Indentures or
this Agreement, that may involve the Book-Entry Depositary in personal
liability, or that the Book-Entry Depositary determines in good faith may be
unduly prejudicial to the rights of the holders of Book-Entry Notes not joining
in the giving of such direction and may take any other action it deems proper
that is not inconsistent with any directions received from DTC, Euroclear or
Clearstream pursuant to this Section 2.9(d).
SECTION 2.10 Changes Affecting the Global Notes. Upon any
reclassification of the Global Notes, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting the Issuer
or to which the Issuer is a party, any securities that shall be received by the
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Book-Entry Depositary in exchange for or in respect of a Global Note shall be
treated as a new Global Note under this Agreement and any corresponding
Depositary Interests shall thenceforth represent such new securities so
received; provided, however, that any security issued in exchange for or in
respect of a Global Note under such circumstances shall not be deemed to be a
new security if the Issuer delivers to the Book-Entry Depositary an Opinion of
Counsel, to the effect that the recapitalization, reorganization, merger or
consolidation or sale of assets, as appropriate, did not result in the creation
of a security materially different from that represented by such Global Note.
SECTION 2.11 Surrender of the Global Notes. In the event of
the redemption, payment or purchase in full of all the Notes represented by any
of the Global Notes, then the applicable Depositary Interest and the applicable
Global Note shall become void and the Book-Entry Depositary shall surrender such
Global Note to the Trustee for cancellation. In the event of a partial
redemption of the Notes represented by a Global Note, the Book-Entry Depositary
shall comply with the requirements of Section 2.7 hereof.
SECTION 2.12 Reports. The Book-Entry Depositary shall promptly
send to DTC, Euroclear and Clearstream any notices, reports and other
communications received from the Issuer that are received by the Book-Entry
Depositary as holder of the Global Notes.
ARTICLE III
THE BOOK-ENTRY DEPOSITARY
SECTION 3.1 Certain Duties and Responsibilities. (a) The
Book-Entry Depositary undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement.
(b) No provision of this Agreement shall be construed to
relieve the Book-Entry Depositary from liability for its own negligent action,
its own negligent failure to act, or its own bad faith or willful misconduct,
except that:
(1) the duties and obligations of the Book-Entry Depositary
with respect to the Global Notes and the Depositary Interests shall be
determined solely by the express provisions of this Agreement and
neither the Book-Entry Depositary, nor its officers, directors,
employees and agents shall be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement,
and no
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implied covenants or obligations shall be read into
this Agreement against the Book-Entry Depositary; and
(2) in the absence of bad faith on its part, the Book-Entry
Depositary may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Book-Entry Depositary and
conforming to the requirements of this Agreement, but in the case of
any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Book-Entry Depositary, the
Book-Entry Depositary shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Agreement.
(c) The Book-Entry Depositary shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Book-Entry
Depositary, unless it shall be proved that the Book-Entry Depositary was grossly
negligent in ascertaining the pertinent facts.
(d) The Book-Entry Depositary shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the written direction of DTC, Euroclear or Clearstream pursuant to Section
2.9 hereof relating to the time, method and place of conducting any proceeding
for any remedy available to the Book-Entry Depositary, or exercising any power
conferred upon the Book-Entry Depositary, under this Agreement.
(e) No provision of this Agreement will require the Book-Entry
Depositary 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.
(f) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Book-Entry Depositary shall be subject to the
provisions of this Section.
(g) The Book-Entry Depositary owes no fiduciary duties to any
person by virtue of this Agreement except as expressly set forth herein.
SECTION 3.2 Notice of Default. The Book-Entry Depositary shall
(x) within 90 days after the occurrence of any Event of Default in respect of
the Global Notes of which
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a Responsible Officer of the Book-Entry Depositary assigned to its Global Trust
Services department has actual knowledge or (y) promptly after being notified of
an Event of Default by the Trustee, transmit by mail to DTC, Euroclear and
Clearstream in the manner provided in Section 5.2, notice of such Event of
Default, unless such Event of Default shall have been cured or waived.
SECTION 3.3 Certain Rights of Book-Entry Depositary. Subject
to the provisions of Section 3.1 hereof:
(a) the Book-Entry Depositary may conclusively 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, coupon, security, or other paper or
document delivered to it in accordance with the terms of this Agreement and
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers' Certificate,
Issuer Order or Issuer Request, and any resolution of the Board of Directors of
the Issuer may be sufficiently evidenced by a Board Resolution;
(c) the Book-Entry Depositary may consult with counsel and the
advice of such counsel confirmed in writing or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon in
accordance with such advice or Opinion of Counsel;
(d) the Book-Entry Depositary shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document, but the Book-Entry Depositary, may (but shall have no obligation to)
make reasonable further inquiry or investigation into such facts or matters
related to the issuance of the Global Notes and, if the Book-Entry Depositary
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Issuer, at the
Issuer's expense, at reasonable times during normal business hours, personally
or by agent or attorney;
(e) the Book-Entry Depositary may execute any of the powers
hereunder or perform any duties hereunder either
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directly or by or through agents or attorneys and the Book-Entry Depositary
shall not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care;
(f) the Book-Entry Depositary shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at the
request, order or direction of DTC, Euroclear or Clearstream pursuant to this
Agreement, unless DTC, Euroclear or Clearstream shall have offered or caused to
be offered to the Book-Entry Depositary 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, provided that such
request, order or direction shall not expose the Book-Entry Depositary to
personal liability;
(g) the Book-Entry Depositary shall not be liable for any
action taken or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion, rights or powers conferred upon it by this
Agreement; and
(h) whenever in the administration of its duties under this
Agreement the Book-Entry Depositary shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Book-Entry Depositary, be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the Book-Entry
Depositary, and such certificate, in the absence of negligence or bad faith on
the part of the Book-Entry Depositary, shall be full warrant to the Book-Entry
Depositary for any action taken, suffered or omitted by it under the provisions
of the Agreement, upon the faith thereof.
SECTION 3.5 Not Responsible for Recitals or Issuance of Notes.
The recitals contained in the Indentures and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Issuer,
and the Book-Entry Depositary assumes no responsibility for their correctness.
The Book-Entry Depositary makes no representation as to (i) the validity or
sufficiency of the Indentures or of the Notes, (ii) the sufficiency of this
Agreement or (iii) the validity, with respect to the Issuer, of this Agreement.
The Book-Entry Depositary shall not be accountable for the use or application by
the Issuer of the proceeds with respect to the Notes.
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SECTION 3.5 Money Held in Trust. Money held by the Book-Entry
Depositary in trust hereunder need not be segregated from other funds held by
the Book-Entry Depositary, except to the extent required by law. The Book-Entry
Depositary shall be under no obligation to invest or pay interest on any money
received by it hereunder, except as otherwise agreed in writing with the Issuer.
Any interest accrued on funds deposited with the Book-Entry Depositary under
this Agreement shall be paid to the Issuer from time to time and DTC shall have
no claim to any such interest.
SECTION 3.6 Compensation and Reimbursement. The Issuer and
Holdings, jointly and severally agree:
(a) to pay to the Book-Entry Depositary from time to time
reasonable compensation agreed in writing for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law with
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Book-Entry Depositary upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Book-Entry
Depositary in accordance with any provision of this Agreement (including the
reasonable compensation, expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct; and
(c) to indemnify the Book-Entry Depositary and its directors,
officers, agents and employees for, and to hold it harmless against, any loss,
liability or expense incurred without negligence, bad faith on its part, arising
out of or in connection with the acceptance or administration of this Agreement
and its duties hereunder, including the costs and expenses of defending itself
against or investigating any claim of liability in connection with the exercise
or performance of any of its powers or duties hereunder.
The obligations of the Issuer under this Section to compensate
and indemnify the Book-Entry Depositary and to pay or reimburse the Book-Entry
Depositary for reasonable expenses, disbursements and advances shall survive the
satisfaction and discharge of this Agreement or the earlier of the resignation
or the removal of the Book-Entry Depositary. Such obligations shall be a senior
claim to that of the Notes upon all property and funds held or collected by the
Book-Entry Depositary as such, except funds held in trust for the benefit of the
holders of the Notes.
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SECTION 3.7 Book-Entry Depositary Required: Eligibility. At
all times when there is a Book-Entry Depositary hereunder, such Book-Entry
Depositary shall be a corporation organized and doing business under the laws of
the United States of America, any State thereof or the District of Columbia,
having, together with its parent, a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by federal, state or District
of Columbia authority, willing to act on reasonable terms. Such corporation
shall have its principal place of business in the Borough of Manhattan, The City
of New York, if there be such a corporation in such location willing to act upon
reasonable and customary terms and conditions. If such corporation, or its
parent, publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Book-Entry Depositary
shall have executed a letter of representations to DTC acceptable in form and
substance to DTC and the Issuer with respect to the Depositary Interests. The
Book-Entry Depositary hereunder shall at all times be the Trustee under the
Indentures, subject to receipt by the Issuer of an Opinion of Counsel that the
same Person is precluded by law from acting in such capacities. If at any time
the Book-Entry Depositary shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 3.8 Resignation and Removal, Appointment of Successor.
(a) No resignation or removal of the Book-Entry Depositary and no appointment
of a successor Book-Entry Depositary pursuant to this Article shall become
effective until (i) the approval in writing of a successor Book-Entry Depositary
by the Issuer and the acceptance of the appointment by such successor Book-Entry
Depositary in accordance with the applicable requirements of Section 3.9 hereof
or (ii) the issuance of Registered Notes in accordance with Section 2.5 hereof
and the Indentures.
(b) The Book-Entry Depositary may resign all of its rights and
duties with respect to the Global Notes and the Depositary Interests by giving
written notice thereof to the Issuer, DTC, Euroclear and Clearstream in
accordance with Sections 5.1 and 5.2 hereof. The Book-Entry Depositary may be
removed at any time upon 30 days' notice by the filing with it of an instrument
in writing signed on behalf of the Issuer and specifying such removal and the
date when it is intended to become effective. If the instrument of acceptance by
a successor Book-Entry Depositary or the
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approval by the Issuer required by Section 3.9 hereof shall not have been
delivered to the Book-Entry Depositary within 30 days after the giving of such
notice of resignation, the resigning Book-Entry Depositary may petition any
court of competent jurisdiction for the appointment of a successor Book-Entry
Depositary.
(c) If at any time:
(1) the Book-Entry Depositary shall cease to be eligible under
Section 3.7 hereof or shall cease to be eligible as Trustee under the
Indentures, and shall fail to resign after written request therefor by
the Issuer or DTC, Euroclear, and Clearstream, or
(2) the Book-Entry Depositary shall become incapable of acting
with respect to the Global Notes and the Depositary Interests, or shall
be adjudged bankrupt or insolvent, or a receiver or liquidator of the
Book-Entry Depositary or its property shall be appointed or any public
officer shall take charge or control of the Book-Entry Depositary or
its property or affairs for the purpose of rehabilitation, conservation
or liquidation,
then, in any such case, (i) the Issuer, by Board Resolution, may remove the
Book-Entry Depositary and appoint a successor Book-Entry Depositary and (ii) if
the Issuer does not remove the Book-Entry Depositary and appoint a successor
pursuant to clause (i), DTC, Euroclear, and Clearstream, upon the direction of
holders of at least a majority of the total aggregate principal amount of the
Book-Entry Notes outstanding, may petition any court of competent jurisdiction
for the removal of the Book-Entry Depositary with respect to the Global Notes
and the Depositary Interests and the appointment of a successor Book-Entry
Depositary or Book-Entry Depositaries unless Registered Notes have been issued
in accordance with the Indentures. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Book-Entry Depositary
with respect to the Global Notes and the Depositary Interests and appoint a
successor Book-Entry Depositary for the Global Notes and the Depositary
Interests.
(d) If the Book-Entry Depositary shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
Book-Entry Depositary for any cause, the Issuer, by Board Resolution, shall
promptly appoint a successor Book-Entry Depositary (other than the Issuer) and
shall comply with the applicable requirements of Section 3.9 hereof. If no
successor Book-Entry Depositary with respect to the Notes shall have been so
appointed by the Issuer and
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accepted appointment in the manner required by Section 3.9, DTC, Euroclear and
Clearstream, upon direction of holders of at least a majority of the total
aggregate principal amount of Book-Entry Notes outstanding, may petition any
court of competent jurisdiction for the appointment of a successor Book-Entry
Depositary unless Registered Notes have been issued in accordance with the
Indenture and Section 2.5 hereof.
(e) The Issuer shall give, or shall cause such successor
Book-Entry Depositary to give, notice of each resignation and each removal of a
Book-Entry Depositary and each appointment of a successor Book-Entry Depositary
to DTC, Euroclear and Clearstream in accordance with Section 5.2 hereof. Each
notice shall include the name of the successor Book-Entry Depositary and the
address of its Corporate Trust Office.
(f) If a Book-Entry Depositary hereunder shall resign, it
shall not be relieved of any responsibility for its actions or omissions
hereunder solely by virtue of such resignation.
SECTION 3.9 Acceptance of Appointment by Successor. (a) In
case of the appointment hereunder of a successor Book-Entry Depositary, every
such successor Book-Entry Depositary so appointed shall execute, acknowledge
and deliver to the Issuer and to the retiring Book-Entry Depositary an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Book-Entry Depositary shall become effective and such successor
Book-Entry Depositary, without any further act, deed or conveyance, shall become
vested with all the rights, powers, agencies and duties of the retiring
Book-Entry Depositary, with like effect as if originally named as Book-Entry
Depositary hereunder; but, on the request of the Issuer or the successor
Book-Entry Depositary, such retiring Book-Entry Depositary shall, upon payment
of all amounts due and payable to it pursuant to Section 3.6 hereof, execute and
deliver an instrument transferring to such successor Book-Entry Depositary all
the rights and powers of the retiring Book-Entry Depositary and shall duly
assign, transfer and deliver to such successor Book-Entry Depositary all
property and money held by such retiring Book-Entry Depositary hereunder. Any
retiring Book-Entry Depositary shall, nonetheless, retain a prior claim upon all
property or funds held or collected by such Book-Entry Depositary to secure any
amounts then due it pursuant to Section 3.6 hereof. The Book-Entry Depositary
will not be liable for any acts or omissions of any successor Book-Entry
Depositary appointed pursuant to Section 3.8 hereof.
xxiii
<PAGE>
(b) Upon request of any such successor Book-Entry Depositary,
the Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Book-Entry Depositary all such
rights, powers and agencies referred to in paragraph (a) of this Section.
(c) No successor Book-Entry Depositary shall accept its
appointment unless at the time of such acceptance such successor Book-Entry
Depositary shall be eligible to serve as such under this Article.
(d) Upon acceptance of appointment by any successor Book-Entry
Depositary as provided in this Section, the Issuer shall give notice thereof to
DTC in accordance with Section 5.02 hereof. If the acceptance of appointment is
substantially contemporaneous with the resignation of the Book-Entry Depositary,
then the notice called for by the preceding sentence may be combined with the
notice called for by Section 3.8 hereof. If the Issuer fails to give such notice
within ten days after acceptance of appointment by the successor Book-Entry
Depositary, the successor Book-Entry Depositary shall cause such notice to be
given at the expense of the Issuer.
SECTION 3.10 Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Book-Entry Depositary may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Book-Entry Depositary
shall be a party, or any corporation succeeding to all or substantially all the
agency business of the Book-Entry Depositary, shall be the successor of the
Book-Entry Depositary hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto; provided that such
corporation shall be otherwise eligible to serve as Book-Entry Depositary under
this Article.
SECTION 3.11 Compliance with Letter of Representations. As
long as DTC or its nominee is DTC, the Book-Entry Depositary shall comply with
all of its representations made to DTC in the Letter of Representations, and any
successor Book-Entry Depositary shall comply with all representations made to
DTC in a similar letter of representations in form and substance acceptable to
DTC and the Issuer.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 5.1 Notices to Book-Entry Depositary or Issuer. Any
request, demand, authorization, direction,
xxiv
<PAGE>
notice, consent, or waiver or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with:
(a) the Book-Entry Depositary by DTC, by Euroclear, by
Clearstream, by the Trustee or by the Issuer shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if made, given,
furnished or filed in writing and personally delivered or mailed, by overnight
delivery or certified mail, postage prepaid, to the Book-Entry Depositary at the
following address:
The Chase Manhattan Bank
550 West 33rd Street
New York, NY 10001
Attention: Global Trust Services
Facsimile: 1-212-956-7799
or at any other address furnished in writing by the Book-Entry Depositary to
DTC, Euroclear, Clearstream, the Trustee and the Issuer; or
(b) the Issuer by the Book-Entry Depositary or by DTC,
Euroclear or Clearstream shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished or filed in
writing and personally delivered or mailed, by overnight delivery or first-class
postage prepaid, to the following address:
RSL Communications PLC
767 Fifth Avenue
Suite 5300
New York, New York 10153
with a copy to:
George E.B. Maguire
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Facsimile: (212) 909-6836
or at any other addresses furnished in writing to the Book-Entry Depositary by
the Issuer. Any communication sent pursuant to this Section 5.1 shall be deemed
given when delivered, if personally delivered or sent by overnight delivery and
three days after deposit in the U.S. mail, if sent by certified mail.
SECTION 5.2 Notice to DTC; Waiver. Where this Agreement
provides for notice to DTC, Euroclear or Clearstream of any event, such notice
shall be sufficiently
xxv
<PAGE>
given (unless otherwise herein expressly provided or as provided in the Letter
of Representations) if in writing and mailed, first-class postage prepaid, to
DTC, Euroclear or Clearstream at the address that DTC, Euroclear or Clearstream
has notified in writing to the Book-Entry Depositary, in each case not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. Where this Agreement 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 DTC, Euroclear or Clearstream
shall be filed with the Book-Entry Depositary, 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 Book-
Entry Depositary shall constitute a sufficient notification for every purpose
hereunder.
SECTION 5.3 Effect of Headings and Table of Contents. The
Article and Section headings herein are for convenience only and shall not
affect the construction hereof.
SECTION 5.5 Successors and Assigns. All covenants and
agreements in this Agreement and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not.
SECTION 5.5 Separability Clause. In case any provision in this
Agreement or in the Notes shall be invalid, illegal or unenforceable, the
validity. legality and enforceability of the remaining provisions hereof and
thereof shall not in any way be affected or impaired thereby.
SECTION 5.6 Benefits of Agreement. Nothing in this Agreement,
the Notes, or the Indentures, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, any benefits or
any legal or equitable right, remedy or claim under this Agreement. By the
acceptance of the Depositary Interests representing the Notes, DTC, Euroclear
and Clearstream shall be party to this Agreement and shall be bound by all of
the terms and conditions hereof and of the Indentures and the Notes.
SECTION 5.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
xxvi
<PAGE>
OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 5.8 Jurisdiction. The Issuer agrees that any legal
suit, action or proceeding against the Issuer brought by DTC, Euroclear,
Clearstream or the Book-Entry Depositary arising out of or based upon this
Agreement may be instituted in any state or federal court in the Borough of
Manhattan, The City of New York, and waives any objection which it may now or
hereafter have to the laying of venue of any such proceeding and irrevocably
submits to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding. The Issuer has appointed RSL Communications N. America, Inc., 767
Fifth Avenue, Suite 5300, New York, New York 10153, as its authorized agent
(together with any successor, the "Authorized Agent") upon whom process may be
served in any legal suit, action or proceeding arising out of or based upon this
Agreement which may be instituted in any state or federal court in the Borough
of Manhattan, The City of New York, by DTC, Euroclear, Clearstream or the
Book-Entry Depositary and expressly accepts the nonexclusive jurisdiction of any
such court in respect of any such action. The Issuer represents and warrants
that the Authorized Agent has agreed to act as said agent for service of
process, and the Issuer agrees to take any and all action, including the filing
of any and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Authorized Agent shall be deemed, in every respect, effective service of process
upon the Issuer. Notwithstanding the foregoing, any action based on this
Agreement may be instituted by the Book-Entry Depositary in any competent court
in England.
SECTION 5.9 Counterparts. This Agreement may be executed in
any number of counterparts by the parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be deemed an original, but all
of which shall together constitute one and the same instrument.
SECTION 5.10 Inspection of Agreement. A copy of this Agreement
shall be available at all reasonable times during normal business hours at the
Corporate Trust Office of the Book-Entry Depositary for inspection by DTC.
SECTION 5.11 Satisfaction and Discharge. Upon Issuer Request
to terminate this Agreement, this Agreement shall cease to be of further effect
and the Book-Entry Depositary shall execute proper instruments acknowledging
satisfaction and discharge of this Agreement, when (i) the Indenture has been
satisfied and discharged pursuant to the
xxvii
<PAGE>
provisions thereof or Registered Notes have been issued and all Global Notes
have been canceled in accordance with the provisions of the Indentures and
Sections 3.05 and 3.09 thereof, (ii) the Issuer has paid or caused to be paid
all sums payable hereunder by the Issuer and (iii) the Issuer has delivered to
the Book-Entry Depositary an Officers' Certificate, stating that all conditions
precedent provided herein relating to the satisfaction and discharge of this
Agreement have been complied with.
SECTION 5.12 Amendments. The Issuer and the Book-Entry
Depositary may amend this Agreement without the consent of DTC, Euroclear or
Clearstream:
(a) to cure any ambiguity, defect or inconsistency, provided
that such amendment or supplement does not adversely affect the rights of DTC,
Euroclear, Clearstream or any holder of Book-Entry Notes;
(b) to evidence the succession of another person to the Issuer
(when a similar amendment with respect to the Indentures is being executed) and
the assumption by any such successor of the covenants of the Issuer herein;
(c) to evidence or provide for a successor Book-Entry
Depositary,
(d) to make any amendment, change or supplement that does not
adversely affect DTC, Euroclear, Clearstream or holders of Book-Entry Notes;
(e) to add to the covenants of the Issuer or the Book-Entry
Depositary; or
(f) to comply with the United States federal and United
Kingdom. securities laws.
No amendment may be made to this Agreement that adversely
affects DTC, Euroclear or Clearstream, without the consent of DTC, Euroclear or
Clearstream, as applicable, and no amendment may be made to this Agreement that
adversely affects the holders of Book-Entry Notes without the consent of a
majority of the aggregate principal amount of Book-Entry Notes outstanding.
SECTION 5.13 Book-Entry Depositary To Sign Amendments. The
Book-Entry Depositary shall sign any amendment authorized pursuant to Section
5.12 hereof if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Book-Entry Depositary. If it does, the
Book-Entry Depositary may but need not sign it. In signing such amendment the
Book-Entry Depositary shall be entitled to receive indemnity satisfactory to it
and to
xxviii
<PAGE>
receive, and shall be fully protected in reasonably relying upon, an Officers'
Certificate (which need only cover the matters set forth in clause (a) below)
and an Opinion of Counsel to the effect that:
(a) such amendment is authorized or permitted by this
Agreement;
(b) the Issuer has all necessary corporate power and authority
to execute and deliver the amendment and that the execution, delivery and
performance of such amendment has been duly authorized by all necessary
corporate action;
(c) the execution, delivery and performance of the amendment
do not conflict with, or result in the breach of or constitute a default under
any of the terms, conditions or provisions of (i) this Agreement, (ii) the
Memorandum and Articles of Association of the Issuer, (iii) any law or
regulation applicable to the Issuer, (iv) any material order, writ, injunction
or decree of any court or governmental instrumentality applicable to the Issuer
or (v) any material agreement or instrument to which the Issuer is subject; and
(d) such amendment has been duly and validly executed and
delivered by the Issuer, and this Agreement together with such amendment
constitutes a legal, valid and binding obligation of the Issuer enforceable
against the Issuer in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and general equitable principles.
[signature page follows]
xxix
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
RSL COMMUNICATIONS PLC
By:/s/ Itzhak Fisher
------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Book-Entry Depositary
By: /s/ Robert S. Peschler
------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
With respect to the provisions of Section 3.6 only
RSL COMMUNICATIONS, LTD.
By:/s/ Itzhak Fisher
-----------------
Name:
Title:
xxx
<PAGE>
EXECUTION COPY
================================================================================
EXHIBIT 5.2
RSL COMMUNICATIONS PLC
As Issuer
---------
RSL COMMUNICATIONS, LTD.
As Parent Guarantor
-------------------
RSL COM U.S.A., INC.
As Subsidiary Guarantor
-----------------------
TO
THE CHASE MANHATTAN BANK
As Trustee
----------
------------------------------------
Indenture
Dated as of February 22, 2000
------------------------------------
12 7/8% SENIOR NOTES DUE 2010
DOLLAR DENOMINATED
================================================================================
<PAGE>
Certain Sections of this Indenture relating to
Sections 3.10 through 3.18 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C> <C>
Section 3.10(a)(1) ..................................................... 6.09
(a)(2) ..................................................... 6.09
(a)(3) ..................................................... Not
Applicable
(a)(5) ..................................................... Not
Applicable
(b) ..................................................... 6.08
..................................................... 6.10
Section 3.11(a) ..................................................... 6.13
(b) ..................................................... 6.13
Section 3.12(a) ..................................................... 7.01
..................................................... 7.02(a)
(b) ..................................................... 7.02(b)
(c) ..................................................... 7.02(c)
Section 3.13(a) ..................................................... 7.03(a)
(a)(5) ..................................................... 7.03(a)
(b) ..................................................... 7.03(a)
(c) ..................................................... 7.03(a)
(d) ..................................................... 7.03(b)
Section 3.15(a) ..................................................... 7.05
10.18
(b) ..................................................... Not
..................................................... Applicable
(c)(1) ..................................................... 1.02
(c)(2) ..................................................... 1.02
(c)(3) ..................................................... Not
..................................................... Applicable
(d) ..................................................... Not
..................................................... Applicable
(e) ..................................................... 1.02
Section 3.15(a) ..................................................... 6.01
(b) ..................................................... 6.02
(c) ..................................................... 6.01
(d) ..................................................... 6.01
(e) ..................................................... 5.15
</TABLE>
- ---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
-i-
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C> <C>
Section 3.16(a)(1)(A) ..................................................... 5.02
..................................................... 5.12
(a)(1)(B) ..................................................... 5.13
(a)(2) ..................................................... Not
..................................................... Applicable
(b) ..................................................... 5.08
(c) ..................................................... 1.05
Section 3.17(a)(1) ..................................................... 5.03
(a)(2) ..................................................... 5.05
(b) ..................................................... 10.03
Section 3.18(a) ..................................................... 1.07
</TABLE>
- ---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
Page
----
Parties......................................................................1
Recitals of the Issuer ......................................................1
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions...................................................2
Acquired Debt.......................................................2
Act.................................................................3
Additional Amounts..................................................3
Additional Securities...............................................3
Affiliate...........................................................3
Agent Member........................................................3
Applicable Procedures...............................................3
Asset Disposition...................................................3
Average Life........................................................5
beneficial interest.................................................5
Board of Directors..................................................5
Board Resolution....................................................5
Book-Entry Depositary...............................................5
Business Day........................................................5
Capital Lease Obligation............................................5
Capital Stock.......................................................5
Change of Control...................................................5
Clearstream.........................................................5
Commission..........................................................5
Common Stock........................................................5
Consolidated Cash Flow Available for Fixed Charges..................5
Consolidated Income Tax Expense.....................................6
Consolidated Interest Expense.......................................6
Consolidated Net Income.............................................7
Consolidated Net Worth..............................................7
Consolidated Tangible Assets........................................7
Corporate Trust Office..............................................8
corporation.........................................................8
Credit Facility.....................................................8
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-iii-
<PAGE>
Page
----
Debt................................................................8
Defaulted Interest..................................................9
Definitive Security.................................................9
Deposit Agreement...................................................9
Depositary..........................................................9
Depositary Interest.................................................9
Disqualified Stock..................................................9
Eligible Institution................................................9
Euroclear..........................................................10
Event of Default...................................................10
Exchange Act.......................................................10
Exchange and Registration Rights Agreement.........................10
Exchange Offer.....................................................10
Exchange Offer Registration Statement..............................10
Exchange Security..................................................10
Existing Stockholders..............................................10
Expiration Date....................................................10
Global Security....................................................11
Government Securities..............................................11
Guarantee..........................................................11
Guarantors.........................................................12
Holder.............................................................11
Incremental Paid-in Capital........................................11
Incur..............................................................12
Indenture..........................................................13
Indirect Participant...............................................13
Initial Purchasers.................................................13
Interest Payment Date..............................................13
Interest Rate or Currency Protection Agreement.....................13
Investment.........................................................13
Issuer.............................................................15
"Issuer Request" or "Issuer Order".................................15
Lien...............................................................15
Listing Failure....................................................15
Marketable Securities..............................................15
Maturity...........................................................15
Net Available Proceeds.............................................15
Offer to Purchase..................................................16
Officers' Certificate..............................................18
Opinion of Counsel.................................................19
Original Securities................................................19
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-iv-
<PAGE>
Page
----
Outstanding........................................................19
Parent Guarantor...................................................20
Participant........................................................20
Paying Agent.......................................................20
Permitted Interest Rate or Currency Protection
Agreement......................................................20
Permitted Investment...............................................21
Permitted Liens....................................................21
Person.............................................................22
Predecessor Security...............................................22
Purchase Agreement.................................................22
Purchase Money Debt................................................22
readily marketable cash equivalents................................23
Receivables........................................................23
Receivables Sale...................................................23
Redemption Date....................................................23
Redemption Price...................................................23
Registered Securities..............................................23
Regular Record Date................................................25
Regulation S.......................................................25
Regulation S Certificate...........................................25
Regulation S Global Security.......................................25
Regulation S Legend................................................25
Regulation S Securities............................................25
Related Person.....................................................25
Resale Registration Statement......................................25
Responsible Officer................................................25
Restricted Global Security.........................................25
Restricted Period..................................................25
Restricted Securities..............................................25
Restricted Securities Certificate..................................25
Restricted Securities Legend.......................................25
Restricted Subsidiary..............................................25
RSLNA..............................................................25
Rule 155A..........................................................25
Rule 155A Securities...............................................26
Securities.........................................................26
Securities Act.....................................................26
Securities Act Legend..............................................26
Securities Guarantee...............................................26
"Security Register" and "Security Registrar".......................26
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-v-
<PAGE>
Page
----
Significant Subsidiary.............................................26
Special Interest...................................................26
Special Record Date................................................26
Stated Maturity....................................................26
Step-Down Date.....................................................27
Step-Up............................................................27
Strategic Investor.................................................27
Subordinated Debt..................................................27
Subsidiary.........................................................28
Subsidiary Guarantor...............................................28
Substitute Securities..............................................28
Successor Security.................................................28
Tax ...............................................................29
Taxing Authority...................................................29
Telecommunications Assets..........................................29
Telecommunications Business........................................29
Trustee............................................................29
Trust Indenture Act................................................29
Unrestricted Securities Certificate................................30
Unrestricted Subsidiary............................................30
Vice President.....................................................30
Voting Stock.......................................................31
Wholly Owned Subsidiary............................................31
SECTION 1.02. Compliance Certificates and Opinions.........................31
SECTION 1.03. Form of Documents Delivered to Trustee.......................32
SECTION 1.05. Acts of Holders; Record Dates................................32
SECTION 1.05. Notices, Etc., to Trustee, Issuer and
Guarantors................................................35
SECTION 1.06. Notice to Holders; Waiver....................................36
SECTION 1.07. Application of Trust Indenture Act...........................36
SECTION 1.08. Effect of Headings and Table of
Contents..................................................37
SECTION 1.09. Successors and Assigns.......................................37
SECTION 1.10. Separability Clause..........................................37
SECTION 1.11. Benefits of Indenture........................................37
SECTION 1.12. Governing Law ..............................................37
SECTION 1.13. Legal Holidays ..............................................37
SECTION 1.15. Agent for Service; Submission to
Jurisdiction; Waiver of Immunities........................37
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-vi-
<PAGE>
Page
----
ARTICLE II
Security Forms
SECTION 2.01. Forms Generally..............................................38
SECTION 2.02. Form of Face of Security.....................................50
SECTION 2.03. Form of Reverse of Security..................................56
SECTION 2.05. Form of Trustee's Certificate
Authentication............................................51
ARTICLE III
The Securities
SECTION 3.01. Title and Terms..............................................52
SECTION 3.02. Denominations ..............................................53
SECTION 3.03. Execution, Authentication, Delivery and
Dating....................................................53
SECTION 3.05. Temporary Securities.........................................55
SECTION 3.05. Registration, Registration of Transfer
and Exchange..............................................55
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Securities................................................62
SECTION 3.07. Payment of Interest; Interest
Rights Preserved..........................................63
SECTION 3.08. Persons Deemed Owners........................................65
SECTION 3.09. Cancelation ..............................................65
SECTION 3.10. Computation of Interest......................................65
SECTION 3.11. CUSIP and ISIN Numbers.......................................65
ARTICLE IV
Guarantee Of Securities
SECTION 5.01. Guarantee....................................................66
SECTION 5.02. Obligations Unconditional....................................68
SECTION 5.03. Notice to Trustee............................................69
SECTION 5.05. Release of Subsidiary Guarantor..............................69
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-vii-
<PAGE>
Page
----
ARTICLE V
Remedies
SECTION 5.01. Events of Default............................................69
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment.................................................72
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee....................................73
SECTION 5.05. Trustee May File Proofs of Claim.............................75
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Securities..................................75
SECTION 5.06. Application of Money Collected...............................75
SECTION 5.07. Limitation on Suits..........................................75
SECTION 5.08. Unconditional Right of Holders To
Receive Principal, Premium and Interest...................76
SECTION 5.09. Restoration of Rights and Remedies...........................76
SECTION 5.10. Rights and Remedies Cumulative...............................77
SECTION 5.11. Delay or Omission Not Waiver.................................77
SECTION 5.12. Control by Holders...........................................77
SECTION 5.13. Waiver of Past Defaults......................................77
SECTION 5.15. Undertaking for Costs........................................78
SECTION 5.15. Waiver of Stay or Extension Laws.............................78
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities..........................79
SECTION 6.02. Notice of Defaults...........................................79
SECTION 6.03. Certain Rights of Trustee....................................79
SECTION 6.05. Not Responsible for Recitals
or Issuance of Securities.................................82
SECTION 6.05. May Hold Securities..........................................82
SECTION 6.06. Money Held in Trust..........................................82
SECTION 6.07. Compensation and Reimbursement...............................83
SECTION 6.08. Disqualification; Conflicting Interests......................85
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-viii-
<PAGE>
Page
----
SECTION 6.09. Corporate Trustee Required; Eligibility......................85
SECTION 6.10. Resignation and Removal; Appointment of
Successor.................................................85
SECTION 6.11. Acceptance of Appointment by Successor.......................86
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business....................................86
SECTION 6.13. Preferential Collection of Claims
Against Issuer or Guarantors..............................87
SECTION 6.15. Appointment of Authenticating Agent..........................87
SECTION 6.15. Withholding Taxes............................................89
ARTICLE VII
Holders' Lists and Reports by Trustee and Issuer
SECTION 7.01. Issuer to Furnish Trustee Names and
Addresses of Holder.......................................90
SECTION 7.02. Preservation of Information;
Communications to Holders.................................90
SECTION 7.03. Reports by Trustee...........................................90
SECTION 7.05. Reports by Issuer and Guarantors.............................91
SECTION 7.05. Officers' Certificate with Respect to
Change in Interest Rates..................................91
ARTICLE VIII
Merger, Consolidation, Etc.
SECTION 8.01. Mergers, Consolidations and Certain
Sales of Assets...............................91
SECTION 8.02. Successor Substituted........................................93
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent
of Holders....................................95
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
-ix-
<PAGE>
Page
----
SECTION 9.02. Supplemental Indentures with Consent of
Holders...................................................95
SECTION 9.03. Execution of Supplemental Indentures.........................96
SECTION 9.05. Effect of Supplemental Indentures............................96
SECTION 9.05. Conformity with Trust Indenture Act..........................96
SECTION 9.06. Reference in Securities to Supplemental
Indentures................................................96
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and
Interest.................................................97
SECTION 10.02. Maintenance of Office or Agency.............................97
SECTION 10.03. Money for Security Payments To Be Held
in Trust.................................................97
SECTION 10.05. Existence...................................................99
SECTION 10.05. Maintenance of Properties...................................99
SECTION 10.06. Payment of Taxes and Other Claims..........................100
SECTION 10.07. Maintenance of Insurance...................................100
SECTION 10.08. Limitation on Consolidated Debt............................100
SECTION 10.09. Additional Amounts.........................................103
SECTION 10.10. Limitation on Restricted Payments..........................105
SECTION 10.11. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.......................108
SECTION 10.12. Limitation on Transactions with
Affiliates and Related Persons..........................109
SECTION 10.13. Limitation on Asset Dispositions...........................110
SECTION 10.15. Limitation on Issuances and Sales of Capital Stock
of Restricted Subsidiaries..............................112
SECTION 10.15. Limitation on Liens........................................113
SECTION 10.16. Limitation on Issuance of Guarantees of Debt by
Restricted Subsidiaries.................................115
SECTION 10.17. Change of Control..........................................115
SECTION 10.18. Provision of Financial Information.........................116
SECTION 10.19. Statement by Officers as to Default........................116
SECTION 10.20. Waiver of Certain Covenants................................117
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Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
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Page
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SECTION 10.21. Paying Agent .............................................117
ARTICLE XI
Redemption of Securities
SECTION 11.01. Right of Redemption........................................117
SECTION 11.02. Applicability of Article...................................119
SECTION 11.03. Election To Redeem; Notice to Trustee......................119
SECTION 11.05. Securities To Be Redeemed Pro Rata.........................119
SECTION 11.05. Notice of Redemption.......................................120
SECTION 11.06. Deposit of Redemption Price................................121
SECTION 11.07. Securities Payable on Redemption Date......................121
SECTION 11.08. Securities Redeemed in Part................................121
ARTICLE XII
Discharge of Indenture
SECTION 12.01. Termination of Issuer's Obligations........................122
SECTION 12.02. Defeasance and Discharge of Indenture......................123
SECTION 12.03. Defeasance of Certain Obligations..........................126
SECTION 12.05. Application of Trust Money.................................128
SECTION 12.05. Repayment to Issuer........................................128
SECTION 12.06. Reinstatement .............................................128
SECTION 12.07. Insiders...................................................129
TESTIMONIUM................................................................130
SIGNATURES AND SEALS.......................................................130
ANNEX A -- Form of Regulation S Certificate
ANNEX B -- Form of Restricted Securities Certificate
ANNEX C -- Form of Unrestricted Securities Certificate
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Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
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INDENTURE, dated as of February 22, 2000, between RSL
COMMUNICATIONS PLC, a United Kingdom corporation, as issuer (the "Issuer"),
having its principal office at Victoria House, London Square, Guilford, Surrey,
England GU1 1UJ, RSL COMMUNICATIONS, LTD., a Bermuda corporation, as guarantor
(the "Parent Guarantor"), having its principal office at Clarendon House, Church
Street, Hamilton HM CX, Bermuda, RSL COM U.S.A., INC., a Delaware corporation,
as a guarantor (the "Subsidiary Guarantor"), having its principal office at 760
Fifth Avenue, Suite 5300, New York, New York 10153, and THE CHASE MANHATTAN
BANK, a corporation duly organized and existing under the laws of the State of
New York, as Trustee (herein called the "Trustee").
RECITALS OF THE ISSUER
The Issuer has duly authorized the creation of its 12 7/8%
Senior Notes due 2010 (the "Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Issuer has duly authorized
the execution and delivery of this Indenture. The Issuer has initially
authorized the issuance of $100,000,000 aggregate principal amount of
Securities. As provided herein, the Issuer may authorize the issuance of
Additional Securities from time to time after the date hereof.
The Securities may consist of Original Securities and/or
Exchange Securities, each as defined herein. The Original Securities and the
Exchange Securities shall rank pari passu with one another and shall together
constitute a single class of securities.
All things necessary (i) to make the Securities, when executed
by the Issuer and authenticated and delivered hereunder and duly issued by the
Issuer, the valid obligations of the Issuer, (ii) to make the Securities
Guarantee, when executed and delivered by the Guarantors hereunder, the valid
obligation of the Guarantors, and (iii) to make this Indenture a valid agreement
of the Issuer and the Guarantors, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is
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mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities, as follows:
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles (whether or not such is indicated herein) and,
except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles
as are generally accepted as consistently applied by the Issuer or the
Guarantors, as applicable, at the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Acquired Debt" means, with respect to any specified Person,
(i) Debt of any other Person (x) existing at the time such Person merges with or
into or consolidates with or becomes a Subsidiary of such specified Person or
(y) that is assumed by the specified Person as part of the acquisition by the
specified Person from such other Person of property and assets that constitute
substantially all of
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a division or line of business of such other Person and (ii) Debt secured by a
Lien encumbering any asset acquired by such specified Person, which Debt was not
Incurred in anticipation of, and was outstanding prior to, such merger,
consolidation or acquisition.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.05.
"Additional Amounts" has the meaning specified in Section
10.09.
"Additional Securities" means securities originally issued or
authorized hereof pursuant to Section 3.12.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, Euroclear and
Clearstream, in each case to the extent applicable to such transaction and as in
effect from time to time.
"Asset Disposition" by any Person means any transfer,
conveyance, sale, lease or other disposition by such Person or any of its
Subsidiaries (including a consolidation or merger or other sale of any such
Subsidiary with, into or to another Person in a transaction in which such
Subsidiary ceases to be a Subsidiary of the specified Person, but excluding (x)
a disposition by a Subsidiary of such Person to such Person or a Wholly Owned
Subsidiary of such Person or by such Person to a Wholly Owned Subsidiary of such
Person or by a Restricted Subsidiary to the Parent Guarantor or a Restricted
Subsidiary or by the Parent Guarantor to a Restricted Subsidiary and (y) any
transaction that is governed by the provisions of Article (VIII)) of
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(i) shares of Capital Stock or other ownership interests of a Subsidiary of such
Person; (ii) substantially all of the assets of such Person or any of its
Subsidiaries representing a division or line of business (other than as part of
a Permitted Investment); or (iii) other assets or rights of such Person or any
of its Subsidiaries outside of the ordinary course of business, provided in the
case of each of the preceding clauses (i), (ii) and (iii) that the aggregate
consideration for such transfer, conveyance, sale, lease or other disposition is
equal to $2.0 million or more in any 12-month period.
"Average Life" means, at any date of determination with
respect to any Debt, 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 and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"beneficial interest" means an indirect beneficial interest in
a Global Security held through a corresponding Depositary Interest and shown on,
and transferred only through, records maintained in book-entry form by the
Depositary (with respect to the Participants) and their Participants.
"Board of Directors" means either the board of directors of
the Parent Guarantor, the Subsidiary Guarantor or the Issuer, as applicable, or
any duly authorized committee of that board duly authorized to act with respect
to this Indenture from time to time.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Parent Guarantor, the Subsidiary
Guarantor or the Issuer, as applicable, to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Depositary" means The Chase Manhattan Bank in its
capacity as book-entry depositary pursuant to the terms of the Deposit
Agreement, until a successor Book-Entry Depositary shall have become such
pursuant to the terms of the Deposit Agreement, and thereafter "Book-Entry
Depositary" shall mean such successor Book-Entry Depositary.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the Borough of
Manhattan, the City
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of New York, New York are authorized or obligated by law or executive order to
close.
"Capital Lease Obligation" of any Person means the obligation
to pay rent or other payment amounts under a lease of (or other Debt
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles (a "Capital Lease"). The stated
maturity of such obligation shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty. The principal
amount of such obligation shall be the capitalized amount thereof that would
appear on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person.
"Change of Control" has the meaning specified in Section
10.17.
"Clearstream" means Clearstream Banking, societe anonyme (or
any successor securities clearing agency).
"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 or
not performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" for any
period means the Consolidated Net Income of the Parent Guarantor and its
Restricted Subsidiaries for such period increased by the sum of (i) Consolidated
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Interest Expense of the Parent Guarantor and its Restricted Subsidiaries for
such period, plus (ii) Consolidated Income Tax Expense of the Parent Guarantor
and its Restricted Subsidiaries for such period, plus (iii) the consolidated
depreciation and amortization expense included in the income statement of the
Parent Guarantor and its Restricted Subsidiaries for such period, plus (iv) any
noncash expense related to the issuance to employees of the Parent Guarantor or
any Restricted Subsidiary of the Parent Guarantor of options to purchase Capital
Stock of the Parent Guarantor or such Restricted Subsidiary, plus (v) any charge
related to any premium or penalty paid in connection with redeeming or retiring
any Debt prior to its stated maturity; provided, however, that there shall be
excluded therefrom the Consolidated Cash Flow Available for Fixed Charges (if
positive) of any Restricted Subsidiary of the Parent Guarantor (calculated
separately for such Restricted Subsidiary in the same manner as provided above
for the Parent Guarantor) that is subject to a restriction which prevents the
payment of dividends or the making of distributions to the Parent Guarantor or
another Restricted Subsidiary of the Parent Guarantor to the extent of such
restriction.
"Consolidated Income Tax Expense" for any period means the
aggregate amounts of the provisions for income taxes of the Parent Guarantor and
its Restricted Subsidiaries for such period calculated on a consolidated basis
in accordance with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the
interest expense included in a consolidated income statement (excluding interest
income) of the Parent Guarantor and its Restricted Subsidiaries for such period
in accordance with generally accepted accounting principles, including without
limitation or duplication (or, to the extent not so included, with the addition
of), (i) the amortization of Debt discounts; (ii) any payments or fees with
respect to letters of credit, bankers' acceptances or similar facilities; (iii)
fees with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements; (iv) Preferred Stock dividends
of the Parent Guarantor and its Restricted Subsidiaries (other than dividends
paid in shares of Preferred Stock that is not Disqualified Stock) declared and
paid or payable; (v) accrued Disqualified Stock dividends of the Parent
Guarantor and its Restricted Subsidiaries, whether or not declared or paid; (vi)
interest on Debt guaranteed by the Parent Guarantor and its Restricted
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Subsidiaries (but only to the extent such interest is actually paid by the
Parent Guarantor or a Restricted Subsidiary); and (vii) the portion of any
Capital Lease Obligation paid during such period that is allocable to interest
expense; excluding, however, any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offerings of the
Securities; all of the foregoing as determined on a consolidated basis (without
taking into account Unrestricted Subsidiaries) in conformity with generally
accepted accounting principles.
"Consolidated Net Income" for any period means the net income
(or loss) of the Parent Guarantor and its Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Parent Guarantor or a
Restricted Subsidiary of the Parent Guarantor in a pooling-of-interests
transaction for any period prior to the date of such transaction, (b) the net
income (or loss) of any Person that is not a Restricted Subsidiary of the Parent
Guarantor except to the extent of the amount of dividends or other distributions
actually paid to the Parent Guarantor or a Restricted Subsidiary of the Parent
Guarantor by such Person during such period, (c) gains or losses on Asset
Dispositions by the Parent Guarantor or its Restricted Subsidiaries, (d) all
extraordinary gains and extraordinary losses, determined in accordance with
generally accepted accounting principles, (e) the cumulative effect of changes
in accounting principles, (f) noncash gains or losses resulting from
fluctuations in currency exchange rates and (g) the tax effect of any of the
items described in clauses (a) through (f) above.
"Consolidated Net Worth" of any Person means the stockholders'
equity of such Person, determined on a consolidated basis in accordance with
generally accepted accounting principles, less amounts attributable to
Disqualified Stock of such Person.
"Consolidated Tangible Assets" of any Person means the total
amount of assets (less applicable reserves and other properly deductible items)
which under generally accepted accounting principles would be included on a
consolidated balance sheet of such Person and its Subsidiaries after deducting
therefrom all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each case under
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generally accepted accounting principles would be included on such consolidated
balance sheet.
"Corporate Trust Office" means the principal office of the
Trustee in the Borough of Manhattan, The City of New York, New York, at which at
any particular time its corporate trust business shall be administered, which at
the date hereof is located at 550 West 33rd Street, New York, NY 10001-2697.
"corporation" means a corporation, association, company,
limited liability company, joint-stock company or business trust.
"Credit Facility" means credit agreements, vendor financings
or other facilities or arrangements made available from time to time to the
Parent Guarantor and its Restricted Subsidiaries by banks, other financial
institutions and/or equipment manufacturers for the Incurrence of Debt,
including the private or public issuance of debt securities or the provision of
letters of credit and any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified or restated from time to time.
"Debt" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, the amount of (i) every obligation of such Person for
money borrowed, (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations Incurred
in connection with the acquisition of property, assets or businesses, (iii)
every reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith), (v) every Capital Lease Obligation of such Person,
(vi) all Receivables Sales of such Person, together with any obligation of such
Person to pay any discount, interest, fees, indemnities, penalties, recourse,
expenses or other amounts in connection therewith, (vii) all obligations to
redeem Disqualified Stock issued by such Person, (viii) every obligation under
Interest Rate and Currency Protection Agreements of such Person and (ix) every
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obligation of the type referred to in clauses (i) through (viii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed to the extent the same is Guaranteed by such Person.
The "amount" or "principal amount" of Debt at any time of determination as used
herein represented by (a) any Debt issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with generally accepted accounting
principles, (b) any Receivables Sale shall be the amount of the unrecovered
capital or principal investment of the purchaser (other than the Parent
Guarantor or a Wholly Owned Restricted Subsidiary of the Parent Guarantor)
thereof to the extent such Person is liable therefor, excluding amounts
representative of yield or interest earned on such investment or (c) any
Disqualified Stock shall be the maximum fixed redemption or repurchase price in
respect thereof.
"Defaulted Interest" has the meaning specified in Section
3.07.
"Definitive Security" means a certificated Security registered
in the name of the Holder thereof and issued in accordance with Section 3.05(d)
hereof.
"deltathree.com" means deltathree.com, Inc., a Delaware
corporation.
"Deposit Agreement" means the Note Deposit Agreement, dated as
of the date hereof, between the Issuer and The Chase Manhattan Bank, as
Book-Entry Depositary with respect to the Global Securities, as amended from
time to time in accordance with the terms thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in the form of one or more Global Securities, The
Depository Trust Company for so long as it shall be a clearing agency registered
under the Exchange Act, or such successor as the Issuer shall designate from
time to time in an Officers' Certificate delivered to the Trustee.
"Depositary Interest" means a certificateless depositary
interest representing a 100% beneficial interest in a Global Security.
"Disqualified Stock" of any Person means any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for
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which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of such Person, any Subsidiary of such Person or the
holder thereof, in whole or in part, on or prior to the final Stated Maturity of
the Securities; provided, however, that any Preferred Stock which would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Preferred Stock
upon the occurrence of a Change of Control occurring prior to the final maturity
of the Securities shall not constitute Disqualified Stock if the change of
control provisions applicable to such Preferred Stock are no more favorable to
the holders of such Preferred Stock than the provisions applicable to the
Securities contained in Section 10.17 and such Preferred Stock specifically
provides that such Person will not repurchase or redeem any such stock pursuant
to such provisions prior to such Person's repurchase of such Securities as are
required to be repurchased pursuant to Section 10.17 (it being understood,
however, that any requirement to purchase or redeem preferred stock using
Capital Stock of the Parent Guarantor that does not constitute Disqualified
Stock shall not be limited under the foregoing definition).
"Dollar" and the symbol "$" each mean the lawful currency of
the United States of America.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" (or higher) according to
Standard & Poor's Ratings Service or Moody's Investors Service, Inc. at the time
as of which any investment or rollover therein is made.
"Euroclear" means the Euroclear Clearance System (or any
successor securities clearing agency).
"Event of Default" has the meaning set forth in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1935, as
amended (or any successor act), and the rules and regulations thereunder.
"Exchange and Registration Rights Agreement" means the
Exchange and Registration Rights Agreement, dated as of February 22, 2000 among
the Issuer, the Parent Guarantor and the Initial Purchasers and the Holders from
time to time as
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provided therein, as such agreement may be amended from time to time. Such term
shall also refer to any other agreement having substantially similar terms
relating to Additional Securities.
"Exchange Offer" has the meaning set forth in the form of the
Securities contained in Section 2.02.
"Exchange Offer Registration Statement" has the meaning set
forth in the form of the Securities contained in Section 2.02.
"Exchange Security" means any Security issued in exchange for
an Original Security or Original Securities pursuant to the Exchange Offer or
otherwise registered under the Securities Act and any Security with respect to
which the next preceding Predecessor Security of such Security was an Exchange
Security.
"Existing Stockholders" means (A) R.S. Lauder, Gaspar & Co.,
L.P., ("LGC"), (B) partners in LGC and Lauder Gaspar Ventures LLC and their
Affiliates, in each case as of the Closing Date, (C) Itzhak Fisher, Ronald S.
Lauder, Leonard Lauder, Jacob Z. Schuster, Nir Tarlovsky, Nesim N. Bildirici and
Eugene Sekulow, (D) family members of any of the foregoing, (E) trusts, the only
beneficiaries of which are persons or entities described in clauses (A) through
(D) above and (F) partnerships which are controlled by the persons or entities
described in clauses (A) through (D) above.
"Expiration Date" has the meaning specified in the definition
of "Offer to Purchase".
"Global Security" means the security or securities issued
initially in bearer form that evidences all or part of the Securities and bears
the legend set forth in Section 2.02.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not less
than one year from the date of Investment therein.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any
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other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Debt, (ii) to purchase property, securities
or services for the purpose of assuring the holder of such Debt of the payment
of such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed" and "Guaranteeing"
shall have meanings correlative to the foregoing); provided, however, that the
Guarantee by any Person shall not include endorsements by such Person for
collection or deposit, in either case, in the ordinary course of business.
"Guarantors" means the Parent Guarantor and the
Subsidiary Guarantor.
"Holder" means a Person (i) who is the bearer of a Global
Security (which shall initially be the Book-Entry Depositary) or (ii) in whose
name a Definitive Security is registered in the Security Register.
"Incremental Paid-in Capital" means as of any date the
cumulative aggregate amount of the increase in paid-in capital (determined in
accordance with generally accepted accounting principles applied on a consistent
basis) since September 30, 1997, as determined based on the most recent
unaudited quarterly or audited annual financial statements of the Parent
Guarantor and its consolidated subsidiaries filed with the Commission, as
compared with the Parent Guarantor's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, enter into a Guarantee in respect of or otherwise become liable in
respect of such Debt or other obligation including by acquisition of
Subsidiaries or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on the
balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming Debt shall not
be deemed an Incurrence of such Debt and that
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neither the accrual of interest nor the accretion of original issue discount
shall be deemed an Incurrence of Debt.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Indirect Participant" means a Person who holds an interest
through a Participant in a Depositary Interest issued by the Book-Entry
Depositary to the Depositary.
"Initial Purchasers" means the parties named as such in the
Purchase Agreement.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate or Currency Protection Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but excluding any loan,
advance or extension of credit to an employee of the Parent Guarantor or any of
its Subsidiaries in the ordinary course of business and commercially reasonable
extensions of trade credit. Without limiting the foregoing, the term
"Investment" 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 the Parent Guarantor or any of its Restricted
Subsidiaries, of (or in) any Person (other than deltathree.com and its
Subsidiaries) that has ceased to be a Restricted Subsidiary. For purposes of the
definition of "Unrestricted Subsidiary" and Section 10.10, (i) "Investment"
shall include the fair market value of the assets (net of liabilities (other
than liabilities to the
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Parent Guarantor or any of its Restricted Subsidiaries)) of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary, (ii) the fair market value of the assets (net of
liabilities (other than liabilities to the Parent Guarantor or any of its
Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer. Notwithstanding the foregoing, an
acquisition of assets (including, without limitation, Capital Stock or rights to
acquire Capital Stock) by the Parent Guarantor or any of its Restricted
Subsidiaries shall be deemed not to be an Investment to the extent that the
consideration therefor consists of Common Stock of the Parent Guarantor.
"Issuer" means the Person named as the "Issuer" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Issuer"
shall mean such successor Person.
"Issuer Request" or "Issuer Order" means a written request or
order signed in the name of the Issuer by the Issuer's Chairman of the Board,
its Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, Receivables Sale,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness), encumbrance, preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Listing Failure" has the meaning specified in Section 10.09.
"Marketable Securities" means: (i) Government Securities; (ii)
any certificate of deposit maturing not more than 270 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution;
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(iii) commercial paper maturing not more than 270 days after the date of
acquisition issued by a corporation (other than an Affiliate of the Parent
Guarantor) with a rating, at the time as of which any investment therein is
made, of "A-1" (or higher) according to Standard & Poor's Ratings Service or
"P-1" (or higher) according to Moody's Investor Service, Inc.; (iv) any banker's
acceptances or money market deposit accounts issued or offered by an Eligible
Institution; (v) time deposits, certificates of deposit, bank promissory notes
and bankers' acceptances maturing not more than 180 days after the acquisition
thereof and guaranteed or issued by any of the ten largest banks (based on
assets as of the immediately preceding December 31), organized under the laws of
any jurisdiction in which one of the Restricted Subsidiaries does business or
any foreign country recognized by the United States and which are not under
intervention, bankruptcy or similar proceeding, not to exceed $10 million
outstanding at any one term; and (vi) any fund investing exclusively in
investments of the types described in clauses (i) through (iv) above.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or readily marketable cash equivalents received (including
amounts received by way of sale or discounting of any note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiror of Debt or other obligations relating
to such properties or assets) therefrom by such Person, net of (i) all legal,
title and recording tax expenses, commissions and other fees and expenses
Incurred and all Federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Asset Disposition, (ii) all
payments made by such Person or its Subsidiaries on any Debt which is secured by
such assets in accordance with the terms of any Lien upon or with respect to
such assets or which must by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Disposition or by applicable law, be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other
payments made to minority interest holders in Subsidiaries of such Person as a
result of such Asset Disposition and (iv) appropriate amounts to be provided by
such Person or any Subsidiary thereof, as the case may be, as a reserve in
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accordance with generally accepted accounting principles against any liabilities
associated with such assets and retained by such Person or any Subsidiary
thereof, as the case may be, after such Asset Disposition, including, without
limitation, liabilities under any indemnification obligations and severance and
other employee termination costs associated with such Asset Disposition, in each
case as determined by the board of directors of such Person, in its reasonable
good faith judgment; provided, however, that any reduction in such reserve
within 12 months following the consummation of such Asset Disposition will be
treated for all purposes of the Indenture and the Securities as a new Asset
Disposition at the time of such reduction with Net Available Proceeds equal to
the amount of such reduction.
"Offer to Purchase" means a written offer (the "Offer") sent
by or on behalf of the Issuer by first class mail, postage prepaid, to each
Holder of Securities at his address appearing in the related Security Register
on the date of the Offer offering to purchase up to the principal amount of
Securities specified in such Offer at the purchase price specified in such Offer
(as determined pursuant to this Indenture). Unless otherwise required by
applicable law, the Offer shall specify an expiration date (the "Expiration
Date") of the Offer to Purchase which shall be, subject to any contrary
requirements of applicable law, not less than 30 days or more than 60 days after
the date of such Offer and a settlement date (the "Purchase Date") for purchase
of Securities within five Business Days after the Expiration Date. The Issuer
shall notify in writing the Trustee at least 15 Business Days (or such shorter
period as is acceptable to the Trustee) prior to the mailing of the Offer of the
Issuer's obligation to make an Offer to Purchase, and the Offer shall be mailed
by the Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer. The Offer shall contain information concerning the
business of the Parent Guarantor and its Subsidiaries which the Guarantors and
Issuer in good faith believe will enable such Holders to make an informed
decision with respect to the Offer to Purchase (which at a minimum will include
(i) the most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the documents required to be filed with the Trustee pursuant to
this Indenture (which requirements may be satisfied by delivery of such
documents together with the Offer), (ii) a description of material developments
in the Parent Guarantor's business subsequent to the date of the latest of such
financial statements referred to in clause (i) (including a description of the
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events requiring the Issuer to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events requiring the Issuer to make the Offer to Purchase and (iv) any other
information required by applicable law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer to Purchase. The Offer shall also state:
(a) the Section of this Indenture pursuant to
which the Offer to Purchase is being made;
(b) the Expiration Date and the Purchase Date;
(c) the aggregate principal amount at maturity of the
Outstanding Securities offered to be purchased by the Issuer pursuant
to the Offer to Purchase (including, if less than 100%, the manner by
which such has been determined pursuant to the Section hereof requiring
the Offer to Purchase) (the "Purchase Amount");
(d) the purchase price to be paid by the Issuer for each
$1,000 aggregate principal amount at maturity of Securities accepted
for payment (as specified pursuant to the Indenture) (the "Purchase
Price");
(e) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that any portion
of a Security tendered must be tendered in an integral multiple of
$1,000 principal amount at maturity;
(f) the place or places where Securities are to be
surrendered for tender pursuant to the Offer to
Purchase;
(g) that interest on any Security not tendered or
tendered but not purchased by the Issuer pursuant to
the Offer to Purchase will continue to accrue;
(h) that on the Purchase Date the Purchase Price will become
due and payable upon each Security being accepted for payment pursuant
to the Offer to Purchase and that interest thereon shall cease to
accrue on and after the Purchase Date;
(i) that each Holder electing to tender a Security
pursuant to the Offer to Purchase will be required to
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surrender such Security at the place or places specified in the Offer
prior to the close of business on the Expiration Date (such Security
being, if the Issuer or the Trustee so requires, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to
the Issuer and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing);
(j) that Holders will be entitled to withdraw all or any
portion of Securities tendered if the Issuer (or their Paying Agent)
receives, not later than the close of business on the Expiration Date,
a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount at maturity of the Security
the Holder tendered, the certificate number of the Security the Holder
tendered and a statement that such Holder is withdrawing all or a
portion of his tender;
(k) that (a) if Securities in an aggregate principal amount at
maturity less than or equal to the Purchase Amount are duly tendered
and not withdrawn pursuant to the Offer to Purchase, the Issuer shall
purchase all such Securities and (b) if Securities in an aggregate
principal amount at maturity in excess of the Purchase Amount are
tendered and not withdrawn pursuant to the Offer to Purchase, the
Issuer shall purchase Securities having an aggregate principal amount
at maturity equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only Securities in
denominations of $1,000 or integral multiples thereof shall be
purchased); and
(l) that in the case of any Holder whose Security is purchased
only in part, the Issuer shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount at maturity
equal to and in exchange for the unpurchased portion of the Security so
tendered.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an
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Assistant Treasurer, the Secretary or an Assistant Secretary, of the Parent
Guarantor or the Issuer, as applicable, and delivered to the Trustee and
containing the statements provided for in Section 1.02. One of the officers
signing an Officers' Certificate given pursuant to Section 10.19 shall be the
principal executive, financial or accounting officer of the Parent Guarantor.
"Opinion of Counsel" means a written opinion of legal counsel,
who may be counsel for the Parent Guarantor or the Issuer, and who shall be
acceptable to the Trustee, and containing the statements provided for in Section
1.02.
"Original Securities" means all Securities that are subject to
an Exchange and Registration Rights Agreement, other than Exchange Securities
issued in exchange therefore.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancelation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Issuer) in trust or set aside and
segregated in trust by the Issuer (if the Issuer shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 3.06
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Issuer; and
(iv) Securities held by the Issuer, the Parent Guarantor or
any of their respective Affiliates for purposes of determining the
amount of Securities that
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remain Outstanding after a redemption pursuant to Section 11.01(a) and
the related provision in such Securities;
provided, however, that in determining whether the Holders of the requisite
principal amount at maturity of the Outstanding Securities have given any
request, demand, 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 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.
"Parent Guarantor" means the Person named as the "Parent
Guarantor" in the first paragraph of this instrument until a successor Personal
shall have become such Person pursuant to the applicable provisions of this
Indenture and thereafter "Parent Guarantor" shall mean such successor Person.
"Participant" means, with respect to the Depositary, Euroclear
or Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to the Depositary, shall include
Euroclear and Clearstream).
"Paying Agent" means any Person authorized by the Issuer to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Issuer.
"Permitted Interest Rate or Currency Protection Agreement" of
any Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
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"Permitted Investment" means (i) any Investment in the Parent
Guarantor or a Restricted Subsidiary, (ii) any Investment in any Person as a
result of which such Person becomes a Restricted Subsidiary of the Parent
Guarantor or upon the making of which such Person will be merged or consolidated
with or into or transfer all or substantially all of its assets to the Parent
Guarantor or a Restricted Subsidiary, (iii) any Investment in Marketable
Securities, (iv) securities or other Investments received in settlement of debts
created in the ordinary course of business and owing to the Parent Guarantor or
any Restricted Subsidiary, or as a result of foreclosure, perfection or
enforcement of any Lien, or in satisfaction of judgments, including in
connection with any bankruptcy proceeding or other reorganization of another
Person, (v) securities or other Investments received as consideration in sales
or other dispositions of property or assets, including Asset Dispositions made
in compliance with Section 10.13 (vi) any Investment in equity securities of a
Person engaged in Telecommunications Business (which term includes any
Internet-based business) received in exchange for equity securities of
deltathree.com and (vii) other Investments at any time outstanding (measured on
the date each such Investment was made without giving effect to subsequent
changes in value) in an aggregate amount not to exceed 10.0% of the Parent
Guarantor's total consolidated assets.
"Permitted Liens" means (a) Liens for taxes, assessments,
governmental charges or claims which are not yet delinquent or which are being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor; (b) other Liens
incidental to the conduct of the Parent Guarantor's and its Restricted
Subsidiaries' business or the ownership of its property and assets not securing
any Debt, and which do not in the aggregate materially detract from the value of
the Parent Guarantor's and its Restricted Subsidiaries' property or assets when
taken as a whole, or materially impair the use of such assets and property in
the operation of its business; (c) Liens with respect to assets of a Subsidiary
granted by such Subsidiary to the Parent Guarantor to secure Debt owing to the
Parent Guarantor; (d) pledges and deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of statutory obligations; (e) deposits made to secure the
performance of tenders, bids, leases, and other obligations of like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed
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money); (f) zoning restrictions, servitudes, easements, rights-of-way,
restrictions and other similar charges or encumbrances incurred in the ordinary
course of business which, in the aggregate, do not materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of the Parent Guarantor or its Restricted Subsidiaries; (g) Liens
on Capital Stock of Restricted Subsidiaries securing obligations not exceeding
$75 million at any time outstanding of the Parent Guarantor or any Restricted
Subsidiary to repurchase or redeem shares of Capital Stock of such Restricted
Subsidiary held by Persons who are not Affiliates or Related Persons of the
Parent Guarantor; (h) Liens arising out of judgments or awards against the
Parent Guarantor or any Restricted Subsidiary with respect to which the Parent
Guarantor or such Restricted Subsidiary is prosecuting an appeal or proceeding
for review and the Parent Guarantor or such Restricted Subsidiary is maintaining
adequate reserves in accordance with generally accepted accounting principles;
and (i) any interest or title of a lessor in the property subject to any lease
other than a Capital Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof or any other entity.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means the Purchase Agreement dated
February 15, 2000, pursuant to which $100,000,000 aggregate principal amount of
Securities have been sold to the Initial Purchasers and any other substantially
similar purchase agreement providing for the sale of Additional Securities.
"Purchase Money Debt" means Debt (including Acquired Debt and
Debt represented by Capital Lease Obligations, mortgage financings and purchase
money obligations) Incurred for the purpose of financing all or any part of the
cost of construction, acquisition or improvement by the Parent Guarantor or any
Restricted Subsidiary of the Parent Guarantor of any Telecommunications
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Assets of the Parent Guarantor or any Restricted Subsidiary of the Parent
Guarantor, and including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified or restated from time to time.
"readily marketable cash equivalents" means (i) marketable
securities issued or directly and unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Rating Service or Moody's Investors Service, Inc.; (iii) commercial paper
maturing no more than 180 days from the date of acquisition thereof and, at the
time of acquisition, having a rating of at least A-1 from Standard & Poor's
Ratings Service or at least P-1 from Moody's Investors Service, Inc.; and (iv)
certificates of deposit or bankers' acceptance maturing within one year from the
date of acquisition thereof issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia having unimpaired capital and surplus of not less than $100,000,000.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money.
"Receivables Sale" of any Person means any sale of Receivables
of such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"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 it is to be redeemed pursuant to this
Indenture.
"Registered Securities" means Exchange Securities
and all other Securities sold or otherwise disposed of
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pursuant to an effective registration statement under the Securities Act,
together with any respective Successor Securities.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the February 15 and August 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 (or
any successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially
in the form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in
Section 2.01.
"Regulation S Legend" means a legend substantially in the form
of the legend required in the form of Security set forth in Section 2.02 to be
placed upon each Regulation S Security.
"Regulation S Securities" means all Securities sold pursuant
to Regulation S, which are required pursuant to Section 3.05(c) to bear a
Regulation S Legend. Such term includes the Regulation S Global Security.
"Related Person" of any Person means any other Person directly
or indirectly owning (a) 5% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a corporation, 5% or more of the
outstanding equity interest in such Person) or (b) 5% or more of the combined
outstanding voting power of the Voting Stock of such Person, except that, for
purposes of Section 10.12, Related Person means any other Person directly or
indirectly owning 10% or more of the combined outstanding voting power of the
Voting Stock of such Person (or, in the case of a Person that is not a
corporation, 10% or more of the outstanding equity interest in such Person).
"Resale Registration Statement" has the meaning set forth in
the Form of the Securities contained in Section 2.02.
"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
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of the trust committee, the president, any 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 also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Global Security" has the meaning specified in
Section 2.01.
"Restricted Period" means the period of 51 consecutive days
beginning on and including the later of (i) the day on which Securities are
first offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S and (ii) the original issuance date of the Securities.
"Restricted Securities" means all Securities required pursuant
to Section 3.05(c) to bear any Restricted Securities Legend. Such term includes
any Restricted Global Security.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Annex B.
"Restricted Securities Legend" means, collectively, the
legends substantially in the forms of the legends required in the form of
Security set forth in Section 2.02 to be placed upon each Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Parent
Guarantor other than an Unrestricted Subsidiary.
"RSL Australia" means RSL COM Australia Holdings Pty. Limited
or a newly-formed parent or subsidiary thereof organized under the laws of
Australia.
"RSL Spain" means RSL Communications Spain S.A. or a
newly-formed parent or subsidiary thereof organized under the laws of Spain.
"RSLNA" has the meaning specified in Section 1.15.
"Rule 155A" means Rule 155A under the Securities Act (or any
successor provision), as it may be amended from time to time.
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"Rule 155A Securities" means all Securities sold pursuant to
Rule 155A, which are required pursuant to Section 3.05(c) to bear a Restricted
Securities Legend. Such term includes the Restricted Global Security.
"Securities" has the meaning specified in the first paragraph
of the recitals to this instrument.
"Securities Act" means the Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend
or a Regulation S Legend.
"Securities Guarantee" means the Securities Guarantee issued
by the Guarantors in accordance with Article IV hereunder.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.05.
"Significant Subsidiary" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Parent Guarantor, accounted for more than 10% of the
consolidated revenues of the Parent Guarantor 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 the Parent Guarantor and its Restricted Subsidiaries, all
as set forth on the most recently available consolidated financial statements of
the Parent Guarantor for such fiscal year.
"Special Interest" has the meaning set forth in the form of
Security contained in Section 2.02. Unless the context otherwise requires,
references herein to "interest" on the Securities shall include Special
Interest.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.
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"Step-Down Date" has the meaning set forth in the form of the
Security contained in Section 2.02.
"Step-Up" has the meaning set forth in the form of the
Security contained in Section 2.02.
"Strategic Investor" means a corporation, partnership or other
entity engaged in the Telecommunications Business that has, or 80% or more of
the Voting Stock of which is owned by a Person that has, an equity market
capitalization or paid in capital, at the time of any Investment by such
corporation, partnership or other entity in a Restricted Subsidiary pursuant to
clause (iv)(2) of Section 10.15, in excess of $100 million.
"Subordinated Debt" means Debt of the Parent Guarantor or any
Restricted Subsidiary as to which the payment of principal of (and premium, if
any) and interest and other payment obligations in respect of such Debt shall be
subordinate to the prior payment in full of the Securities to at least the
following extent: (i) no payments of principal of (or premium, if any) or
interest on or otherwise due in respect of such Debt may be permitted for so
long as any default in the payment of principal (or premium, if any) or interest
on the Securities exists; (ii) in the event that any other default that with the
passing of time or the giving of notice, or both, would constitute an event of
default exists with respect to the Securities, upon written notice by 25% or
more in principal amount at maturity of the Securities to the Trustee, the
Trustee shall have the right to give notice to the Parent Guarantor or such
Restricted Subsidiary and the holders of such Debt (or trustees or agents
therefor) of a payment blockage, and thereafter no payments of principal of (or
premium, if any) or interest on or otherwise due in respect of such Debt may be
made for a period of 179 days from the date of such notice; and (iii) such Debt
may not (x) provide for payments of principal of such Debt at the stated
maturity thereof or by way of a sinking fund applicable thereto or by way of any
mandatory redemption, defeasance, retirement or repurchase thereof by the Parent
Guarantor or such Restricted Subsidiary (including any redemption, retirement or
repurchase which is contingent upon events or circumstances, but excluding any
retirement required by virtue of acceleration of such Debt upon an event of
default thereunder), in each case prior to the final Stated Maturity of the
Securities or (y) permit redemption or other retirement (including pursuant to
an offer to purchase made by the Parent Guarantor or such Restricted Subsidiary)
of such other Debt at the option of the holder thereof prior to
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the final Stated Maturity of the Securities, other than a redemption or other
retirement at the option of the holder of such Debt (including pursuant to an
offer to purchase made by the Parent Guarantor or such Restricted Subsidiary)
which is conditioned upon a change of control of the Parent Guarantor pursuant
to provisions substantially similar to those described under Section 10.17 (and
which shall provide that such Debt will not be repurchased pursuant to such
provisions prior to the Parent Guarantor's or such Restricted Subsidiary's
repurchase of the Securities required to be repurchased pursuant to the
provisions described under Section 10.17).
"Subsidiary" of any Person means (i) a corporation more than
50% of the combined voting power of the outstanding Voting Stock, of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and one
or more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs
thereof. An 80% or more owned Subsidiary of the Parent Guarantor is (i) a
corporation 80% or more of the combined voting power of the outstanding Voting
Stock, and more than 80% of the Capital Stock or other ownership interests, of
which is owned, directly or indirectly, by the Parent Guarantor or by one or
more other Subsidiaries of the Parent Guarantor or by the Parent Guarantor and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which the Parent Guarantor, or one or more other Subsidiaries of
the Parent Guarantor or the Parent Guarantor and one or more other Subsidiaries
of the Parent Guarantor, directly or indirectly, has at least an 80% ownership
interest and power to direct the policies, management and affairs thereof.
"Subsidiary Guarantor" means the Person named as the
"Subsidiary Guarantor" in the first paragraph of this instrument until a
successor Person shall have become such Person pursuant to the applicable
provisions of this Indenture and thereafter "Subsidiary Guarantor" shall mean
such successor Person, in each case, until the Subsidiary Guarantor shall have
been released and discharged from its obligations under the Securities Guarantee
pursuant to Section 5.05 and thereafter references to the "Subsidiary Guarantor"
shall have no further force or effect.
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"Substitute Securities" has the meaning specified in Section
3.01.
"Successor Security" of any particular Security means every
Security issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.06 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Tax" means any tax, duty, levy, impost, assessment or other
governmental charge (including penalties, interest and any other liabilities
related thereto).
"Taxing Authority" means any government or political
subdivision or territory or possession of any government or any authority or
agency therein or thereof having power to tax.
"Telecommunications Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
or intended for use in connection with a Telecommunications Business, including
a majority of the Voting Stock of a Person engaged in the Telecommunications
Business and a minority equity interest in a Person engaged in the
Telecommunications Business (which term includes any internet-based business)
received in exchange for equity securities of deltathree.com.
"Telecommunications Business" means the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunications Business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in (i) or (ii) above; provided that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the Board of Directors of the Parent Guarantor.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable
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provisions of this Indenture, and thereafter "Trustee" shall mean such successor
Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Annex C.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Parent Guarantor that at the time of determination shall be designated an
Unrestricted Subsidiary of the Parent Guarantor by the Board of Directors in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Restricted Subsidiary (including any newly
acquired or newly formed Subsidiary of the Parent Guarantor) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Parent Guarantor or any
Restricted Subsidiary; provided that (A) any Guarantee by the Parent Guarantor
or any Restricted Subsidiary of any Debt of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Debt and an "Investment" by the Parent
Guarantor or such Restricted Subsidiary (or both, if applicable) at the time of
such designation, in each case, to the extent such Debt is so Guaranteed by the
Parent Guarantor or such Restricted Subsidiary; (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, such designation would be permitted under
Section 10.10 (provided that this clause II shall not apply in the case of the
designation of deltathree.com and its Subsidiaries as Unrestricted Subsidiaries)
and (C) if applicable, the Incurrence of Debt and the Investment referred to in
clause (A) of this proviso would be permitted under Sections 10.08 and 10.10.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that immediately after giving effect to such
designation (x) the Parent Guarantor could Incur $1.00 of additional Debt under
the first paragraph of Section 10.08 and (y) no Default or Event of Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution
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giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.
"Vice President", when used with respect to the Issuer, the
Parent Guarantor or the Trustee, means any vice president, whether or not
designated by a number or a word or words added before or after the title "vice
president".
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Voting Stock or other ownership interests
(other than directors' qualifying shares) of which shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer and Guarantors shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture. Each such certificate or opinion shall
be given in the form of an Officers' Certificate, if to be given by an officer
of the Issuer or the Guarantors, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate of an officer of the Issuer or either
Guarantor may be based, insofar as it relates to legal matters, upon an opinion
of counsel submitted therewith, unless such officer knows, or in the exercise of
reasonable care should know, that the opinion with respect to the matters upon
which his certificate is based is erroneous. Any opinion of counsel may be
based, insofar as it relates to factual matters, upon a certificate of an
officer or officers of the Issuer or either Guarantor submitted therewith
stating the information on which counsel is relying, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate with
respect to such matters is erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.05. Acts of Holders; Record Dates. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
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such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Issuer or the Guarantors. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Trustee and the Issuer
and Parent Guarantor, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee, the
Issuer or the Parent Guarantor in reliance thereon, whether or not notation of
such action is made upon such Security.
The Issuer may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities; provided that the Issuer may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If not set by
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the Issuer prior to the first solicitation of a Holder made by any Person in
respect of any such matter referred to in the foregoing sentence, the record
date for any such matter shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 7.01)
prior to such first solicitation. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount at maturity of
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Issuer from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect), and nothing in this paragraph shall
be construed to render ineffective any action taken by Holders of the requisite
principal amount at maturity of Outstanding Securities on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Issuer, at its own expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Trustee
in writing and to each Holder of Securities in the manner set forth in Section
1.06.
The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.02, (iii) any request to institute
proceedings referred to in Section 5.07(2) or (iv) any direction referred to in
Section 5.12. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount at maturity of
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with
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no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount at maturity of Outstanding Securities on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Issuer's expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Issuer in writing and to each Holder of Securities in the
manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section,
the party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
1.06, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.05. Notices, Etc., to Trustee, Issuer and
Guarantors. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Issuer or either
Guarantor shall be sufficient for every purpose hereunder if in writing
and delivered in person or by first class mail, commercial courier
service or telecopies communication to a Responsible Officer of the
Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or as may otherwise be
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expressly provided in any solicitation of any Act of
the Holders, or
(2) the Issuer or either Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Issuer or either Guarantor as
applicable, addressed to it, if prior to receipt by the Trustee of
written notice pursuant to this Section 1.05 of a change of address, at
the address of its principal office specified in the first paragraph of
this instrument, or, if after receipt by the Trustee of written notice
pursuant to this Section 1.05 of a change of address, at such other
address as may be previously furnished in writing to the Trustee by the
Issuer or either Guarantor, as applicable.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. 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 1.07. Application of Trust Indenture Act. The Trust
Indenture Act shall apply as a matter of contract to this Indenture for purposes
of interpretation, construction and defining the rights and obligations
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hereunder. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 1.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and
agreements in this Indenture by the Issuer and the Guarantors shall bind their
respective successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause. 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 1.11. Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders of Securities,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 1.12. Governing Law. This Indenture, the Securities
and the Securities Guarantee shall be governed by and construed in accordance
with the laws of the State of New York.
SECTION 1.13. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Purchase Date or Stated Maturity of any Security
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and premium,
if any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, Purchase Date or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Purchase Date or Stated Maturity, as the case may be.
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SECTION 1.15. Agent for Service; Submission to Jurisdiction;
Waiver of Immunities. By the execution and delivery of this Indenture, each of
the Issuer, the Parent Guarantor and the Subsidiary Guarantor (i) represents
that it has designated and appointed RSL Communications N. America, Inc.
("RSLNA"), as its authorized agent upon which process may be served in any suit,
action or proceeding arising out of or relating to the Securities, the
Securities Guarantee or this Indenture that may be instituted in any Federal or
state court in the State of New York, Borough of Manhattan, or brought under
Federal or state securities laws or brought by the Trustee (whether in its
individual capacity or in its capacity as Trustee hereunder), and that RSLNA has
accepted such designation, (ii) submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding, (iii) agrees that service of
process upon RSLNA and written notice of said service to the Issuer or the
Parent Guarantor, as applicable, (mailed or delivered to its President at its
principal office as specified in Section 1.05) shall be deemed in every respect
effective service of process upon it in any such suit or proceeding, and (iv)
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 RSLNA in full force and effect so long as any of
the Securities shall be Outstanding.
To the extent that the Issuer or either Guarantor 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, each of the Issuer, Parent Guarantor and the Subsidiary
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Indenture, the Securities Guarantee and the Securities, to the extent
permitted by law.
ARTICLE II
Security Forms
SECTION 2.01. Forms Generally. The Securities and the
Trustee's certificates of authentication thereof shall be in substantially the
forms set forth in this Article, with such appropriate legends, insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such
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letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities.
Upon their original issuance, Rule 155A Securities shall be
issued in the form of a Global Security in bearer form without interest coupons,
which shall be deposited on behalf of the Initial Purchasers with the Book-Entry
Depositary at its New York corporate trust office, duly executed by the Issuer
and authenticated by the Trustee as hereinafter provided. Such Global Security,
together with its Successor Securities which are Global Securities other than
the Regulation S Global Security, are collectively herein called the "Restricted
Global Security". Upon their original issuance, Regulation S Securities shall be
issued in the form of a Global Security in bearer form without interest coupons,
which shall be deposited on behalf of the Initial Purchasers with the Book-Entry
Depositary at its New York corporate trust office, duly executed by the Issuer
and authenticated by the Trustee as hereinafter provided. Such Global Security,
together with its Successor Securities which are Global Securities other than
the Restricted Global Security, are collectively herein called the "Regulation S
Global Security".
Upon receipt of the Restricted Global Security and the
Regulation S Global Security authenticated and delivered by the Trustee, the
Book-Entry Depositary shall issue to the Depositary a Depositary Interest in
each such Global Security by recording the Depositary Interest in the register
of the Book Entry Depositary in the name of Cede & Co., as nominee of the
Depositary. Ownership of beneficial interests shall be limited to Participants,
including Euroclear and Clearstream, and Indirect Participants. Upon the
issuance of the Depositary Interest in such Global Security to the Depositary,
the Depositary shall credit, on its internal book-entry registration and
transfer system, its Participant's accounts with respective interests owned by
such Participants.
Neither the Depositary nor its Participants shall have any
rights either under this Indenture or under any Global Security with respect to
such Global Security held on their behalf by the Book-Entry Depositary, and the
Book- Entry Depositary may be treated by the Issuer, the Trustee and any agent
of the Issuer or the Trustee as the absolute owner of such Global Security for
the purpose of receiving
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payment of or on account of the principal of (premium, if any) and, subject to
the provisions of this Indenture, interest on the Global Security and for all
other purposes. Notwithstanding the foregoing, nothing herein shall prevent the
Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Book-Entry Depositary or impair, as between the Book-Entry Depositary and the
Depositary and its Participants, the operation of customary practices of such
Depositary governing the exercise of the rights of an owner of a beneficial
interest in any Global Security.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
SECTION 2.02. Form of Face of Security. [If a Global Security
issued in bearer form, then insert -- THIS SECURITY IS A GLOBAL SECURITY WITHIN
THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS HELD BY THE BOOK-
ENTRY DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF. THIS SECURITY IS NOT
EXCHANGEABLE IN WHOLE OR IN PART OR TRANSFERABLE IN WHOLE OR IN PART EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If Restricted Securities, then insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 155A
UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
155A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
RULE 905 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 155 THEREUNDER (IF
AVAILABLE), (5) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (IF AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION
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STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH ABOVE.]
[If a Regulation S Security, then insert -- THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THIS SECURITY IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE.]
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12 7/8% SENIOR NOTES DUE 2010
[IF RESTRICTED GLOBAL SECURITY - CUSIP NO. 75972EAL2] [IF REGULATION S GLOBAL
SECURITY - CUSIP NO. G7703AH8; ISIN NO. - USG7703AAH89]
No. __________ $_______________
RSL Communications PLC, a United Kingdom corporation (herein
called the "Issuer", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to [If this Security is a Global Security issued in bearer form, then insert:
the bearer hereof] [If this Security is not a Global Security issued in bearer
form, then insert: _____________, or registered assigns], the principal sum of
______________ DOLLARS [if this Security is a Global Security, then insert:
(which principal amount may from time to time be increased or decreased to such
other principal amounts by adjustments made on the records of the Trustee
hereinafter referred to in accordance with the Indenture)] on March 1, 2010, and
to pay interest thereon from February 22, 2000 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on March 1 and September 1, in each year, at the rate of 12.875% per annum,
until the principal hereof is paid or made available for payment; [If Original
Securities, then insert: provided, however, that if the Issuer has not filed a
registration statement (an "Exchange Offer Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), registering a
security substantially identical to this Security (except that such Security
will not contain terms with respect to the Special Interest payments described
below or transfer restrictions) pursuant to an exchange offer (the "Exchange
Offer") (or, in lieu thereof, a registration statement registering this Security
for resale (a "Resale Registration Statement")), and (i) the Exchange Offer has
not been completed by 210 days after the date of original issuance of this
Security or its predecessors (if an Exchange Offer is then required to be made
pursuant to the Exchange and Registration Rights Agreement (an "Exchange and
Registration Rights Agreement"), by and between the Issuer, the Parent
Guarantor, as defined in the Indenture, the Subsidiary Guarantor as defined in
the Indentrue, the Purchasers (as defined therein) and the Holders from time to
time of the Securities) or (ii) any Resale Registration Statement required to be
filed by the Exchange and Registration Rights Agreement is filed and declared
effective but shall thereafter cease to be effective (except
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<PAGE>
as specifically permitted therein) without being succeeded promptly by an
additional registration statement filed and declared effective upon the terms
and conditions set forth in the Exchange and Registration Rights Agreement (each
such event referred to in clauses (i) and (ii), a "Registration Default"), then
interest will accrue (in addition to the stated interest on the Securities) (the
"Step-Up") at a rate of 0.5% per annum, determined daily, on the principal
amount of the Securities, from the period from and including the date of
occurrence of the Registration Default to but excluding such date (the
"Step-Down Date") as no Registration Default is in effect (commencing on which
date such interest rate will be restored to its initial rate). Interest accruing
as a result of the Step-Up is referred to herein as "Special Interest." Accrued
Special Interest, if any, shall be paid semi-annually on March 1 and September 1
in each year; and the amount of accrued Special Interest shall be determined on
the basis of the number of days actually elapsed. Any accrued and unpaid
interest (including Special Interest) on this Security upon the issuance of an
Exchange Security (as defined in the Indenture) in exchange for this Security
shall cease to be payable to the Holder hereof but such accrued and unpaid
interest (including Special Interest) shall be payable on the next Interest
Payment Date for such Exchange Security to the Holder thereof [if not a Global
Security in bearer form, insert: on the related Regular Record Date].] The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to [If this Security
is a Global Security issued in bearer form, then insert: the bearer hereof on
the Interest Payment Date] [If this Security is not a Global Security issued in
bearer form, then insert: the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the February 15 or August 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date]. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Interest
Payment Date and may either be paid to [If this Security is a Global Security
issued in bearer form, then insert: the bearer hereof on the Special Payment
Date] [If this Security is not a Global Security issued in bearer form, then
insert: the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date,] or be paid
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<PAGE>
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Under certain circumstances described in the Indenture, the
Issuer (or the Guarantors) also shall pay Additional Amounts to the Holders of
Securities equal to an amount that the Issuer or Guarantors, as the case may be,
may be required to withhold or deduct for or on account of Taxes imposed by a
Taxing Authority within the United Kingdom or Bermuda, as the case may be, from
any payment made under or with respect to the Securities or the Securities
Guarantee.
In the case of a default in payment of principal of and
premium, if any, on this Security upon acceleration or redemption, interest
shall be payable pursuant to the preceding paragraph on such overdue principal
and premium, if any, such interest shall be payable on demand and, if not so
paid on demand, such interest shall itself bear interest at the rate of 15.875%
per annum (to the extent that the payment of such interest shall be legally
enforceable), and shall accrue from the date of such demand for payment to the
date payment of such interest has been made or duly provided for, and such
interest on unpaid interest shall also be payable on demand.
[If this Security is a Global Security issued in bearer form,
then insert: The Issuer will pay interest, if any, on this Security to the
bearer of this Security. The Holder of this Security must surrender this
Security to the Trustee to collect principal payments.] Payment of the principal
of (and premium, if any) and interest on this Security will be made at the
corporate trust office of the Trustee and at the office or agency of the Issuer
maintained for that purpose in the Borough of Manhattan, The City of New York,
New York, and at any other office or agency maintained by the Issuer for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address [If
this Security is a Global Security in bearer form, then insert: is specified by
the bearer hereof] [If this Security is a Definitive Security, then insert:
shall appear in the Security Register]. Payments of principal
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interest and premium, if any, will be made by the Issuer in Dollars.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated:
The Common Seal of
RSL COMMUNICATIONS PLC
was hereto affixed in
the presence of:
[SEAL]
RSL COMMUNICATIONS PLC,
by
--------------------------
Name:
Title:
by
--------------------------
Name:
Title:
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<PAGE>
SECTION 2.03. Form of Reverse of Security. This Security is
one of a duly authorized issue of Securities of the Issuer designated as its
12 7/8% Senior Notes due 2010 (the "Securities") issued under an Indenture,
dated as of February 22, 2000 (herein called the "Indenture"), between the
Issuer, RSL Communications, Ltd., as a Parent Guarantor (the "Parent Guarantor",
which term includes any successor Person under the Indenture) RSL COM U.S.A.,
Inc., as a guarantor (the "Subsidiary Guarantor", which term includes any
successor Person under the Indenture, and together with the Parent Guarantor,
the "Guarantors") and The Chase Manhattan Bank, as trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture).
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Guarantors, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Securities are subject to redemption upon not less than 30
nor more than 60 days' notice by mail to each Holder of Securities to be
redeemed at such Holder's address appearing in the Security Register, in amounts
of $1,000 or an integral multiple of $1,000, at any time on or after March 1,
2005 and prior to maturity, as a whole or in part, at the election of the
Issuer, at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued interest to but excluding the Redemption Date
(subject to the right of Holders [If this Security is not a Global Security
issued in bearer form, insert: on the relevant Regular Record 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 beginning March 1, of each of the
years indicated below:
Redemption
Year Price
---- ------
2005 106.538%
2006 105.292%
2007 102.156%
2008 and 100.000%
thereafter
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such
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redemption with accrued interest to but excluding the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities [If this Security is not a Global Security issued in
bearer form, insert:, of record at the close of business on the relevant Record
Dates referred to on the face hereof,] all as provided in the Indenture.
In addition, at any time prior to March 1, 2003, in the event
that the Parent Guarantor receives net cash proceeds from the public or private
sale of its Common Stock (other than Disqualified Stock), the Issuer (to the
extent it receives such proceeds and has not used such proceeds, directly or
indirectly, to redeem or repurchase other securities pursuant to optional
redemption provisions) may, at its option, apply an amount equal to any such net
cash proceeds or any portion thereof to redeem, from time to time, Securities in
a principal amount at maturity of up to an aggregate amount equal to 33 1/3% of
the original aggregate principal amount at maturity of the Securities; provided,
however, that Securities in an amount equal to at least 66 2/3% of the aggregate
original principal amount at maturity of the Securities remain Outstanding after
each redemption. Each redemption must occur on a Redemption Date within 180 days
of the related sale and upon not less than 30 nor more than 60 days' notice by
mail to each Holder of Securities to be redeemed at such Holder's address
appearing in the Security Register, in amounts of $1,000 or an integral multiple
of $1,000 at a Redemption Price of 112.875% of the principal amount of the
Securities plus accrued interest to but excluding the Redemption Date.
Furthermore, in the event that (i) the Guarantors or the
Issuer has become or would become obligated to pay any Additional Amounts as a
result of (x) changes affecting withholding tax laws or (y) a Listing Failure,
provided that the Issuer has used reasonable best efforts to list and maintain a
listing of the Securities on a "recognized stock exchange" (within the meaning
of Section 851 of the U.K. Income and Corporation Taxes Act 1988) (as provided
for in Section 10.09), and (ii) the Guarantors and the Issuer are unable to
avoid the requirement to pay such Additional Amounts by taking reasonable
measures available to them (including, without limitation, the Guarantors making
payments directly to holders under the Securities Guarantee, unless such payment
is likely to result in adverse consequences to the Issuer or the Guarantors),
then the Issuer may redeem all, but not less than all, of the Securities at any
time at 100% of the principal amount
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<PAGE>
thereof on the Redemption Date, together with accrued interest thereon, if any,
to but excluding the Redemption Date. Prior to the publication of the notice of
redemption in accordance with the foregoing, the Issuer shall deliver to the
Trustee an officer's certificate stating that the Issuer is entitled to effect
such redemption based on a written opinion of independent tax counsel or
accounting firm reasonably satisfactory to the Trustee.
The Securities do not have the benefit of any sinking fund
obligations.
The Indenture provides that, subject to certain conditions, if
(i) a Change of Control occurs or (ii) certain Net Available Proceeds are
available to the Issuer as a result of any Asset Disposition, the Issuer shall
be required to make an Offer to Purchase for all or a specified portion of the
Securities.
[If not a Global Security: In the event of redemption or
purchase pursuant to an Offer to Purchase of this Security in part only, a new
Security or Securities of like tenor for the unredeemed or unpurchased portion
hereof will be issued in the name of the Holder hereof upon the cancelation
hereof.]
[If a Global Security insert: In the event of a deposit or
withdrawal of a beneficial interest in this Security (including upon an
exchange, transfer, redemption or repurchase of this Security in part only)
effected in accordance with the Applicable Procedures, the Security Registrar,
upon receipt of notice of such event from the Depositary's custodian for this
Security shall make an adjustment on its records to reflect an increase or
decrease of the Outstanding principal amount at maturity of this Security
resulting from such deposit or withdrawal, as the case may be, and shall
instruct the Book-Entry Depositary to make a similar notation in its book-entry
system to the corresponding Depositary Interest.]
If an Event of Default shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (i) the entire indebtedness of this Security, or (ii) certain restrictive
covenants and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
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<PAGE>
Unless the context otherwise requires, the Original Securities
and the Exchange Securities shall constitute one series for all purposes under
the Indenture, including without limitation, amendments, waivers, redemptions
and Offers to Purchase.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer, the Guarantors and the rights of the Holders of the
Securities under the Indenture at any time by the Issuer, the Guarantors and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount at maturity of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount at maturity of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities, to waive compliance by the Issuer
or the Guarantors with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
[If this Security is not a Global Security issued in bearer
form, then insert: As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Issuer in the Borough of Manhattan, the
City of New York, New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Security
Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations
and like tenor and for the same aggregate principal amount at maturity, will be
issued to the designated transferee or transferees.]
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The Global Securities are issuable only in bearer form without
coupons in denominations of $1,000 and any integral multiple thereof. Definitive
Securities shall be issuable in registered form without interest coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like tenor and aggregate principal amount at maturity of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
[If this Security is a Global Security issued in bearer form,
then insert: The bearer of this Security shall be treated as the owner of this
Security for all purposes.]
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
[If this Security is not a Global Security issued in bearer
form, insert: Prior to due presentment of this Security for registration of
transfer, the Issuer, the Guarantors, the Trustee and any agent of the Issuer,
the Guarantors, or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Issuer, the Parent Guarantor, the Subsidiary
Guarantor, the Trustee nor any such agent shall be affected by notice to the
contrary.]
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months [If Original Securities, then insert: ;
provided, however, that Special Interest shall be computed on the basis of a
365- or 366-day year, as the case may be, and the number of days actually
elapsed].
Generally, when a successor Person assumes all of the
obligations of its predecessor under the Notes and the Indenture, the
predecessor Person will be released from these obligations. In addition, the
Subsidiary Guarantor may be released from the Securities Guarantee under certain
circumstances provided in the Indenture.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuer pursuant to Section 10.13 or 10.17 of the Indenture, check the box:
/ /
--
If you want to elect to have only a part of this Security
purchased by the Issuer pursuant to Section 10.13 or 10.17 of the Indenture,
state the amount: $___________
Dated:_____________ Your Signature:____________________
(Sign exactly as name appears on the other side
of this Security)
Signature Guarantee:
------------------------------------------------------------
Notice: Signature(s) must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Security Registrar which requirements will include
membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the
Trustee in addition to, or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1935, as
amended.
SECTION 2.05. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
by
----------------------------
Authorized Signatory
ARTICLE III
The Securities
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<PAGE>
SECTION 3.01. Title and Terms. The aggregate principal amount
of Securities which may be authenticated and delivered under this Indenture is
unlimited; provided that unless the Issuer authorizes the execution and delivery
of Additional Securities pursuant to Section 3.12, the aggregate principal
amount of Securities shall be limited to $100,000,000 except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 3.05, 3.05, 3.06, 9.06
or 11.08 or in connection with an Offer to Purchase pursuant to Section 10.13 or
10.17 (all Securities referred to in this exception being deemed "Substitute
Securities"). The Issuer may issue Exchange Securities from time to time
pursuant to an Exchange Offer or otherwise, in each case pursuant to a Board
Resolution, subject to Section 3.03, included in an Officers' Certificate
delivered to the Trustee, in authorized denominations in exchange for a like
principal amount at maturity of Original Securities. Upon any such exchange the
Original Securities shall be canceled in accordance with Section 3.09 and shall
no longer be deemed Outstanding for any purpose. In no event shall the aggregate
principal amount at maturity of Original Securities and Exchange Securities
Outstanding exceed $100,000,000.
The Securities shall be known and designated as the "12 7/8%
Senior Notes due 2010" of the Issuer. The Stated Maturity of the Securities
shall be 2010. The Securities shall bear cash interest at the rate of 12.875%
per annum on the principal amount at maturity of the Securities, from February
22, 2000 or from the most recent Interest Payment Date thereafter to which
interest has been paid or duly provided for, as the case may be, payable
semi-annually on March 1 and September 1, commencing September 1, 2000, until
the principal thereof is paid or made available for payment; provided, however,
with respect to Original Securities, if there has been a Registration Default, a
Step-Up will occur and the Original Securities will from then bear Special
Interest to but excluding the Step-Down Date. Accrued Special Interest, if any,
shall be paid in cash in arrears semi-annually on March 1 and September 1 in
each year, and the amount of accrued Special Interest shall be determined on the
basis of the number of days actually elapsed.
With respect to Global Securities, the Issuer will pay
interest, if any, on such Securities to the bearers of such Securities. Holders
of such Global Securities must surrender such Securities to the Trustee to
collect principal payments. The principal of and premium, if any, and interest
on the Securities shall be payable at the
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<PAGE>
corporate trust office of the Trustee in the Borough of Manhattan, the City of
New York, New York, maintained for such purpose and at any other office or
agency maintained by the Issuer for such purpose; provided, however, that at the
option of the Issuer payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
The Securities shall be subject to repurchase by the Issuer
pursuant to an Offer to Purchase as provided in Sections 10.13 and 10.17 of the
Indenture.
The Securities shall be redeemable as provided in Article
Eleven.
The Securities shall not have the benefit of any sinking fund
obligations.
The Securities shall be subject to defeasance at the option of
the Issuer as provided in Article Twelve.
The Securities are guaranteed by the Guarantors as set forth
in Article IV of this Indenture.
A copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Issuer and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate or the trust indenture supplemental hereto setting forth the terms
of such Securities.
Unless the context otherwise requires, the Original Securities
and the Exchange Securities shall constitute one series for all purposes under
the Indenture, including without limitation, amendments, waivers, redemptions
and Offers to Purchase.
SECTION 3.02. Denominations. The Global Securities shall be
issuable in bearer form without coupons and only in denominations of $1,000 and
any integral multiple of $1,000 in excess thereof. Definitive Registered
Securities shall be issuable in registered form without interest coupons in
denominations of $1,000 and any integral multiple thereof.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Issuer by its Chairman of the
Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
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Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Securities executed by the
Issuer to the Trustee for authentication, together with a Issuer Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Issuer Order shall authenticate and deliver such Securities as in this
Indenture provided and not otherwise.
At any time and from time to time after the execution and
delivery of this Indenture and after the effectiveness of a Registration
Statement under the Securities Act with respect thereto, the Issuer may deliver
Exchange Securities executed by the Issuer to the Trustee for authentication,
together with an Issuer Order for the authentication and delivery of such
Exchange Securities and a like principal amount at maturity of Original
Securities for cancelation in accordance with Section 3.09 of this Indenture,
and the Trustee in accordance with the Issuer Order shall authenticate and
deliver such Securities. In authenticating such Exchange Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel
stating,
(a) that such Exchange Securities have been duly and validly
issued in accordance with the terms of the Indenture, and are entitled
to all the rights and benefits set forth herein; and
(b) that the issuance of the Exchange Securities in exchange
for the Original Securities has been effected in compliance with the
Securities Act of 1933, as amended.
Each Security shall be dated the date of its authentication.
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<PAGE>
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 3.05. Temporary Securities. Pending the preparation of
definitive Securities, the Issuer may execute, and upon Issuer Order the Trustee
shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such 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 any office or agency of the Issuer designated pursuant to Section
10.02, without charge to the Holder. Upon surrender for cancelation of any one
or more temporary Securities, the Issuer shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like tenor and principal amount
at maturity of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 3.05. Registration, Registration of Transfer and
Exchange. (a) The Issuer shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
registration of Definitive Securities and of transfers of such Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
such Securities and transfers of such Securities as herein provided. Such
Security Register shall distinguish between Original Securities and Exchange
Securities.
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<PAGE>
Subject to the other provisions of this Indenture regarding
restrictions on transfer, upon surrender for registration of transfer of any
Definitive Security at an office or agency of the Issuer designated pursuant to
Section 10.02 for such purpose in accordance with the terms hereof, the Issuer
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like tenor and aggregate principal amount at
maturity and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other
provisions of this Section 3.05, Securities may be exchanged for other
Securities of any authorized denominations and of a like tenor and aggregate
principal amount at maturity, upon surrender of such Securities to be exchanged
at such office or agency. Whenever any Securities are so surrendered for
exchange, the Issuer shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Issuer, evidencing
the same debt, and (subject to the provisions in the Original Securities
regarding the payment of Special Interest) entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Issuer or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 3.05, 3.05(d), 9.06 or
11.08 or in accordance with any Offer to Purchase pursuant to Section 10.13 or
10.17 not involving any transfer.
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The Issuer 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 11.05 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.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 3.05(b) shall be made only in accordance with this Section
3.05(b) or, if necessary, in accordance with such other procedures as the Issuer
shall develop which shall comply with applicable securities laws.
(i) Restricted Global Security to Regulation S Global
Security. If the owner of a beneficial interest in the Restricted
Global Security wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial
interest in the Regulation S Global Security, such transfer may be
effected only in accordance with the provisions of this Clause (b)(i)
and Clause (b)(v) below and subject to the Applicable Procedures. Upon
receipt by the Trustee, as Security Registrar, of (A) an order given by
the Depositary or its authorized representative directing that a
beneficial interest in the Regulation S Global Security in a specified
Agent Member's principal amount at maturity be credited to a specified
Agent Member's account and that a beneficial interest in the Restricted
Global Security in an equal principal amount at maturity be debited
from another specified Agent Member's account and (B) a Regulation S
Certificate, satisfactory to the Trustee and duly executed by the owner
of such beneficial interest in the Restricted Global Security or his
attorney duly authorized in writing, then the Trustee, as Security
Registrar but subject to Clause (b)(v) below, shall reduce or cause to
be reduced the principal amount at maturity of the Restricted Global
Security and increase the principal amount at maturity of the
Regulation S Global Security by such specified principal amount at
maturity as provided in Section 3.05(e).
(ii) Regulation S Global Security to Restricted Global
Security. If the owner of a beneficial interest
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in the Regulation S Global Security wishes at any time to transfer such
interest to a Person who wishes to acquire the same in the form of a
beneficial interest in the Restricted Global Security, such transfer
may be effected only in accordance with this Clause (b)(ii) and subject
to the Applicable Procedures. Upon receipt by the Trustee, as Security
Registrar, of (A) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the Restricted
Global Security in a specified principal amount at maturity be credited
to a specified Agent Member's account and that a beneficial interest in
the Regulation S Global Security in an equal principal amount at
maturity be debited from another specified Agent Member's account and
(B) if such transfer is to occur during the Restricted Period, a
Restricted Securities Certificate, satisfactory to the Trustee and duly
executed by the owner of such beneficial interest in the Regulation S
Global Security or his attorney duly authorized in writing, then the
Trustee, as Security Registrar, shall reduce or cause to be reduced the
principal amount at maturity of the Regulation S Global Security and
increase the principal amount at maturity of the Restricted Global
Security by such specified principal amount at maturity as provided in
Section 3.05(e).
(iii) Definitive Security to Definitive Security. A
Security that is a Definitive Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Security
that is a Definitive Security as provided in Section 3.05(a), provided
that, if the Security to be transferred in whole or in part is a
Restricted Security, or is a Regulation S Security and the transfer is
to occur during the Restricted Period, then the Trustee shall have
received (A) a Restricted Securities Certificate, satisfactory to the
Trustee and duly executed by the transferor Holder or his attorney duly
authorized in writing, in which case the transferee Holder shall take
delivery in the form of a Restricted Security, or (B) a Regulation S
Certificate, satisfactory to the Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing, in which
case the transferee Holder shall take delivery in the form of a
Regulation S Security (subject in every case to Section 3.05(c)).
(iv) Exchanges between Global Security and Definitive
Security. A beneficial interest in a Global
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Security may be exchanged for a Security that is a Definitive Security
as provided in Section 3.05(d), provided that, if such interest is a
beneficial interest in the Restricted Global Security, or if such
interest is a beneficial interest in the Regulation S Global Security
and such exchange is to occur during the Restricted Period, then such
interest shall be exchanged for a Restricted Security or a Regulation S
Security, as the case may be (subject in each case to Section 3.05(c)).
(v) Regulation S Global Security to be Held Through Euroclear
or Clearstream during Restricted Period. The Issuer shall use its best
efforts to cause the Depositary to ensure that, until the expiration of
the Restricted Period, beneficial interests in the Regulation S Global
Security may be held only in or through accounts maintained at the
Depositary by Euroclear or Clearstream (or by Agent Members acting for
the account thereof), and no person shall be entitled to effect any
transfer or exchange that would result in any such interest being held
otherwise than in or through such an account; provided that this Clause
(b)(v) shall not prohibit any transfer or exchange of such an interest
in accordance with Clause (b) above.
(c) Securities Act Legends. Rule 155A Securities and their
Successor Securities shall bear a Restricted Securities Legend, and the
Regulation S Securities and their Successor Securities shall bear a Regulation S
Legend, subject to the following:
(i) subject to the following Clauses of this Section
3.05(c), a Security or any portion thereof which is exchanged, upon
transfer or otherwise, for a Global Security or any portion thereof
shall bear the Securities Act Legend borne by such Global Security
while represented thereby;
(ii) subject to the following Clauses of this Section
3.05(c), a new Security which is a Definitive Security and is issued in
exchange for a Global Security or any portion thereof, upon transfer or
otherwise, shall bear the Securities Act Legend borne by such other
Security, provided that, if such new Security is required pursuant to
Section 3.05(b)(iii) or (iv) to be issued in the form of a Restricted
Security, it shall bear a Restricted Securities Legend and, if such new
Security is so required to be issued
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in the form of a Regulation S Security, it shall bear a
Regulation S Legend;
(iii) Registered Securities shall not bear a
Securities Act Legend;
(iv) at any time after the Securities may be freely
transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act,
a new Security which does not bear a Securities Act Legend may be
issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if the
Trustee has received an Unrestricted Securities Certificate,
satisfactory to the Trustee and duly executed by the Holder of such
legended Security or his attorney duly authorized in writing, and after
such date and receipt of such certificate, the Trustee shall
authenticate and deliver such a new Security in exchange for or in lieu
of such other Security as provided in this Article III;
(v) a new Security which does not bear a Securities Act
Legend may be issued in exchange for or in lieu of a Security (other
than a Global Security) or any portion thereof which bears such a
legend if, in the Issuer's judgment, placing such a legend upon such
new Security is not necessary to ensure compliance with the
registration requirements of the Securities Act, and the Trustee, at
the direction of the Issuer, shall authenticate and deliver such a new
Security as provided in this Article III; and
(vi) notwithstanding the foregoing provisions of this
Section 3.05(c), a Successor Security of a Security that does not bear
a particular form of Securities Act Legend shall not bear such form of
legend unless the Issuer has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of
Rule 155, in which case the Trustee, at the direction of the Issuer,
shall authenticate and deliver a new Security bearing a Restricted
Securities Legend in exchange for such Successor Security as provided
in this Article III.
(d) Exchanges of Global Security for Definitive Security.
Transfers of Global Securities shall be by delivery. The Book-Entry Depositary
and the Issuer have agreed that the Global Securities shall only be delivered in
the circumstances described in the Deposit Agreement.
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Notwithstanding any other provision in this Indenture, no Global Security may be
exchanged in whole or in part for Definitive Securities unless (i) the
Depositary notifies the Issuer or the Book-Entry Depositary in writing that it
(or its nominee) is unwilling or unable to continue to act as depositary, or
ceases to be, a clearing agency registered under the Exchange Act, and, in
either case, a successor depositary registered as a clearing agency under the
Exchange Act is not appointed by the Issuer within 90 days, (ii) at any time if
the Issuer determines that the Global Securities (in whole but not in part)
should be exchanged for Definitive Securities; provided, that (x) such exchange
is required by (A) any applicable law or (B) any event beyond the Issuer's
control or (y) payments of interest on any Global Security, Depositary Interest
or beneficial interest are, or would become, subject to any deduction or
withholding for taxes, (iii) at any time after the consummation of the Exchange
Offer, if the owner of a beneficial interest requests such exchange in writing
delivered to the Depositary and through the Depositary to the Book-Entry
Depositary and the Trustee, or (iv) if the Book-Entry Depositary is at any time
unwilling or unable to continue as Book-Entry Depositary and a successor
Book-Entry Depositary is not appointed by the Issuer within 90 days. Upon the
occurrence of any of the preceding events, Definitive Securities shall be issued
in such names as the Book-Entry Depositary shall instruct the Trustee based on
the instructions of the Depositary.
(e) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Book-Entry Depositary or its nominee to the Trustee, as Security Registrar, for
exchange or cancelation as provided in this Article III. If any Global Security
is to be exchanged for other Securities or canceled in part, or if another
Security is to be exchanged in whole or in part for a beneficial interest in any
Global Security, then either (i) such Global Security shall be so surrendered
for exchange or cancelation as provided in this Article III or (ii) the
principal amount at maturity thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or canceled, or equal to the
principal amount at maturity of such other Security to be so exchanged for a
beneficial interest therein, as the case may be, by means of an appropriate
adjustment made by the Book-Entry Depositary as directed by the Trustee in such
Book-Entry Depositary's book-entry system to the corresponding Depositary
Interest, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized
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representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security, the Trustee shall, subject to
Section 3.05(b) and as otherwise provided in this Article III, authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of, and registered (if applicable) in such
names as may be directed by, the Book-Entry Depositary or its authorized
representative. Upon the request of the Trustee in connection with the
occurrence of any of the events specified in the preceding paragraph, the Issuer
shall promptly make available to the Trustee a reasonable supply of Securities
that are not in the form of Global Securities. The Trustee shall be entitled to
rely upon any order, direction or request of the Book-Entry Depositary or the
Depositary or any of their authorized representatives which is given or made
pursuant to this Article III if such order, direction or request is given or
made in accordance with the Deposit Agreement with respect to the Book-Entry
Depositary and the Applicable Procedures with respect to the Depositary.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Securities. If any mutilated Security is surrendered to the Trustee, the Issuer
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount at maturity and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Issuer and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of written
notice to the Issuer or the Trustee that such Security has been acquired by a
bona fide purchaser, the Issuer shall execute and the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount at maturity and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Issuer in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge
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that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the bearer thereof
on the Interest Payment Date in the case of a Global Security in bearer form
and, in the case of a Definitive Security, to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest (including Special Interest) on any Security
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall (a) bear
interest at the rate per annum stated in the form of Security included herein
(to the extent that the payment of such interest shall be legally enforceable),
and (b) forthwith cease to be payable to the bearer thereof on such Interest
Payment Date with respect to a Global Security in bearer form and, with respect
to a Definitive Security, to the Holder on the relevant Regular Record Date by
virtue of having been such Holder, and, in each case, such Defaulted Interest
may be paid by the Issuer, at its election in each case, as provided in Clause
(a) or (b) below:
(a) The Issuer may elect to make payment of any Defaulted
Interest to the bearer of such Security on any Special Payment Date (as
defined below) with respect to any Global Security in bearer form and,
with respect to a Definitive Security, to the Persons in whose names
the Securities (or their respective Predecessor Securities) are
registered at the close of
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business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Issuer
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Issuer shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Issuer of such Special Record Date and, in the name and at the
expense of the Issuer, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder, not less than 10
days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid, with respect to
any Definitive Security, to the Persons in whose names the Securities
(or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (b). As used in this Clause
(a), "Special Payment Date" means the date on which Defaulted Interest
is paid to the Holder.
(b) The Issuer may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice given
by the Issuer to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
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accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment
of a Security for registration of transfer, the Issuer, the Parent Guarantor,
the Subsidiary Guarantor, the Trustee and any agent of the Issuer, the Parent
Guarantor, the Subsidiary Guarantor or the Trustee may treat the Person in whose
name a Definitive Security is registered as the owner of such Security and may
treat the bearer of a Global Security as the owner of such Security, in each
case, for the purpose of receiving payment of principal of and premium, if any,
and (subject to Section 3.07) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Issuer, the Parent Guarantor, the Subsidiary Guarantor, the Trustee nor any
agent of the Issuer, the Parent Guarantor, the Subsidiary Guarantor or the
Trustee shall be affected by notice to the contrary.
SECTION 3.09. Cancelation. All Securities surrendered for
payment, redemption, registration of transfer, exchange or pursuant to any Offer
to Purchase pursuant to Section 10.13 or 10.17 shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by it. The Issuer may at any time deliver to the Trustee for
cancelation any Securities previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
standard procedures or as directed by an Issuer Order; provided, however, that
the Trustee shall not be required to destroy such Securities.
SECTION 3.10. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months, provided, however, that Special Interest on Original Securities shall be
computed on the basis of a 365- or 366-day year, as the case may be, and the
number of days actually elapsed.
SECTION 3.11. CUSIP and ISIN Numbers. The Issuer in issuing
Securities may use "CUSIP and "ISIN" numbers (if then generally in use) in
addition to serial numbers; if so, the Trustee shall use such "CUSIP" and "ISIN"
numbers in
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addition to serial numbers in notices of redemption and repurchase as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such "CUSIP" and "ISIN" numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such "CUSIP"
and "ISIN" numbers.
SECTION 3.12. Additional Securities. Subject to Article X of
this Indenture, the Issuer may authorize the issuance of Additional Securities.
All Securities originally issued on the date of this Indenture and any
Additional Securities originally issued after the date of this Indenture shall
be treated as a single class of Securities for all purposes under this
Indenture.
Additional Securities shall be issued, authenticated and
delivered in accordance with the provisions of Section 3.03 and shall be
entitled to the benefits of the Guarantees of the Guarantors to the same extent
as all other Securities. The Issuer shall specify in the Issuer Order pursuant
to Section 3.03 the aggregate principal amount of Additional Securities and
shall certify that the issuance complies with the requirements of the Indenture,
including Article X. The Issuer shall be entitled to issue Additional Securities
initially as Original Securities or as Exchange Securities. If Additional
Securities are issued as Original Securities, they may be exchanged for Exchange
Securities in accordance with this Indenture and the applicable Exchange and
Registration Rights Agreement.
ARTICLE IV
Guarantee Of Securities
SECTION 5.01. Guarantee. Subject to the provisions of this
Article Four, the Guarantors hereby fully, unconditionally and irrevocably
guarantee 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
(including Special 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
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lawful, and the due and punctual performance of all other obligations of the
Issuer to the Holders or the Trustee, all in accordance with the terms of such
Security and this 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. The Guarantors hereby waive diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Issuer, any right to require a proceeding first against the Issuer, 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
Securities 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 12.01 and Section 12.02 (subject to Section 12.06). The maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five for
the purposes of this Article Four. In the event of any declaration of
acceleration of such obligations as provided in Article Five, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Article Four. In addition, without limiting
the foregoing provisions, upon the effectiveness of an acceleration under
Article Five, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article Four.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or either Guarantor, or any
custodian, receiver, liquidator, trustee, sequestrator or other similar official
acting in relation to the Issuer or either Guarantor, any amount paid to the
Trustee or such Holder in respect of a Security, this Securities Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
The Guarantors further agree, to the fullest extent that they may lawfully do
so, that, as between them, 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 Five hereof for the purposes of this
Securities Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
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Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Guarantors hereby irrevocably waive any claim or other rights which
they may now or hereafter acquire against the Issuer that arise from the
existence, payment, performance or enforcement of their obligations under this
Securities Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to either
Guarantor 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 such Guarantor 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.
The Guarantors acknowledge that they will receive direct and indirect benefits
from the issuance of the Securities pursuant to this Indenture and that the
waivers set forth in this Section 5.01 are knowingly made in contemplation of
such benefits.
The Guarantee set forth in this Section 5.01 shall not be
valid or become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 5.02. Obligations Unconditional. Subject to Section
5.05, nothing contained in this Article Four or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Guarantors and
the holders of the Securities, the obligation of the Guarantors, which is
absolute and unconditional, upon failure by the Issuer, 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
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either Guarantor, nor shall anything herein or therein prevent the holder of any
Securities or the Trustee on their behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article Four will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 or to
pursue any rights or remedies hereunder.
SECTION 5.03. Notice to Trustee. The Guarantors shall give
prompt written notice to the Trustee of any fact known to either Guarantor which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities Guarantee pursuant to the provisions of this Article Four.
SECTION 5.05. Release of Subsidiary Guarantor. The Subsidiary
Guarantor shall be automatically and unconditionally released and discharged
from its obligations under this Securities Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Parent Guarantor, of all of
the Parent Guarantor's and each Restricted Subsidiary's Capital Stock in, or all
or substantially all the assets of, the Subsidiary Guarantor (which sale,
exchange or transfer is not prohibited by this Indenture) or (ii) at any time,
so long as in the case of this clause (ii) Standard & Poor's Corporation is
notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications. Upon the release and
discharge of the Subsidiary Guarantor from its obligations under the Securities
Guarantee pursuant to this Section 5.05, the Subsidiary Guarantor shall also be
released and discharged from any other obligations it has under this Indenture
in its capacity as Subsidiary Guarantor, provided that no such release and
discharge shall affect any obligation of the Subsidiary Guarantor in its
capacity as a Restricted Subsidiary of the Guarantor.
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ARTICLE V
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon
any Security when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of (or
premium, if any, on) any Security when due; or
(c) default in the payment of principal and interest upon any
Security required to be purchased pursuant to an Offer to Purchase
pursuant to Sections 10.13 or 10.17; or
(d) default in the performance, or breach, of
Section 8.01, 10.13 or 10.17; or
(e) default in the performance, or breach, of any covenant or
warranty of the Issuer or either Guarantor in this Indenture or in any
Security (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
60 days after there has been given, by registered or certified mail, to
the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 25% in aggregate principal amount at maturity of
the Outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(f) a default or defaults under any bond(s), debenture(s),
note(s) or other evidence(s) of indebtedness by the Parent Guarantor,
the Issuer or any Subsidiary of the Parent Guarantor or under any
mortgage(s), indenture(s) or instrument(s) under which there may be
issued or by which there may be secured or evidenced any indebtedness
of such type by the Parent Guarantor, the Issuer or any Subsidiary of
the Parent
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Guarantor with a principal amount then outstanding, individually or in
the aggregate, in excess of $10 million, whether such indebtedness now
exists or shall hereafter be created, which default or defaults shall
constitute a failure to pay in excess of $10 million of the principal
of such indebtedness when due at the final maturity thereof, or shall
have resulted in excess of $10 million of indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise have become due and payable; or
(g) a final judgment or final judgments for the payment of
money are entered against the Parent Guarantor, the Issuer or any
Subsidiary of the Parent Guarantor in an aggregate amount in excess of
$10 million (net of indemnities and funds actually received or to be
received within 90 days of such judgment) by a court or courts of
competent jurisdiction, which judgments remain undischarged or unbonded
for a period (during which execution shall not be effectively stayed)
of 60 days after the right to appeal all such judgments has expired; or
(h) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of either Guarantor, the
Issuer or any Significant Subsidiaries in an involuntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar law or (B) a decree or order adjudging either
Guarantor, the Issuer or any Significant Subsidiaries a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of either Guarantor, the Issuer or any Significant Subsidiaries under
any applicable law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of either
Guarantor, the Issuer or any Significant Subsidiaries or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(i) the commencement by either Guarantor, the Issuer or any
Significant Subsidiaries of a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law
or of
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any other case or proceeding to be adjudicated a bankrupt or insolvent,
or the consent by it to the entry of a decree or order for relief in
respect of either Guarantor, the Issuer or any Significant Subsidiaries
in an involuntary case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable law, or the consent by it to the filing
of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of either Guarantor, the Issuer or any
Significant Subsidiaries or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by either
Guarantor, the Issuer or any Significant Subsidiaries in furtherance of
any such action; provided that this clause (i) shall not apply to any
actions in connection with the winding up or liquidation of the
Guarantors or the Issuer to be effected after the Person then
constituting such Guarantor or the Issuer shall cease to be such
Guarantor or the Issuer following a transaction governed by the
provisions of Article VIII.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified in
Section 5.01(h) or (i)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount at maturity
of the Outstanding Securities may declare the principal amount at maturity of
all the Securities to be due and payable immediately, by a notice in writing to
the Issuer (and to the Trustee if given by Holders), and upon any such
declaration such principal amount and any accrued interest shall become
immediately due and payable. If an Event of Default specified in Section 5.01(h)
or (i) occurs, the principal amount of and any accrued interest on the
Securities then Outstanding shall ipso facto become immediately due and payable
without any declaration or other Act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due based on
acceleration has been obtained by the Trustee as hereinafter in this Article
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provided, the Holders of a majority in principal amount at maturity of the
Outstanding Securities, by written notice to the Issuer and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Issuer has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal amount of (and premium, if any, on)
any Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required
to have been purchased on the Purchase Date pursuant to an
Offer to Purchase made by the Issuer) and interest thereon at
the rate borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default, other than the non- payment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Issuer covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to
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Purchase made by the Issuer, at the Purchase Date
thereof,
the Issuer will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer or any other obligor upon the Securities and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Issuer or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.05. Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Issuer (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have claims of the
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys, securities or
other property payable or deliverable upon the exchange of the Securities or
upon any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby
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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 it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the 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;
provided, however, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and be a member of a
creditors or other similar committee.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the
Trustee under Section 6.07; and
SECOND: To the payment of the amounts then due
and unpaid for principal of (and 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,
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according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively.
SECTION 5.07. Limitation on Suits. No Holder of any Security
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount at maturity of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested,
provided to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(5) the Trustee for 60 days after its receipt of such notice,
request and offer and, if requested, provision of indemnity has failed
to institute any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount at maturity of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.08. Unconditional Right of Holders To Receive
Principal, Premium and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 3.07) interest on such Security on the respective Stated
Maturities expressed
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in such Security (or, in the case of redemption, on the Redemption Date or, in
the case of an Offer to Purchase made by the Issuer and required to be accepted
as to such Security, on the Purchase Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the 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 Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Security 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 or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
principal amount at maturity of the Outstanding Securities shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; provided that
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(1) such direction shall not be in conflict with any rule of
law or with this Indenture or expose the Trustee to personal liability
(as determined in the sole discretion of the Trustee), and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The Holders of not less
than a majority in aggregate principal amount at maturity of the Outstanding
Securities may on behalf of the Holders of all the Securities by written notice
to the Trustee waive any past default hereunder and its consequences, except a
default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to
have been purchased pursuant to an Offer to Purchase which has been
made by the Issuer), or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected or
(3) arising from failure to purchase any Security tendered
pursuant to Sections 10.13 and 10.17 of this Indenture.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.15. 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 such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act; provided that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such an undertaking or to make such an assessment in any
suit instituted by the Issuer or the Parent Guarantor; further provided, that
the provisions of this Section 5.15 shall not apply to any suit
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instituted by the Trustee, to any suit instituted by any Holder or group of
Holders holding more than 10% in aggregate principal amount at maturity of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of, or premium, if any, or interest
on any Security on or after the respective due dates expressed in such Security.
SECTION 5.15. Waiver of Stay or Extension Laws. Each of the
Issuer and the Parent Guarantor covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and each of the Issuer and the
Parent Guarantor (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants, duties or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
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(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount at maturity
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; and
(5) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.02. Notice of Defaults. The Trustee shall give the
Holders notice of any default hereunder known to the Trustee as and to the
extent provided by the Trust Indenture Act; provided, however, that in the case
of any default of the character specified in Section 5.01(e), no
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such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 6.03. Certain Rights of Trustee. Subject to the
provisions of Section 6.01:
(a) the Trustee may conclusively rely and shall be completely
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 presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by a Issuer Request or Issuer Order and
any resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution;
(c) 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, request from the Issuer and be
completely protected in relying upon an Officers' Certificate received
in response to such request;
(d) the Trustee may consult with counsel of its selection and
the written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction reasonably
satisfactory to the Trustee;
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(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee may (but shall have no
obligation to) 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 Issuer or the Parent
Guarantor, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in accordance with the
direction of Holders of Outstanding Securities as provided in Sections
5.02, 5.12 and 5.13 hereof; and
(i) for all purposes under this Indenture, the Trustee shall
not be deemed to have notice of any Event of Default unless a
Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture.
SECTION 6.05. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities or the Securities Guarantee. The Trustee shall
not be accountable for the use or application by the Issuer of Securities or the
proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any Paying
Agent, any Security Registrar or any other agent of the Issuer, in its
individual or any other capacity, may
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become the owner or pledgee of Securities and, subject to Sections 6.08 and
6.13, may otherwise deal with the Issuer or the Parent Guarantor with the same
rights it would have if it were not Trustee, Paying Agent, Security Registrar or
such other agent.
SECTION 6.06. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer.
SECTION 6.07. Compensation and Reimbursement. The Issuer and
the Parent Guarantor jointly and severally agree
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of enforcing this Indenture against the Issuer or the Parent
Guarantor (including, without limitation, this Section 6.07) and of
defending itself against any claim (whether asserted by any Holder or
the Issuer or the Parent Guarantor) or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
provisions of this Section 6.07 shall survive any termination of this
Indenture and the resignation or removal of the Trustee.
As security for the performance of the obligations
of the Issuer under this Section 6.07, the Trustee shall
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have a lien prior to the Securities upon all property and funds held or
collected by the Trustee, except funds held in trust for the payment of
principal of (and premium, if any) or interest on particular Securities. The
Trustee's right to receive payment of any amounts due under this Section 6.07
shall not be subordinate to any other liability or indebtedness of the Issuer
(even though the Securities may be so subordinated).
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(h) or Section
5.01(i), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or State bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture or the earlier resignation or termination of the Trustee.
SECTION 6.08. Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000 and its Corporate Trust Office in
the Borough of Manhattan, the City of New York, New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee
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pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.11, at which time the
retiring Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving written
notice thereof to the Issuer. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount at maturity of the Outstanding
Securities, delivered to the Trustee and to the Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after
written request therefor by the Issuer or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09
and shall fail to resign after written request therefor by the Issuer
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.15, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Issuer, by a Board Resolution, shall promptly appoint a successor
Trustee. If,
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within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount at maturity of the Outstanding
Securities delivered to the Issuer and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Issuer. If no successor Trustee shall have been so appointed by the Issuer
or the Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Issuer and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Issuer or the successor Trustee,
such retiring Trustee shall, upon payment of all sums owing to the Trustee under
Section 6.07, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Issuer shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the
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Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided that such corporation
shall be otherwise qualified and eligible under this Article. In case any
Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against Issuer
or Guarantors. If and when the Trustee shall be or become a creditor of the
Issuer or either Guarantor (or any other obligor upon the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of claims against the Issuer or Parent Guarantor (or any such
other obligor).
SECTION 6.15. Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents with respect to the Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities issued upon original issue and upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 3.06, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Issuer and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
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to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent;
provided, such corporation shall be otherwise eligible under this Section.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Issuer. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Issuer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Issuer and shall give notice of such
appointment in the manner provided in Section 1.06 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.07.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in lieu
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of the Trustee's certificate of authentication, an alternative certificate of
authentication in the following form:
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK, as
Trustee,
by
-------------------------------,
as Authenticating Agent
by
--------------------------------
Authorized Signatory
SECTION 6.15. Withholding Taxes. Notwithstanding any other
provision of this Agreement, the Trustee, as agent for the Issuer and the Parent
Guarantor, shall exclude and withhold from each payment of principal and
interest and other amounts due hereunder or under the Securities or the
Securities Guarantee 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 amounts payable in respect of
the Securities or the Securities Guarantee, 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 furnish to the Holders of the Securities
such forms or certificates as are necessary or appropriate to provide the
information described in Section 10.09(c)(i) hereof or make the declaration or
claim described in Section 10.09(c)(ii) hereof, 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.
In the event that the Trustee is also acting as Paying Agent,
Authenticating Agent, transfer agent, or
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Registrar hereunder, the rights and protections afforded to the Trustee pursuant
to this Article Six shall also be afforded to such Paying Agent, Authenticating
Agent, transfer agent, or Registrar.
ARTICLE VII
Holders' Lists and Reports by Trustee and Issuer
SECTION 7.01. Issuer to Furnish Trustee Names and Addresses of
Holder. The Issuer will furnish or cause to be furnished to the Trustee (a)
semi-annually, not more than 15 days after each Regular Record Date, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Issuer of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 7.02. Preservation of Information; Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Issuer and the Trustee that neither the Issuer nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
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SECTION 7.03. Reports by Trustee. (a) Within 30 days after
January 1 of each year, commencing with the first January 1 following the first
issuance of Securities pursuant to Section 3.01, if required by Section 3.13(a)
of the Trust Indenture Act, the Trustee shall transmit, pursuant to Section
3.13(c) of the Trust Indenture Act, a brief report dated as of such January 1
with respect to any of the events specified in said Section 3.13(a) which may
have occurred since the later of the immediately preceding January 1 and the
date of this Indenture.
(b) The Trustee shall transmit the reports required by Section
3.13(b) of the Trust Indenture Act and Section 6.02 hereof at the times
specified therein.
(c) Reports pursuant to this Section shall be transmitted in
the manner and to the persons required by Sections 3.13(c) and 3.13(d) of the
Trust Indenture Act.
(d) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Issuer. The
Issuer will promptly notify the Trustee when the Securities are listed on any
stock exchange.
SECTION 7.05. Reports by Issuer and Parent Guarantor. Each of
the Parent Guarantor and the Issuer shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act and
in the manner set forth in Section 10.18.
SECTION 7.05. Officers' Certificate with Respect to Change in
Interest Rates. Within five days after any Step-Up or Step-Down Date, the Issuer
shall deliver an Officers' Certificate to the Trustee stating the new interest
rate and the date on which it became effective.
ARTICLE VIII
Merger, Consolidation, Etc.
SECTION 8.01. Mergers, Consolidations and Certain Sales of
Assets. Neither the Parent Guarantor, the Issuer nor, so long as it has not been
released from its obligations under the Securities Guarantee, the Subsidiary
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Guarantor may, in a single transaction or a series of related transactions,
(except, in the case of the Subsidiary Guarantor, in any transaction or series
of related transactions as a result of which the Subsidiary Guarantor is
released from its obligations under the Securities Guarantee) (i) consolidate
with or merge into any other Person or permit any other Person to consolidate
with or merge into either Guarantor or the Issuer, or (ii) directly or
indirectly, transfer, sell, lease or otherwise dispose of all or substantially
all of its assets to any other Person, unless:
(1) in a transaction in which either Guarantor or the Issuer,
as applicable, does not survive or in which either Guarantor or the
Issuer sells, leases or otherwise disposes of all or substantially all
of its assets to any other Person (other than, in any such case, either
Guarantor or the Issuer), the successor entity to such Guarantor or the
Issuer is organized under the laws of Bermuda, the United Kingdom, the
United States of America or any State thereof or the District of
Columbia, the British Virgin Islands, Cayman Islands, The Netherlands,
Ireland or Jersey and shall expressly assume, by a supplemental
indenture executed and delivered to the Trustee in form satisfactory to
the Trustee, all of such Guarantors' or the Issuer's obligations under
the Indenture;
(2) immediately before and after giving effect to such
transaction and treating any Debt which becomes an obligation of either
Guarantor or a Subsidiary as a result of such transaction as having
been Incurred by such Guarantor or such Subsidiary at the time of the
transaction, no Event of Default or event that with the passing of time
or the giving of notice, or both, would constitute an Event of Default
shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Parent Guarantor (or other successor
entity to the Parent Guarantor) is equal to or greater than that of the
Parent Guarantor immediately prior to the transaction;
(5) if, as a result of any such transaction, property or
assets of the Parent Guarantor or any Subsidiary would become subject
to a Lien prohibited by Section 10.15, the Parent Guarantor or the
successor entity to the Parent Guarantor shall have secured the
Securities as required by said covenant; and
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(5) in the event that the continuing Person is incorporated in
a jurisdiction other than the United States or the jurisdiction in
which such Person was incorporated immediately prior to such
transaction, (A) the Issuer delivers to the Trustee an Opinion of
Counsel stating that the obligations of the continuing Person under the
Indenture are enforceable under the laws of the new jurisdiction of its
incorporation to the same extent as the obligations of the Issuer or
the Parent Guarantor, as the case may be, under the Indenture
immediately prior to such transaction; (B) the continuing Person agrees
in writing to submit to jurisdiction and appoints an agent for the
service of process, each under terms substantially similar to the terms
contained in the Indenture with respect to the Issuer or such
Guarantor, as the case may be; (C) the continuing Person agrees in
writing to pay Additional Amounts as provided under this Indenture
under Section 10.09 with respect to the Issuer or such Guarantor, as
the case may be, except that such Additional Amount shall relate to any
withholding tax whatsoever regardless of any change of law (subject to
exceptions substantially similar to those contained in Section 10.09);
(D) the Board of Directors of the Parent Guarantor determines in good
faith that such transaction will have no material adverse effect on any
Holder and a Board Resolution to that effect is delivered to the
Trustee; and (E) the principal purpose of the continuing Person being
incorporated in such jurisdiction is to obtain tax benefits for such
Guarantor, the Issuer, their direct and indirect stockholders or the
Holders.
SECTION 8.02. Successor Substituted. Upon any consolidation of
either Guarantor or the Issuer with, or merger of either Guarantor or the Issuer
with or into, any other Person or any conveyance, transfer or lease of the
properties and assets of either Guarantor or the Issuer substantially as an
entirety in accordance with Section 8.01, the successor Person formed by such
consolidation or into which such Guarantor or the Issuer, as applicable, is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, such
Guarantor or the Issuer, as applicable, under this Indenture with the same
effect as if such successor Person had been named as such Guarantor or the
Issuer herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this Indenture
and the Securities.
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ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Issuer and the Guarantors, each
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Issuer
or either Guarantor and the assumption by any such successor of the
covenants of the Issuer or such Guarantor herein and in the Securities;
or
(2) to add to the covenants of the Issuer or either Guarantor
for the benefit of the Holders, or to surrender any right or power
herein conferred upon the Issuer or either Guarantor; or
(3) to secure the Securities pursuant to the requirements of
Section 10.15 or otherwise; or
(5) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to comply with any
requirement of the Commission in order to effect qualification of this
Indenture under the Trust Indenture Act in connection with the issuance
of Exchange Securities or Registered Securities or thereafter to
maintain the qualification of this Indenture under the Trust Indenture
Act; or
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture; provided that such action
pursuant to this Clause (5) shall not adversely affect the interests of
the Holders in any material respect; or
(6) to provide for uncertificated Securities in addition to or
in place of certified Securities.
SECTION 9.02. Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of not less than a majority in aggregate
principal amount at
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maturity of the Outstanding Securities, by Act of said Holders delivered to the
Issuer and the Trustee, and consistent with Section 5.13, the Issuer and the
Guarantors, each when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the written consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
thereon, or change the coin or currency in which, any Security or any
premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date) or, in the case of an Offer to Purchase which has been
made, on or after the applicable Purchase Date, or
(2) reduce the percentage in principal amount at maturity of
the Outstanding Securities, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13
or Section 10.20, 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, or
(5) following the making of an Offer with respect to an Offer
to Purchase pursuant to Sections 10.13 or 10.17, modify the provisions
of this Indenture with respect to such Offer to Purchase in a manner
materially adverse to such Holder, or
(5) release either Guarantor from its Securities Guarantee,
except for a release of the Subsidiary Guarantor pursuant to Section
5.05.
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It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.05. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
SECTION 9.06. Reference in Securities to Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
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ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and
Interest. The Issuer will duly and punctually pay the principal of and premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture. Payments of principal, interest and premium, if
any, shall be made in Dollars.
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SECTION 10.02. Maintenance of Office or Agency. The Issuer
will maintain in the Borough of Manhattan, the City of New York, New York, an
office or agency where Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer or exchange 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
Corporate Trust Office of the Trustee, and the Issuer hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Issuer may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, the City of
New York, New York) where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuer of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York, New York for such purposes. 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.
SECTION 10.03. Money for Security Payments To Be Held in
Trust. If the Issuer shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of (and premium, if any) or interest on
any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
in writing of its action or failure so to act. As provided in Section 5.05, upon
any bankruptcy or reorganization proceeding relative to the Issuer, the Trustee
shall serve as the Paying Agent for the Securities.
Whenever the Issuer shall have one or more Paying Agents, it
will, prior to each due date of the principal of
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(and premium, if any) or interest on any Securities, deposit with a Paying Agent
a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Issuer will promptly notify the Trustee in writing of its
action or failure so to act. Upon any bankruptcy or reorganization proceeding
relative to the Issuer, the Trustee shall serve as the Paying Agent for the
Securities.
The Issuer will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee written notice of any default by the
Issuer (or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest;
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent; and
(5) acknowledge, accept and agree to comply in all respects
with the provisions of this Indenture relating to the duties, rights
and obligations of such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Issuer or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Issuer, in trust for the payment of the principal of (and
premium, if any) or interest on any
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Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Issuer on Issuer Request, or (if then held by the Issuer) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Issuer as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, the City of New York, New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer.
SECTION 10.05. Existence. Subject to Article Eight, the
Guarantors will do or cause to be done all things necessary to preserve and keep
in full force and effect the existence, rights (charter and statutory) and
franchises of the Guarantors, the Issuer and each of the Restricted
Subsidiaries; provided, however, that the Guarantors shall not be required to
preserve any such right or franchise if either Guarantor shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of such Guarantor, the Issuer or the Restricted Subsidiaries and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 10.05. Maintenance of Properties. The Guarantors will
cause all properties used or useful in the conduct of their business or the
business of the Issuer or any Restricted Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Guarantors may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent either Guarantor from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the reasonable judgment of the Parent Guarantor, desirable
in the conduct of its business or the business of the Issuer or any Restricted
Subsidiary and not disadvantageous in any material respect to the Holders.
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SECTION 10.06. Payment of Taxes and Other Claims. Neither
Guarantor will pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon such Guarantor or the Issuer or any
Restricted Subsidiaries or upon the income, profits or property of such
Guarantor or the Issuer or any Restricted Subsidiaries, and (2) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of such Guarantor or the Issuer or any Restricted
Subsidiaries; provided, however, that neither Guarantor shall be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings.
SECTION 10.07. Maintenance of Insurance. The Guarantors shall,
and shall cause the Issuer and the Restricted Subsidiaries to, keep at all times
all of their properties which are of an insurable nature insured against loss or
damage with insurers believed by the Guarantors to be responsible to the extent
that property of similar character is usually so insured by corporations
similarly situated and owning like properties in accordance with good business
practice.
SECTION 10.08. Limitation on Consolidated Debt. The Parent
Guarantor may not, and may not permit any Restricted Subsidiary of the Parent
Guarantor to, Incur any Debt (other than the Securities and the Securities
Guarantee) unless the ratio of (i) the aggregate consolidated principal amount
of Debt (which is defined to include the accreted value of any Debt issued at a
discount) of the Parent Guarantor outstanding as of the most recent available
quarterly or annual balance sheet, after giving pro forma effect to the
Incurrence of such Debt and any other Debt Incurred since such balance sheet
date and the receipt and application of the proceeds thereof, to (ii) four (5)
times the Consolidated Cash Flow Available for Fixed Charges for the most recent
fiscal quarter next preceding the Incurrence of such Debt for which consolidated
financial statements are available, determined on a pro forma basis as if any
such Debt had been Incurred and the proceeds thereof had been applied at the
beginning of such recent fiscal quarter, would be less than 7.0 to 1.0 for such
period.
Notwithstanding the foregoing limitation, the Parent Guarantor
and any Restricted Subsidiary may Incur the following:
(i) Debt under Credit Facilities in an aggregate principal
amount at any one time not to exceed $200
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million, and any renewal, extension, refinancing or refunding thereof
in an amount which, together with any principal amount remaining
outstanding under all Credit Facilities, does not exceed the aggregate
principal amount outstanding under all Credit Facilities immediately
prior to such renewal, extension, refinancing or refunding;
(ii) Debt owed by the Parent Guarantor to any Restricted
Subsidiary of the Parent Guarantor or Debt owed by a Restricted
Subsidiary of the Parent Guarantor to the Parent Guarantor or a
Restricted Subsidiary of the Parent Guarantor; provided, however, that
upon either (x) the transfer or other disposition by such Restricted
Subsidiary or the Parent Guarantor of any Debt so permitted to a Person
other than the Parent Guarantor or another Restricted Subsidiary of the
Parent Guarantor or (y) such Restricted Subsidiary ceasing to be a
Restricted Subsidiary, the provisions of this clause (ii) shall no
longer be applicable to such Debt and such Debt shall be deemed to have
been Incurred at the time of such transfer or other disposition;
(iii) Debt Incurred to renew, extend, refinance or refund
(each, a "refinancing") (x) Debt outstanding at the date hereof (after
giving effect to the Equity Clawback) or (y) Incurred pursuant to the
first paragraph of this Section, or clause (vi) or (vii) of this
paragraph or (z) the Securities issued on the date hereof or Securities
exchanged therefore, in each case, in an aggregate principal amount not
to exceed the aggregate principal amount of and accrued interest on the
Debt so refinanced plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the Debt
so refinanced or the amount of any premium reasonably determined by the
Parent Guarantor as necessary to accomplish such refinancing by means
of a tender offer or privately negotiated repurchase, plus the expenses
of the Parent Guarantor or the Restricted Subsidiary effecting such
refinancing incurred in connection with such refinancing; provided,
however, that Debt the proceeds of which are used to refinance the
Securities or Debt which is pari passu to the Securities and the
Security Guarantee or Debt which is subordinate in right of payment to
the Securities and the Security Guarantee shall only be permitted if
(A) in the case of any refinancing of the Securities or Debt which is
pari passu to the Securities and the Security Guarantee, the
refinancing Debt is made pari passu or subordinated to the Securities
and the Security Guarantee, and, in the case of any refinancing of
Subordinated Debt, the
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refinancing Debt constitutes Subordinated Debt and (B) in any case, the
refinancing Debt by its terms, or by the terms of any agreement or
instrument pursuant to which such Debt is issued, does not have a final
stated maturity prior to the final stated maturity of the Debt being
refinanced, and the Average Life of such new Debt is at least equal to
the remaining Average Life of the Debt being refinanced (assuming that
such Debt being refinanced had a final stated maturity three months
later than its actual final stated maturity);
(iv) Debt in an aggregate principal amount not in excess of
(A) two (2) times the aggregate amount of the Parent Guarantor's
Incremental Paid-in Capital minus (B) $165 million;
(v) Debt in an aggregate principal amount not in excess of 80%
of the aggregate amount of accounts receivable set forth on the most
recent unaudited quarterly or audited annual financial statements of
the Parent Guarantor and its consolidated subsidiaries filed with the
Commission;
(vi) Purchase Money Debt, which is incurred for the
construction, acquisition and improvement of Telecommunications Assets,
provided that the amount of such Purchase Money Debt does not exceed
the cost of the construction, acquisition or improvement of the
applicable Telecommunications Assets;
(vii) Debt consisting of Permitted Interest Rate and
Currency Protection Agreements; and
(viii) Debt not otherwise permitted to be Incurred pursuant to
clauses (i) through (vii) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (viii), has an
aggregate principal amount not in excess of $50 million at any time
outstanding.
For purposes of determining compliance with this Section, with
respect to any item of Debt, (x) in the event that such item of Debt meets the
criteria of more than one of the types of Debt the Parent Guarantor or a
Restricted Subsidiary is permitted to Incur pursuant to the foregoing clauses
(i) through (viii), the Parent Guarantor shall have the right, in its sole
discretion, to classify such item of Debt and shall only be required to include
the amount and type of such Debt under the clause permitting the Debt as so
classified and (y) any other obligation of the obligor on such Debt (or of any
other Person who could have Incurred such Debt under this Section) arising under
any Guarantee, Lien or letter of credit supporting such Debt shall be
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disregarded to the extent that such Guarantee, Lien or letter of credit secures
the principal amount of such Debt.
For purposes of determining compliance with any
Dollar-denominated restriction on the Incurrence of Debt denominated in a
foreign currency, the Dollar-equivalent principal amount of such
foreign-currency-denominated Debt Incurred pursuant thereto shall be calculated
based on the relevant currency exchange rate in effect on the date that such
foreign-currency-denominated Debt was Incurred, in the case of term debt, or
first committed, in the case of revolving credit debt; provided that (x) the
Dollar-equivalent principal amount of any such Debt outstanding on the date
hereof shall be calculated based on the relevant currency exchange rate in
effect on the date hereof and (y) if such Debt is Incurred to refinance other
Debt denominated in a foreign currency, and such refinancing would cause the
applicable Dollar-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
Dollar denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Debt does not exceed the principal
amount of such Debt being refinanced. The principal amount of any Debt Incurred
to refinance other Debt, if Incurred in a different currency from the Debt being
refinanced, shall be calculated based on the currency exchange rate applicable
to the currency in which such respective Debt is denominated that is in effect
on the date of such refinancing.
SECTION 10.09. Additional Amounts. Payments made by the Issuer
or the Guarantors pursuant to the Securities or the Securities Guarantee will be
made without withholding or deduction for taxes unless required by law. In the
event of (x) any change that becomes effective after the date hereof in the laws
of the U.K. or Bermuda or of any political subdivision or taxing authority
thereof or therein or any change in the interpretation or administration thereof
or (y) a failure by the Issuer to list and maintain a listing of the Securities
on a "recognized stock exchange" (within the meaning of Section 851 of the U.K.
Income and Corporation Taxes Act 1988) prior to the first date upon which
interest is required to be paid hereunder (a "Listing Failure"), the effect of
which is to require the withholding or deduction by the Issuer or the Guarantors
pursuant to the Securities or the Securities Guarantee, respectively, of any
amount for taxes that would not have been required to be withheld or deducted
absent such change or Listing Failure, as the case may be, the Issuer or the
Guarantors will pay, to the extent they may then lawfully do so, such additional
amounts ("Additional Amounts") as may be necessary in order that every net
payment of the principal of and interest on the Securities, after deduction for
withholding for or on
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account of any future tax, assessment or other governmental charge will not be
less than the amount provided for in the Securities to be then due and payable;
provided, however, that the foregoing obligation to pay Additional Amounts shall
not apply in respect of:
(i) any tax, withholding, assessment or other governmental
charge which would not have been imposed but for (x) the existence of
any present or former connection between such holder (or between a
fiduciary, settlor, beneficiary, member or shareholder of, or possessor
of a power over, such holder, if such holder is an estate, trust,
partnership or corporation) and the U.K. or Bermuda or any political
subdivision or taxing authority thereof including, without limitation,
such holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident
thereof or being or having been present or engaged in trade or business
therein or having or having had a permanent establishment therein or
(y) the presentation of a Security or a Securities Guarantee (where
presentation is required) for payment on a date more than 30 days after
the date on which such payment became due and payable or the date on
which payment thereof is duly provided for, whichever occurs later,
except for Additional Amounts with respect to Taxes that would have
been imposed had the holder presented the Security for payment within
such 30-day period;
(ii) any estate, inheritance, gift, sale, transfer
or personal property tax;
(iii) any tax, assessment or other governmental charge that is
withheld by reason of the failure to timely comply by the holder or the
beneficial owner of the Security with a request in writing of the
Issuer or the Parent Guarantor (which request shall be furnished to the
Trustee) (x) to provide information concerning the nationality,
residence or identity of the holder or such beneficial owner or (y) to
make any declaration or other similar claim or satisfy any information
or reporting requirement, which, in the case of (x) or (y), is required
or imposed by a statute, treaty, regulation or administrative practice
of the taxing or domicile jurisdiction as a precondition to exemption
from or reduction of all or part of such tax, assessment or other
governmental charge; provided, however, that this clause (iii) shall
not apply to limit the Issuer's or Guarantors' obligation to pay
Additional Amounts if the completing and filing of the information
described in subclause (x) or the declaration or other claim described
in subclause (y)
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would be materially more onerous in form, in procedure or in substance
of information disclosed, in comparison to the information reporting
requirements imposed under U.S. tax law with respect to Forms 1001, W-8
and W-9; or
(iv) any tax, withholding, assessment or other governmental
charge resulting from a Listing Failure with respect to any Security
issued in the form of a Definitive Security pursuant to the terms of
the Deposit Agreement and this Indenture; or
(v) any combination of items (i), (ii), (iii) and (iv) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any Security or Securities Guarantee
to any holder who is not the sole beneficial owner of such Security or
Securities Guarantee or is a fiduciary or partnership, but only to the
extent that a beneficial owner, a beneficiary or a settlor with respect
to a fiduciary or a member of the partnership would not have been
entitled to the payment of the Additional Amount had the beneficial
owner, beneficiary, settlor or member of such partnership received
directly its beneficial or distributive share of the payment.
At least 30 days prior to each date on which any payment under
or with respect to the Securities is due and payable, if the Issuer or the
Guarantors will be obligated to pay Additional Amounts with respect to such
payment, the Issuer or the Guarantors will deliver to the Trustee an Officer's
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 (and 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.
SECTION 10.10. Limitation on Restricted Payments. The Parent
Guarantor (i) may not, and will not permit any Restricted Subsidiary, directly
or indirectly, to declare or pay any dividend, or make any distribution, in
respect of its Capital Stock or to the holders thereof, excluding (x) any
dividends or distributions payable solely in shares of its Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to acquire its
Capital Stock (other than Disqualified Stock), (y) any dividends
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paid to the Parent Guarantor or a Restricted Subsidiary, or (z) pro rata
dividends paid on shares of Common Stock of Restricted Subsidiaries, (ii) may
not, and may not permit any Restricted Subsidiary to, purchase, redeem, or
otherwise retire or acquire for value (a) any Capital Stock of the Parent
Guarantor or any Related Person of the Parent Guarantor (other than a permitted
refinancing) or (b) any options, warrants or rights to purchase or acquire
shares of Capital Stock of the Parent Guarantor or any Related Person of the
Parent Guarantor or any securities convertible or exchangeable into shares of
Capital Stock of the Parent Guarantor or any Related Person of the Parent
Guarantor (other than a permitted refinancing), (iii) may not make, or permit
any Restricted Subsidiary to make, any Investment, except for Permitted
Investments, and (iv) may not, and may not permit any Restricted Subsidiary to,
redeem, defease, repurchase, retire or otherwise acquire or retire for value,
prior to any scheduled maturity, repayment or sinking fund payment, Debt of the
Guarantors or the Issuer which is subordinate in right of payment to the
Securities or the Securities Guarantee (each of clauses (i) through (iv) being a
"Restricted Payment") if: (1) an Event of Default, or an event that with the
passing of time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing, or (2) except with respect to
Investments, upon giving effect to such Restricted Payment, the Parent Guarantor
could not Incur at least $1.00 of additional Debt pursuant to the first
paragraph of Section 10.08, or (3) upon giving effect to such Restricted
Payment, the aggregate of all Restricted Payments from the date hereof exceeds
the sum of: (a)(x) Consolidated Cash Flow Available for Fixed Charges since the
end of the last full fiscal quarter prior to the date hereof through the last
day of the last full fiscal quarter ending immediately preceding the date of
such Restricted Payment (the "Calculation Period") minus (y) 1.5 times
Consolidated Interest Expense for the Calculation Period plus (b) an amount
equal to the net reduction in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on Debt,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to the Parent Guarantor or any Restricted Subsidiary or from the Net
Cash Proceeds from the sale of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation of
Consolidated Cash Flow Available for Fixed Charges for the Calculation Period),
or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of Investment), not to
exceed, in each case, the amount of Investments previously made by the Parent
Guarantor or any Restricted Subsidiary in such Person or Unrestricted Subsidiary
plus (c) an amount equal to the aggregate net proceeds received after the date
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hereof, including the fair market value of property other than cash (determined
in good faith by the Board of Directors as evidenced by a resolution of the
Board of Directors filed with the Trustee), as capital contributions to the
Parent Guarantor or from the issuance (other than to a Subsidiary) of Capital
Stock (other than Disqualified Stock) of the Parent Guarantor and warrants,
rights or options on Capital Stock (other than Disqualified Stock) of the Parent
Guarantor and the principal amount at maturity of Debt of the Parent Guarantor
or any Restricted Subsidiary that has been converted into Capital Stock (other
than Disqualified Stock and other than by a Subsidiary) of the Parent Guarantor
after the date hereof plus (d) $30 million.
Notwithstanding the foregoing, (i) the Parent Guarantor may
pay any dividend on Capital Stock of any class of the Parent Guarantor within 60
days after the declaration thereof if, on the date when the dividend was
declared, the Parent Guarantor could have paid such dividend in accordance with
the foregoing provisions, (ii) the Parent Guarantor may make acquisitions of a
minority equity interest in entities engaged in the Telecommunications Business;
provided that (A) the acquisition of a majority equity interest in such entities
is not then permitted or practicable under applicable law without regulatory
consent or change of law, (B) the Board of Directors of the Parent Guarantor
determines in good faith that there is a substantial probability that such
approval or change of law will be obtained, (C) the Parent Guarantor or one of
its Restricted Subsidiaries has the right to acquire Capital Stock representing
a majority of the voting power of the Voting Stock of such entity upon receipt
of regulatory consent or change of law and does acquire such Voting Stock
reasonably promptly upon receipt of such consent or change of law and (D) in the
event that such consent or change of law has not been obtained within 18 months
of funding such Investment, the Parent Guarantor or one of its Restricted
Subsidiaries has the right to sell such minority equity interest to the Person
from whom it acquired such interest, for consideration consisting of the
consideration originally paid by the Parent Guarantor and its Restricted
Subsidiaries for such minority equity interest; (iii) the Parent Guarantor may
repurchase any shares of its Common Stock or options to acquire its Common Stock
from Persons who were formerly directors, officers or employees of the Parent
Guarantor or any of its Subsidiaries, provided that the aggregate amount of all
such repurchases made pursuant to this clause (iii) shall not exceed $6 million,
plus the aggregate cash proceeds received by the Parent Guarantor since the date
hereof from issuances of its Common Stock or options to acquire its Common Stock
to directors, officers and employees of the Parent Guarantor or any of its
Subsidiaries, (iv) the Parent Guarantor or a Restricted
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Subsidiary may redeem, defease, repurchase, retire or otherwise acquire or
retire for value Debt of the Guarantors or the Issuer which is subordinated in
right of payment to the Securities or the Security Guarantees, as the case may
be, in exchange for, or out of the proceeds of a substantially concurrent sale
(other than to a Subsidiary) of, Capital Stock (other than Disqualified Stock of
the Parent Guarantor) or in a refinancing that satisfies the requirements of
clause (iii) of the second paragraph of Section 10.08, (v) the Parent Guarantor
and its Restricted Subsidiaries may retire or repurchase any Capital Stock of
the Parent Guarantor or of any Subsidiary of the Parent Guarantor in exchange
for, or out of the proceeds of the substantially concurrent sale (other than to
a Subsidiary of the Parent Guarantor) of, Capital Stock (other than Disqualified
Stock) of the Parent Guarantor or such Restricted Subsidiary and (vi) the Parent
Guarantor or a Restricted Subsidiary may make payments or distributions to
dissenting stockholders pursuant to applicable law or pursuant to or in
connection with a transaction governed by the provisions of Article VIII hereof,
provided that the number of shares as to which dissent or appraisal rights are
exercised and such payments or distributions are being made does not exceed 1%
of the total number of shares of all classes for which such rights are
exercisable.
SECTION 10.11. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. The Parent Guarantor may not,
and may not permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of the
Parent Guarantor (i) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock owned by the Parent Guarantor or
any other Restricted Subsidiary of the Parent Guarantor or pay any Debt or other
obligation owed to the Parent Guarantor or any other Restricted Subsidiary; (ii)
to make loans or advances to the Parent Guarantor or any other Restricted
Subsidiary; or (iii) to transfer any of its property or assets to the Parent
Guarantor or any other Restricted Subsidiary.
Notwithstanding the foregoing, the Parent Guarantor may, and
may permit any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction (a) pursuant to any agreement in effect on the date hereof; (b)
pursuant to an agreement relating to any Acquired Debt, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person so acquired and was not Incurred in anticipation
of such Person being acquired; (c) pursuant to an agreement effecting a renewal,
refunding or extension of
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Debt Incurred pursuant to an agreement referred to in clause (a) or (b) above;
provided, however, that the provisions contained in such renewal, refunding or
extension agreement relating to such encumbrance or restriction are no more
restrictive in any material respect than the provisions contained in the
agreement the subject thereof; (d) in the case of clause (iii) in the above
paragraph, contained in any security agreement (including a Capital Lease
Obligation) securing Debt of the Parent Guarantor or a Restricted Subsidiary
otherwise permitted hereunder, but only to the extent such restrictions restrict
the transfer of the property subject to such security agreement; (e) in the case
of clause (iii) in the above paragraph, with respect to customary nonassignment
provisions entered into in the ordinary course of business in leases and other
agreements; (f) with respect to a Restricted Subsidiary of the Parent Guarantor
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary, provided that (x) the consummation of such transaction
would not result in an Event of Default or an event that, with the passing of
time or the giving of notice or both, would constitute an Event of Default, (y)
such restriction terminates if such transaction is not consummated and (z) the
consummation or abandonment of such transaction occurs within one year of the
date such agreement was entered into; (g) pursuant to applicable law or required
by any regulatory authority having jurisdiction over the Parent Guarantor or any
Subsidiary; (h) pursuant to this Indenture and the Securities; (i) constituting
a Lien otherwise permitted pursuant to Section 10.15; and (j) other encumbrances
or restrictions that are not materially more restrictive than customary
provisions in comparable financings provided that each of the Issuer and the
Guarantors provides an Officer's Certificate to the Trustee to the effect that
in the opinion of the signers of such certificate such encumbrances or
restrictions will not materially impact the Issuer's and the Guarantors' ability
to make scheduled payments of interest and principal under the Securities.
SECTION 10.12. Limitation on Transactions with Affiliates and
Related Persons. The Parent Guarantor 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
Related Person or with any Affiliate of the Parent Guarantor or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Parent Guarantor or such Restricted Subsidiary than could be obtained, at the
time of such transaction or, if such transaction is pursuant to a written
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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 a Related Person
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 or (B) for which the Parent Guarantor or a Restricted
Subsidiary delivers to the Trustee a written opinion of a nationally recognized
investment banking firm (or a subsidiary or affiliate thereof) in the United
States stating that the transaction is fair to the Parent Guarantor or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Parent Guarantor and any of its Wholly Owned Restricted
Subsidiaries or solely between Wholly Owned Restricted Subsidiaries; and (iii)
any payments or other transactions pursuant to any tax-sharing agreement between
the Parent Guarantor and any other Person with which the Parent Guarantor files
a consolidated tax return or with which the Parent Guarantor is part of a
consolidated group for tax purposes. Notwithstanding the foregoing, any
transaction covered by the first paragraph of this Section and not covered by
clauses (ii) through (iii) of this paragraph must be approved or determined to
be fair in the manner provided for in clause (i)(A) or (B) above unless the
aggregate amount of such transaction is less than $5 million in value.
SECTION 10.13. Limitation on Asset Dispositions. (a) The
Parent Guarantor may not, and may not permit any Restricted Subsidiary of the
Parent Guarantor to, make any Asset Disposition in one or more related
transactions unless: (i) the Parent Guarantor or the Restricted Subsidiary, as
the case may be, receives consideration for such disposition at least equal to
the fair market value for the assets sold or disposed of as determined by the
Board of Directors in good faith and, in the case of an Asset Disposition in an
amount greater than $5 million, evidenced by a resolution of the Board of
Directors filed with the Trustee; and (ii) at least 75% of the consideration for
such disposition consists of (1) cash or readily marketable cash equivalents or
the assumption of Debt of the Guarantors (other than Debt that is subordinated
to the Securities and the Securities Guarantee) or of a Restricted Subsidiary
and release from all liability on the Debt assumed, or (2) Telecommunications
Assets. However, none of the provisions of Section 10.13 shall apply to the
issuance or sale of capital stock of (x) deltathree.com, (y) RSL Australia or
(z) RSL Spain, in each case, made in compliance with clause (v) of Section
10.15. In the event and to the extent that the Net Available Proceeds received
by the Parent Guarantor or any of its Restricted Subsidiaries from one or more
Asset Dispositions occurring on or after the
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date hereof in any period of 12 consecutive months exceed 10% of Consolidated
Tangible Assets (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of the Parent Guarantor
and its subsidiaries have been filed with the Commission), then the Parent
Guarantor or the Issuer shall or shall cause the relevant Restricted Subsidiary
to (i) within 12 months after the date Net Available Proceeds so received exceed
10% of Consolidated Tangible Assets (A) apply an amount equal to such excess Net
Available Proceeds to permanently repay unsubordinated Debt of the Parent
Guarantor or any Restricted Subsidiary providing a Subsidiary Guarantee pursuant
to Section 10.15 or Debt of any other Restricted Subsidiary, in each case owing
to a Person other than the Parent Guarantor 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 Telecommunications
Assets and (ii) apply (no later than the end of the 12-month period referred to
in clause (i)) such excess Net Available Proceeds (to the extent not applied
pursuant to clause (i)) as provided in the paragraph (b) below. The amount of
such excess Net Available 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".
(b) 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 totals at least $10 million, the Issuer shall
repay any Debt of the Parent Guarantor or any Restricted Subsidiary to the
extent the terms of such Debt require repayment prior to an Offer to Purchase
being made hereunder (including by way of an offer to purchase to the holders of
such Debt, if so required). To the extent there are Excess Proceeds after such
repayment (or offer to purchase), the Issuer must commence, not later than the
fifteenth Business Day of such month (or if later, the fifteenth Business Day
after the expiration of any such required offer to purchase), and consummate an
Offer to Purchase from the holders of the Securities on a pro rata basis an
aggregate principal amount of Securities on the relevant Payment Date equal to
the Excess Proceeds on such date not applied or to be applied pursuant to the
first sentence of this paragraph (b), at a purchase price equal to 100% of the
principal amount of the Securities, plus, in each case, accrued interest (if
any) to but excluding the Payment Date and, to the extent required by the terms
thereof, any other Debt of the Parent Guarantor that is pari passu with the
Securities at a price no greater than 100% of the principal amount
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thereof plus accrued interest to but excluding the date of purchase (or 100% of
the accreted value in the case of original issue discount Debt). To the extent
there are any remaining Excess Proceeds following the completion of the Offer to
Purchase, the Issuer must repay such other Debt of the Parent Guarantor or Debt
of a Restricted Subsidiary of the Parent Guarantor, to the extent permitted
under the terms thereof and, to the extent there are any remaining Excess
Proceeds after such repayment, the Issuer shall apply such amount to any other
use as determined by the Issuer which is not otherwise prohibited by this
Indenture.
SECTION 10.15. Limitation on Issuances and Sales of Capital
Stock of Restricted Subsidiaries. The Parent Guarantor may not, and may not
permit any Restricted Subsidiary of the Parent Guarantor to, issue, transfer,
convey, sell or otherwise dispose of any shares of Capital Stock of a Restricted
Subsidiary of the Parent Guarantor or securities convertible or exchangeable
into, or options, warrants, rights or any other interest with respect to,
Capital Stock of a Restricted Subsidiary of the Parent Guarantor to any Person
other than the Parent Guarantor or a Wholly Owned Restricted Subsidiary of the
Parent Guarantor except (i) a sale of all of the Capital Stock of such
Restricted Subsidiary owned by the Parent Guarantor and any Restricted
Subsidiary of the Parent Guarantor that complies with Section 10.13 above to the
extent such Section applies, (ii) if required, the issuance, transfer,
conveyance, sale or other disposition of directors' qualifying shares, (iii)
Disqualified Stock issued in exchange for, or upon conversion of, or the
proceeds of the issuance of which are used to redeem, refinance, replace or
refund shares of Disqualified Stock of such Restricted Subsidiary; provided that
the amounts of the redemption obligations of such Disqualified Stock shall not
exceed the amounts of the redemption obligations of, and such Disqualified Stock
shall have redemption obligations no earlier than those required by, the
Disqualified Stock being exchanged, converted, redeemed, refinanced, replaced or
refunded and (iv) issuances of not more than 59% of the voting stock and equity
interest in a Restricted Subsidiary engaged in the Telecommunications Business
(1) in connection with the acquisition of such Restricted Subsidiary or of
Telecommunications Assets acquired or to be acquired by the Parent Guarantor or
a Restricted Subsidiary or (2) to a Strategic Investor; provided, that the
Parent Guarantor complies with Section 10.13 above to the extent such Section
applies and (v) issuances or sales of capital stock of each of deltathree.com,
RSL Australia and RSL Spain, including pursuant to stock option plans or other
equity compensation and incentive plans established for each of their respective
employees, directors, and consultants, so long as
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immediately after giving effect to such issuances and sales, the issuer of such
capital stock is a Restricted Subsidiary.
SECTION 10.15. Limitation on Liens. The Parent Guarantor may
not, and may not permit any Restricted Subsidiary of the Parent Guarantor to,
Incur or suffer to exist any Lien on or with respect to any property or assets
now owned or hereafter acquired to secure any Debt without making, or causing
such Restricted Subsidiary to make, effective provision for securing the
Securities (x) equally and ratably with such Debt as to such property for so
long as such Debt will be so secured or (y) in the event such Debt is Debt of
the Parent Guarantor which is subordinate in right of payment to the Securities,
prior to such Debt as to such property for so long as such Debt will be so
secured.
The foregoing restrictions shall not apply to: (i) Liens
existing on the date hereof and securing Debt outstanding on the date hereof;
(ii) Liens securing Debt outstanding or available under all Credit Facilities to
the extent such Debt is permitted under clause (i) of the second paragraph of
Section 10.08; (iii) Liens in favor of the Parent Guarantor or any Restricted
Subsidiary of the Parent Guarantor; (iv) Liens on real or personal property of
the Parent Guarantor or a Restricted Subsidiary of the Parent Guarantor
acquired, constructed or constituting improvements made after the date of
original issuance of the Securities to secure Purchase Money Debt which is
Incurred for the construction, acquisition and improvement of Telecommunications
Assets and is otherwise permitted under this Indenture; provided, however, that
(a) the principal amount of any Debt secured by such a Lien does not exceed 100%
of such purchase price or cost of construction or improvement of the property
subject to such Liens, (b) such Lien attaches to such property prior to, at the
time of or within 180 days after the acquisition, completion of construction or
commencement of operation of such property and (c) such Lien does not extend to
or cover any property other than the specific item of property (or portion
thereof) acquired, constructed or constituting the improvements made with the
proceeds of such Purchase Money Debt; (v) Liens to secure Acquired Debt;
provided, however, that (a) such Lien attaches to the acquired asset prior to
the time of the acquisition of such asset and (b) such Lien does not extend to
or cover any other asset; (vi) Liens to secure Debt Incurred to extend, renew,
refinance or refund (or successive extensions, renewals, refinancings or
refundings), in whole or in part, Debt secured by any Lien referred to in the
foregoing clauses (i), (ii), (iv) and (v) so long as the principal amount of
Debt so secured is not increased except as otherwise permitted under clause
(iii) of the second paragraph of Section 10.08 and, in the case of Liens to
secure Debt incurred to extend, renew, refinance or
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refund Debt secured by a Lien referred to in the foregoing clause (i), (iv) or
(v), such Liens do not extend to any other property; and (vii) Permitted Liens.
SECTION 10.16. Limitation on Issuance of Guarantees of Debt by
Restricted Subsidiaries. The Parent Guarantor will not permit any Restricted
Subsidiary, directly or indirectly, to incur any Guarantee of any Debt of the
Guarantors or the Issuer unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for a Guarantee by such
Subsidiary of the Securities; any Subsidiary Guarantee by such Subsidiary of the
Securities (x) will be senior in right of payment to any Guarantee of
Subordinated Debt of the Guarantors or the Issuer and (y) will be pari passu
with or senior to any Guarantee of any other Debt of the Guarantors or the
Issuer.
Notwithstanding the foregoing, any Subsidiary Guarantee 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 the Parent Guarantor, of all of the Parent Guarantor'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.
SECTION 10.17. Change of Control. (a) Unless the Issuer has
heretofore exercised its right to redeem all of the Securities in accordance
with the terms of this Indenture and the Securities, upon the occurrence of a
Change of Control (as defined below), each Holder of a Security shall have the
right to have such Security repurchased by the Issuer on the terms and
conditions precedent set forth in this Section 10.17 and otherwise in this
Indenture. The Issuer shall, within 30 days following the date of the
consummation of a transaction resulting in a Change of Control, mail an Offer
with respect to an Offer to Purchase all Outstanding Securities at a purchase
price equal to 101% of their principal amount plus accrued interest to but
excluding the date of purchase. Installments of interest (including Special
Interest) whose Stated Maturity is on or prior to the Purchase Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.07. Each Holder
shall be entitled to tender all or any portion of the Securities owned by such
Holder pursuant to the Offer to Purchase,
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subject to the requirement that any portion of a Security tendered must be
tendered in an integral multiple of $1,000 principal amount at maturity.
(b) The Issuer and Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. Prior to the
Purchase Date, the Issuer shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if the Issuer is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) 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 so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Issuer. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security or Securities equal in principal amount to any unpurchased portion of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Issuer to the Holder
thereof.
(c) A "Change of Control" shall be deemed to have occurred in
the event that, after the date of this Indenture, either (i) a "person" or
"group" (within the meaning of Sections 13(d) and 15(d)(2) of the Exchange Act)
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 35% of the total voting power of the Voting Stock of
the Parent Guarantor, on a fully diluted basis, and such ownership is greater
than the amount of voting power of the Voting Stock of the Parent Guarantor, on
a fully diluted basis, held by the Existing Stockholders and their Affiliates on
such date; (ii) individuals who on the date of this Indenture constitute the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the Parent Guarantor's
stockholders 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 on the date of this Indenture 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 then in office; or (iii) all
of the Common Stock of the Issuer is not beneficially owned by the Parent
Guarantor (other than directors' qualifying shares).
(d) In the event that the Issuer makes an Offer to Purchase
the Securities, the Issuer and the Guarantors
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shall comply with any applicable securities laws and regulations, including any
applicable requirements of Section 15(e) of, and Rule 15e-1 under, the
Securities Exchange Act.
SECTION 10.18. Provision of Financial Information. The
Guarantors and the Issuer have agreed that, for so long as any Securities remain
Outstanding, each will furnish to the holders of the Securities and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 155A(d)(5) under the
Securities Act. In addition, the Guarantors and the Issuer will file with the
Trustee within 15 days after it files them with the Commission copies of the
annual and quarterly reports and the information, documents, and other reports
that the Guarantors or the Issuer is required to file with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports"). In the
event either Guarantor or the Issuer shall cease to be required to file SEC
Reports pursuant to the Exchange Act, such Guarantor and the Issuer will
nevertheless continue to file such reports with the Commission (unless the
Commission will not accept such a filing) and the Trustee. The Guarantors and
the Issuer will furnish copies of the SEC Reports to the holders of Securities
at the time the Guarantors or the Issuer is required to file the same with the
Trustee and will make such information available to investors who request it in
writing.
SECTION 10.19. Statement by Officers as to Default. (a) The
Issuer and the Guarantors will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Parent Guarantor ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof either Guarantor or the Issuer is in default in the performance
and observance of any of the terms, provisions and conditions of Sections 10.05
to 10.18, inclusive, and if either Guarantor or the Issuer shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
(b) The Issuer and the Guarantors shall deliver to the
Trustee, as soon as possible and in any event within 10 days after the Issuer or
either Guarantor becomes aware of the occurrence of an Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Issuer or such Guarantor proposes to
take with respect thereto.
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SECTION 10.20. Waiver of Certain Covenants. The Issuer, the
Parent Guarantor or the Subsidiary Guarantor, as applicable, may omit in any
particular instance to comply with any covenant or condition set forth in
Sections 10.05 to 10.17, inclusive, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount at
maturity of the Outstanding Securities shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Issuer and the Guarantors
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
SECTION 10.21. Paying Agent. The Issuer shall not authorize or
designate any Person (including the Trustee) as a Paying Agent hereunder unless
such Person is located outside of the United Kingdom.
ARTICLE XI
Redemption of Securities
SECTION 11.01. Right of Redemption. (a) At any time prior to
March 1, 2003, in the event that the Parent Guarantor receives net cash proceeds
from the public or private sale of its Common Stock (other than Disqualified
Stock), the Issuer (to the extent it receives such proceeds and has not used
such proceeds, directly or indirectly, to redeem or repurchase other securities
pursuant to optional redemption provisions) may, at its option, apply an amount
equal to any such net cash proceeds to redeem, from time to time, Securities in
a principal amount at maturity of up to an aggregate amount equal to 33 1/3% of
the original aggregate principal amount at maturity of the Securities; provided,
however, that Securities in an amount equal to at least 66 2/3% of the original
aggregate principal amount at maturity of the Securities remain Outstanding
after each redemption. Each redemption must occur on a Redemption Date within
180 days of the related sale and upon not less than 30 nor more than 60 days'
notice by mail to each Holder of Securities to be redeemed at such Holder's
address appearing in the Security Register, in amounts of $1,000 or an integral
multiple of $1,000 at a Redemption Price of 112.875% of the principal amount of
the Securities plus accrued interest to but excluding the Redemption Date
(subject to, in the case of a Global Security in bearer form, the right of the
Holder thereof and, in the case of Definitive Securities, the right of Holders
of record on the relevant Regular Record Date, to receive Interest due on an
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Interest Payment Date that is on or prior to the Redemption Date).
(b) In the event that (i) the Guarantors or the Issuer has
become or would become obligated to pay any Additional Amounts as a result of
(x) changes affecting withholding tax laws or (y) a Listing Failure (as defined
herein) provided that the Issuer has used reasonable best efforts to list and
maintain the listing of the Securities on a "recognized stock exchange" (within
the meaning of Section 851 of the U.K. Income and Corporation Taxes Act 1988)
(as provided for in Section 10.09), and (ii) the Guarantors and the Issuer are
unable to avoid the requirement to pay such Additional Amounts by taking
reasonable measures available to them (including, without limitation, the
Guarantors making payments directly to holders under the Securities Guarantee,
unless such payment is likely to result in adverse consequences to the Issuer or
either Guarantor), then the Issuer may redeem all, but not less than all, of the
Securities at any time at 100% of the principal amount thereof on the Redemption
Date, together with accrued interest thereon, if any, to but excluding the
Redemption Date (subject to, in the case of a Global Security in bearer form,
the right of the Holder thereof and, in the case of Definitive Securities, the
right of Holders of record on the relevant Regular Record Date, to receive
Interest due on an Interest Payment Date that is on or prior to the Redemption
Date). Prior to the publication of the notice of redemption in accordance with
the foregoing, the Issuer shall deliver to the Trustee an officer's certificate
stating that the Issuer is entitled to effect such redemption based on a written
opinion of independent tax counsel or accounting firm reasonably satisfactory to
the Trustee.
(c) The Securities further may be redeemed, as a whole or in
part, at the election of the Issuer, at any time on or after March 1, 2005 and
prior to maturity, upon not less than 30 nor more than 60 days' notice by mail
to each Holder of Securities to be redeemed at such Holder's address appearing
in the Security Register, in amounts of $1,000 or an integral multiple of
$1,000, at the Redemption Prices specified in the form of Security hereinbefore
set forth, together with accrued interest to but excluding the Redemption Date
(subject to, in the case of a Global Security in bearer form, the right of the
Holder thereof and, in the case of Definitive Securities, the right of Holders
of record on the relevant Regular Record Date, to receive Interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
SECTION 11.02. Applicability of Article. Redemption of
Securities at the election of the Issuer, as
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permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 11.03. Election To Redeem; Notice to Trustee. The
election of the Issuer to redeem any Securities pursuant to Section 11.01 shall
be evidenced by a Board Resolution. In case of any redemption at the election of
the Issuer of less than all the Securities, the Issuer shall, at least 5 days
prior to giving notice of such redemption pursuant to Section 11.05 (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee in
writing of such Redemption Date and of the principal amount of Securities to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Issuer shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 11.05. Securities To Be Redeemed Pro Rata. If less
than all the Securities are to be redeemed in any redemption, the Securities to
be redeemed shall be selected by the Trustee by prorating, as nearly as may be
practicable, the principal amount at maturity of Securities to be redeemed. In
any proration pursuant to this Section, the Trustee shall make such adjustments,
reallocations and eliminations as it shall deem proper to the end that the
principal amount at maturity of Securities so prorated shall be $1,000 or a
multiple thereof, by increasing or decreasing or eliminating the amount which
would be allocable to any Holder on the basis of exact proportion by an amount
not exceeding $1,000. The Trustee in its discretion may determine the particular
Securities (if there are more than one) registered in the name of any Holder
which are to be redeemed, in whole or in part. The Trustee shall incur no
liabilities for any selection made pursuant to this Section 11.05.
The Trustee shall promptly notify the Issuer and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount at
maturity thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount at maturity of such Securities
which has been or is to be redeemed.
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SECTION 11.05. Notice of Redemption. Notice of redemption
shall be given by first-class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at such Holder's address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) whether the redemption is being made pursuant to Section
11.01(a), (b) or (c) and, if being made pursuant to Section 11.01(a) or
(b), a brief statement setting forth the Issuer's right to effect such
redemption and the Issuer's basis therefor,
(5) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts at maturity) of the particular
Securities to be redeemed,
(5) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(7) that in the case that a Security is only redeemed in part,
the Issuer shall execute and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a new Security
or Securities in an aggregate amount equal to the unredeemed portion of
the Security.
Notice of redemption of Securities to be redeemed at the
election of the Issuer shall be given by the Issuer or, at the Issuer's request,
by the Trustee in the name and at the expense of the Issuer. If so requested by
the Issuer, the Trustee shall mail any such notice not later than the date
specified for mailing by the Issuer, which shall not be sooner than 5 days after
receipt by the Trustee of such request (unless a shorter period shall be
satisfactory to the Trustee).
SECTION 11.06. Deposit of Redemption Price. Prior to any
Redemption Date, the Issuer shall deposit with
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the Trustee or with a Paying Agent (or, if the Issuer is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 11.07. Securities Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Issuer shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall cease to bear interest. Upon surrender of any such Security for redemption
in accordance with said notice, such Security shall be paid by the Issuer at the
Redemption Price, together with accrued interest to but excluding the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the bearer of such
Security, in the case of a Global Security in bearer form, and, in the case of a
Definitive Security, to Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.07.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate provided
by the Security.
SECTION 11.08. Securities Redeemed in Part. Any Security which
is to be redeemed only in part shall be surrendered at an office or agency of
the Issuer designated for that purpose pursuant to Section 10.02 (with, if the
Issuer or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Issuer
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities of like
tenor, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
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ARTICLE XII
Discharge of Indenture
SECTION 12.01. Termination of Issuer's Obligations. Except as
otherwise provided in this Section 12.01, each of the Issuer and the Guarantors
may terminate its obligations under the Securities and this Indenture if:
(a) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities for whose payment money or securities have
theretofore been held in trust and thereafter repaid to the Issuer, as
provided in Section 12.05) have been delivered to the Trustee for
cancelation and the Issuer has paid all sums payable by it hereunder;
or
(b)(i) all such 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, (ii)
the Issuer irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form satisfactory to the Trustee, as trust funds solely for the benefit
of the Holders of such Securities 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 such Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder, (iii) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, (iv) 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 Parent Guarantor or the Issuer is a party or by
which it is bound, (v) if at such time the Securities are listed on a
national securities exchange, the Securities will not be delisted as a
result of such deposit, defeasance and discharge, 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 satisfaction and discharge of this Indenture
have been complied with.
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With respect to the foregoing clause (a), the Issuer's
obligations under Section 6.07 shall survive. With respect to the foregoing
clause (b), the Issuer's obligations in Sections 3.03, 3.05, 3.05, 3.06, 3.07,
10.01, 10.09, 6.07, 6.10, 6.11, 12.05, 12.05 and 12.06 shall survive until the
Securities have matured or have been redeemed. Thereafter, only the Issuer's
obligations in Sections 6.07, 12.05 and 12.06 shall survive. After any such
irrevocable deposit, the Trustee upon written request shall acknowledge in
writing the discharge of the Issuer's obligations under the Securities and this
Indenture, and the Parent Guarantor's obligations under the Guarantee and this
Indenture, except for those surviving obligations specified above.
SECTION 12.02. Defeasance and Discharge of Indenture. The
Issuer will be deemed to have paid and the Issuer and the Guarantors will be
discharged from any and all obligations in respect of the Securities and the
Securities Guarantee on the 123rd day after the date of the deposit referred to
in clause (a) of this Section 12.02 if:
(a) with reference to this Section 12.02, the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee and has conveyed all right, title and interest for the benefit
of the Holders, under the terms of an irrevocable trust agreement in
form 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 (i) money in an amount, (ii) 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 (iii) 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 or upon earlier redemption;
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
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to the Securities and to give any related notice of redemption;
(b) 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 Guarantors, the Issuer or any of their
Subsidiaries is a party or by which the Guarantors, the Issuer or any
of their Subsidiaries is bound;
(c) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default, or event that after the
giving of notice or lapse of time or both could become a 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 after the
date of such deposit;
(d) the Issuer shall have delivered to the Trustee either (i)
a ruling based on relevant law and practice at the time directed to the
Trustee from the Inland Revenue or other relevant tax authority to the
effect that the Holders will not recognize income, gain or loss for
U.K. income tax or other tax purposes as a result of the Issuer's
exercise of its option under this Section 12.02, disregarding income
tax on any amounts that would have been received but for such exercise
of its option under this Section 12.02, and will be subject to U.K.
income tax on the same amount and in the same manner and at the same
time as would have been the case if such option had not been exercised
or (ii) an Opinion of Counsel to the same effect as the ruling
described in clause (i) above;
(e) the Issuer shall have delivered to the Trustee (i) either
(A) a ruling directed to the Trustee received from the Internal Revenue
Service to the effect that the Holders will not recognize additional
income, gain or loss for U.S. federal income tax purposes as a result
of the Issuer's exercise of its option under this Section 12.02 and
will be subject to U.S. 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 or (B) an Opinion of Counsel to the
same effect as the ruling described in clause (A) above accompanied by
a ruling to that effect published by the Internal Revenue Service,
unless there has been a change in the relevant U.S. federal income tax
law since the date of this Indenture and (ii) an Opinion of Counsel to
the effect that (A) the creation of the defeasance trust does not
violate the Investment Company Act of 1950 and (B) after the passage of
123 days following the deposit
-125-
<PAGE>
(except, with respect to any trust funds for the account of any Holder
who may be deemed to be "connected" with the Issuer for purposes of the
Insolvency Act 1986 after two years following the deposit), the trust
funds will not be subject to the effect of Section 557 of the United
States Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law and either (I) the trust funds will no longer remain the
property of the Issuer (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 (1) 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 and (2) 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 Debt of the
Issuer or any of its Securities;
(f) if at such time the Securities are 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 the Issuer's exercise of its opinion under this
Section 12.02; and
(g) the Issuer shall have 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 12.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the post
deposit period referred to in clause (e)(ii)(B) of this Section 12.02, none of
the Issuer's obligations under this Indenture shall be discharged. Subsequent to
the end of such period with respect to this Section 12.02, the Issuer's
obligations in Sections 3.03, 3.05, 3.05, 3.06, 3.07, 10.01, 10.09, 6.07, 6.10,
6.11, 12.05, 12.05 and 12.06 shall survive until the Securities mature or are
redeemed. Thereafter, only the Issuer's obligations in Sections 6.07, 12.05 and
12.06 shall survive. If and when a ruling from the Internal Revenue Service or
an Opinion of Counsel referred to in clause (e)(i) of this Section 12.02 may be
provided specifically without regard to, and not in reliance
-126-
<PAGE>
upon, the continuance of the Issuer's obligations under Section 10.01, then the
Issuer's obligations under such sentence 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 12.02.
After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Issuer's obligations under the
Securities, any Subsidiary Guarantee, if any, and this Indenture except for
those surviving obligations in the immediately preceding paragraph.
SECTION 12.03. Defeasance of Certain Obligations. The Issuer
and the Guarantors may omit to comply with any term, provision or condition set
forth in clauses (3) and (5) of Section 8.01 and Sections 10.05 through 10.18
(except for Section 10.09 and any covenant otherwise required by the TIA), and
clause (d) of Section 5.01 with respect to clauses (3) and (5) of Section 8.01,
clauses (d) and (e) of Section 5.01 with respect to Sections 10.05 through
10.18, except as aforesaid, and clauses (c), (f) and (g) of Section 5.01 shall
be deemed not to be Events of Default, in each case with respect to the
Outstanding Securities if:
(a) with reference to this Section 12.03, the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee 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 Securities, and dedicated solely to,
the benefit of the Holders, in and to (i) money in an amount, (ii) 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 (a), money in an amount or (iii) 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 or upon earlier
-127-
<PAGE>
redemption 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
and to give any related notice of redemption;
(b) 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 Parent Guarantor, the Issuer or any of their
Subsidiaries is a party or by which the Parent Guarantor, the Issuer or
any of their Subsidiaries is bound;
(c) immediately after giving effect to such deposit or a pro
forma basis, no Default or Event of Default, or event that after the
giving of notice or lapse of time or both would become a 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 after the day
of such deposit;
(d) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (i) the creation of the defeasance trust
does not violate the Investment Company Act of 1950, (ii) the Holders
will not recognize income, gain or loss for U.S. 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 12.03
and will be subject to U.S. 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 and (iii) 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
"connected" with the Issuer for purposes of the Insolvency Act 1986
after two years following the deposit), the trust funds will not be
subject to the effect of Section 557 of the United States Bankruptcy
Code or Section 15 of the New York Debtor and Creditor Law, and either
(A) the trust funds will no longer remain the property of the Issuer
(and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditor's rights generally) or (B) if a court were to rule under any
such law in any case or proceeding that the trust funds remained
property of the Issuer (1) 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
-128-
<PAGE>
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 and (2) 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 or holders of other Indebtedness of the Issuer or any of its
Securities;
(e) if at such time the Securities are listed on a national
securities exchange, the Issuer has delivered to the Trustee an Opinion
of Counsel to the effect that the Securities will not be delisted as a
result of the Issuer's exercise of its option under Section 12.03; and
(f) 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 12.03 have been complied with.
SECTION 12.05. Application of Trust Money. Subject to Section
12.06, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 12.01, 12.02 or 12.03, 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 12.05. Repayment to Issuer. Subject to Sections 6.07,
12.01, 12.02 and 12.03, the Trustee and the Paying Agent shall promptly pay to
the Issuer upon request set forth in an Officers' Certificate 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 in accordance with Section 10.02.
SECTION 12.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
Section 12.01, 12.02 or 12.03, 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
obligations of the Issuer and the Guarantors under this Indenture, the
Securities Guarantee, and the Securities shall be revived and
-129-
<PAGE>
reinstated as though no deposit had occurred pursuant to Section 12.01, 12.02 or
12.03, 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 12.01, 12.02 or 12.03, as the case may be; provided that, if the
Issuer has made any payment of principal of, premium, if any, or interest on any
Securities because of the reinstatement of its obligations, the Issuer 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 12.07. Insiders. With respect to the determination of
the Persons constituting beneficial owners of Securities and whether any such
Person is "connected" with the Issuer for purposes of Sections 12.02(e)(ii)(B)
and 12.03(d)(iii), the Trustee may rely on an Officers' Certificate.
-130-
<PAGE>
[DOLLAR DENOMINATED NOTES INDENTURE]
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
Dated:
The Common Seal of
RSL COMMUNICATIONS PLC
was hereto affixed in
the presence of:
[SEAL]
RSL COMMUNICATIONS PLC,
by
/s/ Donald R. Shassian
-------------------------------
Name:
Title:
by
/s/ Margaret B. Niche
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
by
/s/ Robert S. Peschler
-------------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
by
/s/ Donald R. Shassian
-------------------------------
Name:
Title:
RSL COM U.S.A., INC.
by
/s/ Joel Beckoff
-------------------------------
Name:
Title:
-131-
<PAGE>
ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Section 3.05(b)(i) and (iii)
of the Indenture)
The Chase Manhattan Bank,
as Trustee
550 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
Re: 12 7/8% Senior Notes due 2010 of
RSL Communications PLC (the "Securities")
-----------------------------------------
Reference is made to the Indenture, dated as of February 22,
2000 (the "Indenture"), between RSL Communications PLC (the "Issuer"), RSL
Communications, Ltd. (the "Parent Guarantor") RSL COM U.S.A., Inc. (the
"Subsidiary Guarantor") and The Chase Manhattan Bank, as Trustee. Terms used
herein and defined in the Indenture or in Regulation S or Rule 155 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein
as so defined.
This certificate relates to U.S. $____________ principal
amount at maturity of Securities, which are evidenced by the following
certificate(s) (the "Specified Securities"):
CUSIP No(s).
---------------------------
CERTIFICATE No(s).
---------------------
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Book-Entry Depositary who issued a Depositary Interest to the
Depositary (or its nominee) who holds such interest in the name of the
Undersigned. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf of
the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a Regulation S Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act,
A-1
<PAGE>
it is being effected in accordance with Rule 905 or Rule 155 under the
Securities Act and with all applicable securities laws of the states of the
United States and other jurisdictions. Accordingly, the Owner hereby further
certifies as follows:
(1) Rule 905 Transfers. If the transfer is being effected in
accordance with Rule 905:
(A) the Owner is not a distributor of the Securities,
an affiliate of the Issuer or any such distributor or a person
acting on behalf of any of the foregoing;
(B) the offer of the Specified Securities
was not made to a person in the United States;
(C) either:
(i) at the time the buy order was
originated, the Transferee was outside the United
States or the Owner and any person acting on its
behalf reasonably believed that the Transferee was
outside the United States, or
(ii) the transaction is being executed in,
on or through the facilities of the Eurobond market,
as regulated by the Association of International Bond
Dealers, or another designated offshore securities
market and neither the Owner nor any person acting on
its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been
made in the United States by or on behalf of the
Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has
received a selling concession, fee or other remuneration in
respect of the Specified Securities, and the transfer is to
occur during the Restricted Period, then the requirements of
Rule 905(c)(1) have been satisfied; and
(F) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act.
(2) Rule 155 Transfers. If the transfer is being effected
pursuant to Rule 155:
A-2
<PAGE>
(A) the transfer is occurring after a holding period
of at least one year (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of Rule 155; or
(B) the transfer is occurring after a holding period
of at least two years (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and the Owner is not, and during
the preceding three months has not been, an affiliate of the
Issuer.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
---------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
by:
---------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
A-3
<PAGE>
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.05(b)(ii) and (iii)
of the Indenture)
The Chase Manhattan Bank,
as Trustee
550 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
Re: 12 7/8% Senior Notes due 2010 of
RSL Communications PLC (the "Securities")
-----------------------------------------
Reference is made to the Indenture, dated as of February 22,
2000 (the "Indenture"), between RSL Communications PLC (the "Issuer"), RSL
Communications, Ltd. (the "Parent Guarantor") RSL COM U.S.A., Inc. (the
"Subsidiary Guarantor") and The Chase Manhattan Bank, as Trustee. Terms used
herein and defined in the Indenture or in Regulation S or Rule 155 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein
as so defined.
This certificate relates to U.S. $_____________ principal
amount at maturity of Securities, which are evidenced by the following
certificate(s) (the "Specified Securities"):
CUSIP No(s).
---------------------------
CERTIFICATE No(s).
---------------------
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Book-Entry Depositary who issued a Depositary Interest to the
Depositary (or its nominee) who holds such interest in the name of the
Undersigned. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf of
the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a Restricted Security. In connection with such transfer, the Owner hereby
certifies
B-1
<PAGE>
that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 155A or Rule 155 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 155A Transfers. If the transfer is being effected in
accordance with Rule 155A:
(A) the Specified Securities are being transferred to
a person that the Owner and any person acting on its behalf
reasonably believe is a "qualified institutional buyer" within
the meaning of Rule 155A, acquiring for its own account or for
the account of a qualified institutional buyer; and
(B) the Owner and any person acting on its behalf
have taken reasonable steps to ensure that the Transferee is
aware that the Owner may be relying on Rule 155A in connection
with the transfer; and
(2) Rule 155 Transfers. If the transfer is being effected
pursuant to Rule 155:
(A) the transfer is occurring after a holding period
of at least one year (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of Rule 155; or
(B) the transfer is occurring after a holding period
of at least two years (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and the Owner is not, and during
the preceding three months has not been, an affiliate of the
Issuer.
B-2
<PAGE>
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
---------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
by:
---------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
B-3
<PAGE>
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 3.05(c))
The Chase Manhattan Bank,
as Trustee
550 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
Re: 12 7/8% Senior Notes due 2010 of
RSL Communications PLC (the "Securities")
-----------------------------------------
Reference is made to the Indenture, dated as of February 22,
2000 (the "Indenture"), between RSL Communications PLC (the "Issuer"), RSL
Communications, Ltd. (the "Parent Guarantor") RSL COM U.S.A., Inc. (the
"Subsidiary Guarantor") and The Chase Manhattan Bank, as Trustee. Terms used
herein and defined in the Indenture or in Regulation S or Rule 155 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein
as so defined.
This certificate relates to U.S. $_____________ principal
amount at maturity of Securities, which are evidenced by the following
certificate(s) (the "Specified Securities"):
CUSIP No(s).
---------------------------
CERTIFICATE No(s).
---------------------
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Book-Entry Depositary who issued a Depositary Interest to the
Depositary (or its nominee) who holds such interest in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be
exchanged for Securities bearing no Securities Act Legend pursuant to Section
305(c) of the Indenture. In connection with such exchange, the Owner hereby
certifies
C-1
<PAGE>
that the exchange is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 155) has elapsed since the
Specified Securities were last acquired from the Issuer or from an affiliate of
the Issuer, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Issuer. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
---------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
by:
---------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
C-2
<PAGE>
EXHIBIT 5.3
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RSL COMMUNICATIONS PLC
As Parent Issuer
----------------
RSL COMMUNICATIONS, LTD.
As Parent Guarantor
-------------------
RSL COM U.S.A., INC.
As Subsidiary Guarantor
-----------------------
TO
THE CHASE MANHATTAN BANK
As Trustee
----------
------------------------------------
Indenture
Dated as of February 22, 2000
------------------------------------
12 7/8% SENIOR NOTES DUE 2010
EURO DENOMINATED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Certain Sections of this Indenture relating to
Sections 3.10 through 3.18 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- --------
<S> <C> <C>
ss. 3.10(a)(1) ..................................................... 6.09
(a)(2) ..................................................... 6.09
(a)(3) ..................................................... Not
Applicable
(a)(5) ..................................................... Not
Applicable
(b) ..................................................... 6.08
..................................................... 6.10
ss. 3.11(a) ..................................................... 6.13
(b) ..................................................... 6.13
ss. 3.12(a) ..................................................... 7.01
7.02(a)
(b) ..................................................... 7.02(b)
(c) ..................................................... 7.02(c)
ss. 3.13(a) ..................................................... 7.03(a)
(a)(5) ..................................................... 7.03(a)
(b) ..................................................... 7.03(a)
(c) ..................................................... 7.03(a)
(d) ..................................................... 7.03(b)
ss. 3.15(a) ..................................................... 7.05
..................................................... 10.18
(b) ..................................................... Not
Applicable
(c)(1) ..................................................... 1.02
(c)(2) ..................................................... 1.02
(c)(3) ..................................................... Not
Applicable
(d) ..................................................... Not
Applicable
(e) ..................................................... 1.02
ss. 3.15(a) ..................................................... 6.01
(b) ..................................................... 6.02
(c) ..................................................... 6.01
(d) ..................................................... 6.01
(e) ..................................................... 5.15
</TABLE>
- ---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
-i-
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- --------
<S> <C> <C>
ss. 3.16(a)(1)(A) .....................................................
5.02
5.12
(a)(1)(B) ..................................................... 5.13
(a)(2) ..................................................... Not
Applicable
(b) ..................................................... 5.08
(c) ..................................................... 1.05
ss. 3.17(a)(1) ..................................................... 5.03
(a)(2) ..................................................... 5.05
(b) ..................................................... 10.03
ss. 3.18(a) ..................................................... 1.07
</TABLE>
- ---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
Page
----
Parties.......................................................................1
Recitals of the Issuer .......................................................1
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions ...................................................2
Acquired Debt........................................................2
Act..................................................................3
Additional Amounts...................................................3
Affiliate............................................................3
Applicable Procedures................................................3
Asset Disposition....................................................3
Average Life.........................................................5
beneficial interest..................................................5
Board of Directors...................................................5
Board Resolution.....................................................5
Book-Entry Depositary................................................5
Business Day.........................................................5
Capital Lease Obligation.............................................5
Capital Stock........................................................5
Change of Control....................................................5
Clearstream..........................................................5
Commission...........................................................5
Common Depositary....................................................5
Common Stock.........................................................5
Consolidated Cash Flow Available for Fixed Charges...................5
Consolidated Income Tax Expense......................................6
Consolidated Interest Expense........................................6
Consolidated Net Income..............................................7
Consolidated Net Worth...............................................7
Consolidated Tangible Assets.........................................7
Corporate Trust Office...............................................8
corporation..........................................................8
Credit Facility......................................................8
Debt.................................................................8
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be part of the Indenture.
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Defaulted Interest....................................................9
Definitive Security...................................................9
Deposit Agreement.....................................................9
Depositary Interest...................................................9
Disqualified Stock....................................................9
Eligible Institution.................................................10
Euroclear............................................................10
Event of Default.....................................................10
Exchange Act.........................................................10
Exchange and Registration Rights Agreement...........................10
Exchange Offer.......................................................11
Exchange Offer Registration Statement................................11
Exchange Security....................................................11
Existing Stockholders................................................11
Expiration Date......................................................11
Global Security......................................................11
Government Securities................................................11
Guarantee............................................................11
Guarantors...........................................................12
Holder...............................................................12
Incremental Paid-in Capital..........................................12
Incur................................................................12
Indenture............................................................13
Indirect Participant.................................................13
Initial Purchasers...................................................13
Interest Payment Date................................................13
Interest Rate or Currency Protection Agreement.......................13
Investment...........................................................13
Issuer...............................................................15
"Issuer Request" or "Issuer Order"...................................15
Lien.................................................................15
Listing Failure......................................................15
Marketable Securities................................................15
Maturity.............................................................15
Net Available Proceeds...............................................15
Offer to Purchase....................................................16
Officers' Certificate................................................18
Opinion of Counsel...................................................19
Original Securities..................................................19
Outstanding..........................................................19
Parent Guarantor ....................................................20
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Participant..........................................................20
Paying Agent.........................................................20
Permitted Interest Rate or Currency Protection
Agreement............................................................20
Permitted Investment.................................................20
Permitted Liens......................................................21
Person...............................................................22
Predecessor Security.................................................22
Purchase Agreement...................................................22
Purchase Money Debt..................................................22
readily marketable cash equivalents..................................23
Receivables..........................................................23
Receivables Sale.....................................................23
Redemption Date......................................................23
Redemption Price.....................................................23
Registered Securities................................................23
Regular Record Date..................................................25
Regulation S.........................................................25
Regulation S Certificate.............................................25
Regulation S Global Security.........................................25
Regulation S Legend..................................................25
Regulation S Securities..............................................25
Related Person.......................................................25
Resale Registration Statement........................................25
Responsible Officer..................................................25
Restricted Global Security...........................................25
Restricted Period....................................................25
Restricted Securities................................................25
Restricted Securities Certificate....................................25
Restricted Securities Legend.........................................25
Restricted Subsidiary................................................25
RSLNA................................................................25
Rule 155A............................................................25
Rule 155A Securities.................................................26
Securities...........................................................26
Securities Act.......................................................26
Securities Act Legend................................................26
Securities Guarantee.................................................26
Security Register and Security Registrar.............................26
Significant Subsidiary...............................................26
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be part of the Indenture.
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Special Interest....................................................26
Special Record Date.................................................26
Stated Maturity.....................................................26
Step-Down Date......................................................27
Step-Up.............................................................27
Strategic Investor..................................................27
Subordinated Debt...................................................27
Subsidiary..........................................................28
Subsidiary Guarantor................................................28
Substitute Securities...............................................28
Successor Security..................................................28
Tax.................................................................29
Taxing Authority....................................................29
Telecommunications Assets...........................................29
Telecommunications Business.........................................29
Trustee.............................................................29
Trust Indenture Act.................................................29
Unrestricted Securities Certificate.................................30
Unrestricted Subsidiary.............................................30
Vice President......................................................30
Voting Stock........................................................31
Wholly Owned Subsidiary.............................................31
SECTION 1.02. Compliance Certificates and Opinions..........................31
SECTION 1.03. Form of Documents Delivered to Trustee........................32
SECTION 1.05. Acts of Holders; Record Dates.................................33
SECTION 1.05. Notices, Etc., to Trustee, Issuer and Guarantors..............35
SECTION 1.06. Notice to Holders; Waiver.....................................36
SECTION 1.07. Application of Trust Indenture Act............................37
SECTION 1.08. Effect of Headings and Table of Contents......................37
SECTION 1.09. Successors and Assigns........................................37
SECTION 1.10. Separability Clause...........................................37
SECTION 1.11. Benefits of Indenture.........................................37
SECTION 1.12. Governing Law.................................................37
SECTION 1.13. Legal Holidays................................................37
SECTION 1.15. Agent for Service; Submission to Jurisdiction; Waiver
of Immunities...............................................37
SECTION 1.15. Currency Indemnity............................................38
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be part of the Indenture.
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ARTICLE II
Security Forms
SECTION 2.01. Forms Generally...............................................39
SECTION 2.02. Form of Face of Security......................................51
SECTION 2.03. Form of Reverse of Security...................................56
SECTION 2.05. Form of Trustee's Certificate of Authentication ..............51
ARTICLE III
The Securities
SECTION 3.01. Title and Terms...............................................52
SECTION 3.02. Denominations.................................................53
SECTION 3.03. Execution, Authentication, Delivery and Dating................53
SECTION 3.05. Temporary Securities..........................................55
SECTION 3.05. Registration, Registration of Transfer and Exchange...........55
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities..............62
SECTION 3.07. Payment of Interest; Interest Rights Preserved................63
SECTION 3.08. Persons Deemed Owners.........................................65
SECTION 3.09. Cancelation ..................................................65
SECTION 3.10. Computation of Interest.......................................65
SECTION 3.11. ISIN Numbers and Common Code Numbers..........................65
SECTION 3.12. Additional Securities.........................................66
ARTICLE IV
Guarantee Of Securities
SECTION 5.01. Guarantee ..................................................66
SECTION 5.02. Obligations Unconditional.....................................68
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SECTION 5.03. Notice to Trustee.............................................69
SECTION 5.05. Release of Subsidiary Guarantor...............................69
ARTICLE V
Remedies
SECTION 5.01. Events of Default.............................................69
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment............72
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.....................................................73
SECTION 5.05. Trustee May File Proofs of Claim..............................75
SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities...75
SECTION 5.06. Application of Money Collected................................75
SECTION 5.07. Limitation on Suits...........................................75
SECTION 5.08. Unconditional Right of Holders To Receive Principal,
Premium and Interest........................................76
SECTION 5.09. Restoration of Rights and Remedies............................76
SECTION 5.10. Rights and Remedies Cumulative................................76
SECTION 5.11. Delay or Omission Not Waiver..................................77
SECTION 5.12. Control by Holders............................................77
SECTION 5.13. Waiver of Past Defaults.......................................77
SECTION 5.15. Undertaking for Costs.........................................78
SECTION 5.15. Waiver of Stay or Extension Laws..............................78
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities...........................79
SECTION 6.02. Notice of Defaults............................................80
SECTION 6.03. Certain Rights of Trustee.....................................80
SECTION 6.05. Not Responsible for Recitals or Issuance of Securities........82
SECTION 6.05. May Hold Securities...........................................82
SECTION 6.06. Money Held in Trust...........................................82
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be part of the Indenture.
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SECTION 6.07. Compensation and Reimbursement................................82
SECTION 6.08. Disqualification; Conflicting Interests.......................85
SECTION 6.09. Corporate Trustee Required; Eligibility.......................85
SECTION 6.10. Resignation and Removal; Appointment of Successor.............85
SECTION 6.11. Acceptance of Appointment by Successor........................86
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business...86
SECTION 6.13. Preferential Collection of Claims Against Issuer or
Guarantors..................................................87
SECTION 6.15. Appointment of Authenticating Agent...........................87
SECTION 6.15. Withholding Taxes.............................................89
ARTICLE VII
Holders' Lists and Reports by Trustee and Issuer
SECTION 7.01. Issuer to Furnish Trustee Names and Addresses of Holder.......90
SECTION 7.02. Preservation of Information; Communications to Holders........90
SECTION 7.03. Reports by Trustee............................................90
SECTION 7.05. Reports by Issuer and Parent Guarantor........................91
SECTION 7.05. Officers' Certificate with Respect to Change in Interest
Rates.......................................................91
ARTICLE VIII
Merger, Consolidation, Etc.
SECTION 8.01. Mergers, Consolidations and Certain Sales of Assets...........91
SECTION 8.02. Successor Substituted.........................................93
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be part of the Indenture.
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ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Holders............95
SECTION 9.02. Supplemental Indentures with Consent of Holders...............95
SECTION 9.03. Execution of Supplemental Indentures..........................96
SECTION 9.05. Effect of Supplemental Indentures.............................96
SECTION 9.05. Conformity with Trust Indenture Act...........................96
SECTION 9.06. Reference in Securities to Supplemental Indentures............96
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and Interest...................97
SECTION 10.02. Maintenance of Office or Agency..............................97
SECTION 10.03. Money for Security Payments To Be Held in Trust..............97
SECTION 10.05. Existence ..................................................99
SECTION 10.05. Maintenance of Properties....................................99
SECTION 10.06. Payment of Taxes and Other Claims...........................100
SECTION 10.07. Maintenance of Insurance....................................100
SECTION 10.08. Limitation on Consolidated Debt.............................100
SECTION 10.09. Additional Amounts..........................................105
SECTION 10.10. Limitation on Restricted Payments...........................106
SECTION 10.11. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.........................109
SECTION 10.12. Limitation on Transactions with Affiliates and Related
Persons...................................................110
SECTION 10.13. Limitation on Asset Dispositions............................111
SECTION 10.15. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries...................................113
SECTION 10.15. Limitation on Liens.........................................115
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SECTION 10.16. Limitation on Issuance of Guarantees of Debt by
Restricted Subsidiaries...................................115
SECTION 10.17. Change of Control...........................................115
SECTION 10.18. Provision of Financial Information..........................117
SECTION 10.19. Statement by Officers as to Default.........................117
SECTION 10.20. Waiver of Certain Covenants.................................118
SECTION 10.21. Paying Agent................................................118
ARTICLE XI
Redemption of Securities
SECTION 11.01. Right of Redemption.........................................118
SECTION 11.02. Applicability of Article....................................120
SECTION 11.03. Election To Redeem; Notice to Trustee.......................120
SECTION 11.05. Securities To Be Redeemed Pro Rata..........................120
SECTION 11.05. Notice of Redemption........................................121
SECTION 11.06. Deposit of Redemption Price.................................122
SECTION 11.07. Securities Payable on Redemption Date.......................122
SECTION 11.08. Securities Redeemed in Part.................................123
ARTICLE XII
Discharge of Indenture
SECTION 12.01. Termination of Issuer's Obligations.........................123
SECTION 12.02. Defeasance and Discharge of Indenture.......................125
SECTION 12.03. Defeasance of Certain Obligations...........................128
SECTION 12.05. Application of Trust Money..................................130
SECTION 12.05. Repayment to Issuer.........................................130
SECTION 12.06. Reinstatement...............................................130
SECTION 12.07. Insiders .................................................131
TESTIMONIUM.................................................................132
SIGNATURES AND SEALS........................................................132
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be part of the Indenture.
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ANNEX A -- Form of Regulation S Certificate
ANNEX B -- Form of Restricted Securities Certificate
ANNEX C -- Form of Unrestricted Securities Certificate
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Note: This table of contents shall not, for any purpose, be deemed to
be part of the Indenture.
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INDENTURE, dated as of February 22, 2000, between RSL
COMMUNICATIONS PLC, a United Kingdom corporation, as issuer (the "Issuer"),
having its principal office at Victoria House, London Square, Guilford, Surrey,
England GU1 1UJ, RSL COMMUNICATIONS, LTD., a Bermuda corporation, as guarantor
(the "Parent Guarantor"), having its principal office at Clarendon House, Church
Street, Hamilton HM CX, Bermuda, RSL COM U.S.A., INC., a Delaware corporation,
as a guarantor (the "Subsidiary Guarantor"), having its principal office at 760
Fifth Avenue, Suite 5300, New York, New York 10153, and THE CHASE MANHATTAN
BANK, a corporation duly organized and existing under the laws of the State of
New York, as Trustee (herein called the "Trustee").
RECITALS OF THE ISSUER
The Issuer has duly authorized the creation of its 12 7/8%
Senior Notes due 2010 (the "Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Issuer has duly authorized
the execution and delivery of this Indenture. The Issuer has initially
authorized the issuance of (U)100,000,000 aggregate principal amount of
Securities. As provided herein, the Issuer may authorize the issuance of
Additional Securities from time to time after the date hereof.
The Securities may consist of Original Securities and/or
Exchange Securities, each as defined herein. The Original Securities and the
Exchange Securities shall rank pari passu with one another and shall together
constitute a single class of securities.
All things necessary (i) to make the Securities, when executed
by the Issuer and authenticated and delivered hereunder and duly issued by the
Issuer, the valid obligations of the Issuer, (ii) to make the Securities
Guarantee, when executed and delivered by the Guarantors hereunder, the valid
obligation of the Guarantors, and (iii) to make this Indenture a valid agreement
of the Issuer and the Guarantors, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE 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
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proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles (whether or not such is indicated herein) and,
except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles
as are generally accepted as consistently applied by the Issuer or the
Guarantors, as applicable, at the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Acquired Debt" means, with respect to any specified Person,
(i) Debt of any other Person (x) existing at the time such Person merges with or
into or consolidates with or becomes a Subsidiary of such specified Person or
(y) that is assumed by the specified Person as part of the acquisition by the
specified Person from such other Person of property and assets that constitute
substantially all of a division or line of business of such other Person and
(ii) Debt secured by a Lien encumbering any asset acquired
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by such specified Person, which Debt was not Incurred in anticipation of, and
was outstanding prior to, such merger, consolidation or acquisition.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.05.
"Additional Amounts" has the meaning specified in Section
10.09.
"Additional Securities" means securities originally issued or
authorized hereof pursuant to Section 3.12.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of Euroclear and Clearstream, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Asset Disposition" by any Person means any transfer,
conveyance, sale, lease or other disposition by such Person or any of its
Subsidiaries (including a consolidation or merger or other sale of any such
Subsidiary with, into or to another Person in a transaction in which such
Subsidiary ceases to be a Subsidiary of the specified Person, but excluding (x)
a disposition by a Subsidiary of such Person to such Person or a Wholly Owned
Subsidiary of such Person or by such Person to a Wholly Owned Subsidiary of such
Person or by a Restricted Subsidiary to the Parent Guarantor or a Restricted
Subsidiary or by the Parent Guarantor to a Restricted Subsidiary and (y) any
transaction that is governed by the provisions of Article (VIII)) of (i) shares
of Capital Stock or other ownership interests of a Subsidiary of such Person;
(ii) substantially all of the assets of such Person or any of its Subsidiaries
representing a division or line of business (other than as part of a Permitted
Investment); or (iii) other assets or
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rights of such Person or any of its Subsidiaries outside of the ordinary course
of business, provided in the case of each of the preceding clauses (i), (ii) and
(iii) that the aggregate consideration for such transfer, conveyance, sale,
lease or other disposition is equal to $2.0 million or more in any 12-month
period.
"Average Life" means, at any date of determination with
respect to any Debt, 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 and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"beneficial interest" means an indirect beneficial interest in
a Global Security held through a corresponding Depositary Interest and shown on,
and transferred only through, records maintained in book-entry form by Euroclear
or Clearstream (with respect to the Participants) and their Participants.
"Board of Directors" means either the board of directors of
the Parent Guarantor, the Subsidiary Guarantor or the Issuer, as applicable, or
any duly authorized committee of that board duly authorized to act with respect
to this Indenture from time to time.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Parent Guarantor, the Subsidiary
Guarantor or the Issuer, as applicable, to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Depositary" means The Chase Manhattan Bank in its
capacity as book-entry depositary pursuant to the terms of the Deposit
Agreement, until a successor Book- Entry Depositary shall have become such
pursuant to the terms of the Deposit Agreement, and thereafter "Book-Entry
Depositary" shall mean such successor Book-Entry Depositary.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the Borough of
Manhattan, the City of New York, New York are authorized or obligated by law or
executive order to close.
"Capital Lease Obligation" of any Person means the obligation
to pay rent or other payment amounts under a
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lease of (or other Debt arrangements conveying the right to use) real or
personal property of such Person which is required to be classified and
accounted for as a capital lease or a liability on the face of a balance sheet
of such Person in accordance with generally accepted accounting principles (a
"Capital Lease"). The stated maturity of such obligation shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a penalty. The principal amount of such obligation shall be the capitalized
amount thereof that would appear on the face of a balance sheet of such Person
in accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person.
"Change of Control" has the meaning specified in Section
10.17.
"Clearstream" means Clearstream Banking, societe anonyme (or
any successor securities clearing agency).
"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 or
not performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Depositary" means The Chase Manhattan Bank, until a
successor Common Depositary shall have become such, and thereafter "Common
Depositary" shall mean such successor Common Depositary.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" for any
period means the Consolidated Net Income of the Parent Guarantor and its
Restricted Subsidiaries for such period increased by the sum of (i) Consolidated
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Interest Expense of the Parent Guarantor and its Restricted Subsidiaries for
such period, plus (ii) Consolidated Income Tax Expense of the Parent Guarantor
and its Restricted Subsidiaries for such period, plus (iii) the consolidated
depreciation and amortization expense included in the income statement of the
Parent Guarantor and its Restricted Subsidiaries for such period, plus (iv) any
noncash expense related to the issuance to employees of the Parent Guarantor or
any Restricted Subsidiary of the Parent Guarantor of options to purchase Capital
Stock of the Parent Guarantor or such Restricted Subsidiary, plus (v) any charge
related to any premium or penalty paid in connection with redeeming or retiring
any Debt prior to its stated maturity; provided, however, that there shall be
excluded therefrom the Consolidated Cash Flow Available for Fixed Charges (if
positive) of any Restricted Subsidiary of the Parent Guarantor (calculated
separately for such Restricted Subsidiary in the same manner as provided above
for the Parent Guarantor) that is subject to a restriction which prevents the
payment of dividends or the making of distributions to the Parent Guarantor or
another Restricted Subsidiary of the Parent Guarantor to the extent of such
restriction.
"Consolidated Income Tax Expense" for any period means the
aggregate amounts of the provisions for income taxes of the Parent Guarantor and
its Restricted Subsidiaries for such period calculated on a consolidated basis
in accordance with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the
interest expense included in a consolidated income statement (excluding interest
income) of the Parent Guarantor and its Restricted Subsidiaries for such period
in accordance with generally accepted accounting principles, including without
limitation or duplication (or, to the extent not so included, with the addition
of), (i) the amortization of Debt discounts; (ii) any payments or fees with
respect to letters of credit, bankers' acceptances or similar facilities; (iii)
fees with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements; (iv) Preferred Stock dividends
of the Parent Guarantor and its Restricted Subsidiaries (other than dividends
paid in shares of Preferred Stock that is not Disqualified Stock) declared and
paid or payable; (v) accrued Disqualified Stock dividends of the Parent
Guarantor and its Restricted Subsidiaries, whether or not declared or paid; (vi)
interest on Debt guaranteed by the Parent Guarantor and its Restricted
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Subsidiaries (but only to the extent such interest is actually paid by the
Parent Guarantor or a Restricted Subsidiary); and (vii) the portion of any
Capital Lease Obligation paid during such period that is allocable to interest
expense; excluding, however, any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offerings of the
Securities; all of the foregoing as determined on a consolidated basis (without
taking into account Unrestricted Subsidiaries) in conformity with generally
accepted accounting principles.
"Consolidated Net Income" for any period means the net income
(or loss) of the Parent Guarantor and its Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Parent Guarantor or a
Restricted Subsidiary of the Parent Guarantor in a pooling-of-interests
transaction for any period prior to the date of such transaction, (b) the net
income (or loss) of any Person that is not a Restricted Subsidiary of the Parent
Guarantor except to the extent of the amount of dividends or other distributions
actually paid to the Parent Guarantor or a Restricted Subsidiary of the Parent
Guarantor by such Person during such period, (c) gains or losses on Asset
Dispositions by the Parent Guarantor or its Restricted Subsidiaries, (d) all
extraordinary gains and extraordinary losses, determined in accordance with
generally accepted accounting principles, (e) the cumulative effect of changes
in accounting principles, (f) noncash gains or losses resulting from
fluctuations in currency exchange rates and (g) the tax effect of any of the
items described in clauses (a) through (f) above.
"Consolidated Net Worth" of any Person means the stockholders'
equity of such Person, determined on a consolidated basis in accordance with
generally accepted accounting principles, less amounts attributable to
Disqualified Stock of such Person.
"Consolidated Tangible Assets" of any Person means the total
amount of assets (less applicable reserves and other properly deductible items)
which under generally accepted accounting principles would be included on a
consolidated balance sheet of such Person and its Subsidiaries after deducting
therefrom all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each case under
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generally accepted accounting principles would be included on such consolidated
balance sheet.
"Corporate Trust Office" means the principal office of the
Trustee in the Borough of Manhattan, The City of New York, New York, at which at
any particular time its corporate trust business shall be administered, which at
the date hereof is located at 550 West 33rd Street, New York, NY 10001-2697.
"corporation" means a corporation, association, company,
limited liability company, joint-stock company or business trust.
"Credit Facility" means credit agreements, vendor financings
or other facilities or arrangements made available from time to time to the
Parent Guarantor and its Restricted Subsidiaries by banks, other financial
institutions and/or equipment manufacturers for the Incurrence of Debt,
including the private or public issuance of debt securities or the provision of
letters of credit and any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified or restated from time to time.
"Debt" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, the amount of (i) every obligation of such Person for
money borrowed, (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations Incurred
in connection with the acquisition of property, assets or businesses, (iii)
every reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith), (v) every Capital Lease Obligation of such Person,
(vi) all Receivables Sales of such Person, together with any obligation of such
Person to pay any discount, interest, fees, indemnities, penalties, recourse,
expenses or other amounts in connection therewith, (vii) all obligations to
redeem Disqualified Stock issued by such Person, (viii) every obligation under
Interest Rate and Currency Protection Agreements of such Person and (ix) every
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obligation of the type referred to in clauses (i) through (viii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed to the extent the same is Guaranteed by such Person.
The "amount" or "principal amount" of Debt at any time of determination as used
herein represented by (a) any Debt issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with generally accepted accounting
principles, (b) any Receivables Sale shall be the amount of the unrecovered
capital or principal investment of the purchaser (other than the Parent
Guarantor or a Wholly Owned Restricted Subsidiary of the Parent Guarantor)
thereof to the extent such Person is liable therefor, excluding amounts
representative of yield or interest earned on such investment or (c) any
Disqualified Stock shall be the maximum fixed redemption or repurchase price in
respect thereof.
"Defaulted Interest" has the meaning specified in Section
3.07.
"Definitive Security" means a certificated Security registered
in the name of the Holder thereof and issued in accordance with Section 3.05(d)
hereof.
"deltathree.com" means deltathree.com, Inc., a Delaware
corporation.
"Deposit Agreement" means the Note Deposit Agreement, dated as
of the date hereof, between the Issuer and The Chase Manhattan Bank, as
Book-Entry Depositary with respect to the Global Securities, as amended from
time to time in accordance with the terms thereof.
"Depositary Interest" means a certificated depositary interest
representing a 100% beneficial interest in a Global Security.
"Disqualified Stock" of any Person means any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of such Person, any
Subsidiary of such Person or the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities; provided, however, that
any Preferred Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders
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thereof the right to require such Person to repurchase or redeem such Preferred
Stock upon the occurrence of a Change of Control occurring prior to the final
maturity of the Securities shall not constitute Disqualified Stock if the change
of control provisions applicable to such Preferred Stock are no more favorable
to the holders of such Preferred Stock than the provisions applicable to the
Securities contained in Section 10.17 and such Preferred Stock specifically
provides that such Person will not repurchase or redeem any such stock pursuant
to such provisions prior to such Person's repurchase of such Securities as are
required to be repurchased pursuant to Section 10.17 (it being understood,
however, that any requirement to purchase or redeem preferred stock using
Capital Stock of the Parent Guarantor that does not constitute Disqualified
Stock shall not be limited under the foregoing definition).
"Dollar" and the symbol "$" each mean the lawful currency of
the United States of America.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" (or higher) according to
Standard & Poor's Ratings Service or Moody's Investors Service, Inc. at the time
as of which any investment or rollover therein is made.
"Euro" and the symbol "(U)" mean the lawful currency of the
participating Member States of the European Economic and Monetary Union.
"Euroclear" means the Euroclear Clearance System (or any
successor securities clearing agency).
"Event of Default" has the meaning set forth in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1935, as
amended (or any successor act), and the rules and regulations thereunder.
"Exchange and Registration Rights Agreement" means the
Exchange and Registration Rights Agreement, dated as of February 22, 2000 among
the Issuer, the Parent Guarantor and the Initial Purchasers, and the Holders
from time to time as provided therein, as such agreement may be amended from
time to time. Such term shall also refer to any other agreement having
substantially similar terms relating to Additional Securities.
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"Exchange Offer" has the meaning set forth in the form of the
Securities contained in Section 2.02.
"Exchange Offer Registration Statement" has the meaning set
forth in the form of the Securities contained in Section 2.02.
"Exchange Security" means any Security issued in exchange for
an Original Security or Original Securities pursuant to the Exchange Offer or
otherwise registered under the Securities Act and any Security with respect to
which the next preceding Predecessor Security of such Security was an Exchange
Security.
"Existing Stockholders" means (A) R.S. Lauder, Gaspar & Co.,
L.P., ("LGC"), (B) partners in LGC and Lauder Gaspar Ventures LLC and their
Affiliates, in each case as of the Closing Date, (C) Itzhak Fisher, Ronald S.
Lauder, Leonard Lauder, Jacob Z. Schuster, Nir Tarlovsky, Nesim N. Bildirici,
and Eugene Sekulow, (D) family members of any of the foregoing, (E) trusts, the
only beneficiaries of which are persons or entities described in clauses (A)
through (D) above and (F) partnerships which are controlled by the persons or
entities described in clauses (A) through (D) above.
"Expiration Date" has the meaning specified in the definition
of "Offer to Purchase".
"Global Security" means the security or securities issued
initially in bearer form that evidences all or part of the Securities and bears
the legend set forth in Section 2.02.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not less
than one year from the date of Investment therein.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the
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purchase of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed"
and "Guaranteeing" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Guarantors" means the Parent Guarantor and the Subsidiary
Guarantor.
"Holder" means a Person (i) who is the bearer of a Global
Security (which shall initially be the Book-Entry Depositary) or (ii) in whose
name a Definitive Security is registered in the Security Register.
"Incremental Paid-in Capital" means as of any date the
cumulative aggregate amount of the increase in paid-in capital (determined in
accordance with generally accepted accounting principles applied on a consistent
basis) since September 30, 1997, as determined based on the most recent
unaudited quarterly or audited annual financial statements of the Parent
Guarantor and its consolidated subsidiaries filed with the Commission, as
compared with the Parent Guarantor's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, enter into a Guarantee in respect of or otherwise become liable in
respect of such Debt or other obligation including by acquisition of
Subsidiaries or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on the
balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming Debt shall not
be deemed an Incurrence of such Debt and that neither the accrual of interest
nor the accretion of original issue discount shall be deemed an Incurrence of
Debt.
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"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Indirect Participant" means a Person who holds an interest
through a Participant in a Depositary Interest issued by the Book-Entry
Depositary to the Common Depositary.
"Initial Purchasers" means the parties named as such in the
Purchase Agreement.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate or Currency Protection Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but excluding any loan,
advance or extension of credit to an employee of the Parent Guarantor or any of
its Subsidiaries in the ordinary course of business and commercially reasonable
extensions of trade credit. Without limiting the foregoing, the term
"Investment" 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 the Parent Guarantor or any of its Restricted
Subsidiaries, of (or in) any Person (other than deltathree.com and its
Subsidiaries) that has ceased to be a Restricted Subsidiary. For purposes of the
definition of "Unrestricted Subsidiary" and Section 10.10, (i) "Investment"
shall include the fair market value of the assets (net of liabilities (other
than liabilities to the Parent Guarantor or any of its Restricted Subsidiaries))
of any Restricted Subsidiary at the time that such Restricted Subsidiary is
designated an Unrestricted Subsidiary,
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(ii) the fair market value of the assets (net of liabilities (other than
liabilities to the Parent Guarantor or any of its Restricted Subsidiaries)) of
any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary shall be considered a reduction in
outstanding Investments and (iii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer. Notwithstanding the foregoing, an acquisition of assets
(including, without limitation, Capital Stock or rights to acquire Capital
Stock) by the Parent Guarantor or any of its Restricted Subsidiaries shall be
deemed not to be an Investment to the extent that the consideration therefor
consists of Common Stock of the Parent Guarantor.
"Issuer" means the Person named as the "Issuer" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Issuer"
shall mean such successor Person.
"Issuer Request" or "Issuer Order" means a written request or
order signed in the name of the Issuer by the Issuer's Chairman of the Board,
its Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, Receivables Sale,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness), encumbrance, preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Listing Failure" has the meaning specified in Section 10.09.
"Marketable Securities" means: (i) Government Securities; (ii)
any certificate of deposit maturing not more than 270 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution; (iii)
commercial paper maturing not more than 270 days after the date of acquisition
issued by a corporation (other than an Affiliate of the Parent Guarantor) with a
rating, at the
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time as of which any investment therein is made, of "A-1" (or higher) according
to Standard & Poor's Ratings Service or "P-1" (or higher) according to Moody's
Investor Service, Inc.; (iv) any banker's acceptances or money market deposit
accounts issued or offered by an Eligible Institution; (v) time deposits,
certificates of deposit, bank promissory notes and bankers' acceptances maturing
not more than 180 days after the acquisition thereof and guaranteed or issued by
any of the ten largest banks (based on assets as of the immediately preceding
December 31), organized under the laws of any jurisdiction in which one of the
Restricted Subsidiaries does business or any foreign country recognized by the
United States and which are not under intervention, bankruptcy or similar
proceeding, not to exceed $10 million outstanding at any one term; and (vi) any
fund investing exclusively in investments of the types described in clauses (i)
through (iv) above.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or readily marketable cash equivalents received (including
amounts received by way of sale or discounting of any note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiror of Debt or other obligations relating
to such properties or assets) therefrom by such Person, net of (i) all legal,
title and recording tax expenses, commissions and other fees and expenses
Incurred and all Federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Asset Disposition, (ii) all
payments made by such Person or its Subsidiaries on any Debt which is secured by
such assets in accordance with the terms of any Lien upon or with respect to
such assets or which must by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Disposition or by applicable law, be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other
payments made to minority interest holders in Subsidiaries of such Person as a
result of such Asset Disposition and (iv) appropriate amounts to be provided by
such Person or any Subsidiary thereof, as the case may be, as a reserve in
accordance with generally accepted accounting principles against any liabilities
associated with such assets and retained by such Person or any Subsidiary
thereof, as the
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case may be, after such Asset Disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the board of directors of such Person, in its reasonable good
faith judgment; provided, however, that any reduction in such reserve within 12
months following the consummation of such Asset Disposition will be treated for
all purposes of the Indenture and the Securities as a new Asset Disposition at
the time of such reduction with Net Available Proceeds equal to the amount of
such reduction.
"Offer to Purchase" means a written offer (the "Offer") sent
by or on behalf of the Issuer by first class mail, postage prepaid, to each
Holder of Securities at his address appearing in the related Security Register
on the date of the Offer offering to purchase up to the principal amount of
Securities specified in such Offer at the purchase price specified in such Offer
(as determined pursuant to this Indenture). Unless otherwise required by
applicable law, the Offer shall specify an expiration date (the "Expiration
Date") of the Offer to Purchase which shall be, subject to any contrary
requirements of applicable law, not less than 30 days or more than 60 days after
the date of such Offer and a settlement date (the "Purchase Date") for purchase
of Securities within five Business Days after the Expiration Date. The Issuer
shall notify in writing the Trustee at least 15 Business Days (or such shorter
period as is acceptable to the Trustee) prior to the mailing of the Offer of the
Issuer's obligation to make an Offer to Purchase, and the Offer shall be mailed
by the Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer. The Offer shall contain information concerning the
business of the Parent Guarantor and its Subsidiaries which the Guarantors and
Issuer in good faith believe will enable such Holders to make an informed
decision with respect to the Offer to Purchase (which at a minimum will include
(i) the most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the documents required to be filed with the Trustee pursuant to
this Indenture (which requirements may be satisfied by delivery of such
documents together with the Offer), (ii) a description of material developments
in the Parent Guarantor's business subsequent to the date of the latest of such
financial statements referred to in clause (i) (including a description of the
events requiring the Issuer to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events
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requiring the Issuer to make the Offer to Purchase and (iv) any other
information required by applicable law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer to Purchase. The Offer shall also state:
(a) the Section of this Indenture pursuant to which the Offer
to Purchase is being made;
(b) the Expiration Date and the Purchase Date;
(c) the aggregate principal amount at maturity of the
Outstanding Securities offered to be purchased by the Issuer pursuant
to the Offer to Purchase (including, if less than 100%, the manner by
which such has been determined pursuant to the Section hereof requiring
the Offer to Purchase) (the "Purchase Amount");
(d) the purchase price to be paid by the Issuer for each
(U)1,000 aggregate principal amount at maturity of Securities accepted
for payment (as specified pursuant to the Indenture) (the "Purchase
Price");
(e) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that any portion
of a Security tendered must be tendered in an integral multiple of
(U)1,000 principal amount at maturity;
(f) the place or places where Securities are to be surrendered
for tender pursuant to the Offer to Purchase;
(g) that interest on any Security not tendered or tendered but
not purchased by the Issuer pursuant to the Offer to Purchase will
continue to accrue;
(h) that on the Purchase Date the Purchase Price will become
due and payable upon each Security being accepted for payment pursuant
to the Offer to Purchase and that interest thereon shall cease to
accrue on and after the Purchase Date;
(i) that each Holder electing to tender a Security pursuant to
the Offer to Purchase will be required to surrender such Security at
the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Security being, if the
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Issuer or the Trustee so requires, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Issuer and
the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(j) that Holders will be entitled to withdraw all or any
portion of Securities tendered if the Issuer (or their Paying Agent)
receives, not later than the close of business on the Expiration Date,
a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount at maturity of the Security
the Holder tendered, the certificate number of the Security the Holder
tendered and a statement that such Holder is withdrawing all or a
portion of his tender;
(k) that (a) if Securities in an aggregate principal amount at
maturity less than or equal to the Purchase Amount are duly tendered
and not withdrawn pursuant to the Offer to Purchase, the Issuer shall
purchase all such Securities and (b) if Securities in an aggregate
principal amount at maturity in excess of the Purchase Amount are
tendered and not withdrawn pursuant to the Offer to Purchase, the
Issuer shall purchase Securities having an aggregate principal amount
at maturity equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only Securities in
denominations of (U)1,000 or integral multiples thereof shall be
purchased); and
(l) that in the case of any Holder whose Security is purchased
only in part, the Issuer shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount at maturity
equal to and in exchange for the unpurchased portion of the Security so
tendered.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Parent Guarantor or the Issuer, as applicable, and
delivered to the Trustee and containing the
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statements provided for in Section 1.02. One of the officers signing an
Officers' Certificate given pursuant to Section 10.19 shall be the principal
executive, financial or accounting officer of the Parent Guarantor.
"Opinion of Counsel" means a written opinion of legal counsel,
who may be counsel for the Parent Guarantor or the Issuer, and who shall be
acceptable to the Trustee, and containing the statements provided for in Section
1.02.
"Original Securities" means all Securities that are subject to
an Exchange and Registration Rights Agreement, other than Exchange Securities
issued in exchange therefore.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancelation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Issuer) in trust or set aside and
segregated in trust by the Issuer (if the Issuer shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 3.06
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Issuer; and
(iv) Securities held by the Issuer, the Parent Guarantor or
any of their respective Affiliates for purposes of determining the
amount of Securities that remain Outstanding after a redemption
pursuant to Section 11.01(a) and the related provision in such
Securities;
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provided, however, that in determining whether the Holders of the requisite
principal amount at maturity of the Outstanding Securities have given any
request, demand, 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 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.
"Parent Guarantor" means the Person named as the "Parent
Guarantor" in the first paragraph of this instrument until a successor Personal
shall have become such Person pursuant to the applicable provisions of this
Indenture and thereafter "Parent Guarantor" shall mean such successor Person.
"Participant" means, with respect to the Euroclear or
Clearstream, a Person who has an account with Euroclear or Clearstream,
respectively.
"Paying Agent" means any Person authorized by the Issuer to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Issuer.
"Permitted Interest Rate or Currency Protection Agreement" of
any Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Investment" means (i) any Investment in the Parent
Guarantor or a Restricted Subsidiary, (ii) any Investment in any Person as a
result of which such Person becomes a Restricted Subsidiary of the Parent
Guarantor or upon the making of which such Person will be merged or consolidated
with or into or transfer all or substantially
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all of its assets to the Parent Guarantor or a Restricted Subsidiary, (iii) any
Investment in Marketable Securities, (iv) securities or other Investments
received in settlement of debts created in the ordinary course of business and
owing to the Parent Guarantor or any Restricted Subsidiary, or as a result of
foreclosure, perfection or enforcement of any Lien, or in satisfaction of
judgments, including in connection with any bankruptcy proceeding or other
reorganization of another Person, (v) securities or other Investments received
as consideration in sales or other dispositions of property or assets, including
Asset Dispositions made in compliance with Section 10.13 (vi) any Investment in
equity securities of a Person engaged in Telecommunications Business (which term
includes any Internet-based business) received in exchange for equity securities
of deltathree.com and (vii) other Investments at any time outstanding (measured
on the date each such Investment was made without giving effect to subsequent
changes in value) in an aggregate amount not to exceed 10.0% of the Parent
Guarantor's total consolidated assets.
"Permitted Liens" means (a) Liens for taxes, assessments,
governmental charges or claims which are not yet delinquent or which are being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor; (b) other Liens
incidental to the conduct of the Parent Guarantor's and its Restricted
Subsidiaries' business or the ownership of its property and assets not securing
any Debt, and which do not in the aggregate materially detract from the value of
the Parent Guarantor's and its Restricted Subsidiaries' property or assets when
taken as a whole, or materially impair the use of such assets and property in
the operation of its business; (c) Liens with respect to assets of a Subsidiary
granted by such Subsidiary to the Parent Guarantor to secure Debt owing to the
Parent Guarantor; (d) pledges and deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of statutory obligations; (e) deposits made to secure the
performance of tenders, bids, leases, and other obligations of like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (f) zoning restrictions, servitudes, easements,
rights-of-way, restrictions and other similar charges or encumbrances incurred
in the ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Parent Guarantor or
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its Restricted Subsidiaries; (g) Liens on Capital Stock of Restricted
Subsidiaries securing obligations not exceeding $75 million at any time
outstanding of the Parent Guarantor or any Restricted Subsidiary to repurchase
or redeem shares of Capital Stock of such Restricted Subsidiary held by Persons
who are not Affiliates or Related Persons of the Parent Guarantor; (h) Liens
arising out of judgments or awards against the Parent Guarantor or any
Restricted Subsidiary with respect to which the Parent Guarantor or such
Restricted Subsidiary is prosecuting an appeal or proceeding for review and the
Parent Guarantor or such Restricted Subsidiary is maintaining adequate reserves
in accordance with generally accepted accounting principles; and (i) any
interest or title of a lessor in the property subject to any lease other than a
Capital Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof or any other entity.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means the Purchase Agreement, dated as of
February 15, 2000, pursuant to which (U)100,000,000 aggregate principal amount
of Securities have been sold to the Initial Purchasers and any other
substantially similar purchase agreement providing for the sale of Additional
Securities.
"Purchase Money Debt" means Debt (including Acquired Debt and
Debt represented by Capital Lease Obligations, mortgage financings and purchase
money obligations) Incurred for the purpose of financing all or any part of the
cost of construction, acquisition or improvement by the Parent Guarantor or any
Restricted Subsidiary of the Parent Guarantor of any Telecommunications Assets
of the Parent Guarantor or any Restricted Subsidiary of the Parent Guarantor,
and including any related notes, Guarantees, collateral documents, instruments
and agreements executed in connection therewith, as the same may be amended,
supplemented, modified or restated from time to time.
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"readily marketable cash equivalents" means (i) marketable
securities issued or directly and unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Rating Service or Moody's Investors Service, Inc.; (iii) commercial paper
maturing no more than 180 days from the date of acquisition thereof and, at the
time of acquisition, having a rating of at least A-1 from Standard & Poor's
Ratings Service or at least P-1 from Moody's Investors Service, Inc.; and (iv)
certificates of deposit or bankers' acceptance maturing within one year from the
date of acquisition thereof issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia having unimpaired capital and surplus of not less than $100,000,000.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money.
"Receivables Sale" of any Person means any sale of Receivables
of such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"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 it is to be redeemed pursuant to this
Indenture.
"Registered Securities" means Exchange Securities and all
other Securities sold or otherwise disposed of pursuant to an effective
registration statement under the Securities Act, together with any respective
Successor Securities.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the February 15 and August
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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 (or
any successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially
in the form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in
Section 2.01.
"Regulation S Legend" means a legend substantially in the form
of the legend required in the form of Security set forth in Section 2.02 to be
placed upon each Regulation S Security.
"Regulation S Securities" means all Securities sold pursuant
to Regulation S, which are required pursuant to Section 3.05(c) to bear a
Regulation S Legend. Such term includes the Regulation S Global Security.
"Related Person" of any Person means any other Person directly
or indirectly owning (a) 5% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a corporation, 5% or more of the
outstanding equity interest in such Person) or (b) 5% or more of the combined
outstanding voting power of the Voting Stock of such Person, except that, for
purposes of Section 10.12, Related Person means any other Person directly or
indirectly owning 10% or more of the combined outstanding voting power of the
Voting Stock of such Person (or, in the case of a Person that is not a
corporation, 10% or more of the outstanding equity interest in such Person).
"Resale Registration Statement" has the meaning set forth in
the Form of the Securities contained in Section 2.02.
"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, 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
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by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Global Security" has the meaning specified in
Section 2.01.
"Restricted Period" means the period of 51 consecutive days
beginning on and including the later of (i) the day on which Securities are
first offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S and (ii) the original issuance date of the Securities.
"Restricted Securities" means all Securities required pursuant
to Section 3.05(c) to bear any Restricted Securities Legend. Such term includes
any Restricted Global Security.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Annex B.
"Restricted Securities Legend" means, collectively, the
legends substantially in the forms of the legends required in the form of
Security set forth in Section 2.02 to be placed upon each Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Parent
Guarantor other than an Unrestricted Subsidiary.
"RSL Australia" means RSL COM Australia Holdings Pty. Limited
or a newly-formed parent or subsidiary thereof organized under the laws of
Australia.
"RSL Spain" means RSL Communications Spain S.A. or a
newly-formed parent or subsidiary thereof organized under the laws of Spain.
"RSLNA" has the meaning specified in Section 1.15.
"Rule 155A" means Rule 155A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 155A Securities" means all Securities sold pursuant to
Rule 155A, which are required pursuant to Section 3.05(c) to bear a Restricted
Securities Legend. Such term includes the Restricted Global Security.
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"Securities" has the meaning specified in the first paragraph
of the recitals to this instrument.
"Securities Act" means the Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend
or a Regulation S Legend.
"Securities Guarantee" means the Securities Guarantee issued
by the Guarantors in accordance with Article IV hereunder.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.05.
"Significant Subsidiary" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Parent Guarantor, accounted for more than 10% of the
consolidated revenues of the Parent Guarantor 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 the Parent Guarantor and its Restricted Subsidiaries, all
as set forth on the most recently available consolidated financial statements of
the Parent Guarantor for such fiscal year.
"Special Interest" has the meaning set forth in the form of
Security contained in Section 2.02. Unless the context otherwise requires,
references herein to "interest" on the Securities shall include Special
Interest.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Step-Down Date" has the meaning set forth in the form of the
Security contained in Section 2.02.
"Step-Up" has the meaning set forth in the form of the
Security contained in Section 2.02.
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"Strategic Investor" means a corporation, partnership or other
entity engaged in the Telecommunications Business that has, or 80% or more of
the Voting Stock of which is owned by a Person that has, an equity market
capitalization or paid in capital, at the time of any Investment by such
corporation, partnership or other entity in a Restricted Subsidiary pursuant to
clause (iv)(2) of Section 10.15, in excess of $100 million.
"Subordinated Debt" means Debt of the Parent Guarantor or any
Restricted Subsidiary as to which the payment of principal of (and premium, if
any) and interest and other payment obligations in respect of such Debt shall be
subordinate to the prior payment in full of the Securities to at least the
following extent: (i) no payments of principal of (or premium, if any) or
interest on or otherwise due in respect of such Debt may be permitted for so
long as any default in the payment of principal (or premium, if any) or interest
on the Securities exists; (ii) in the event that any other default that with the
passing of time or the giving of notice, or both, would constitute an event of
default exists with respect to the Securities, upon written notice by 25% or
more in principal amount at maturity of the Securities to the Trustee, the
Trustee shall have the right to give notice to the Parent Guarantor or such
Restricted Subsidiary and the holders of such Debt (or trustees or agents
therefor) of a payment blockage, and thereafter no payments of principal of (or
premium, if any) or interest on or otherwise due in respect of such Debt may be
made for a period of 179 days from the date of such notice; and (iii) such Debt
may not (x) provide for payments of principal of such Debt at the stated
maturity thereof or by way of a sinking fund applicable thereto or by way of any
mandatory redemption, defeasance, retirement or repurchase thereof by the Parent
Guarantor or such Restricted Subsidiary (including any redemption, retirement or
repurchase which is contingent upon events or circumstances, but excluding any
retirement required by virtue of acceleration of such Debt upon an event of
default thereunder), in each case prior to the final Stated Maturity of the
Securities or (y) permit redemption or other retirement (including pursuant to
an offer to purchase made by the Parent Guarantor or such Restricted Subsidiary)
of such other Debt at the option of the holder thereof prior to the final Stated
Maturity of the Securities, other than a redemption or other retirement at the
option of the holder of such Debt (including pursuant to an offer to purchase
made by the Parent Guarantor or such Restricted Subsidiary) which is conditioned
upon a change of control of the Parent Guarantor pursuant to provisions
substantially similar to
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those described under Section 10.17 (and which shall provide that such Debt will
not be repurchased pursuant to such provisions prior to the Parent Guarantor's
or such Restricted Subsidiary's repurchase of the Securities required to be
repurchased pursuant to the provisions
described under Section 10.17).
"Subsidiary" of any Person means (i) a corporation more than
50% of the combined voting power of the outstanding Voting Stock, of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and one
or more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs
thereof. An 80% or more owned Subsidiary of the Parent Guarantor is (i) a
corporation 80% or more of the combined voting power of the outstanding Voting
Stock, and more than 80% of the Capital Stock or other ownership interests, of
which is owned, directly or indirectly, by the Parent Guarantor or by one or
more other Subsidiaries of the Parent Guarantor or by the Parent Guarantor and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which the Parent Guarantor, or one or more other Subsidiaries of
the Parent Guarantor or the Parent Guarantor and one or more other Subsidiaries
of the Parent Guarantor, directly or indirectly, has at least an 80% ownership
interest and power to direct the policies, management and affairs thereof.
"Subsidiary Guarantor" means the Person named as the
"Subsidiary Guarantor" in the first paragraph of this instrument until a
successor Person shall have become such Person pursuant to the applicable
provisions of this Indenture and thereafter "Subsidiary Guarantor" shall mean
such successor Person, in each case, until the Subsidiary Guarantor shall have
been released and discharged from its obligations under the Securities Guarantee
pursuant to Section 5.05 and thereafter references to the "Subsidiary Guarantor"
shall have no further force or effect.
"Substitute Securities" has the meaning specified in Section
3.01.
"Successor Security" of any particular Security means every
Security issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
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definition, any Security authenticated and delivered under Section 3.06 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Tax" means any tax, duty, levy, impost, assessment or other
governmental charge (including penalties, interest and any other liabilities
related thereto).
"Taxing Authority" means any government or political
subdivision or territory or possession of any government or any authority or
agency therein or thereof having power to tax.
"Telecommunications Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
or intended for use in connection with a Telecommunications Business, including
a majority of the Voting Stock of a Person engaged in the Telecommunications
Business and a minority equity interest in a Person engaged in the
Telecommunications Business (which term includes any internet-based business)
received in exchange for equity securities of deltathree.com.
"Telecommunications Business" means the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunications Business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in (i) or (ii) above; provided that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the Board of Directors of the Parent Guarantor.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by
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any such amendment, the Trust Indenture Act of 1939 as so amended.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Annex C.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Parent Guarantor that at the time of determination shall be designated an
Unrestricted Subsidiary of the Parent Guarantor by the Board of Directors in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Restricted Subsidiary (including any newly
acquired or newly formed Subsidiary of the Parent Guarantor) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Parent Guarantor or any
Restricted Subsidiary; provided that (A) any Guarantee by the Parent Guarantor
or any Restricted Subsidiary of any Debt of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Debt and an "Investment" by the Parent
Guarantor or such Restricted Subsidiary (or both, if applicable) at the time of
such designation, in each case, to the extent such Debt is so Guaranteed by the
Guarantors or such Restricted Subsidiary; (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, such designation would be permitted under Section
10.10 (provided that this clause II shall not apply in the case of the
designation of deltathree.com and its Subsidiaries as Unrestricted Subsidiaries)
and (C) if applicable, the Incurrence of Debt and the Investment referred to in
clause (A) of this proviso would be permitted under Sections 10.08 and 10.10.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that immediately after giving effect to such
designation (x) the Parent Guarantor could Incur $1.00 of additional Debt under
the first paragraph of Section 10.08 and (y) no Default or Event of Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"Vice President", when used with respect to the Issuer, the
Parent Guarantor or the Trustee, means any vice president, whether or not
designated by a number or a word or words added before or after the title "vice
president".
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"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Voting Stock or other ownership interests
(other than directors' qualifying shares) of which shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer and Guarantors shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture. Each such certificate or opinion shall
be given in the form of an Officers' Certificate, if to be given by an officer
of the Issuer or the Guarantors, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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SECTION 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate of an officer of the Issuer or either
Guarantor may be based, insofar as it relates to legal matters, upon an opinion
of counsel submitted therewith, unless such officer knows, or in the exercise of
reasonable care should know, that the opinion with respect to the matters upon
which his certificate is based is erroneous. Any opinion of counsel may be
based, insofar as it relates to factual matters, upon a certificate of an
officer or officers of the Issuer or either Guarantor submitted therewith
stating the information on which counsel is relying, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate with
respect to such matters is erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.05. Acts of Holders; Record Dates. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Issuer or the Guarantors. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Trustee
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and the Issuer and Parent Guarantor, if made in the manner provided in this
Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee, the
Issuer or the Parent Guarantor in reliance thereon, whether or not notation of
such action is made upon such Security.
The Issuer may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities; provided that the Issuer may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If not set by the Issuer prior to the first solicitation of a
Holder made by any Person in respect of any such matter referred to in the
foregoing sentence, the record date for any such matter shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 7.01) prior to such first solicitation. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to take
the relevant action,
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whether or not such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount at
maturity of Outstanding Securities on such record date. Nothing in this
paragraph shall be construed to prevent the Issuer from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount at maturity of Outstanding Securities on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Issuer, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Trustee in writing and to each Holder of Securities in the
manner set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.02, (iii) any request to institute
proceedings referred to in Section 5.07(2) or (iv) any direction referred to in
Section 5.12. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount at maturity of
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect), and nothing in this paragraph shall
be construed to render ineffective any action taken by Holders of the requisite
principal amount at maturity of Outstanding Securities on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Issuer's expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration
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Date to be given to the Issuer in writing and to each Holder of Securities in
the manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section,
the party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
1.06, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.05. Notices, Etc., to Trustee, Issuer and
Guarantors. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Issuer or the either
Guarantor shall be sufficient for every purpose hereunder if in writing
and delivered in person or by first class mail, commercial courier
service or telecopies communication to a Responsible Officer of the
Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or as may otherwise be expressly provided in any
solicitation of any Act of the Holders, or
(2) the Issuer or either Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Issuer or either Guarantor as
applicable,
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addressed to it, if prior to receipt by the Trustee of written notice
pursuant to this Section 1.05 of a change of address, at the address of
its principal office specified in the first paragraph of this
instrument, or, if after receipt by the Trustee of written notice
pursuant to this Section 1.05 of a change of address, at such other
address as may be previously furnished in writing to the Trustee by the
Issuer or either Guarantor, as applicable.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. 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 1.07. Application of Trust Indenture Act. The Trust
Indenture Act shall apply as a matter of contract to this Indenture for purposes
of interpretation, construction and defining the rights and obligations
hereunder. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply
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to this Indenture as so modified or to be excluded, as the case may be.
SECTION 1.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and
agreements in this Indenture by the Issuer and the Guarantors shall bind their
respective successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause. 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 1.11. Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders of Securities,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 1.12. Governing Law. This Indenture, the Securities
and the Securities Guarantee shall be governed by and construed in accordance
with the laws of the State of New York.
SECTION 1.13. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Purchase Date or Stated Maturity of any Security
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and premium,
if any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, Purchase Date or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Purchase Date or Stated Maturity, as the case may be.
SECTION 1.15. Agent for Service; Submission to Jurisdiction;
Waiver of Immunities. By the execution and delivery of this Indenture, each of
the Issuer, the Parent Guarantor and the Subsidiary Guarantor (i) represents
that it has designated and appointed RSL Communications N. America, Inc.
("RSLNA"), as its authorized agent upon
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which process may be served in any suit, action or proceeding arising out of or
relating to the Securities, the Securities Guarantee or this Indenture that may
be instituted in any Federal or state court in the State of New York, Borough of
Manhattan, or brought under Federal or state securities laws or brought by the
Trustee (whether in its individual capacity or in its capacity as Trustee
hereunder), and that RSLNA has accepted such designation, (ii) submits to the
non-exclusive jurisdiction of any such court in any such suit, action or
proceeding, (iii) agrees that service of process upon RSLNA and written notice
of said service to the Issuer or the Parent Guarantor, as applicable, (mailed or
delivered to its President at its principal office as specified in Section 1.05)
shall be deemed in every respect effective service of process upon it in any
such suit or proceeding, and (iv) 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 RSLNA in full force
and effect so long as any of the Securities shall be Outstanding.
To the extent that the Issuer or either Guarantor 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, each of the Issuer, Parent Guarantor and the Subsidiary
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Indenture, the Securities Guarantee and the Securities, to the extent
permitted by law.
SECTION 1.15. Currency Indemnity. The Euro is the sole
currency of account and payment for all sums payable by the Issuer or the
Guarantors under or in connection with the Securities, including damages. Any
amount received or recovered in a currency other than the Euro (whether as a
result of, or the enforcement of, a judgment or order of a court of any
jurisdiction, in the winding-up or dissolution of the Issuer or the Guarantors
or otherwise) by any Holder of a Security in respect of any sum expressed to be
due to it from the Issuer or the Guarantors shall only constitute a discharge to
the Issuer or the Guarantors, as applicable, to the extent of the Euro amount
which the recipient is able to purchase with the amount so received or recovered
in that other currency on the date of that receipt or recovery (or, if it is not
practicable to make that purchase on that date, on the first date on which it is
practicable to do so). If the Euro amount received is
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less than the Euro amount expressed to be due to the recipient under any
Security, the Issuer or the Guarantors, as applicable, shall indemnify it
against any loss sustained by it as a result. In any event, the Issuer or
Guarantors shall indemnify the recipient against the cost of making any such
purchase. For the purposes of this Section, it will be sufficient for the Holder
of a Security to certify in a satisfactory manner (indicating the sources of
information used) that it would have suffered a loss had an actual purchase of
the Euro been made with the amount so received in that other currency on the
date of receipt or recovery (or, if a purchase of the Euro on such date had not
been practicable, on the first date on which it would have been practicable, it
being required that the need for a change of date be certified in the manner
mentioned above). These indemnities constitute a separate and independent
obligation from the Issuer's and the Guarantors' other obligations, shall give
rise to a separate and independent cause of action, shall apply irrespective of
any indulgence granted by any Holder of a Security and shall continue in full
force and effect despite any other judgment, order, claim or proof for a
liquidated amount in respect of any sum due under any Security.
ARTICLE II
Security Forms
SECTION 2.01. Forms Generally. The Securities and the
Trustee's certificates of authentication thereof shall be in substantially the
forms set forth in this Article, with such appropriate legends, insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
Upon their original issuance, Rule 155A Securities shall be
issued in the form of a Global Security in bearer form without interest coupons,
which shall be deposited on behalf of the Initial Purchasers with the Book-Entry
Depositary at its New York corporate trust office, duly executed by the Issuer
and authenticated by the Trustee as
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hereinafter provided. Such Global Security, together with its Successor
Securities which are Global Securities other than the Regulation S Global
Security, are collectively herein called the "Restricted Global Security". Upon
their original issuance, Regulation S Securities shall be issued in the form of
a Global Security in bearer form without interest coupons, which shall be
deposited on behalf of the Initial Purchasers with the Book-Entry Depositary at
its New York corporate trust office, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided. Such Global Security,
together with its Successor Securities which are Global Securities other than
the Restricted Global Security, are collectively herein called the "Regulation S
Global Security".
Upon receipt of the Restricted Global Security and the
Regulation S Global Security authenticated and delivered by the Trustee, the
Book-Entry Depositary shall issue to the Common Depositary a Depositary Interest
in each such Global Security, registered in the name of the Common Depositary.
Ownership of beneficial interests shall be limited to Participants and Indirect
Participants. Upon the issuance of the Depositary Interest in such Global
Security to the Common Depositary, Euroclear and Clearstream shall credit, on
their respective internal book-entry registration and transfer systems, their
respective Participant's accounts with interests owned by such Participants.
Neither the Common Depositary, Euroclear, Clearstream nor
their Participants shall have any rights either under this Indenture or under
any Global Security with respect to such Global Security held on their behalf by
the Book-Entry Depositary, and the Book-Entry Depositary may be treated by the
Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute
owner of such Global Security for the purpose of receiving payment of or on
account of the principal of (premium, if any) and, subject to the provisions of
this Indenture, interest on the Global Security and for all other purposes.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the
Trustee or any agent of the Issuer or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Book-Entry
Depositary or impair, as between the Book-Entry Depositary, the Common
Depositary, Euroclear and Clearstream, and their Participants, the operation of
customary practices of Euroclear and Clearstream governing the exercise of the
rights of an owner of a beneficial interest in any Global Security.
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The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
SECTION 2.02. Form of Face of Security. [If a Global Security
issued in bearer form, then insert -- THIS SECURITY IS A GLOBAL SECURITY WITHIN
THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS HELD BY THE BOOK-
ENTRY DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF. THIS SECURITY IS NOT
EXCHANGEABLE IN WHOLE OR IN PART OR TRANSFERABLE IN WHOLE OR IN PART EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If Restricted Securities, then insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 155A
UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
155A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
RULE 905 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 155 THEREUNDER (IF
AVAILABLE), (5) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (IF AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH ABOVE.]
[If a Regulation S Security, then insert -- THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THIS SECURITY IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE.]
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12 7/8% SENIOR NOTES DUE 2010
[IF RESTRICTED GLOBAL SECURITY - Common Code No. 010813656;
ISIN NO. XS0108136565]
[IF REGULATION S GLOBAL SECURITY - Common Code No. 010813603;
ISIN NO. - XS0108136036]
No. __________ (U)_______________
RSL Communications PLC, a United Kingdom corporation (herein
called the "Issuer", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to [If this Security is a Global Security issued in bearer form, then insert:
the bearer hereof] [If this Security is not a Global Security issued in bearer
form, then insert: _____________, or registered assigns], the principal sum of
______________ EUROS [if this Security is a Global Security, then insert: (which
principal amount may from time to time be increased or decreased to such other
principal amounts by adjustments made on the records of the Trustee hereinafter
referred to in accordance with the Indenture)] on March 1, 2010, and to pay
interest thereon from February 22, 2000 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
March 1 and September 1, in each year, at the rate of 12.875% per annum, until
the principal hereof is paid or made available for payment; [If Original
Securities, then insert: provided, however, that if the Issuer has not filed a
registration statement (an "Exchange Offer Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), registering a
security substantially identical to this Security (except that such Security
will not contain terms with respect to the Special Interest payments described
below or transfer restrictions) pursuant to an exchange offer (the "Exchange
Offer") (or, in lieu thereof, a registration statement registering this Security
for resale (a "Resale Registration Statement")), and (i) the Exchange Offer has
not been completed by 210 days after the date of original issuance of this
Security or its predecessors (if an Exchange Offer is then required to be made
pursuant to the Exchange and Registration Rights Agreement (an "Exchange and
Registration Rights Agreement"), by and between the Issuer, the Parent
Guarantor, as defined in the Indenture, the Subsidiary Guarantor, as defined in
the Indenture, the Purchasers (as defined therein) and the Holders from time to
time of the Securities or (ii) any Resale Registration Statement required to be
filed by the Exchange and Registration Rights Agreement is filed and declared
effective but shall thereafter cease to be
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effective (except as specifically permitted therein) without being succeeded
promptly by an additional registration statement filed and declared effective
upon the terms and conditions set forth in the Exchange and Registration Rights
Agreement (each such event referred to in clauses (i) and (ii), a "Registration
Default"), then interest will accrue (in addition to the stated interest on the
Securities) (the "Step-Up") at a rate of 0.5% per annum, determined daily, on
the principal amount of the Securities, from the period from and including the
date of occurrence of the Registration Default to but excluding such date (the
"Step-Down Date") as no Registration Default is in effect (commencing on which
date such interest rate will be restored to its initial rate). Interest accruing
as a result of the Step-Up is referred to herein as "Special Interest." Accrued
Special Interest, if any, shall be paid semi-annually on March 1 and September 1
in each year; and the amount of accrued Special Interest shall be determined on
the basis of the number of days actually elapsed. Any accrued and unpaid
interest (including Special Interest) on this Security upon the issuance of an
Exchange Security (as defined in the Indenture) in exchange for this Security
shall cease to be payable to the Holder hereof but such accrued and unpaid
interest (including Special Interest) shall be payable on the next Interest
Payment Date for such Exchange Security to the Holder thereof [if not a Global
Security in bearer form, insert: on the related Regular Record Date].] The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to [If this Security
is a Global Security issued in bearer form, then insert: the bearer hereof on
the Interest Payment Date] [If this Security is not a Global Security issued in
bearer form, then insert: the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the February 15 or August 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date]. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Interest
Payment Date and may either be paid to [If this Security is a Global Security
issued in bearer form, then insert: the bearer hereof on the Special Payment
Date] [If this Security is not a Global Security issued in bearer form, then
insert: the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date,] or be paid
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at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Under certain circumstances described in the Indenture, the
Issuer (or the Guarantors) also shall pay Additional Amounts to the Holders of
Securities equal to an amount that the Issuer or Guarantors, as the case may be,
may be required to withhold or deduct for or on account of Taxes imposed by a
Taxing Authority within the United Kingdom or Bermuda, as the case may be, from
any payment made under or with respect to the Securities or the Securities
Guarantee.
In the case of a default in payment of principal of and
premium, if any, on this Security upon acceleration or redemption, interest
shall be payable pursuant to the preceding paragraph on such overdue principal
and premium, if any, such interest shall be payable on demand and, if not so
paid on demand, such interest shall itself bear interest at the rate of 15.875%
per annum (to the extent that the payment of such interest shall be legally
enforceable), and shall accrue from the date of such demand for payment to the
date payment of such interest has been made or duly provided for, and such
interest on unpaid interest shall also be payable on demand.
[If this Security is a Global Security issued in bearer form,
then insert: The Issuer will pay interest, if any, on this Security to the
bearer of this Security. The Holder of this Security must surrender this
Security to the Trustee to collect principal payments.] Payment of the principal
of (and premium, if any) and interest on this Security will be made at the
corporate trust office of the Trustee and at the office or agency of the Issuer
maintained for that purpose in the Borough of Manhattan, The City of New York,
New York, and at any other office or agency maintained by the Issuer for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address [If
this Security is a Global Security in bearer form, then insert: is specified by
the bearer hereof] [If this Security is a Definitive Security, then insert:
shall appear in the Security Register]. Payments of principal,
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interest and premium, if any, will be made by the Issuer in Euros.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated:
The Common Seal of
RSL COMMUNICATIONS PLC
was hereto affixed in
the presence of:
[SEAL]
RSL COMMUNICATIONS PLC,
by
----------------------
Name:
Title:
by
----------------------
Name:
Title:
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SECTION 2.03. Form of Reverse of Security. This Security is
one of a duly authorized issue of Securities of the Issuer designated as its
12 7/8% Senior Notes due 2010 (the "Securities") issued under an Indenture,
dated as of February 22, 2000 (herein called the "Indenture"), between the
Issuer, RSL Communications, Ltd., as a Parent Guarantor (the "Parent Guarantor",
which term includes any successor Person under the Indenture) RSL COM U.S.A.,
Inc., as a guarantor (the "Subsidiary Guarantor", which term includes any
successor Person under the Indenture, and together with the Parent Guarantor,
the "Guarantors") and The Chase Manhattan Bank, as trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture).
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Guarantors, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Securities are subject to redemption upon not less than 30
nor more than 60 days' notice by mail to each Holder of Securities to be
redeemed at such Holder's address appearing in the Security Register, in amounts
of (U)1,000 or an integral multiple of (U)1,000, at any time on or after March
1, 2005 and prior to maturity, as a whole or in part, at the election of the
Issuer, at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued interest to but excluding the Redemption Date
(subject to the right of Holders [If this Security is not a Global Security
issued in bearer form, insert: on the relevant Regular Record 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 beginning March 1, of each of the
years indicated below:
Redemption
Year Price
---- -----
2005 106.538%
2006 105.292%
2007 102.156%
2008 and
thereafter 100.000%
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such
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redemption with accrued interest to but excluding the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities [If this Security is not a Global Security issued in
bearer form, insert:, of record at the close of business on the relevant Record
Dates referred to on the face hereof,] all as provided in the Indenture.
In addition, at any time prior to March 1, 2003, in the event
that the Guarantors receive net cash proceeds from the public or private sale of
its Common Stock (other than Disqualified Stock), the Issuer (to the extent it
receives such proceeds and has not used such proceeds, directly or indirectly,
to redeem or repurchase other securities pursuant to optional redemption
provisions) may, at its option, apply an amount equal to any such net cash
proceeds or any portion thereof to redeem, from time to time, Securities in a
principal amount of up to an aggregate amount equal to 33 1/3% of the aggregate
principal amount at maturity of the Securities; provided, however, that
Securities in an amount equal to at least 66 2/3% of the aggregate principal
amount at maturity of the Securities remain Outstanding after each redemption.
Each redemption must occur on a Redemption Date within 180 days of the related
sale and upon not less than 30 nor more than 60 days' notice by mail to each
Holder of Securities to be redeemed at such Holder's address appearing in the
Security Register, in amounts of (U)1,000 or an integral multiple of (U)1,000 at
a Redemption Price of 112.875% of the principal amount of the Securities plus
accrued interest to but excluding the Redemption Date.
Furthermore, in the event that (i) the Guarantors or the
Issuer has become or would become obligated to pay any Additional Amounts as a
result of (x) changes affecting withholding tax laws or (y) a Listing Failure,
provided that the Issuer has used reasonable best efforts to list and maintain a
listing of the Securities on a "recognized stock exchange" (within the meaning
of Section 851 of the U.K. Income and Corporation Taxes Act 1988) (as provided
for in Section 10.09), and (ii) the Guarantors and the Issuer are unable to
avoid the requirement to pay such Additional Amounts by taking reasonable
measures available to them (including, without limitation, the Guarantors making
payments directly to holders under the Securities Guarantee, unless such payment
is likely to result in adverse consequences to the Issuer or the Guarantors),
then the Issuer may redeem all, but not less than all, of the Securities at any
time at 100% of the principal amount
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thereof on the Redemption Date, together with accrued interest thereon, if any,
to but excluding the Redemption Date. Prior to the publication of the notice of
redemption in accordance with the foregoing, the Issuer shall deliver to the
Trustee an officer's certificate stating that the Issuer is entitled to effect
such redemption based on a written opinion of independent tax counsel or
accounting firm reasonably satisfactory to the Trustee.
The Securities do not have the benefit of any sinking fund
obligations.
The Indenture provides that, subject to certain conditions, if
(i) a Change of Control occurs or (ii) certain Net Available Proceeds are
available to the Issuer as a result of any Asset Disposition, the Issuer shall
be required to make an Offer to Purchase for all or a specified portion of the
Securities.
[If not a Global Security: In the event of redemption or
purchase pursuant to an Offer to Purchase of this Security in part only, a new
Security or Securities of like tenor for the unredeemed or unpurchased portion
hereof will be issued in the name of the Holder hereof upon the cancelation
hereof.]
[If a Global Security insert: In the event of a deposit or
withdrawal of a beneficial interest in this Security (including upon an
exchange, transfer, redemption or repurchase of this Security in part only)
effected in accordance with the Applicable Procedures, the Security Registrar,
upon receipt of notice of such event from Euroclear or Clearstream, shall make
an adjustment on its records to reflect an increase or decrease of the
Outstanding principal amount at maturity of this Security resulting from such
deposit or withdrawal, as the case may be, and shall instruct the Book-Entry
Depositary to make a similar notation in its book-entry system to the
corresponding Depositary Interest.]
If an Event of Default shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (i) the entire indebtedness of this Security, or (ii) certain restrictive
covenants and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
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Unless the context otherwise requires, the Original Securities
and the Exchange Securities shall constitute one series for all purposes under
the Indenture, including without limitation, amendments, waivers,
redemptions and Offers to Purchase.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer, the Guarantors and the rights of the Holders of the
Securities under the Indenture at any time by the Issuer, the Guarantors and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount at maturity of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount at maturity of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities, to waive compliance by the Issuer
or the Guarantors with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
[If this Security is not a Global Security issued in bearer
form, then insert: As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Issuer in the Borough of Manhattan, the
City of New York, New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Security
Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations
and like tenor and for the same aggregate principal amount at maturity, will be
issued to the designated transferee or transferees.]
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The Global Securities are issuable only in bearer form without
coupons in denominations of (U)1,000 and any integral multiple thereof.
Definitive Securities shall be issuable in registered form without interest
coupons in denominations of (U)1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like tenor and aggregate principal amount at
maturity of Securities of a different authorized denomination, as requested by
the Holder surrendering the same.
[If this Security is a Global Security issued in bearer form,
then insert: The bearer of this Security shall be treated as the owner of this
Security for all purposes.]
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
[If this Security is not a Global Security issued in bearer
form, insert: Prior to due presentment of this Security for registration of
transfer, the Issuer, the Guarantors, the Trustee and any agent of the Issuer,
the Guarantors, or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Issuer, the Parent Guarantor, the Subsidiary
Guarantor, the Trustee nor any such agent shall be affected by notice to the
contrary.]
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months [If Original Securities, then insert: ;
provided, however, that Special Interest shall be computed on the basis of a
365- or 366-day year, as the case may be, and the number of days actually
elapsed].
Generally, when a successor Person assumes all of the
obligations of its predecessor under the Notes and the Indenture, the
predecessor Person will be released from these obligations. In addition, the
Subsidiary Guarantor may be released from the Securities Guarantee under certain
circumstances provided in the Indenture.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuer pursuant to Section 10.13 or 10.17 of the Indenture, check the box:
|_|
If you want to elect to have only a part of this Security
purchased by the Issuer pursuant to Section 10.13 or 10.17 of the Indenture,
state the amount: (U)___________
Dated:___________________ Your Signature:______________________________________
(Sign exactly as name appears
on the other side of this
Security)
Signature Guarantee:____________________________________________________________
Notice: Signature(s) must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Security Registrar which requirements will include
membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the
Trustee in addition to, or in substitution for STAMP, all
in accordance with the Securities Exchange Act of 1935, as
amended.
SECTION 2.05. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
by___________________________
Authorized Signatory
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ARTICLE III
The Securities
SECTION 3.01. Title and Terms. The aggregate principal amount
of Securities which may be authenticated and delivered under this Indenture is
unlimited; provided that unless the Issuer authorizes the execution and delivery
of Additional Securities pursuant to Section 3.12, the aggregate principal
amount of Securities shall be limited to (U)100,000,000, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 3.05, 3.05, 3.06, 9.06
or 11.08 or in connection with an Offer to Purchase pursuant to Section 10.13 or
10.17 (all Securities referred to in this exception being deemed "Substitute
Securities"). The Issuer may issue Exchange Securities from time to time
pursuant to an Exchange Offer or otherwise, in each case pursuant to a Board
Resolution, subject to Section 3.03, included in an Officers' Certificate
delivered to the Trustee, in authorized denominations in exchange for a like
principal amount at maturity of Original Securities. Upon any such exchange the
Original Securities shall be canceled in accordance with Section 3.09 and shall
no longer be deemed Outstanding for any purpose. In no event shall the aggregate
principal amount at maturity of Original Securities and Exchange Securities
Outstanding exceed (U)100,000,000.
The Securities shall be known and designated as the "12 7/8%
Senior Notes due 2010" of the Issuer. The Stated Maturity of the Securities
shall be March 1, 2010. The Securities shall bear cash interest at the rate of
12.875% per annum on the principal amount at maturity of the Securities, from
February 22, 2000 or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly provided for, as the case may be, payable
semi-annually on March 1 and September 1, commencing September 1, 2000 until the
principal thereof is paid or made available for payment; provided, however, with
respect to Original Securities, if there has been a Registration Default, a
Step-Up will occur and the Original Securities will from then bear Special
Interest to but excluding the Step-Down Date. Accrued Special Interest, if any,
shall be paid in cash in arrears semi-annually on March 1 and September 1 in
each year, and the amount of accrued Special Interest shall be determined on the
basis of the number of days actually elapsed.
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With respect to Global Securities, the Issuer will pay
interest, if any, on such Securities to the bearers of such Securities. Holders
of such Global Securities must surrender such Securities to the Trustee to
collect principal payments. The principal of and premium, if any, and interest
on the Securities shall be payable at the corporate trust office of the Trustee
in the Borough of Manhattan, the City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Issuer for such
purpose; provided, however, that at the option of the Issuer payment of interest
may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register.
The Securities shall be subject to repurchase by the Issuer
pursuant to an Offer to Purchase as provided in Sections 10.13 and 10.17 of the
Indenture.
The Securities shall be redeemable as provided in Article
Eleven.
The Securities shall not have the benefit of any sinking fund
obligations.
The Securities shall be subject to defeasance at the option of
the Issuer as provided in Article Twelve.
The Securities are guaranteed by the Guarantors as set forth
in Article IV of this Indenture.
A copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Issuer and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate or the trust indenture supplemental hereto setting forth the terms
of such Securities.
Unless the context otherwise requires, the Original Securities
and the Exchange Securities shall constitute one series for all purposes under
the Indenture, including without limitation, amendments, waivers,
redemptions and Offers to Purchase.
SECTION 3.02. Denominations. The Global Securities shall be
issuable in bearer form without coupons and only in denominations of (U)1,000
and any integral multiple of (U)1,000 in excess thereof. Definitive Registered
Securities shall be issuable in registered form without interest coupons in
denominations of (U)1,000 and any integral multiple thereof.
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SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Issuer by its Chairman of the
Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Securities executed by the
Issuer to the Trustee for authentication, together with a Issuer Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Issuer Order shall authenticate and deliver such Securities as in this
Indenture provided and not otherwise.
At any time and from time to time after the execution and
delivery of this Indenture and after the effectiveness of a Registration
Statement under the Securities Act with respect thereto, the Issuer may deliver
Exchange Securities executed by the Issuer to the Trustee for authentication,
together with an Issuer Order for the authentication and delivery of such
Exchange Securities and a like principal amount at maturity of Original
Securities for cancelation in accordance with Section 3.09 of this Indenture,
and the Trustee in accordance with the Issuer Order shall authenticate and
deliver such Securities. In authenticating such Exchange Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel
stating,
(a) that such Exchange Securities have been duly and validly
issued in accordance with the terms of the Indenture, and are entitled
to all the rights and benefits set forth herein; and
(b) that the issuance of the Exchange Securities in exchange
for the Original Securities has been
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effected in compliance with the Securities Act of 1933, as amended.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 3.05. Temporary Securities. Pending the preparation of
definitive Securities, the Issuer may execute, and upon Issuer Order the Trustee
shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such 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 any office or agency of the Issuer designated pursuant to Section
10.02, without charge to the Holder. Upon surrender for cancelation of any one
or more temporary Securities, the Issuer shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like tenor and principal amount
at maturity of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 3.05. Registration, Registration of Transfer and
Exchange. (a) The Issuer shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
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registration of Definitive Securities and of transfers of such Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
such Securities and transfers of such Securities as herein provided. Such
Security Register shall distinguish between Original Securities and Exchange
Securities.
Subject to the other provisions of this Indenture regarding
restrictions on transfer, upon surrender for registration of transfer of any
Definitive Security at an office or agency of the Issuer designated pursuant to
Section 10.02 for such purpose in accordance with the terms hereof, the Issuer
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like tenor and aggregate principal amount at
maturity and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other
provisions of this Section 3.05, Securities may be exchanged for other
Securities of any authorized denominations and of a like tenor and aggregate
principal amount at maturity, upon surrender of such Securities to be exchanged
at such office or agency. Whenever any Securities are so surrendered for
exchange, the Issuer shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Issuer, evidencing
the same debt, and (subject to the provisions in the Original Securities
regarding the payment of Special Interest) entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Issuer or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in
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connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.05, 3.05(d), 9.06 or 11.08 or in accordance
with any Offer to Purchase pursuant to Section 10.13 or 10.17 not involving any
transfer.
The Issuer 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 11.05 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.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 3.05(b) shall be made only in accordance with this Section
3.05(b) or, if necessary, in accordance with such other procedures as the Issuer
shall develop which shall comply with applicable securities laws.
(i) Restricted Global Security to Regulation S Global
Security. If the owner of a beneficial interest in the Restricted
Global Security wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial
interest in the Regulation S Global Security, such transfer may be
effected only in accordance with the provisions of this Clause (b)(i)
and subject to the Applicable Procedures. Upon receipt by the Trustee,
as Security Registrar, of (A) an order given by Euroclear or
Clearstream or an authorized representative of Euroclear or Clearstream
directing that a beneficial interest in the Regulation S Global
Security in a specified principal amount at maturity be credited to a
specified Participant's account and that a beneficial interest in the
Restricted Global Security in an equal principal amount at maturity be
debited from another specified Participant's account and (B) a
Regulation S Certificate, satisfactory to the Trustee and duly executed
by the owner of such beneficial interest in the Restricted Global
Security or his attorney duly authorized in writing, then the Trustee,
as Security Registrar, shall reduce or cause to be reduced the
principal amount at maturity of the Restricted Global Security and
increase the principal amount at maturity
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of the Regulation S Global Security by such specified principal amount
at maturity as provided in Section 3.05(e).
(ii) Regulation S Global Security to Restricted Global
Security. If the owner of a beneficial interest in the Regulation S
Global Security wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial
interest in the Restricted Global Security, such transfer may be
effected only in accordance with this Clause (b)(ii) and subject to the
Applicable Procedures. Upon receipt by the Trustee, as Security
Registrar, of (A) an order given by Euroclear or Clearstream or an
authorized representative of Euroclear or Clearstream directing that a
beneficial interest in the Restricted Global Security in a specified
principal amount at maturity be credited to a specified Participant's
account and that a beneficial interest in the Regulation S Global
Security in an equal principal amount at maturity be debited from
another specified Participant's account and (B) if such transfer is to
occur during the Restricted Period, a Restricted Securities
Certificate, satisfactory to the Trustee and duly executed by the owner
of such beneficial interest in the Regulation S Global Security or his
attorney duly authorized in writing, then the Trustee, as Security
Registrar, shall reduce or cause to be reduced the principal amount at
maturity of the Regulation S Global Security and increase the principal
amount at maturity of the Restricted Global Security by such specified
principal amount at maturity as provided in Section 3.05(e).
(iii) Definitive Security to Definitive Security. A
Security that is a Definitive Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Security
that is a Definitive Security as provided in Section 3.05(a), provided
that, if the Security to be transferred in whole or in part is a
Restricted Security, or is a Regulation S Security and the transfer is
to occur during the Restricted Period, then the Trustee shall have
received (A) a Restricted Securities Certificate, satisfactory to the
Trustee and duly executed by the transferor Holder or his attorney duly
authorized in writing, in which case the transferee Holder shall take
delivery in the form of a Restricted Security, or (B) a Regulation S
Certificate, satisfactory to the Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing, in which
case the
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transferee Holder shall take delivery in the form of a Regulation S
Security (subject in every case to Section 3.05(c)).
(iv) Exchanges between Global Security and Definitive
Security. A beneficial interest in a Global Security may be exchanged
for a Security that is a Definitive Security as provided in Section
3.05(d), provided that, if such interest is a beneficial interest in
the Restricted Global Security, or if such interest is a beneficial
interest in the Regulation S Global Security and such exchange is to
occur during the Restricted Period, then such interest shall be
exchanged for a Restricted Security or a Regulation S Security, as the
case may be (subject in each case to Section 3.05(c)).
(c) Securities Act Legends. Rule 155A Securities and their
Successor Securities shall bear a Restricted Securities Legend, and the
Regulation S Securities and their Successor Securities shall bear a Regulation S
Legend, subject to the following:
(i) subject to the following Clauses of this Section
3.05(c), a Security or any portion thereof which is exchanged, upon
transfer or otherwise, for a Global Security or any portion thereof
shall bear the Securities Act Legend borne by such Global Security
while represented thereby;
(ii) subject to the following Clauses of this Section
3.05(c), a new Security which is a Definitive Security and is issued in
exchange for a Global Security or any portion thereof, upon transfer or
otherwise, shall bear the Securities Act Legend borne by such other
Security, provided that, if such new Security is required pursuant to
Section 3.05(b)(iii) or (iv) to be issued in the form of a Restricted
Security, it shall bear a Restricted Securities Legend and, if such new
Security is so required to be issued in the form of a Regulation S
Security, it shall bear a Regulation S Legend;
(iii) Registered Securities shall not bear a Securities
Act Legend;
(iv) at any time after the Securities may be freely
transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act,
a new
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Security which does not bear a Securities Act Legend may be issued in
exchange for or in lieu of a Security (other than a Global Security) or
any portion thereof which bears such a legend if the Trustee has
received an Unrestricted Securities Certificate, satisfactory to the
Trustee and duly executed by the Holder of such legended Security or
his attorney duly authorized in writing, and after such date and
receipt of such certificate, the Trustee shall authenticate and deliver
such a new Security in exchange for or in lieu of such other Security
as provided in this Article III;
(v) a new Security which does not bear a Securities Act
Legend may be issued in exchange for or in lieu of a Security (other
than a Global Security) or any portion thereof which bears such a
legend if, in the Issuer's judgment, placing such a legend upon such
new Security is not necessary to ensure compliance with the
registration requirements of the Securities Act, and the Trustee, at
the direction of the Issuer, shall authenticate and deliver such a new
Security as provided in this Article III; and
(vi) notwithstanding the foregoing provisions of this
Section 3.05(c), a Successor Security of a Security that does not bear
a particular form of Securities Act Legend shall not bear such form of
legend unless the Issuer has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of
Rule 155, in which case the Trustee, at the direction of the Issuer,
shall authenticate and deliver a new Security bearing a Restricted
Securities Legend in exchange for such Successor Security as provided
in this Article III.
(d) Exchanges of Global Security for Definitive Security.
Transfers of Global Securities shall be by delivery. The Book-Entry Depositary
and the Issuer have agreed that the Global Securities shall only be delivered in
the circumstances described in the Deposit Agreement. Notwithstanding any other
provision in this Indenture, no Global Security may be exchanged in whole or in
part for Definitive Securities unless (i) Euroclear and Clearstream each
notifies the Issuer or the Book-Entry Depositary in writing that it (or its
nominee) is unwilling or unable to continue to act as, or ceases to be, a
clearing agency registered under the Exchange Act, and, in either case, a
successor registered as a clearing agency under the Exchange Act is not
appointed by the Issuer within 90 days, (ii) at any time if the Issuer
determines that the Global Securities
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(in whole but not in part) should be exchanged for Definitive Securities;
provided, that (x) such exchange is required by (A) any applicable law or (B)
any event beyond the Issuer's control or (y) payments of interest on any Global
Security, Depositary Interest or beneficial interest are, or would become,
subject to any deduction or withholding for taxes, (iii) at any time after the
consummation of the Exchange Offer, if the owner of a beneficial interest
requests such exchange in writing delivered to Euroclear or Clearstream and
through Euroclear or Clearstream to the Book-Entry Depositary and the Trustee,
or (iv) if the Book-Entry Depositary is at any time unwilling or unable to
continue as Book-Entry Depositary and a successor Book-Entry Depositary is not
appointed by the Issuer within 90 days. Upon the occurrence of any of the
preceding events, Definitive Securities shall be issued in such names as the
Book-Entry Depositary shall instruct the Trustee based on the instructions of
Euroclear or Clearstream.
(e) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Book-Entry Depositary or its nominee to the Trustee, as Security Registrar, for
exchange or cancelation as provided in this Article III. If any Global Security
is to be exchanged for other Securities or canceled in part, or if another
Security is to be exchanged in whole or in part for a beneficial interest in any
Global Security, then either (i) such Global Security shall be so surrendered
for exchange or cancelation as provided in this Article III or (ii) the
principal amount at maturity thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or canceled, or equal to the
principal amount at maturity of such other Security to be so exchanged for a
beneficial interest therein, as the case may be, by means of an appropriate
adjustment made by (x) the Book-Entry Depositary as directed by the Trustee in
such Book-Entry Depositary's book-entry system to the corresponding Depositary
Interest and (y) the Common Depositary as directed by the Book-Entry Depositary
in accordance with the Deposit Agreement to the corresponding Depositary
Interest, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct Euroclear or Clearstream (as applicable) or their authorized
representatives to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security, the Trustee shall, subject to
Section 3.05(b) and as otherwise provided in this Article III, authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of,
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and registered (if applicable) in such names as may be directed by, the
Book-Entry Depositary or its authorized representative. Upon the request of the
Trustee in connection with the occurrence of any of the events specified in the
preceding paragraph, the Issuer shall promptly make available to the Trustee a
reasonable supply of Securities that are not in the form of Global Securities.
The Trustee shall be entitled to rely upon any order, direction or request of
the Book-Entry Depositary or Euroclear or Clearstream or any of their authorized
representatives which is given or made pursuant to this Article III if such
order, direction or request is given or made in accordance with the Deposit
Agreement with respect to the Book-Entry Depositary and the Applicable
Procedures with respect to Euroclear and Clearstream.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Securities. If any mutilated Security is surrendered to the Trustee, the Issuer
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount at maturity and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Issuer and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of written
notice to the Issuer or the Trustee that such Security has been acquired by a
bona fide purchaser, the Issuer shall execute and the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount at maturity and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Issuer in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall
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constitute an original additional contractual obligation of the Issuer, whether
or not the destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the bearer thereof
on the Interest Payment Date in the case of a Global Security in bearer form
and, in the case of a Definitive Security, to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest (including Special Interest) on any Security
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall (a) bear
interest at the rate per annum stated in the form of Security included herein
(to the extent that the payment of such interest shall be legally enforceable),
and (b) forthwith cease to be payable to the bearer thereof on such Interest
Payment Date with respect to a Global Security in bearer form and, with respect
to a Definitive Security, to the Holder on the relevant Regular Record Date by
virtue of having been such Holder, and, in each case, such Defaulted Interest
may be paid by the Issuer, at its election in each case, as provided in Clause
(a) or (b) below:
(a) The Issuer may elect to make payment of any Defaulted
Interest to the bearer of such Security on any Special Payment Date (as
defined below) with respect to any Global Security in bearer form and,
with respect to a Definitive Security, to the Persons in whose names
the Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Issuer shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Issuer shall
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deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Issuer of such Special Record
Date and, in the name and at the expense of the Issuer, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid, with respect to any Definitive Security, to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
Clause (b). As used in this Clause (a), "Special Payment Date" means
the date on which Defaulted Interest is paid to the Holder.
(b) The Issuer may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice given
by the Issuer to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment
of a Security for registration of transfer, the Issuer, the Parent Guarantor,
the Subsidiary Guarantor,
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the Trustee and any agent of the Issuer, the Parent Guarantor, the Subsidiary
Guarantor or the Trustee may treat the Person in whose name a Definitive
Security is registered as the owner of such Security and may treat the bearer of
a Global Security as the owner of such Security, in each case, for the purpose
of receiving payment of principal of and premium, if any, and (subject to
Section 3.07) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Issuer, the Parent
Guarantor, the Subsidiary Guarantor, the Trustee nor any agent of the Issuer,
the Parent Guarantor, the Subsidiary Guarantor or the Trustee shall be affected
by notice to the contrary.
SECTION 3.09. Cancelation. All Securities surrendered for
payment, redemption, registration of transfer, exchange or pursuant to any Offer
to Purchase pursuant to Section 10.13 or 10.17 shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by it. The Issuer may at any time deliver to the Trustee for
cancelation any Securities previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
standard procedures or as directed by an Issuer Order; provided, however, that
the Trustee shall not be required to destroy such Securities.
SECTION 3.10. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months, provided, however, that Special Interest on Original Securities shall be
computed on the basis of a 365- or 366-day year, as the case may be, and the
number of days actually elapsed.
SECTION 3.11. ISIN Numbers and Common Code Numbers. The Issuer
in issuing Securities may use "ISIN" and "Common Code" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such "ISIN" and "Common Code" numbers in addition to serial numbers in notices
of redemption and repurchase as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
"ISIN" and "Common Code" numbers either as printed on the Securities or as
contained in any notice of a
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redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such "ISIN"
and "Common Code" numbers.
SECTION 3.12. Additional Securities. Subject to Article X of
this Indenture, the Issuer may authorize the issuance of Additional Securities.
All Securities originally issued on the date of this Indenture and any
Additional Securities originally issued after the date of Securities for all
purposes under this Indenture.
Additional Securities shall be issued, authenticated and
delivered in accordance with the provisions of Section 3.03 and shall be
entitled to the benefits of the Guarantees of the Guarantors to the same extent
as all other Securities. The Issuer shall specify in the Issuer Order pursuant
to Section 3.03 the aggregate principal amount of Additional Securities and
shall certify that the issuance complies with the requirements of the Indenture,
including Article X. The Issuer shall be entitled to issue Additional Securities
initially as Original Securities or as Exchange Securities. If Additional
Securities are issued as Original Securities, they may be exchanged for Exchange
Securities in accordance with this Indenture and the applicable Exchange and
Registration Rights Agreement.
ARTICLE IV
Guarantee Of Securities
SECTION 5.01. Guarantee. Subject to the provisions of this
Article Four, the Guarantors hereby fully, unconditionally and irrevocably
guarantee 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
(including Special 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 the Issuer to the Holders or the Trustee, all in
accordance with the terms of such Security and this 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
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when due or performed in accordance with the terms of the extension or renewal,
at Stated Maturity, by acceleration or otherwise. The Guarantors hereby waive
diligence, presentment, demand of payment, filing of claims with a court in the
event of merger or bankruptcy of the Issuer, any right to require a proceeding
first against the Issuer, 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 Securities 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 12.01 and Section 12.02 (subject to
Section 12.06). The maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Five for the purposes of this Article Four.
In the event of any declaration of acceleration of such obligations as provided
in Article Five, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Article Four. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article Five, the Trustee shall promptly
make a demand for payment on the Securities under the Guarantee provided for in
this Article Four.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or either Guarantor, or any
custodian, receiver, liquidator, trustee, sequestrator or other similar official
acting in relation to the Issuer or either Guarantor, any amount paid to the
Trustee or such Holder in respect of a Security, this Securities Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
The Guarantors further agree, to the fullest extent that they may lawfully do
so, that, as between them, 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 Five hereof for the purposes of this
Securities Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Guarantors hereby irrevocably waive any claim or other rights which
they may now or hereafter acquire against the Issuer that arise from the
existence, payment, performance or enforcement of their obligations under this
Securities
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Guarantee and this 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 the Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to either
Guarantor 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 such Guarantor 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.
The Guarantors acknowledge that they will receive direct and indirect benefits
from the issuance of the Securities pursuant to this Indenture and that the
waivers set forth in this Section 5.01 are knowingly made in contemplation of
such benefits.
The Guarantee set forth in this Section 5.01 shall not be
valid or become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 5.02. Obligations Unconditional. Subject to Section
5.05, nothing contained in this Article Four or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Guarantors and
the holders of the Securities, the obligation of the Guarantors, which is
absolute and unconditional, upon failure by the Issuer, 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 either Guarantor, nor shall anything herein or
therein prevent the holder of any Securities or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture.
Without limiting the foregoing, nothing contained in this
Article Four will restrict the right of the Trustee
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or the holders of the Securities to take any action to declare the Guarantee to
be due and payable prior to the Stated Maturity of the Securities pursuant to
Section 5.02 or to pursue any rights or remedies hereunder.
SECTION 5.03. Notice to Trustee. The Guarantors shall give
prompt written notice to the Trustee of any fact known to either Guarantor which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities Guarantee pursuant to the provisions of this Article Four.
SECTION 5.05. Release of Subsidiary Guarantor. The Subsidiary
Guarantor shall be automatically and unconditionally released and discharged
from its obligations under this Securities Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Parent Guarantor, of all of
the Parent Guarantor's and each Restricted Subsidiary's Capital Stock in, or all
or substantially all the assets of, the Subsidiary Guarantor (which sale,
exchange or transfer is not prohibited by this Indenture) or (ii) at any time,
so long as in the case of this clause (ii) Standard & Poor's Corporation is
notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications. Upon the release and
discharge of the Subsidiary Guarantor from its obligations under the Securities
Guarantee pursuant to this Section 5.05, the Subsidiary Guarantor shall also be
released and discharged from any other obligations it has under this Indenture
in its capacity as Subsidiary Guarantor, provided that no such release and
discharge shall affect any obligation of the Subsidiary Guarantor in its
capacity as a Restricted Subsidiary of the Guarantor.
ARTICLE V
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(a) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of (or premium, if
any, on) any Security when due; or
(c) default in the payment of principal and interest upon any
Security required to be purchased pursuant to an Offer to Purchase
pursuant to Sections 10.13 or 10.17; or
(d) default in the performance, or breach, of Section 8.01,
10.13 or 10.17; or
(e) default in the performance, or breach, of any covenant or
warranty of the Issuer or either Guarantor in this Indenture or in any
Security (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
60 days after there has been given, by registered or certified mail, to
the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 25% in aggregate principal amount at maturity of
the Outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(f) a default or defaults under any bond(s), debenture(s),
note(s) or other evidence(s) of indebtedness by the Parent Guarantor,
the Issuer or any Subsidiary of the Parent Guarantor or under any
mortgage(s), indenture(s) or instrument(s) under which there may be
issued or by which there may be secured or evidenced any indebtedness
of such type by the Parent Guarantor, the Issuer or any Subsidiary of
the Parent Guarantor with a principal amount then outstanding,
individually or in the aggregate, in excess of $10 million, whether
such indebtedness now exists or shall hereafter be created, which
default or defaults shall constitute a failure to pay in excess of $10
million of the principal of such indebtedness when due at the final
maturity thereof, or shall have resulted in excess of $10 million of
indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable; or
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(g) a final judgment or final judgments for the payment of
money are entered against the Parent Guarantor, the Issuer or any
Subsidiary of the Parent Guarantor in an aggregate amount in excess of
$10 million (net of indemnities and funds actually received or to be
received within 90 days of such judgment) by a court or courts of
competent jurisdiction, which judgments remain undischarged or unbonded
for a period (during which execution shall not be effectively stayed)
of 60 days after the right to appeal all such judgments has expired; or
(h) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of either Guarantor, the
Issuer or any Significant Subsidiaries in an involuntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar law or (B) a decree or order adjudging either
Guarantor, the Issuer or any Significant Subsidiaries a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of either Guarantor, the Issuer or any Significant Subsidiaries under
any applicable law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of either
Guarantor, the Issuer or any Significant Subsidiaries or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(i) the commencement by either Guarantor, the Issuer or any
Significant Subsidiaries of a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order for
relief in respect of either Guarantor, the Issuer or any Significant
Subsidiaries in an involuntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable law, or the consent by it
to the filing of such petition or to the appointment of or taking
possession
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by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of either Guarantor, the Issuer or any
Significant Subsidiaries or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by either
Guarantor, the Issuer or any Significant Subsidiaries in furtherance of
any such action; provided that this clause (i) shall not apply to any
actions in connection with the winding up or liquidation of the
Guarantors or the Issuer to be effected after the Person then
constituting such Guarantors or the Issuer shall cease to be such
Guarantors or the Issuer following a transaction governed by the
provisions of Article VIII.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified in
Section 5.01(h) or (i)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount at maturity
of the Outstanding Securities may declare the principal amount at maturity of
all the Securities to be due and payable immediately, by a notice in writing to
the Issuer (and to the Trustee if given by Holders), and upon any such
declaration such principal amount and any accrued interest shall become
immediately due and payable. If an Event of Default specified in Section 5.01(h)
or (i) occurs, the principal amount of and any accrued interest on the
Securities then Outstanding shall ipso facto become immediately due and payable
without any declaration or other Act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due based on
acceleration has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount at maturity of the
Outstanding Securities, by written notice to the Issuer and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal amount of (and premium, if any, on)
any Securities which have become due
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otherwise than by such declaration of acceleration (including
any Securities required to have been purchased on the Purchase
Date pursuant to an Offer to Purchase made by the Issuer) and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Issuer covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to Purchase made by the Issuer, at the Purchase Date thereof,
the Issuer will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of
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collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer or any other obligor upon the Securities and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Issuer or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.05. Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Issuer (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have claims of the
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys, securities or
other property payable or deliverable upon the exchange of the Securities or
upon any such claims and to distribute the same; 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 it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the
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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; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors or
other similar committee.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.07; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and 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 (and premium, if any) and interest, respectively.
SECTION 5.07. Limitation on Suits. No Holder of any Security
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
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(2) the Holders of not less than 25% in aggregate principal
amount at maturity of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested,
provided to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(5) the Trustee for 60 days after its receipt of such notice,
request and offer and, if requested, provision of indemnity has failed
to institute any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount at maturity of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.08. Unconditional Right of Holders To Receive
Principal, Premium and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 3.07) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date or, in the case of an Offer to Purchase made by the Issuer and
required to be accepted as to such Security, on the Purchase Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture 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
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determination in 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 Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Security 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 or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
principal amount at maturity of the Outstanding Securities shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture or expose the Trustee to personal liability
(as determined in the sole discretion of the Trustee), and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The Holders of not less
than a majority in aggregate principal amount at maturity of the Outstanding
Securities may on
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behalf of the Holders of all the Securities by written notice to the Trustee
waive any past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to
have been purchased pursuant to an Offer to Purchase which has been
made by the Issuer), or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected or
(3) arising from failure to purchase any Security tendered
pursuant to Sections 10.13 and 10.17 of this Indenture.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.15. 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 such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act; provided that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such an undertaking or to make such an assessment in any
suit instituted by the Issuer or the Parent Guarantor; further provided, that
the provisions of this Section 5.15 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder or group of Holders holding
more than 10% in aggregate principal amount at maturity of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of, or premium, if any, or interest on any Security on
or after the respective due dates expressed in such Security.
SECTION 5.15. Waiver of Stay or Extension Laws. Each of the
Issuer and the Parent Guarantor covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever
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claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and each of the Issuer and the Parent
Guarantor (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants, duties or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
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(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount at maturity
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; and
(5) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.02. Notice of Defaults. The Trustee shall give the
Holders notice of any default hereunder known to the Trustee as and to the
extent provided by the Trust Indenture Act; provided, however, that in the case
of any default of the character specified in Section 5.01(e), no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default.
SECTION 6.03. Certain Rights of Trustee. Subject to the
provisions of Section 6.01:
(a) the Trustee may conclusively rely and shall be completely
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
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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 presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by a Issuer Request or Issuer Order and
any resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution;
(c) 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, request from the Issuer and be
completely protected in relying upon an Officers' Certificate received
in response to such request;
(d) the Trustee may consult with counsel of its selection and
the written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction reasonably
satisfactory to the Trustee;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee may (but shall have no
obligation to) 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
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books, records and premises of the Issuer or the Parent Guarantor,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in accordance with the
direction of Holders of Outstanding Securities as provided in Sections
5.02, 5.12 and 5.13 hereof; and
(i) for all purposes under this Indenture, the Trustee shall
not be deemed to have notice of any Event of Default unless a
Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture.
SECTION 6.05. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities or the Securities Guarantee. The Trustee shall
not be accountable for the use or application by the Issuer of Securities or the
proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any Paying
Agent, any Security Registrar or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 6.08 and 6.13, may otherwise deal with the Issuer or
the Parent Guarantor with the same rights it would have if it were not Trustee,
Paying Agent, Security Registrar or such other agent.
SECTION 6.06. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
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money received by it hereunder except as otherwise agreed with the Issuer.
SECTION 6.07. Compensation and Reimbursement. The Issuer and
the Parent Guarantor jointly and severally agree
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of enforcing this Indenture against the Issuer or the Parent
Guarantor (including, without limitation, this Section 6.07) and of
defending itself against any claim (whether asserted by any Holder or
the Issuer or the Parent Guarantor) or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
provisions of this Section 6.07 shall survive any termination of this
Indenture and the resignation or removal of the Trustee.
As security for the performance of the obligations of the
Issuer under this Section 6.07, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee, except
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Securities. The Trustee's right to receive payment of any
amounts due under this Section 6.07 shall not be subordinate to any other
liability or indebtedness of the Issuer (even though the Securities may be so
subordinated).
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When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(h) or Section
5.01(i), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or State bankruptcy,
insolvency or other similar law.
It is understood and agreed that amounts paid by the Issuer or
the Guarantors pursuant to this Section 6.07 may be paid in Dollars as the
Trustee and the Issuer and Guarantors shall agree.
Any amount awarded to the Trustee by a court of appropriate
jurisdiction pursuant to a final judgment to be paid by the Issuer or the
Guarantors in respect of any legal action, suit or proceeding relating to this
Section 6.07 shall be payable in Dollars.
The provisions of this Section shall survive the termination
of this Indenture or the earlier resignation or termination of the Trustee.
SECTION 6.08. Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000 and its Corporate Trust Office in
the Borough of Manhattan, the City of New York, New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
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SECTION 6.10. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11, at which
time the retiring Trustee shall be fully discharged from its obligations
hereunder.
(b) The Trustee may resign at any time by giving written
notice thereof to the Issuer. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount at maturity of the Outstanding
Securities, delivered to the Trustee and to the Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after
written request therefor by the Issuer or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09
and shall fail to resign after written request therefor by the Issuer
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.15, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Issuer, by a Board Resolution, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount at maturity of the Outstanding
Securities delivered to the Issuer and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Issuer. If no successor Trustee shall have been so appointed by the Issuer
or the Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Issuer and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Issuer or the successor Trustee,
such retiring Trustee shall, upon payment of all sums owing to the Trustee under
Section 6.07, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Issuer shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
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No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation shall be otherwise
qualified and eligible under this Article. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
SECTION 6.13. Preferential Collection of Claims Against Issuer
or Guarantors. If and when the Trustee shall be or become a creditor of the
Issuer or either Guarantor (or any other obligor upon the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of claims against the Issuer or Parent Guarantor (or any such
other obligor).
SECTION 6.15. Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents with respect to the Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities issued upon original issue and upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 3.06, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Issuer and shall at all times be a corporation organized and doing business
under the laws of the United States of
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America, any State thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent;
provided, such corporation shall be otherwise eligible under this Section.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Issuer. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Issuer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Issuer and shall give notice of such
appointment in the manner provided in Section 1.06 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its
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services under this Section, and the Trustee shall be entitled to be reimbursed
for such payments, subject to the provisions of Section 6.07.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK, as
Trustee,
by
--------------------------,
as Authenticating Agent
by
---------------------------
Authorized Signatory
SECTION 6.15. Withholding Taxes. Notwithstanding any other
provision of this Agreement, the Trustee, as agent for the Issuer and the Parent
Guarantor, shall exclude and withhold from each payment of principal and
interest and other amounts due hereunder or under the Securities or the
Securities Guarantee 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 amounts payable in respect of
the Securities or the Securities Guarantee, 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 furnish to the Holders of the Securities
such forms or certificates as are necessary or appropriate to provide the
information described in Section 10.09(c)(i) hereof or make the declaration or
claim described in Section 10.09(c)(ii) hereof, 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
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payment thereof, together with such additional documentary evidence as such
Holders may reasonably request from time to time.
In the event that the Trustee is also acting as Paying Agent,
Authenticating Agent, transfer agent, or Registrar hereunder, the rights and
protections afforded to the Trustee pursuant to this Article Six shall also be
afforded to such Paying Agent, Authenticating Agent,
transfer agent, or Registrar.
ARTICLE VII
Holders' Lists and Reports by Trustee and Issuer
SECTION 7.01. Issuer to Furnish Trustee Names and Addresses of
Holder. The Issuer will furnish or cause to be furnished to the Trustee (a)
semi-annually, not more than 15 days after each Regular Record Date, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Issuer of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 7.02. Preservation of Information; Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Issuer and the Trustee
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that neither the Issuer nor the Trustee nor any agent of either of them shall be
held accountable by reason of any disclosure of information as to names and
addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 7.03. Reports by Trustee. (a) Within 30 days after
January 1 of each year, commencing with the first January 1 following the first
issuance of Securities pursuant to Section 3.01, if required by Section 3.13(a)
of the Trust Indenture Act, the Trustee shall transmit, pursuant to Section
3.13(c) of the Trust Indenture Act, a brief report dated as of such January 1
with respect to any of the events specified in said Section 3.13(a) which may
have occurred since the later of the immediately preceding January 1 and the
date of this Indenture.
(b) The Trustee shall transmit the reports required by Section
3.13(b) of the Trust Indenture Act and Section 6.02 hereof at the times
specified therein.
(c) Reports pursuant to this Section shall be transmitted in
the manner and to the persons required by Sections 3.13(c) and 3.13(d) of the
Trust Indenture Act.
(d) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Issuer. The
Issuer will promptly notify the Trustee when the Securities are listed on any
stock exchange.
SECTION 7.05. Reports by Issuer and Parent Guarantor. Each of
the Parent Guarantor and the Issuer shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act and
in the manner set forth in Section 10.18.
SECTION 7.05. Officers' Certificate with Respect to Change in
Interest Rates. Within five days after any Step-Up or Step-Down Date, the Issuer
shall deliver an Officers' Certificate to the Trustee stating the new interest
rate and the date on which it became effective.
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ARTICLE VIII
Merger, Consolidation, Etc.
SECTION 8.01. Mergers, Consolidations and Certain Sales of
Assets. Neither the Parent Guarantor, the Issuer nor, so long as it has not been
released from its obligations under the Securities Guarantee, the Subsidiary
Guarantor may, in a single transaction or a series of related transactions,
(except, in the case of the Subsidiary Guarantor, in any transaction or series
of related transactions as a result of which the Subsidiary Guarantor is
released from its obligations under the Securities Guarantee) (i) consolidate
with or merge into any other Person or permit any other Person to consolidate
with or merge into either Guarantor or the Issuer, or (ii) directly or
indirectly, transfer, sell, lease or otherwise dispose of all or substantially
all of its assets to any other Person, unless:
(1) in a transaction in which either Guarantor or the Issuer,
as applicable, does not survive or in which either Guarantor or the
Issuer sells, leases or otherwise disposes of all or substantially all
of its assets to any other Person (other than, in any such case, either
Guarantor or the Issuer), the successor entity to such Guarantor or the
Issuer is organized under the laws of Bermuda, the United Kingdom, the
United States of America or any State thereof or the District of
Columbia, the British Virgin Islands, Cayman Islands, The Netherlands,
Ireland or Jersey and shall expressly assume, by a supplemental
indenture executed and delivered to the Trustee in form satisfactory to
the Trustee, all of such Guarantor's or the Issuer's obligations under
the Indenture;
(2) immediately before and after giving effect to such
transaction and treating any Debt which becomes an obligation of either
Guarantor or a Subsidiary as a result of such transaction as having
been Incurred by such Guarantor or such Subsidiary at the time of the
transaction, no Event of Default or event that with the passing of time
or the giving of notice, or both, would constitute an Event of Default
shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Parent Guarantor (or other successor
entity to the Parent
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Guarantor) is equal to or greater than that of the Parent Guarantor
immediately prior to the transaction;
(5) if, as a result of any such transaction, property or
assets of the Parent Guarantor or any Subsidiary would become subject
to a Lien prohibited by Section 10.15, the Parent Guarantor or the
successor entity to the Parent Guarantor shall have secured the
Securities as required by said covenant; and
(5) in the event that the continuing Person is incorporated in
a jurisdiction other than the United States or the jurisdiction in
which such Person was incorporated immediately prior to such
transaction, (A) the Issuer delivers to the Trustee an Opinion of
Counsel stating that the obligations of the continuing Person under the
Indenture are enforceable under the laws of the new jurisdiction of its
incorporation to the same extent as the obligations of the Issuer or
the Parent Guarantor, as the case may be, under the Indenture
immediately prior to such transaction; (B) the continuing Person agrees
in writing to submit to jurisdiction and appoints an agent for the
service of process, each under terms substantially similar to the terms
contained in the Indenture with respect to the Issuer or such
Guarantor, as the case may be; (C) the continuing Person agrees in
writing to pay Additional Amounts as provided under this Indenture
under Section 10.09 with respect to the Issuer or such Guarantor, as
the case may be, except that such Additional Amount shall relate to any
withholding tax whatsoever regardless of any change of law (subject to
exceptions substantially similar to those contained in Section 10.09);
(D) the Board of Directors of the Parent Guarantor determines in good
faith that such transaction will have no material adverse effect on any
Holder and a Board Resolution to that effect is delivered to the
Trustee; and (E) the principal purpose of the continuing Person being
incorporated in such jurisdiction is to obtain tax benefits for such
Guarantor, the Issuer, their direct and indirect stockholders or the
Holders.
SECTION 8.02. Successor Substituted. Upon any consolidation of
either Guarantor or the Issuer with, or merger of either Guarantor or the Issuer
with or into, any other Person or any conveyance, transfer or lease of the
properties and assets of either Guarantor or the Issuer substantially as an
entirety in accordance with Section 8.01, the successor Person formed by such
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consolidation or into which such Guarantor or the Issuer, as applicable, is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, such
Guarantor or the Issuer, as applicable, under this Indenture with the same
effect as if such successor Person had been named as such Guarantor or the
Issuer herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this Indenture
and the Securities.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Issuer and the Guarantors, each
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Issuer
or either Guarantor and the assumption by any such successor of the
covenants of the Issuer or such Guarantor herein and in the Securities;
or
(2) to add to the covenants of the Issuer or either Guarantor
for the benefit of the Holders, or to surrender any right or power
herein conferred upon the Issuer or either Guarantor; or
(3) to secure the Securities pursuant to the requirements of
Section 10.15 or otherwise; or
(5) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to comply with any
requirement of the Commission in order to effect qualification of this
Indenture under the Trust Indenture Act in connection with the issuance
of Exchange Securities or Registered Securities or thereafter to
maintain the qualification of this Indenture under the Trust Indenture
Act; or
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not
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be inconsistent with the provisions of this Indenture; provided that
such action pursuant to this Clause (5) shall not adversely affect the
interests of the Holders in any material respect; or
(6) to provide for uncertificated Securities in addition to or
in place of certified Securities.
SECTION 9.02. Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of not less than a majority in aggregate
principal amount at maturity of the Outstanding Securities, by Act of said
Holders delivered to the Issuer and the Trustee, and consistent with Section
5.13, the Issuer and the Guarantors, each when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture; provided, however, that
no such supplemental indenture shall, without the written consent of the Holder
of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
thereon, or change the coin or currency in which, any Security or any
premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date) or, in the case of an Offer to Purchase which has been
made, on or after the applicable Purchase Date, or
(2) reduce the percentage in principal amount at maturity of
the Outstanding Securities, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13
or Section 10.20, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
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waived without the consent of the Holder of each Outstanding Security
affected thereby, or
(5) following the making of an Offer with respect to an Offer
to Purchase pursuant to Sections 10.13 or 10.17, modify the provisions
of this Indenture with respect to such Offer to Purchase in a manner
materially adverse to such Holder, or
(5) release either Guarantor from its Securities Guarantee,
except for a release of the Subsidiary Guarantor pursuant to Section
5.05.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.05. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
SECTION 9.06. Reference in Securities to Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as
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to any matter provided for in such supplemental indenture. If the Issuer shall
so determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and Interest. The
Issuer will duly and punctually pay the principal of and premium, if any, and
interest on the Securities in accordance with the terms of the Securities and
this Indenture. Payments of principal, interest and premium, if any, shall be
made in Euros.
SECTION 10.02. Maintenance of Office or Agency. The Issuer
will maintain in the Borough of Manhattan, the City of New York, New York, an
office or agency where Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer or exchange 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
Corporate Trust Office of the Trustee, and the Issuer hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Issuer may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, the City of
New York, New York) where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuer of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York, New York for such purposes. 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.
SECTION 10.03. Money for Security Payments To Be Held in
Trust. If the Issuer shall at any time act as its own Paying Agent, it will, on
or before each due date of the
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principal of (and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee in writing of its
action or failure so to act. As provided in Section 5.05, upon any bankruptcy or
reorganization proceeding relative to the Issuer, the Trustee shall serve as the
Paying Agent for the Securities.
Whenever the Issuer shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) the Issuer will
promptly notify the Trustee in writing of its action or failure so to act. Upon
any bankruptcy or reorganization proceeding relative to the Issuer, the Trustee
shall serve as the Paying Agent for the Securities.
The Issuer will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee written notice of any default by the
Issuer (or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest;
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent; and
(5) acknowledge, accept and agree to comply in all respects
with the provisions of this Indenture relating
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to the duties, rights and obligations of such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Issuer or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Issuer, in trust for the payment of the principal of (and
premium, if any) or interest on any Security and remaining unclaimed for two
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Issuer on Issuer Request, or (if then held by the
Issuer) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuer as trustee thereof,
shall thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, the City of New York, New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer.
SECTION 10.05. Existence. Subject to Article Eight, the
Guarantors will do or cause to be done all things necessary to preserve and keep
in full force and effect the existence, rights (charter and statutory) and
franchises of the Guarantors, the Issuer and each of the Restricted
Subsidiaries; provided, however, that the Guarantors shall not be required to
preserve any such right or franchise if either Guarantor shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of such Guarantor, the Issuer or the Restricted Subsidiaries and that the loss
thereof is not disadvantageous in any material respect to the Holders.
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SECTION 10.05. Maintenance of Properties. The Guarantors will
cause all properties used or useful in the conduct of their business or the
business of the Issuer or any Restricted Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Guarantors may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent either Guarantor from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the reasonable judgment of the Parent Guarantor, desirable
in the conduct of its business or the business of the Issuer or any Restricted
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 10.06. Payment of Taxes and Other Claims. Neither
Guarantor will pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon such Guarantor or the Issuer or any
Restricted Subsidiaries or upon the income, profits or property of such
Guarantor or the Issuer or any Restricted Subsidiaries, and (2) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of such Guarantor or the Issuer or any Restricted
Subsidiaries; provided, however, that neither Guarantor shall be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings.
SECTION 10.07. Maintenance of Insurance. The Guarantors shall,
and shall cause the Issuer and the Restricted Subsidiaries to, keep at all times
all of their properties which are of an insurable nature insured against loss or
damage with insurers believed by the Guarantors to be responsible to the extent
that property of similar character is usually so insured by corporations
similarly situated and owning like properties in accordance with good business
practice.
SECTION 10.08. Limitation on Consolidated Debt. The Parent
Guarantor may not, and may not permit any Restricted Subsidiary of the Parent
Guarantor to, Incur any Debt (other than the Securities and the Securities
Guarantee) unless the ratio of (i) the aggregate
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consolidated principal amount of Debt (which is defined to include the accreted
value of any Debt issued at a discount) of the Parent Guarantor outstanding as
of the most recent available quarterly or annual balance sheet, after giving pro
forma effect to the Incurrence of such Debt and any other Debt Incurred since
such balance sheet date and the receipt and application of the proceeds thereof,
to (ii) four (5) times the Consolidated Cash Flow Available for Fixed Charges
for the most recent fiscal quarter next preceding the Incurrence of such Debt
for which consolidated financial statements are available, determined on a pro
forma basis as if any such Debt had been Incurred and the proceeds thereof had
been applied at the beginning of such recent fiscal quarter, would be less than
7.0 to 1.0 for such period.
Notwithstanding the foregoing limitation, the Parent Guarantor
and any Restricted Subsidiary may Incur the following:
(i) Debt under Credit Facilities in an aggregate principal
amount at any one time not to exceed $200 million, and any renewal,
extension, refinancing or refunding thereof in an amount which,
together with any principal amount remaining outstanding under all
Credit Facilities, does not exceed the aggregate principal amount
outstanding under all Credit Facilities immediately prior to such
renewal, extension, refinancing or refunding;
(ii) Debt owed by the Parent Guarantor to any Restricted
Subsidiary of the Parent Guarantor or Debt owed by a Restricted
Subsidiary of the Parent Guarantor to the Parent Guarantor or a
Restricted Subsidiary of the Parent Guarantor; provided, however, that
upon either (x) the transfer or other disposition by such Restricted
Subsidiary or the Parent Guarantor of any Debt so permitted to a Person
other than the Parent Guarantor or another Restricted Subsidiary of the
Parent Guarantor or (y) such Restricted Subsidiary ceasing to be a
Restricted Subsidiary, the provisions of this clause (ii) shall no
longer be applicable to such Debt and such Debt shall be deemed to have
been Incurred at the time of such transfer or other disposition;
(iii) Debt Incurred to renew, extend, refinance or refund
(each, a "refinancing") (x) Debt outstanding at the date hereof (after
giving effect to the Equity Clawback) or (y) Incurred pursuant to the
first
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paragraph of this Section, or clause (vi) or (vii) of this paragraph or
(z) the Securities issued on the date hereof or Securities exchanged
therefore, in each case, in an aggregate principal amount not to exceed
the aggregate principal amount of and accrued interest on the Debt so
refinanced plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Debt so
refinanced or the amount of any premium reasonably determined by the
Parent Guarantor as necessary to accomplish such refinancing by means
of a tender offer or privately negotiated repurchase, plus the expenses
of the Parent Guarantor or the Restricted Subsidiary effecting such
refinancing incurred in connection with such refinancing; provided,
however, that Debt the proceeds of which are used to refinance the
Securities or Debt which is pari passu to the Securities and the
Security Guarantee or Debt which is subordinate in right of payment to
the Securities and the Security Guarantee shall only be permitted if
(A) in the case of any refinancing of the Securities or Debt which is
pari passu to the Securities and the Security Guarantee, the
refinancing Debt is made pari passu or subordinated to the Securities
and the Security Guarantee, and, in the case of any refinancing of
Subordinated Debt, the refinancing Debt constitutes Subordinated Debt
and (B) in any case, the refinancing Debt by its terms, or by the terms
of any agreement or instrument pursuant to which such Debt is issued,
does not have a final stated maturity prior to the final stated
maturity of the Debt being refinanced, and the Average Life of such new
Debt is at least equal to the remaining Average Life of the Debt being
refinanced (assuming that such Debt being refinanced had a final stated
maturity three months later than its actual final stated maturity);
(iv) Debt in an aggregate principal amount not in excess of
(A) two (2) times the aggregate amount of the Parent Guarantor's
Incremental Paid-in Capital minus
(B) $165 million;
(v) Debt in an aggregate principal amount not in excess of 80%
of the aggregate amount of accounts receivable set forth on the most
recent unaudited quarterly or audited annual financial statements of
the Parent Guarantor and its consolidated subsidiaries filed with the
Commission;
(vi) Purchase Money Debt, which is incurred for the
construction, acquisition and improvement of
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Telecommunications Assets, provided that the amount of such Purchase
Money Debt does not exceed the cost of the construction, acquisition or
improvement of the applicable Telecommunications Assets;
(vii) Debt consisting of Permitted Interest Rate and
Currency Protection Agreements; and
(viii) Debt not otherwise permitted to be Incurred pursuant to
clauses (i) through (vii) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (viii), has an
aggregate principal amount not in excess of $50 million at any time
outstanding.
For purposes of determining compliance with this Section, with
respect to any item of Debt, (x) in the event that such item of Debt meets the
criteria of more than one of the types of Debt the Parent Guarantor or a
Restricted Subsidiary is permitted to Incur pursuant to the foregoing clauses
(i) through (viii), the Parent Guarantor shall have the right, in its sole
discretion, to classify such item of Debt and shall only be required to include
the amount and type of such Debt under the clause permitting the Debt as so
classified and (y) any other obligation of the obligor on such Debt (or of any
other Person who could have Incurred such Debt under this Section) arising under
any Guarantee, Lien or letter of credit supporting such Debt shall be
disregarded to the extent that such Guarantee, Lien or letter of credit secures
the principal amount of such Debt.
For purposes of determining compliance with any
Dollar-denominated restriction on the Incurrence of Debt denominated in a
foreign currency, the Dollar-equivalent principal amount of such
foreign-currency-denominated Debt Incurred pursuant thereto shall be calculated
based on the relevant currency exchange rate in effect on the date that such
foreign-currency-denominated Debt was Incurred, in the case of term debt, or
first committed, in the case of revolving credit debt; provided that (x) the
Dollar-equivalent principal amount of any such Debt outstanding on the date
hereof shall be calculated based on the relevant currency exchange rate in
effect on the date hereof and (y) if such Debt is Incurred to refinance other
Debt denominated in a foreign currency, and such refinancing would cause the
applicable Dollar-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
Dollar denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing
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Debt does not exceed the principal amount of such Debt being refinanced. The
principal amount of any Debt Incurred to refinance other Debt, if Incurred in a
different currency from the Debt being refinanced, shall be calculated based on
the currency exchange rate applicable to the currency in which such respective
Debt is denominated that is in effect on the date of such refinancing.
SECTION 10.09. Additional Amounts. Payments made by the Issuer
or the Guarantors pursuant to the Securities or the Securities Guarantee will be
made without withholding or deduction for taxes unless required by law. In the
event of (x) any change that becomes effective after the date hereof in the laws
of the U.K. or Bermuda or of any political subdivision or taxing authority
thereof or therein or any change in the interpretation or administration thereof
or (y) a failure by the Issuer to list and maintain a listing of the Securities
on a "recognized stock exchange" (within the meaning of Section 851 of the U.K.
Income and Corporation Taxes Act 1988) prior to the first date upon which
interest is required to be paid hereunder (a "Listing Failure"), the effect of
which is to require the withholding or deduction by the Issuer or the Guarantors
pursuant to the Securities or the Securities Guarantee, respectively, of any
amount for taxes that would not have been required to be withheld or deducted
absent such change or Listing Failure, as the case may be, the Issuer or the
Guarantors will pay, to the extent they may then lawfully do so, such additional
amounts ("Additional Amounts") as may be necessary in order that every net
payment of the principal of and interest on the Securities, after deduction for
withholding for or on account of any future tax, assessment or other
governmental charge will not be less than the amount provided for in the
Securities to be then due and payable; provided, however, that the foregoing
obligation to pay Additional Amounts shall not apply in respect of:
(i) any tax, withholding, assessment or other governmental
charge which would not have been imposed but for (x) the existence of
any present or former connection between such holder (or between a
fiduciary, settlor, beneficiary, member or shareholder of, or possessor
of a power over, such holder, if such holder is an estate, trust,
partnership or corporation) and the U.K. or Bermuda or any political
subdivision or taxing authority thereof including, without limitation,
such holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident
thereof or being or having been present or engaged in trade or business
therein or
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having or having had a permanent establishment therein or (y) the
presentation of a Security or a Securities Guarantee (where
presentation is required) for payment on a date more than 30 days after
the date on which such payment became due and payable or the date on
which payment thereof is duly provided for, whichever occurs later,
except for Additional Amounts with respect to Taxes that would have
been imposed had the holder presented the Security for payment within
such 30-day period;
(ii) any estate, inheritance, gift, sale, transfer or personal
property tax;
(iii) any tax, assessment or other governmental charge that is
withheld by reason of the failure to timely comply by the holder or the
beneficial owner of the Security with a request in writing of the
Issuer or the Parent Guarantor (which request shall be furnished to the
Trustee) (x) to provide information concerning the nationality,
residence or identity of the holder or such beneficial owner or (y) to
make any declaration or other similar claim or satisfy any information
or reporting requirement, which, in the case of (x) or (y), is required
or imposed by a statute, treaty, regulation or administrative practice
of the taxing or domicile jurisdiction as a precondition to exemption
from or reduction of all or part of such tax, assessment or other
governmental charge; provided, however, that this clause (iii) shall
not apply to limit the Issuer's or Guarantors' obligation to pay
Additional Amounts if the completing and filing of the information
described in subclause (x) or the declaration or other claim described
in subclause (y) would be materially more onerous in form, in procedure
or in substance of information disclosed, in comparison to the
information reporting requirements imposed under U.S. tax law with
respect to Forms 1001, W-8 and W-9; or
(iv) any tax, withholding, assessment or other governmental
charge resulting from a Listing Failure with respect to any Security
issued in the form of a Definitive Security pursuant to the terms of
the Deposit Agreement and this Indenture; or
(v) any combination of items (i), (ii), (iii) and (iv) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any Security or Securities Guarantee
to
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any holder who is not the sole beneficial owner of such Security or
Securities Guarantee or is a fiduciary or partnership, but only to the
extent that a beneficial owner, a beneficiary or a settlor with respect
to a fiduciary or a member of the partnership would not have been
entitled to the payment of the Additional Amount had the beneficial
owner, beneficiary, settlor or member of such partnership received
directly its beneficial or distributive share of the payment.
At least 30 days prior to each date on which any payment under
or with respect to the Securities is due and payable, if the Issuer or the
Guarantors will be obligated to pay Additional Amounts with respect to such
payment, the Issuer or the Guarantors will deliver to the Trustee an Officer's
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 (and 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.
SECTION 10.10. Limitation on Restricted Payments. The Parent
Guarantor (i) may not, and will not permit any Restricted Subsidiary, directly
or indirectly, to declare or pay any dividend, or make any distribution, in
respect of its Capital Stock or to the holders thereof, excluding (x) any
dividends or distributions payable solely in shares of its Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to acquire its
Capital Stock (other than Disqualified Stock), (y) any dividends paid to the
Parent Guarantor or a Restricted Subsidiary, or (z) pro rata dividends paid on
shares of Common Stock of Restricted Subsidiaries, (ii) may not, and may not
permit any Restricted Subsidiary to, purchase, redeem, or otherwise retire or
acquire for value (a) any Capital Stock of the Parent Guarantor or any Related
Person of the Parent Guarantor (other than a permitted refinancing) or (b) any
options, warrants or rights to purchase or acquire shares of Capital Stock of
the Parent Guarantor or any Related Person of the Parent Guarantor or any
securities convertible or exchangeable into shares of Capital Stock of the
Parent Guarantor or any Related Person of the Parent Guarantor (other than a
permitted refinancing), (iii) may not make, or
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permit any Restricted Subsidiary to make, any Investment, except for Permitted
Investments, and (iv) may not, and may not permit any Restricted Subsidiary to,
redeem, defease, repurchase, retire or otherwise acquire or retire for value,
prior to any scheduled maturity, repayment or sinking fund payment, Debt of the
Guarantors or the Issuer which is subordinate in right of payment to the
Securities or the Securities Guarantee (each of clauses (i) through (iv) being a
"Restricted Payment") if: (1) an Event of Default, or an event that with the
passing of time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing, or (2) except with respect to
Investments, upon giving effect to such Restricted Payment, the Parent Guarantor
could not Incur at least $1.00 of additional Debt pursuant to the first
paragraph of Section 10.08, or (3) upon giving effect to such Restricted
Payment, the aggregate of all Restricted Payments from the date hereof exceeds
the sum of: (a)(x) Consolidated Cash Flow Available for Fixed Charges since the
end of the last full fiscal quarter prior to the date hereof through the last
day of the last full fiscal quarter ending immediately preceding the date of
such Restricted Payment (the "Calculation Period") minus (y) 1.5 times
Consolidated Interest Expense for the Calculation Period plus (b) an amount
equal to the net reduction in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on Debt,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to the Parent Guarantor or any Restricted Subsidiary or from the Net
Cash Proceeds from the sale of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation of
Consolidated Cash Flow Available for Fixed Charges for the Calculation Period),
or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of Investment), not to
exceed, in each case, the amount of Investments previously made by the Parent
Guarantor or any Restricted Subsidiary in such Person or Unrestricted Subsidiary
plus (c) an amount equal to the aggregate net proceeds received after the date
hereof, including the fair market value of property other than cash (determined
in good faith by the Board of Directors as evidenced by a resolution of the
Board of Directors filed with the Trustee), as capital contributions to the
Parent Guarantor or from the issuance (other than to a Subsidiary) of Capital
Stock (other than Disqualified Stock) of the Parent Guarantor and warrants,
rights or options on Capital Stock (other than Disqualified Stock) of the Parent
Guarantor and the principal amount at maturity of Debt of Parent Guarantor or
any Restricted Subsidiary that
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has been converted into Capital Stock (other than Disqualified Stock and other
than by a Subsidiary) of the Parent Guarantor after the date hereof plus (d) $30
million.
Notwithstanding the foregoing, (i) the Parent Guarantor may
pay any dividend on Capital Stock of any class of the Parent Guarantor within 60
days after the declaration thereof if, on the date when the dividend was
declared, the Parent Guarantor could have paid such dividend in accordance with
the foregoing provisions, (ii) the Parent Guarantor may make acquisitions of a
minority equity interest in entities engaged in the Telecommunications Business;
provided that (A) the acquisition of a majority equity interest in such entities
is not then permitted or practicable under applicable law without regulatory
consent or change of law, (B) the Board of Directors of the Parent Guarantor
determines in good faith that there is a substantial probability that such
approval or change of law will be obtained, (C) the Parent Guarantor or one of
its Restricted Subsidiaries has the right to acquire Capital Stock representing
a majority of the voting power of the Voting Stock of such entity upon receipt
of regulatory consent or change of law and does acquire such Voting Stock
reasonably promptly upon receipt of such consent or change of law and (D) in the
event that such consent or change of law has not been obtained within 18 months
of funding such Investment, the Parent Guarantor or one of its Restricted
Subsidiaries has the right to sell such minority equity interest to the Person
from whom it acquired such interest, for consideration consisting of the
consideration originally paid by the Parent Guarantor and its Restricted
Subsidiaries for such minority equity interest; (iii) the Parent Guarantor may
repurchase any shares of its Common Stock or options to acquire its Common Stock
from Persons who were formerly directors, officers or employees of the Parent
Guarantor or any of its Subsidiaries, provided that the aggregate amount of all
such repurchases made pursuant to this clause (iii) shall not exceed $6 million,
plus the aggregate cash proceeds received by the Parent Guarantor since the date
hereof from issuances of its Common Stock or options to acquire its Common Stock
to directors, officers and employees of the Parent Guarantor or any of its
Subsidiaries, (iv) the Parent Guarantor or a Restricted Subsidiary may redeem,
defease, repurchase, retire or otherwise acquire or retire for value Debt of the
Guarantors or the Issuer which is subordinated in right of payment to the
Securities or the Security Guarantees, as the case may be, in exchange for, or
out of the proceeds of a substantially concurrent sale (other than to a
Subsidiary) of, Capital Stock (other than Disqualified Stock of the
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Parent Guarantor) or in a refinancing that satisfies the requirements of clause
(iii) of the second paragraph of Section 10.08, (v) the Parent Guarantor and its
Restricted Subsidiaries may retire or repurchase any Capital Stock of the Parent
Guarantor or of any Subsidiary of the Parent Guarantor in exchange for, or out
of the proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Parent Guarantor) of, Capital Stock (other than Disqualified Stock) of
the Parent Guarantor or such Restricted Subsidiary and (vi) the Parent Guarantor
or a Restricted Subsidiary may make payments or distributions to dissenting
stockholders pursuant to applicable law or pursuant to or in connection with a
transaction governed by the provisions of Article VIII hereof, provided that the
number of shares as to which dissent or appraisal rights are exercised and such
payments or distributions are being made does not exceed 1% of the total number
of shares of all classes for which such rights are exercisable.
SECTION 10.11. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. The Parent Guarantor may not,
and may not permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of the
Parent Guarantor (i) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock owned by the Parent Guarantor or
any other Restricted Subsidiary of the Parent Guarantor or pay any Debt or other
obligation owed to the Parent Guarantor or any other Restricted Subsidiary; (ii)
to make loans or advances to the Parent Guarantor or any other Restricted
Subsidiary; or (iii) to transfer any of its property or assets to the Parent
Guarantor or any other Restricted Subsidiary.
Notwithstanding the foregoing, the Parent Guarantor may, and
may permit any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction (a) pursuant to any agreement in effect on the date hereof; (b)
pursuant to an agreement relating to any Acquired Debt, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person so acquired and was not Incurred in anticipation
of such Person being acquired; (c) pursuant to an agreement effecting a renewal,
refunding or extension of Debt Incurred pursuant to an agreement referred to in
clause (a) or (b) above; provided, however, that the provisions contained in
such renewal, refunding or extension agreement relating to such encumbrance or
restriction are no
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more restrictive in any material respect than the provisions contained in the
agreement the subject thereof; (d) in the case of clause (iii) in the above
paragraph, contained in any security agreement (including a Capital Lease
Obligation) securing Debt of the Parent Guarantor or a Restricted Subsidiary
otherwise permitted hereunder, but only to the extent such restrictions restrict
the transfer of the property subject to such security agreement; (e) in the case
of clause (iii) in the above paragraph, with respect to customary nonassignment
provisions entered into in the ordinary course of business in leases and other
agreements; (f) with respect to a Restricted Subsidiary of the Parent Guarantor
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary, provided that (x) the consummation of such transaction
would not result in an Event of Default or an event that, with the passing of
time or the giving of notice or both, would constitute an Event of Default, (y)
such restriction terminates if such transaction is not consummated and (z) the
consummation or abandonment of such transaction occurs within one year of the
date such agreement was entered into; (g) pursuant to applicable law or required
by any regulatory authority having jurisdiction over the Parent Guarantor or any
Subsidiary; (h) pursuant to this Indenture and the Securities; (i) constituting
a Lien otherwise permitted pursuant to Section 10.15; and (j) other encumbrances
or restrictions that are not materially more restrictive than customary
provisions in comparable financings provided that each of the Issuer and the
Guarantors provides an Officer's Certificate to the Trustee to the effect that
in the opinion of the signers of such certificate such encumbrances or
restrictions will not materially impact the Issuer's and the Guarantors' ability
to make scheduled payments of interest and principal under the Securities.
SECTION 10.12. Limitation on Transactions with Affiliates and
Related Persons. The Parent Guarantor 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
Related Person or with any Affiliate of the Parent Guarantor or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Parent Guarantor 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
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providing therefor, in a comparable arm's-length transaction with a Person that
is not a Related Person 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 or (B) for which the Parent Guarantor or a Restricted
Subsidiary delivers to the Trustee a written opinion of a nationally recognized
investment banking firm (or a subsidiary or affiliate thereof) in the United
States stating that the transaction is fair to the Parent Guarantor or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Parent Guarantor and any of its Wholly Owned Restricted
Subsidiaries or solely between Wholly Owned Restricted Subsidiaries; and (iii)
any payments or other transactions pursuant to any tax-sharing agreement between
the Parent Guarantor and any other Person with which the Parent Guarantor files
a consolidated tax return or with which the Parent Guarantor is part of a
consolidated group for tax purposes. Notwithstanding the foregoing, any
transaction covered by the first paragraph of this Section and not covered by
clauses (ii) through (iii) of this paragraph must be approved or determined to
be fair in the manner provided for in clause (i)(A) or (B) above unless the
aggregate amount of such transaction is less than $5 million in value.
SECTION 10.13. Limitation on Asset Dispositions. (a) The
Parent Guarantor may not, and may not permit any Restricted Subsidiary of the
Parent Guarantor to, make any Asset Disposition in one or more related
transactions unless: (i) the Parent Guarantor or the Restricted Subsidiary, as
the case may be, receives consideration for such disposition at least equal to
the fair market value for the assets sold or disposed of as determined by the
Board of Directors in good faith and, in the case of an Asset Disposition in an
amount greater than $5 million, evidenced by a resolution of the Board of
Directors filed with the Trustee; and (ii) at least 75% of the consideration for
such disposition consists of (1) cash or readily marketable cash equivalents or
the assumption of Debt of the Guarantors (other than Debt that is subordinated
to the Securities and the Securities Guarantee) or of a Restricted Subsidiary
and release from all liability on the Debt assumed, or (2) Telecommunications
Assets. However, none of the provisions of Section 10.13 shall apply to the
issuance or sale of capital stock of (x) deltathree.com, (y) RSL Australia or
(z) RSL Spain, in each case, made in compliance with clause (v) of Section
10.15. In the event and to the extent that the Net Available Proceeds received
by the
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Parent Guarantor or any of its Restricted Subsidiaries from one or more Asset
Dispositions occurring on or after the date hereof in any period of 12
consecutive months exceed 10% of Consolidated Tangible Assets (determined as of
the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of the Parent Guarantor and its subsidiaries have
been filed with the Commission), then the Parent Guarantor or the Issuer shall
or shall cause the relevant Restricted Subsidiary to (i) within 12 months after
the date Net Available Proceeds so received exceed 10% of Consolidated Tangible
Assets (A) apply an amount equal to such excess Net Available Proceeds to
permanently repay unsubordinated Debt of the Parent Guarantor or any Restricted
Subsidiary providing a Subsidiary Guarantee pursuant to Section 10.15 or Debt of
any other Restricted Subsidiary, in each case owing to a Person other than the
Parent Guarantor 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 Telecommunications Assets and (ii) apply (no later than the
end of the 12-month period referred to in clause (i)) such excess Net Available
Proceeds (to the extent not applied pursuant to clause (i)) as provided in the
paragraph (b) below. The amount of such excess Net Available 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".
(b) 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 totals at least $10 million, the Issuer shall
repay any Debt of the Parent Guarantor or any Restricted Subsidiary to the
extent the terms of such Debt require repayment prior to an Offer to Purchase
being made hereunder (including by way of an offer to purchase to the holders of
such Debt, if so required). To the extent there are Excess Proceeds after such
repayment (or offer to purchase), the Issuer must commence, not later than the
fifteenth Business Day of such month (or if later, the fifteenth Business Day
after the expiration of any such required offer to purchase), and consummate an
Offer to Purchase from the holders of the Securities on a pro rata basis an
aggregate principal amount of Securities on the relevant Payment Date equal to
the Excess Proceeds on such date not applied or to be applied pursuant to the
first sentence of this paragraph (b), at a purchase price equal to 100% of the
principal
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amount of the Securities, plus, in each case, accrued interest (if any) to but
excluding the Payment Date and, to the extent required by the terms thereof, any
other Debt of the Parent Guarantor that is pari passu with the Securities at a
price no greater than 100% of the principal amount thereof plus accrued interest
to but excluding the date of purchase (or 100% of the accreted value in the case
of original issue discount Debt). To the extent there are any remaining Excess
Proceeds following the completion of the Offer to Purchase, the Issuer must
repay such other Debt of the Parent Guarantor or Debt of a Restricted Subsidiary
of the Parent Guarantor, to the extent permitted under the terms thereof and, to
the extent there are any remaining Excess Proceeds after such repayment, the
Issuer shall apply such amount to any other use as determined by the Issuer
which is not otherwise prohibited by this Indenture.
SECTION 10.15. Limitation on Issuances and Sales of Capital
Stock of Restricted Subsidiaries. The Parent Guarantor may not, and may not
permit any Restricted Subsidiary of the Parent Guarantor to, issue, transfer,
convey, sell or otherwise dispose of any shares of Capital Stock of a Restricted
Subsidiary of the Parent Guarantor or securities convertible or exchangeable
into, or options, warrants, rights or any other interest with respect to,
Capital Stock of a Restricted Subsidiary of the Parent Guarantor to any Person
other than the Parent Guarantor or a Wholly Owned Restricted Subsidiary of the
Parent Guarantor except (i) a sale of all of the Capital Stock of such
Restricted Subsidiary owned by the Parent Guarantor and any Restricted
Subsidiary of the Parent Guarantor that complies with Section 10.13 above to the
extent such Section applies, (ii) if required, the issuance, transfer,
conveyance, sale or other disposition of directors' qualifying shares, (iii)
Disqualified Stock issued in exchange for, or upon conversion of, or the
proceeds of the issuance of which are used to redeem, refinance, replace or
refund shares of Disqualified Stock of such Restricted Subsidiary; provided that
the amounts of the redemption obligations of such Disqualified Stock shall not
exceed the amounts of the redemption obligations of, and such Disqualified Stock
shall have redemption obligations no earlier than those required by, the
Disqualified Stock being exchanged, converted, redeemed, refinanced, replaced or
refunded and (iv) issuances of not more than 59% of the voting stock and equity
interest in a Restricted Subsidiary engaged in the Telecommunications Business
(1) in connection with the acquisition of such Restricted Subsidiary or of
Telecommunications Assets acquired or to be acquired by the Parent Guarantor or
a Restricted Subsidiary or (2) to a
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Strategic Investor; provided, that the Parent Guarantor complies with Section
10.13 above to the extent such Section applies and (v) issuances or sales of
capital stock of each of deltathree.com, RSL Australia and RSL Spain, including
pursuant to stock option plans or other equity compensation and incentive plans
established for each of their respective employees, directors, and consultants,
so long as immediately after giving effect to such issuances and sales, the
issuer of such capital stock is a Restricted Subsidiary.
SECTION 10.15. Limitation on Liens. The Parent Guarantor may
not, and may not permit any Restricted Subsidiary of the Parent Guarantor to,
Incur or suffer to exist any Lien on or with respect to any property or assets
now owned or hereafter acquired to secure any Debt without making, or causing
such Restricted Subsidiary to make, effective provision for securing the
Securities (x) equally and ratably with such Debt as to such property for so
long as such Debt will be so secured or (y) in the event such Debt is Debt of
the Parent Guarantor which is subordinate in right of payment to the Securities,
prior to such Debt as to such property for so long as such Debt will be so
secured.
The foregoing restrictions shall not apply to: (i) Liens
existing on the date hereof and securing Debt outstanding on the date hereof;
(ii) Liens securing Debt outstanding or available under all Credit Facilities to
the extent such Debt is permitted under clause (i) of the second paragraph of
Section 10.08; (iii) Liens in favor of the Parent Guarantor or any Restricted
Subsidiary of the Parent Guarantor; (iv) Liens on real or personal property of
the Parent Guarantor or a Restricted Subsidiary of the Parent Guarantor
acquired, constructed or constituting improvements made after the date of
original issuance of the Securities to secure Purchase Money Debt which is
Incurred for the construction, acquisition and improvement of Telecommunications
Assets and is otherwise permitted under this Indenture; provided, however, that
(a) the principal amount of any Debt secured by such a Lien does not exceed 100%
of such purchase price or cost of construction or improvement of the property
subject to such Liens, (b) such Lien attaches to such property prior to, at the
time of or within 180 days after the acquisition, completion of construction or
commencement of operation of such property and (c) such Lien does not extend to
or cover any property other than the specific item of property (or portion
thereof) acquired, constructed or constituting the improvements made with the
proceeds of such Purchase Money Debt; (v) Liens to secure Acquired Debt;
provided, however, that (a) such Lien attaches to the acquired asset prior to
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the time of the acquisition of such asset and (b) such Lien does not extend to
or cover any other asset; (vi) Liens to secure Debt Incurred to extend, renew,
refinance or refund (or successive extensions, renewals, refinancings or
refundings), in whole or in part, Debt secured by any Lien referred to in the
foregoing clauses (i), (ii), (iv) and (v) so long as the principal amount of
Debt so secured is not increased except as otherwise permitted under clause
(iii) of the second paragraph of Section 10.08 and, in the case of Liens to
secure Debt incurred to extend, renew, refinance or refund Debt secured by a
Lien referred to in the foregoing clause (i), (iv) or (v), such Liens do not
extend to any other property; and (vii) Permitted Liens.
SECTION 10.16. Limitation on Issuance of Guarantees of Debt by
Restricted Subsidiaries. The Parent Guarantor will not permit any Restricted
Subsidiary, directly or indirectly, to incur any Guarantee of any Debt of the
Guarantors or the Issuer unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for a Guarantee by such
Subsidiary of the Securities; any Subsidiary Guarantee by such Subsidiary of the
Securities (x) will be senior in right of payment to any Guarantee of
Subordinated Debt of the Guarantors or the Issuer and (y) will be pari passu
with or senior to any Guarantee of any other Debt of the Guarantors or the
Issuer.
Notwithstanding the foregoing, any Subsidiary Guarantee 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 the Parent Guarantor, of all of the Parent Guarantor'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.
SECTION 10.17. Change of Control. (a) Unless the Issuer has
heretofore exercised its right to redeem all of the Securities in accordance
with the terms of this Indenture and the Securities, upon the occurrence of a
Change of Control (as defined below), each Holder of a Security shall have the
right to have such Security repurchased by the Issuer on the terms and
conditions precedent set forth in this Section 10.17 and otherwise in this
Indenture. The Issuer shall, within 30 days following
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the date of the consummation of a transaction resulting in a Change of Control,
mail an Offer with respect to an Offer to Purchase all Outstanding Securities at
a purchase price equal to 101% of their principal amount plus accrued interest
to but excluding the date of purchase. Installments of interest (including
Special Interest) whose Stated Maturity is on or prior to the Purchase Date
shall be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.07. Each Holder
shall be entitled to tender all or any portion of the Securities owned by such
Holder pursuant to the Offer to Purchase, subject to the requirement that any
portion of a Security tendered must be tendered in an integral multiple of
(U)1,000 principal amount at maturity.
(b) The Issuer and Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. Prior to the
Purchase Date, the Issuer shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if the Issuer is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) 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 so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Issuer. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security or Securities equal in principal amount to any unpurchased portion of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Issuer to the Holder
thereof.
(c) A "Change of Control" shall be deemed to have occurred in
the event that, after the date of this Indenture, either (i) a "person" or
"group" (within the meaning of Sections 13(d) and 15(d)(2) of the Exchange Act)
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 35% of the total voting power of the Voting Stock of
the Parent Guarantor, on a fully diluted basis, and such ownership is greater
than the amount of voting power of the Voting Stock of the Parent Guarantor, on
a fully diluted basis, held by the Existing Stockholders and their Affiliates on
such date;
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(ii) individuals who on the date of this Indenture constitute the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the Parent Guarantor's
stockholders 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 on the date of this Indenture 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 then in office; or (iii) all
of the Common Stock of the Issuer is not beneficially owned by the Parent
Guarantor (other than directors' qualifying shares).
(d) In the event that the Issuer makes an Offer to Purchase
the Securities, the Issuer and the Guarantors shall comply with any applicable
securities laws and regulations, including any applicable requirements of
Section 15(e) of, and Rule 15e-1 under, the Securities Exchange Act.
SECTION 10.18. Provision of Financial Information. The
Guarantors and the Issuer have agreed that, for so long as any Securities remain
Outstanding, each will furnish to the holders of the Securities and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 155A(d)(5) under the
Securities Act. In addition, the Guarantors and the Issuer will file with the
Trustee within 15 days after it files them with the Commission copies of the
annual and quarterly reports and the information, documents, and other reports
that the Guarantors or the Issuer is required to file with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports"). In the
event either Guarantor or the Issuer shall cease to be required to file SEC
Reports pursuant to the Exchange Act, such Guarantor and the Issuer will
nevertheless continue to file such reports with the Commission (unless the
Commission will not accept such a filing) and the Trustee. The Guarantors and
the Issuer will furnish copies of the SEC Reports to the holders of Securities
at the time the Guarantors or the Issuer is required to file the same with the
Trustee and will make such information available to investors who request it in
writing.
SECTION 10.19. Statement by Officers as to Default. (a) The
Issuer and the Guarantors will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Parent Guarantor ending after the date hereof,
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an Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof either Guarantor or the Issuer is in default in the performance
and observance of any of the terms, provisions and conditions of Sections 10.05
to 10.18, inclusive, and if either Guarantor or the Issuer shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
(b) The Issuer and the Guarantors shall deliver to the
Trustee, as soon as possible and in any event within 10 days after the Issuer or
either Guarantor becomes aware of the occurrence of an Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Issuer or such Guarantor proposes to
take with respect thereto.
SECTION 10.20. Waiver of Certain Covenants. The Issuer, the
Parent Guarantor or the Subsidiary Guarantor, as applicable, may omit in any
particular instance to comply with any covenant or condition set forth in
Sections 10.05 to 10.17, inclusive, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount at
maturity of the Outstanding Securities shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Issuer and the Guarantors
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
SECTION 10.21. Paying Agent. The Issuer shall not authorize or
designate any Person (including the Trustee) as a Paying Agent hereunder unless
such Person is located outside of the United Kingdom.
ARTICLE XI
Redemption of Securities
SECTION 11.01. Right of Redemption. (a) At any time prior to
March 1, 2003, in the event that the Parent Guarantor receives net cash proceeds
from the public or private sale of its Common Stock (other than Disqualified
Stock), the Issuer (to the extent it receives such proceeds
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and has not used such proceeds, directly or indirectly, to redeem or repurchase
other securities pursuant to optional redemption provisions) may, at its option,
apply an amount equal to any such net cash proceeds to redeem, from time to
time, Securities in a principal amount at maturity of up to an aggregate amount
equal to 33 1/3% of the original aggregate principal amount at maturity of the
Securities; provided, however, that Securities in an amount equal to at least 66
2/3% of the original aggregate principal amount at maturity of the Securities
remain Outstanding after each redemption. Each redemption must occur on a
Redemption Date within 180 days of the related sale and upon not less than 30
nor more than 60 days' notice by mail to each Holder of Securities to be
redeemed at such Holder's address appearing in the Security Register, in amounts
of (U)1,000 or an integral multiple of (U)1,000 at a Redemption Price of
112.875% of the principal amount of the Securities plus accrued interest to but
excluding the Redemption Date (subject to, in the case of a Global Security in
bearer form, the right of the Holder thereof and, in the case of Definitive
Securities, the right of Holders of record on the relevant Regular Record Date,
to receive Interest due on an Interest Payment Date that is on or prior to the
Redemption Date).
(b) In the event that (i) the Guarantors or the Issuer has
become or would become obligated to pay any Additional Amounts as a result of
(x) changes affecting withholding tax laws or (y) a Listing Failure (as defined
herein) provided that the Issuer has used reasonable best efforts to list and
maintain the listing of the Securities on a "recognized stock exchange" (within
the meaning of Section 851 of the U.K. Income and Corporation Taxes Act 1988)
(as provided for in Section 10.09), and (ii) the Guarantors and the Issuer are
unable to avoid the requirement to pay such Additional Amounts by taking
reasonable measures available to them (including, without limitation, the
Guarantors making payments directly to holders under the Securities Guarantee,
unless such payment is likely to result in adverse consequences to the Issuer or
either Guarantor), then the Issuer may redeem all, but not less than all, of the
Securities at any time at 100% of the principal amount thereof on the Redemption
Date, together with accrued interest thereon, if any, to but excluding the
Redemption Date (subject to, in the case of a Global Security in bearer form,
the right of the Holder thereof and, in the case of Definitive Securities, the
right of Holders of record on the relevant Regular Record Date, to receive
Interest due on an Interest Payment Date that is on or prior to the Redemption
Date). Prior to the publication
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of the notice of redemption in accordance with the foregoing, the Issuer shall
deliver to the Trustee an officer's certificate stating that the Issuer is
entitled to effect such redemption based on a written opinion of independent tax
counsel or accounting firm reasonably satisfactory to the Trustee.
(c) The Securities further may be redeemed, as a whole or in
part, at the election of the Issuer, at any time on or after March 1, 2005 and
prior to maturity, upon not less than 30 nor more than 60 days' notice by mail
to each Holder of Securities to be redeemed at such Holder's address appearing
in the Security Register, in amounts of (U)1,000 or an integral multiple of
(U)1,000, at the Redemption Prices specified in the form of Security
hereinbefore set forth, together with accrued interest to but excluding the
Redemption Date (subject to, in the case of a Global Security in bearer form,
the right of the Holder thereof and, in the case of Definitive Securities, the
right of Holders of record on the relevant Regular Record Date, to receive
Interest due on an Interest Payment Date that is on or prior to the Redemption
Date).
SECTION 11.02. Applicability of Article. Redemption of
Securities at the election of the Issuer, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.
SECTION 11.03. Election To Redeem; Notice to Trustee. The
election of the Issuer to redeem any Securities pursuant to Section 11.01 shall
be evidenced by a Board Resolution. In case of any redemption at the election of
the Issuer of less than all the Securities, the Issuer shall, at least 5 days
prior to giving notice of such redemption pursuant to Section 11.05 (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee in
writing of such Redemption Date and of the principal amount of Securities to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Issuer shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 11.05. Securities To Be Redeemed Pro Rata. If less
than all the Securities are to be redeemed in any redemption, the Securities to
be redeemed shall be selected by the Trustee by prorating, as nearly as may be
practicable, the principal amount at maturity of Securities
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to be redeemed. In any proration pursuant to this Section, the Trustee shall
make such adjustments, reallocations and eliminations as it shall deem proper to
the end that the principal amount at maturity of Securities so prorated shall be
(U)1,000 or a multiple thereof, by increasing or decreasing or eliminating the
amount which would be allocable to any Holder on the basis of exact proportion
by an amount not exceeding (U)1,000. The Trustee in its discretion may determine
the particular Securities (if there are more than one) registered in the name of
any Holder which are to be redeemed, in whole or in part. The Trustee shall
incur no liabilities for any selection made pursuant to this Section 11.05.
The Trustee shall promptly notify the Issuer and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount at
maturity thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount at maturity of such Securities
which has been or is to be redeemed.
SECTION 11.05. Notice of Redemption. Notice of redemption
shall be given by first-class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at such Holder's address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) whether the redemption is being made pursuant to Section
11.01(a), (b) or (c) and, if being made pursuant to Section 11.01(a) or
(b), a brief statement setting forth the Issuer's right to effect such
redemption and the Issuer's basis therefor,
(5) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption of
any Securities, the
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principal amounts at maturity) of the particular Securities to be
redeemed,
(5) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(7) that in the case that a Security is only redeemed in part,
the Issuer shall execute and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a new Security
or Securities in an aggregate amount equal to the unredeemed portion of
the Security.
Notice of redemption of Securities to be redeemed at the
election of the Issuer shall be given by the Issuer or, at the Issuer's request,
by the Trustee in the name and at the expense of the Issuer. If so requested by
the Issuer, the Trustee shall mail any such notice not later than the date
specified for mailing by the Issuer, which shall not be sooner than 5 days after
receipt by the Trustee of such request (unless a shorter period shall be
satisfactory to the Trustee).
SECTION 11.06. Deposit of Redemption Price. Prior to any
Redemption Date, the Issuer shall deposit with the Trustee or with a Paying
Agent (or, if the Issuer is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are to be redeemed
on that date.
SECTION 11.07. Securities Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Issuer shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall cease to bear interest. Upon surrender of any such Security for redemption
in accordance with said notice, such Security shall be paid by the Issuer at the
Redemption Price, together with accrued interest to but excluding the
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Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the bearer of
such Security, in the case of a Global Security in bearer form, and, in the case
of a Definitive Security, to Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.07.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate provided
by the Security.
SECTION 11.08. Securities Redeemed in Part. Any Security which
is to be redeemed only in part shall be surrendered at an office or agency of
the Issuer designated for that purpose pursuant to Section 10.02 (with, if the
Issuer or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Issuer
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities of like
tenor, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE XII
Discharge of Indenture
SECTION 12.01. Termination of Issuer's Obligations. Except as
otherwise provided in this Section 12.01, each of the Issuer and the Guarantors
may terminate its obligations under the Securities and this Indenture if:
(a) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities for whose payment money or securities have
theretofore been held in trust and thereafter repaid to the Issuer, as
provided in Section 12.05) have been delivered to the Trustee for
cancelation and the Issuer has paid all sums payable by it hereunder;
or
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(b)(i) all such 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, (ii)
the Issuer irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form satisfactory to the Trustee, as trust funds solely for the benefit
of the Holders of such Securities 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 such Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder, (iii) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, (iv) 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 Parent Guarantor or the Issuer is a party or by
which it is bound, (v) if at such time the Securities are listed on a
national securities exchange, the Securities will not be delisted as a
result of such deposit, defeasance and discharge, 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 satisfaction and discharge of this Indenture
have been complied with.
With respect to the foregoing clause (a), the Issuer's
obligations under Section 6.07 shall survive. With respect to the foregoing
clause (b), the Issuer's obligations in Sections 3.03, 3.05, 3.05, 3.06, 3.07,
10.01, 10.09, 6.07, 6.10, 6.11, 12.05, 12.05 and 12.06 shall survive until the
Securities have matured or have been redeemed. Thereafter, only the Issuer's
obligations in Sections 6.07, 12.05 and 12.06 shall survive. After any such
irrevocable deposit, the Trustee upon written request shall acknowledge in
writing the discharge of the Issuer's obligations under the Securities and this
Indenture, and the Parent Guarantor's obligations under the Guarantee and this
Indenture, except for those surviving obligations specified above.
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SECTION 12.02. Defeasance and Discharge of Indenture. The
Issuer will be deemed to have paid and the Issuer and the Guarantors will be
discharged from any and all obligations in respect of the Securities and the
Securities Guarantee on the 123rd day after the date of the deposit referred to
in clause (a) of this Section 12.02 if:
(a) with reference to this Section 12.02, the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee and has conveyed all right, title and interest for the benefit
of the Holders, under the terms of an irrevocable trust agreement in
form 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 (i) money in an amount, (ii) 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 (iii) 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 or upon earlier redemption;
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 and to give any related notice of redemption;
(b) 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 Guarantors, the Issuer or any of their
Subsidiaries is a party or by which the Guarantors, the Issuer or any
of their Subsidiaries is bound;
(c) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of
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Default, or event that after the giving of notice or lapse of time or
both could become a 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 after the date of such deposit;
(d) the Issuer shall have delivered to the Trustee either (i)
a ruling based on relevant law and practice at the time directed to the
Trustee from the Inland Revenue or other relevant tax authority to the
effect that the Holders will not recognize income, gain or loss for
U.K. income tax or other tax purposes as a result of the Issuer's
exercise of its option under this Section 12.02, disregarding income
tax on any amounts that would have been received but for such exercise
of its option under this Section 12.02, and will be subject to U.K.
income tax on the same amount and in the same manner and at the same
time as would have been the case if such option had not been exercised
or (ii) an Opinion of Counsel to the same effect as the ruling
described in clause (i) above;
(e) the Issuer shall have delivered to the Trustee (i) either
(A) a ruling directed to the Trustee received from the Internal Revenue
Service to the effect that the Holders will not recognize additional
income, gain or loss for U.S. federal income tax purposes as a result
of the Issuer's exercise of its option under this Section 12.02 and
will be subject to U.S. 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 or (B) an Opinion of Counsel to the
same effect as the ruling described in clause (A) above accompanied by
a ruling to that effect published by the Internal Revenue Service,
unless there has been a change in the relevant U.S. federal income tax
law since the date of this Indenture and (ii) an Opinion of Counsel to
the effect that (A) the creation of the defeasance trust does not
violate the Investment Company Act of 1950 and (B) 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 "connected" with
the Issuer for purposes of the Insolvency Act 1986 after two years
following the deposit), the trust funds will not be subject to the
effect of Section 557 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law and either (I) the trust
funds will no longer remain the property of the Issuer (and therefore
will
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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 (1)
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 and (2) 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 Debt of the Issuer or any of its Securities;
(f) if at such time the Securities are 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 the Issuer's exercise of its opinion under this
Section 12.02; and
(g) the Issuer shall have 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 12.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the post
deposit period referred to in clause (e)(ii)(B) of this Section 12.02, none of
the Issuer's obligations under this Indenture shall be discharged. Subsequent to
the end of such period with respect to this Section 12.02, the Issuer's
obligations in Sections 3.03, 3.05, 3.05, 3.06, 3.07, 10.01, 10.09, 6.07, 6.10,
6.11, 12.05, 12.05 and 12.06 shall survive until the Securities mature or are
redeemed. Thereafter, only the Issuer's obligations in Sections 6.07, 12.05 and
12.06 shall survive. If and when a ruling from the Internal Revenue Service or
an Opinion of Counsel referred to in clause (e)(i) of this Section 12.02 may be
provided specifically without regard to, and not in reliance upon, the
continuance of the Issuer's obligations under Section 10.01, then the Issuer's
obligations under such sentence 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
12.02.
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After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Issuer's obligations under the
Securities, any Subsidiary Guarantee, if any, and this Indenture except for
those surviving obligations in the immediately preceding paragraph.
SECTION 12.03. Defeasance of Certain Obligations. The Issuer
and the Guarantors may omit to comply with any term, provision or condition set
forth in clauses (3) and (5) of Section 8.01 and Sections 10.05 through 10.18
(except for Section 10.09 and any covenant otherwise required by the TIA), and
clause (d) of Section 5.01 with respect to clauses (3) and (5) of Section 8.01,
clauses (d) and (e) of Section 5.01 with respect to Sections 10.05 through
10.18, except as aforesaid, and clauses (c), (f) and (g) of Section 5.01 shall
be deemed not to be Events of Default, in each case with respect to the
Outstanding Securities if:
(a) with reference to this Section 12.03, the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee 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 Securities, and dedicated solely to,
the benefit of the Holders, in and to (i) money in an amount, (ii) 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 (a), money in an amount or (iii) 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 or upon earlier redemption 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
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principal, premium, if any, and interest with respect to the Securities
and to give any related notice of redemption;
(b) 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 Parent Guarantor, the Issuer or any of their
Subsidiaries is a party or by which the Parent Guarantor, the Issuer or
any of their Subsidiaries is bound;
(c) immediately after giving effect to such deposit or a pro
forma basis, no Default or Event of Default, or event that after the
giving of notice or lapse of time or both would become a 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 after the day
of such deposit;
(d) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (i) the creation of the defeasance trust
does not violate the Investment Company Act of 1950, (ii) the Holders
will not recognize income, gain or loss for U.S. 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 12.03
and will be subject to U.S. 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 and (iii) 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
"connected" with the Issuer for purposes of the Insolvency Act 1986
after two years following the deposit), the trust funds will not be
subject to the effect of Section 557 of the United States Bankruptcy
Code or Section 15 of the New York Debtor and Creditor Law, and either
(A) the trust funds will no longer remain the property of the Issuer
(and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditor's rights generally) or (B) if a court were to rule under any
such law in any case or proceeding that the trust funds remained
property of the Issuer (1) 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
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valid and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise and (2) 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 or holders of other Indebtedness of the Issuer or any
of its Securities;
(e) if at such time the Securities are listed on a national
securities exchange, the Issuer has delivered to the Trustee an Opinion
of Counsel to the effect that the Securities will not be delisted as a
result of the Issuer's exercise of its option under Section 12.03; and
(f) 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 12.03 have been complied with.
SECTION 12.05. Application of Trust Money. Subject to Section
12.06, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 12.01, 12.02 or 12.03, 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 12.05. Repayment to Issuer. Subject to Sections 6.07,
12.01, 12.02 and 12.03, the Trustee and the Paying Agent shall promptly pay to
the Issuer upon request set forth in an Officers' Certificate 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 in accordance with Section 10.02.
SECTION 12.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
Section 12.01, 12.02 or 12.03, 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
obligations of the Issuer
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and the Guarantors under this Indenture, the Securities Guarantee, and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 12.01, 12.02 or 12.03, 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 12.01, 12.02 or 12.03, as the
case may be; provided that, if the Issuer has made any payment of principal of,
premium, if any, or interest on any Securities because of the reinstatement of
its obligations, the Issuer 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 12.07. Insiders. With respect to the determination of
the Persons constituting beneficial owners of Securities and whether any such
Person is "connected" with the Issuer for purposes of Sections 12.02(e)(ii)(B)
and 12.03(d)(iii), the Trustee may rely on an Officers' Certificate.
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[EURO DENOMINATED NOTES INDENTURE]
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
Dated:
The Common Seal of
RSL COMMUNICATIONS PLC
was hereto affixed in
the presence of:
[SEAL]
RSL COMMUNICATIONS PLC,
by /s/ Donald R. Shassian
-----------------------------
Name:
Title:
by /s/ Margaret B. Niche
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
by /s/ Robert S. Peschler
-----------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
by /s/ Donald R. Shassian
-----------------------------
Name:
Title:
RSL COM U.S.A., INC.
by /s/ Joel Beckoff
-----------------------------
Name:
Title:
<PAGE>
ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to ss. 3.05(b)(i) and (iii)
of the Indenture)
The Chase Manhattan Bank,
as Trustee
550 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
Re: 12 7/8% Senior Notes due 2010 of
RSL Communications PLC (the "Securities")
Reference is made to the Indenture, dated as of February 12,
2000 (the "Indenture"), between RSL Communications PLC (the "Issuer"), RSL
Communications, Ltd. (the "Parent Guarantor") RSL COM U.S.A., Inc. (the
"Subsidiary Guarantor") and The Chase Manhattan Bank, as Trustee. Terms used
herein and defined in the Indenture or in Regulation S or Rule 155 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein
as so defined.
This certificate relates to (U)____________ principal amount
at maturity of Securities, which are evidenced by the following certificate(s)
(the "Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Book-Entry Depositary who issued a Depositary Interest to the Common
Depositary who holds such interest in the name of the Undersigned. If the
Specified Securities are not represented by a Global Security, they are
registered in the name of the Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who
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<PAGE>
will take delivery in the form of a Regulation S Security. In connection with
such transfer, the Owner hereby certifies that, unless such transfer is being
effected pursuant to an effective registration statement under the Securities
Act, it is being effected in accordance with Rule 905 or Rule 155 under the
Securities Act and with all applicable securities laws of the states of the
United States and other jurisdictions. Accordingly, the Owner hereby further
certifies as follows:
(1) Rule 905 Transfers. If the transfer is being effected in
accordance with Rule 905:
(A) the Owner is not a distributor of the Securities,
an affiliate of the Issuer or any such distributor or a person
acting on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not
made to a person in the United States;
(C) either:
(i) at the time the buy order was
originated, the Transferee was outside the United
States or the Owner and any person acting on its
behalf reasonably believed that the Transferee was
outside the United States, or
(ii) the transaction is being executed in,
on or through the facilities of the Eurobond market,
as regulated by the Association of International Bond
Dealers, or another designated offshore securities
market and neither the Owner nor any person acting on
its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the
United States by or on behalf of the Owner or any affiliate
thereof;
(E) if the Owner is a dealer in securities or has
received a selling concession, fee or other remuneration in
respect of the Specified Securities, and the transfer is to
occur during the Restricted Period, then the requirements of
Rule 905(c)(1) have been satisfied; and
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(F) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act.
(2) Rule 155 Transfers. If the transfer is being effected
pursuant to Rule 155:
(A) the transfer is occurring after a holding period
of at least one year (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of Rule 155; or
(B) the transfer is occurring after a holding period
of at least two years (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and the Owner is not, and during
the preceding three months has not been, an affiliate of the
Issuer.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
------------------------------------
(Print the name of the Undersigned,
as such term is defined in the
second paragraph of this
certificate.)
by:
---------------------------------
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the person
signing on behalf of the Undersigned
must be stated.)
A-3
<PAGE>
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to ss. 3.05(b)(ii) and (iii)
of the Indenture)
The Chase Manhattan Bank,
as Trustee
550 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
Re: 12 7/8% Senior Notes due 2010 of
RSL Communications PLC (the "Securities")
Reference is made to the Indenture, dated as of February 22,
2000 (the "Indenture"), between RSL Communications PLC (the "Issuer"), RSL
Communications, Ltd. (the "Parent Guarantor") RSL COM U.S.A., Inc. (the
"Subsidiary Guarantor") and The Chase Manhattan Bank, as Trustee. Terms used
herein and defined in the Indenture or in Regulation S or Rule 155 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein
as so defined.
This certificate relates to (U)_____________ principal amount
at maturity of Securities, which are evidenced by the following certificate(s)
(the "Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Book-Entry Depositary who issued a Depositary Interest to the Common
Depositary who holds such interest in the name of the Undersigned. If the
Specified Securities are not represented by a Global Security, they are
registered in the name of the Undersigned, as or on behalf of the Owner.
B-1
<PAGE>
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 155A or Rule 155 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 155A Transfers. If the transfer is being effected in
accordance with Rule 155A:
(A) the Specified Securities are being transferred to
a person that the Owner and any person acting on its behalf
reasonably believe is a "qualified institutional buyer" within
the meaning of Rule 155A, acquiring for its own account or for
the account of a qualified institutional buyer; and
(B) the Owner and any person acting on its behalf
have taken reasonable steps to ensure that the Transferee is
aware that the Owner may be relying on Rule 155A in connection
with the transfer; and
(2) Rule 155 Transfers. If the transfer is being effected
pursuant to Rule 155:
(A) the transfer is occurring after a holding period
of at least one year (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of Rule 155; or
(B) the transfer is occurring after a holding period
of at least two years (computed in accordance with paragraph
(d) of Rule 155) has elapsed since the Specified Securities
were last acquired from the Issuer or from an affiliate of the
Issuer, whichever is later, and the Owner is not, and during
the preceding three months has not been, an affiliate of the
Issuer.
B-2
<PAGE>
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
------------------------------------
(Print the name of the Undersigned,
as such term is defined in the
second paragraph of this
certificate.)
by:
---------------------------------
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the person
signing on behalf of the Undersigned
must be stated.)
B-3
<PAGE>
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to ss. 3.05(c))
The Chase Manhattan Bank,
as Trustee
550 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
Re: 12 7/8% Senior Notes due 2010 of
RSL Communications PLC (the "Securities")
Reference is made to the Indenture, dated as of February 22,
2000 (the "Indenture"), between RSL Communications PLC (the "Issuer"), RSL
Communications, Ltd. (the "Parent Guarantor") RSL COM U.S.A., Inc. (the
"Subsidiary Guarantor") and The Chase Manhattan Bank, as Trustee. Terms used
herein and defined in the Indenture or in Regulation S or Rule 155 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein
as so defined.
This certificate relates to (U)_____________ principal amount
at maturity of Securities, which are evidenced by the following certificate(s)
(the "Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Book-Entry Depositary who issued a Depositary Interest to the Common
Depositary (or its nominee) who holds such interest in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
C-1
<PAGE>
The Owner has requested that the Specified Securities be
exchanged for Securities bearing no Securities Act Legend pursuant to Section
305(c) of the Indenture. In connection with such exchange, the Owner hereby
certifies that the exchange is occurring after a holding period of at least two
years (computed in accordance with paragraph (d) of Rule 155) has elapsed since
the Specified Securities were last acquired from the Issuer or from an affiliate
of the Issuer, whichever is later, and the Owner is not, and during the
preceding three months has not been, an affiliate of the Issuer. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
Dated:
------------------------------------
(Print the name of the Undersigned,
as such term is defined in the
second paragraph of this
certificate.)
by:
---------------------------------
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the person
signing on behalf of the Undersigned
must be stated.)
C-2
<PAGE>
EXHIBIT 5.5
EXECUTION COPY
RSL COMMUNICATIONS PLC
$100,000,000 Senior Notes due 2010
(U)100,000,000 Senior Notes due 2010
Each Guaranteed as to payment of
Principal and Interest by
RSL COMMUNICATIONS, LTD.
--------------------------------------------
Exchange and Registration Rights Agreement
--------------------------------------------
February 22, 2000
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Lehman Brothers Inc.
As representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10005
Ladies and Gentlemen:
RSL Communications PLC, a United Kingdom corporation (the "Issuer"),
proposes to issue and sell to the Purchasers (as defined herein) an aggregate of
$100,000,000 principal amount at maturity of its 12 7/8% Senior Notes due 2010
(the "Dollar Notes") and (U)100,000,000 principal amount at maturity of its
12 7/8% Senior Notes due 2010 (the "Euro Notes", and together with the Dollar
Notes, the "Notes"). The Dollar Notes and the Euro Notes will each be
unconditionally guaranteed as to payment of principal, interest and any other
amounts due thereon by RSL Communications, Ltd. (the "Parent Guarantor"), a
Bermuda Corporation, and RSL COM U.S.A., Inc., a Delaware Corporation (the
"Subsidiary Guarantor", and together with the Parent Guarantor, the
"Guarantors"). As an inducement to the Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the
Purchasers thereunder, the Issuer and the Guarantors agree with the Purchasers
for the benefit of holders (as defined herein) from time to time of the
Registrable Securities (as defined herein) as follows:
1. Definitions.
For purposes of this Exchange and Registration Rights Agreement, the
following terms shall have the following respective meanings:
<PAGE>
"Base Interest" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indentures, without giving effect
to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing Date" shall mean February 22, 2000.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean
the time and date as of which the Commission declares the Shelf Registration
Statement effective or as of which the Shelf Registration Statement otherwise
becomes effective.
"Exchange Act" shall mean the Securities Exchange Act of 1935, or any
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(d) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
The term "holder" shall mean any Purchaser and other persons who
acquire Registrable Securities from time to time (including any successors or
assigns), in each case for so long as such person owns any Registrable
Securities.
"Indentures" shall mean the Indenture governing the Dollar Notes and
the Indenture governing the Euro Notes, each dated as of February 22, 2000, and
each between the Issuer, the Guarantor and The Chase Manhattan Bank, as Trustee
(the "Trustee"), as both shall be amended from time to time.
The term "person" shall mean a corporation, association, partnership,
organization, business, limited liability company, individual, government or
political subdivision thereof or governmental agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated February
15, 2000 between the Purchasers, the Issuer and the Guarantors relating to the
Securities.
-2-
<PAGE>
"Purchasers" means the purchasers named in Schedule I to the Purchase
Agreement.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) (provided that any Exchange Security received by a broker-dealer in
an Exchange Offer in exchange for a Registrable Security that was not acquired
by the broker-dealer directly from the Issuer will also be a Registrable
Security through and including the earlier of the 90th day after the Exchange
Offer is completed or such time as such broker-dealer no longer owns such
Security); (ii) in the circumstances contemplated by Section 2(b) hereof, a
Shelf Registration Statement registering such Security under the Securities Act
has been declared or becomes effective and such Security has been sold or
otherwise transferred by the holder thereof pursuant to and in a manner
contemplated by such effective Shelf Registration Statement; (iii) such Security
is sold pursuant to Rule 155 (or any successor provision) under circumstances in
which any legend borne by such Security relating to restrictions on
transferability thereof, under the Securities Act or otherwise, is removed by
the Issuer or pursuant to the Indentures; (iv) such Security is eligible to be
sold pursuant to paragraph (k) of Rule 155; or (v) such Security shall cease to
be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 5 hereof.
"Resale Period" shall have the meaning assigned thereto in Section 2(a)
hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of the
Issuer within the meaning of Rule 505, (ii) a holder who acquires Exchange
Securities outside the ordinary course of such holder's business, (iii) a holder
who has arrangements or understandings with any person to participate in the
Exchange Offer for the purpose of a distribution (within the meaning of the
Securities Act) of the Exchange Securities and (iv) a holder that is a
broker-dealer, but only with respect to Exchange Securities received by such
broker-dealer pursuant to an Exchange Offer in exchange for Registrable
Securities acquired by the broker-dealer directly from the Issuer.
"Rule 155," "Rule 505" and "Rule 515" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as the
same shall be amended from time to time.
"Securities" shall mean the Notes to be issued and sold to the
Purchasers, and securities issued in exchange therefor or in lieu thereof
pursuant to the Indentures. Each security will be unconditionally guaranteed as
to payment of principal, interest and any other amounts due thereon by the
Guarantor, as provided by the Indentures under which the Notes will be issued
(the "Notes Guarantees"). Unless the context otherwise requires, any reference
herein to
-3-
<PAGE>
"Security," or "Exchange Security" or a "Registrable Security" shall
include a reference to the related Notes Guarantees.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in Section
2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Special Interest" shall have the meaning assigned thereto in Section
2(c) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Issuer agrees to
file under the Securities Act and use its reasonable best efforts to cause to be
declared effective, a registration statement relating to an offer to exchange
any and all of the Dollar Notes and an offer to exchange any and all of the Euro
Notes (such registration statement, the "Exchange Registration Statement", and
such offers, the "Exchange Offers" and each individually, an "Exchange Offer")
for a like aggregate principal dollar or euro amount, as applicable, of debt
securities issued by the Issuer and guaranteed by the Guarantor, which debt
securities and guarantees are substantially identical to the Securities (and are
entitled to the benefits of trust indentures which are substantially identical
to the Indentures or are the Indentures, and which have each been qualified
under the Trust Indenture Act), except that they have been registered pursuant
to an effective registration statement under the Securities Act and do not
contain registration rights, transfer restrictions and provisions for the
additional interest contemplated in Section 2(c) below (such new debt securities
hereinafter called "Exchange Securities"). The Issuer agrees to use its
reasonable best efforts to cause the Exchange Registration Statement to become
effective under the Securities Act and to consummate each Exchange Offer as soon
as practicable, but no later than 210 days after the Closing Date. The Exchange
Offers will be registered under the Securities Act on the appropriate form
required by the Commission and will comply with all applicable tender offer
rules and regulations under the Exchange Act and all applicable federal and
state securities laws. The Issuer further agrees to use its reasonable best
efforts to hold each Exchange Offer open for at least 30 days and issue Exchange
Securities for all Registrable Securities that have been properly tendered and
not withdrawn on or prior to the expiration of each Exchange Offer. Each
Exchange Offer will be deemed to have been "completed" only if the debt
securities and related guarantees received by holders other than Restricted
Holders in the Exchange Offer for Registrable Securities are, upon receipt,
transferable by each such holder without need for
-5-
<PAGE>
further compliance with Section 5 of the Securities Act (except for the
requirement to deliver a prospectus included in the Exchange Registration
Statement applicable to resales by broker-dealers of Exchange Securities
received by such broker-dealer pursuant to an Exchange Offer in exchange for
Registrable Securities other than those acquired by the broker-dealer directly
from the Issuer) and without material restrictions under the blue sky or
securities laws of a substantial majority of the States of the United States of
America. Each Exchange Offer shall be deemed to have been completed upon the
earlier to occur of (i) the Issuer having exchanged the Exchange Securities for
all outstanding Registrable Securities pursuant to such Exchange Offer and (ii)
the Issuer having exchanged, pursuant to such Exchange Offer, Exchange
Securities for all Registrable Securities that have been properly tendered and
not withdrawn before the expiration of such Exchange Offer, which shall be on a
date that is at least 30 days following the commencement of the Exchange Offer.
The Issuer agrees (x) to include in the Exchange Registration Statement a
prospectus for use in connection with any resales of Exchange Securities by a
broker-dealer, other than resales of Exchange Securities received by a
broker-dealer pursuant to an Exchange Offer in exchange for Registrable
Securities acquired by the broker-dealer directly from the Issuer, and (y) to
keep such Exchange Registration Statement effective for a period (the "Resale
Period") beginning when Exchange Securities are first issued in the Exchange
Offers and ending upon the earlier of (x) the expiration of the 90th day after
the Exchange Offers have been completed and (y) such time as such broker-dealers
no longer own any Registrable Securities. With respect to such Exchange
Registration Statement, each broker-dealer that holds Exchange Securities
received in an Exchange Offer in exchange for Registerable Securities not
acquired by it directly from the Issuer shall have the benefit of the rights of
indemnification and contribution set forth in Sections 6(a), (c), (d) and (e)
hereof.
(b) If prior to the time the Exchange Offers are completed existing
Commission interpretations are changed such that the debt securities or any
related guarantees received by holders other than Restricted Holders in the
Exchange Offers for Registrable Securities are not or would not be, upon
receipt, transferable by each such holder without need for further compliance
with Section 5 of the Securities Act (except for the requirement to deliver a
prospectus included in the Exchange Registration Statement applicable to resales
by broker-dealers of Exchange Securities received by such broker-dealer pursuant
to an Exchange Offer in exchange for Registrable Securities other than those
acquired by the broker-dealer directly from the Issuer) in lieu of conducting
the Exchange Offers contemplated by Section 2(a), the Issuer shall file under
the Securities Act and use its reasonable best efforts to cause to be declared
effective a "shelf" registration statement providing for the registration of,
and the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities, pursuant to Rule 515 or any similar rule that may be
adopted by the Commission (such filing, the "Shelf Registration" and such
registration statement, the "Shelf Registration Statement"), provided, however,
if the Issuer determines that it is advisable to disclose in the Shelf
Registration Statement a financing, acquisition or other corporate transaction,
and the Board of Directors of the Issuer shall have determined in good faith
that such disclosure would not be in the best interests of the Issuer and its
stockholders, the Issuer shall not be required to prepare and file such
amendment, supplement or document for such period or periods as the Board of
Directors of the Issuer shall have determined in good faith is in the best
interests of the Issuer and shall be entitled to suspend the availability of the
Shelf Registration Statement, provided further, however that such period or
periods of suspension shall not exceed 90 days in the aggregate in any
consecutive 365-day period. In addition, in the event that the Purchasers shall
not have resold all of the Securities initially purchased by them from the
Issuer pursuant to the Purchase Agreement, prior to the consummation of the
Exchange Offers, the Issuer shall file under the Securities Act as soon as
practicable a Shelf
-5-
<PAGE>
Registration Statement, which if permitted by the Commission may be by way of a
post-effective amendment to the Exchange Registration Statement. The Issuer
agrees to use its best efforts to cause the Shelf Registration Statement to
become or be declared effective no later than 210 days after the Closing Date
and to keep such Shelf Registration Statement continuously effective for a
period ending on the earlier of (x) the second anniversary of the Closing Date
and (y) such time as there are no longer any Registrable Securities outstanding.
The Issuer further agrees to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Issuer for such
Shelf Registration Statement or by the Securities Act or rules and regulations
promulgated thereunder for a shelf registration, and the Issuer agrees to
furnish to the holders of the Registrable Securities copies of any such
supplement or amendment to such registration statement prior to its being used
or promptly following its filing with the Commission. Attached as Exhibit A
hereto is a form of Notice of Registration Statement and Selling Securityholder
Questionnaire to be completed by holders in connection with a Shelf Registration
of the Dollar Notes pursuant to this Section 2(b).
(c) In the event that (i) either Exchange Offer has not been completed,
or a Shelf Registration Statement has not been declared effective, within 210
days after the Closing Date or (ii) any Exchange Registration Statement or Shelf
Registration Statement required by Section 2(a) or 2(b) hereof is filed and
declared effective but shall thereafter, prior to the time such Exchange
Registration Statement or Shelf Registration Statement is no longer required to
be effective pursuant to Section 2(a) or 2(b) hereof, as the case may be, either
be withdrawn by the Issuer or shall become subject to an effective stop order
issued pursuant to Section 8(d) of the Securities Act suspending the
effectiveness of such registration statement (except as specifically permitted
herein) without being succeeded immediately by an additional registration
statement filed and declared effective (each such event referred to in clauses
(i) and (ii), a "Registration Default" and each period during which a
Registration Default has occurred and is continuing, a "Registration Default
Period"), then, as liquidated damages for such Registration Default, subject to
the provisions of Section 9(b), special interest ("Special Interest"), in
addition to the Base Interest, shall accrue at a per annum rate of 0.50% for the
Registration Default Period. The Special Interest shall be payable in cash
semi-annually in arrears on each March 1 and September 1. Special Interest, if
any, shall be computed on the basis of a 360 day year of twelve 30-day months
and the number of days actually elapsed.
(d) The Issuer and the Guarantor shall take all actions reasonably
necessary or advisable to be taken by them to ensure that the transactions
contemplated herein are effected as so contemplated.
(e) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein to
any post-effective amendment to a registration statement as of any time shall be
deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time.
3. Registration Procedures.
(a) (i) In connection with the Exchange Offers, the Issuer shall comply
with all of the provisions of Section 3(d) and Section 3(e) below, shall use its
reasonable best efforts to effect such exchanges to permit the sale of
Registrable Securities being sold in accordance with the intended method or
methods of distribution thereof, and, prior to effectiveness of the Exchange
Offer Registration Statement, shall, if required by the
-6-
<PAGE>
Commission, provide a supplemental letter to the Commission (A) stating that the
Issuer is registering the Exchange Offers in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May 13,
1988) and Morgan Stanley and Co., Inc. (available June 5, 1991) and (B)
including a representation that the Issuer has not entered into any arrangement
or understanding with any person to distribute the Exchange Securities to be
received in the Exchange Offers and that, to the best of the Issuer's
information and belief, each holder participating in the Exchange Offers is
acquiring the Exchange Securities in its ordinary course of business and has no
arrangement or understanding with any person to participate in the distribution
of the Exchange Securities received in the Exchange Offers.
(ii) As a condition to its participation in either Exchange
Offer pursuant to the terms of this Agreement, each holder of Registrable
Securities shall furnish, upon the request of the Issuer, prior to the
consummation thereof, a written representation to the Issuer (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of the
Issuer or the Guarantor, (B) it is not engaged in, and does not intend to engage
in, and has no arrangement or understanding with any person to participate in, a
distribution of the Exchange Securities to be issued in either Exchange Offer
and (C) it is acquiring the Exchange Securities in its ordinary course of
business. In addition, all such holders of Registrable Securities shall
otherwise cooperate in the Issuer's and the Guarantor's preparations for the
Exchange Offers. Each holder hereby acknowledges and agrees that any
broker-dealer and any such holder, in either case, exchanging Registrable
Securities in either Exchange Offer, in connection with the resale of Exchange
Securities acquired in such Exchange Offer, (1) could not under Commission
policy as in effect on the date of this Agreement rely on the position of the
Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991)
and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters, and (2) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction and that such a secondary resale transaction should
be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Exchange Securities obtained by such holder
in exchange for Registrable Securities acquired by such holder directly from the
Issuer.
If the Issuer files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:
(b) At or before the Effective Time of the Exchange Offers or the Shelf
Registration, as the case may be, the Issuer shall qualify the Indentures under
the Trust Indenture Act.
(c) In the event that such qualification would require the appointment
of a new trustee under either or both of the Indentures, the Issuer shall
appoint a new trustee thereunder pursuant to the applicable provisions of such
Indenture or Indentures.
(d) In connection with the Issuer's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"Exchange Registration"), if applicable, the Issuer shall, as soon as reasonably
possible (or as otherwise specified):
(i) prepare and file with the Commission an Exchange
Registration Statement on any form which may be utilized by the Issuer
and which shall permit
-7-
<PAGE>
the Exchange Offer and resales of Exchange Securities by broker-dealers during
the Resale Period to be effected as contemplated by Section 2(a), and use its
reasonable best efforts to cause such Exchange Registration Statement to become
effective and to consummate the Exchange Offer, as soon as practicable
thereafter, but no later than 210 days after the Closing Date;
(ii) as soon as practicable prepare and file with the Commission such
amendments and supplements to such Exchange Registration Statement and the
prospectus included therein as may be necessary to effect and maintain the
effectiveness of such Exchange Registration Statement for the periods and
purposes contemplated in Section 2(a) hereof and as may be required by the
applicable rules and regulations of the Commission and the instructions
applicable to the form of such Exchange Registration Statement, and promptly
provide each broker-dealer holding Exchange Securities with such number of
copies of the prospectus included therein (as then amended or supplemented), in
conformity in all material respects with the requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the Commission
thereunder, as such broker-dealer reasonably may request prior to the expiration
of the Resale Period, for use in connection with resales of Exchange Securities;
(iii) promptly notify the Purchasers and their counsel and, with
respect to clause C, E and F below only, any broker-dealer that has advised the
Issuer or the Guarantor that it is entitled to a resale prospectus during the
Resale Period, and confirm such advice in writing, (A) when such Exchange
Registration Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such Exchange Registration Statement or any post-effective amendment,
when the same has become effective, (B) of any comments by the Commission and by
the Blue Sky or securities commissioner or regulator of any state with respect
thereto or any request by the Commission for amendments or supplements to such
Exchange Registration Statement or prospectus or for additional information, (C)
of the issuance by the Commission of any stop order suspending the effectiveness
of such Exchange Registration Statement or the initiation or threatening of any
proceedings for that purpose, (D) if at any time the representations and
warranties of the Issuer and the Guarantor contemplated by Section 5 hereof
cease to be true and correct in all material respects, (E) of the receipt by the
Issuer or the Guarantor of any notification with respect to the suspension of
the qualification of the Exchange Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose or (F) at any time
during the Resale Period when a prospectus is required to be delivered under the
Securities Act, that such Exchange Registration Statement, prospectus,
prospectus amendment or supplement or post-effective amendment thereto does not
conform in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder or contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;
(iv) in the event that the Issuer would be required, pursuant to
Section 3(d)(iii)(F) above, to notify any broker-dealer entitled to a resale
prospectus during the Resale Period, prepare and furnish without delay to each
such holder a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to purchasers of such Exchange
Securities
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<PAGE>
during the Resale Period, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(v) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of such Exchange Registration
Statement or any post-effective amendment thereto at the earliest
practicable date;
(vi) use its reasonable best efforts to (A) register or
qualify the Exchange Securities under the securities laws or blue sky
laws of such jurisdictions in the United States as are contemplated by
Section 2(a) no later than the commencement of the Exchange Offers, (B)
keep such registrations or qualifications in effect and comply with
such laws so as to permit the continuance of offers, sales and dealings
therein in such jurisdictions until the expiration of the Resale Period
and (C) take any and all other actions as may be reasonably necessary
or advisable to enable each broker-dealer holding Exchange Securities
to consummate the disposition thereof in such jurisdictions; provided,
however, that neither the Issuer nor the Guarantor shall be required
for any such purpose to (1) qualify as a foreign corporation in any
jurisdiction wherein it would not otherwise be required to qualify but
for the requirements of this Section 3(d)(vi), (2) consent to general
service of process in any such jurisdiction, (3) become subject to any
tax or (5) make any changes to its certificate of incorporation or
by-laws or any agreement between it and its stockholders;
(vii) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal,
state or local, which may be required to effect the Exchange
Registration, the Exchange Offers and the offering and sale of Exchange
Securities by broker-dealers during the Resale Period;
(viii) provide a CUSIP number for all Exchange Securities, not
later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders as
soon as practicable but no later than eighteen months after the
effective date of such Exchange Registration Statement, an earning
statement of the Issuer, the Guarantor and their subsidiaries complying
with Section 11(a) of the Securities Act (including, at the option of
the Issuer, Rule 158 thereunder).
(e) In connection with the Issuer's obligations with respect to the
Shelf Registration, if applicable, the Issuer shall use its reasonable best
efforts to cause the Shelf Registration to permit the disposition of the
Registrable Securities by the holders thereof in accordance with the intended
method or methods of disposition thereof provided for in the Shelf Registration
Statement. In connection therewith, the Issuer shall, as soon as reasonably
possible (or as otherwise specified):
(i) prepare and file with the Commission, as soon as
practicable, a Shelf Registration Statement on any form which may be
utilized by the Issuer and which shall permit the disposition of the
Registrable Securities in accordance with the
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<PAGE>
intended method or methods thereof, as specified in writing by the
holders of the Registrable Securities, and use its reasonable best
efforts to cause such Shelf Registration Statement to become or be
declared effective as soon as practicable thereafter, but no later than
180 days after the Closing Date;
(ii) as soon as practicable prepare and file with the
Commission such amendments and supplements to such Shelf Registration
Statement and the prospectus included therein as may be necessary to
effect and maintain the effectiveness of such Shelf Registration
Statement for the period specified in Section 2(b) hereof and as may be
required by the applicable rules and regulations of the Commission and
the instructions applicable to the form of such Shelf Registration
Statement, and furnish to the holders of the Registrable Securities
copies of any such supplement or amendment simultaneously with or prior
to its being used or filed with the Commission;
(iii) comply with the provisions of the Securities Act with
respect to the disposition of all of the Registrable Securities covered
by such Shelf Registration Statement in accordance with the intended
methods of disposition by the holders thereof provided for in such
Shelf Registration Statement;
(iv) provide (A) the holders of the Registrable Securities to
be included in such Shelf Registration Statement, (B) the underwriters
(which term, for purposes of this Exchange and Registration Rights
Agreement, shall include a person deemed to be an underwriter within
the meaning of Section 2(11) of the Securities Act), if any, thereof,
(C) any sales or placement agent therefor, (D) counsel for any such
underwriter or agent and (E) not more than one counsel for all the
holders of such Registrable Securities the opportunity to participate
in the preparation of such Shelf Registration Statement, each
prospectus included therein or filed with the Commission and each
amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Issuer's principal
place of business or such other reasonable place for inspection by the
persons referred to in Section 3(e)(iv) who shall certify to the Issuer
that they have a current intention to sell the Registrable Securities
pursuant to the Shelf Registration such financial and other information
and books and records of the Issuer as reasonably requested, and cause
the officers, employees, counsel and independent certified public
accountants of the Issuer to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel
referred to in such Section, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided,
however, that each such party shall be required to maintain in
confidence and not disclose to any other person any information or
records reasonably designated by the Issuer as being confidential,
until such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court
or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such
person shall have given the Issuer prompt prior written notice of such
requirement), or (C) after the Effective Time and after having
requested, without compliance, that the Issuer include such information
in such Shelf Registration Statement or an amendment or supplement
thereto, such information is required to be set forth in such Shelf
Registration
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<PAGE>
Statement or the prospectus included therein or in an amendment to such
Shelf Registration Statement or an amendment or supplement to such
prospectus in order that such Shelf Registration Statement, prospectus,
amendment or supplement thereto, as the case may be, complies with
applicable requirements of the Federal securities laws and the rules
and regulations of the Commission and does not contain an untrue
statement of a material fact or omit to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(vi) promptly notify the selling holders of Registrable
Securities, any sales or placement agent therefor and any underwriter
thereof (which notification may be made through any managing
underwriter that is a representative of such underwriter for such
purpose) and confirm such advice in writing, (A) when such Shelf
Registration Statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such Shelf Registration Statement or any
post-effective amendment, when the same has become effective, (B) of
any comments by the Commission and by the Blue Sky or securities
commissioner or regulator of any state with respect thereto or any
request by the Commission for amendments or supplements to such Shelf
Registration Statement or prospectus or for additional information, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of such Shelf Registration Statement or the initiation or
threatening of any proceedings for that purpose, (D) if at any time the
representations and warranties of the Issuer and the Guarantor
contemplated by Section 3(e)(xv) or Section 5 hereof cease to be true
and correct in all material respects, (E) of the receipt by the Issuer
and the Guarantor of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (F) if at any time when a prospectus is required to be
delivered under the Securities Act, such Shelf Registration Statement,
prospectus, prospectus amendment or supplement or post-effective
amendment does not conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder or contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(vii) use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
registration statement or any post-effective amendment thereto at the
earliest practicable date;
(viii) if requested by any managing underwriter or
underwriters, any placement or sales agent or any holder of Registrable
Securities, promptly incorporate in a prospectus supplement or
post-effective amendment such information as is required by the
applicable rules and regulations of the Commission and as such managing
underwriter or underwriters, such agent or such holder specifies should
be included therein relating to the terms of the sale of such
Registrable Securities, including information with respect to the
principal amount of Registrable Securities being sold by such holder or
agent or to any underwriters, the name and description of such holder,
agent or underwriter, the offering price of such Registrable Securities
and any discount, commission or other compensation payable in respect
thereof, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the offering
-11-
<PAGE>
of the Registrable Securities to be sold by such holder or agent or to
such underwriters; and make all required filings of such prospectus
supplement or post-effective amendment promptly after notification of
the matters to be incorporated in such prospectus supplement or
post-effective amendment;
(ix) upon request, furnish to each holder of Registrable
Securities, each placement or sales agent, if any, therefor, each
underwriter, if any, thereof and the respective counsel referred to in
Section 3(e)(iv) an executed copy (or, in the case of a holder of
Registrable Securities, a conformed copy) of such Shelf Registration
Statement, each such amendment and supplement thereto (in each case
including all exhibits thereto (in the case of a holder of Registrable
Securities, upon request) and documents incorporated by reference
therein) and such number of copies of such Shelf Registration Statement
(excluding exhibits thereto and documents incorporated by reference
therein unless specifically so requested by such holder, agent or
underwriter, as the case may be) and of the prospectus included in such
Shelf Registration Statement (including each preliminary prospectus and
any summary prospectus), in conformity in all material respects with
the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder, and such other documents, as such holder, agent, if any,
and underwriter, if any, may reasonably request in order to facilitate
the offering and disposition of the Registrable Securities owned by
such holder, offered or sold by such agent or underwritten by such
underwriter and to permit such holder, agent and underwriter to satisfy
the prospectus delivery requirements of the Securities Act; and,
subject to Sections 2(a) and (b) and 3(e)(vi)(C), (E) and (F), the
Issuer hereby consents to the use of such prospectus (including such
preliminary and summary prospectus) and any amendment or supplement
thereto by each such holder and by any such agent and underwriter, in
each case in the form most recently provided to such person by the
Issuer, in connection with the offering and sale of the Registrable
Securities covered by the prospectus (including such preliminary and
summary prospectus) or any supplement or amendment thereto;
(x) use its reasonable best efforts to (A) register or qualify
the Registrable Securities to be included in such Shelf Registration
Statement under such securities laws or blue sky laws of such
jurisdictions as any holder of such Registrable Securities and each
placement or sales agent, if any, therefor and underwriter, if any,
thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
during the period the Shelf Registration is required to remain
effective under Section 2(b) above or, if a shorter period, for so long
as may be necessary to enable any such holder, agent or underwriter to
complete its distribution of Securities pursuant to such Shelf
Registration Statement and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each such holder, agent, if
any, and underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that
neither the Issuer nor the Guarantor shall be required for any such
purpose to (1) qualify as a foreign corporation in any jurisdiction
wherein it would not otherwise be required to qualify but for the
requirements of this Section 3(e)(x), (2) consent to general service of
process in any such jurisdiction, (3) become subject to any tax or (5)
make any changes to its certificate of incorporation or by-laws or any
agreement between it and its stockholders;
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<PAGE>
(xi) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether Federal,
state or local, which may be required to effect the Shelf Registration
or the offering or sale in connection therewith or to enable the
selling holder or holders to offer, or to consummate the disposition
of, their Registrable Securities;
(xii) cooperate with the holders of the Registrable Securities
and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall be printed,
lithographed or engraved, or produced by any combination of such
methods, and which shall not bear any restrictive legends; and, in the
case of an underwritten offering, enable such Registrable Securities to
be in such denominations and in such names as the managing underwriters
may request at least two business days prior to any sale of the
Registrable Securities;
(xiii) provide a CUSIP number for all Registrable Securities,
not later than the applicable Effective Time;
(xiv) enter into one or more underwriting agreements,
engagement letters, agency agreements, "best efforts" underwriting
agreements or similar agreements, as appropriate, including customary
provisions relating to indemnification and con tribution, and take such
other actions in connection therewith as any holders of Registrable
Securities aggregating at least 20% aggregate principal amount of the
Registrable Securities at the time outstanding shall reasonably request
in order to expedite or facilitate the disposition of such Registrable
Securities; provided, that the Issuer shall not be required to enter
into any such agreement more than once with respect to all of the
Registrable Securities and may delay entering into such agreement until
the consummation of any underwritten public offering which the Issuer
shall have then engaged;
(xv) whether or not an agreement of the type referred to in
Section 3(e)(xiv) hereof is entered into and whether or not any portion
of the offering contemplated by the Shelf Registration is an
underwritten offering or is made through a placement or sales agent or
any other entity, (A) make such representations and warranties to the
holders of the Registrable Securities covered by such Shelf
Registration and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof in form, substance and scope as are
customarily made in connection with an offering of debt securities
pursuant to any appropriate agreement or to a registration statement
filed on the form applicable to the Shelf Registration; (B) obtain an
opinion of counsel to the Issuer and the Guarantor in customary form
and covering such matters, of the type customarily covered by such an
opinion, as the managing underwriters, if any, or as any holders of at
least 20% in aggregate principal amount of the Registrable Securities
at the time outstanding may reasonably request, addressed to such
holder or holders and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof and dated the effective date of
such Shelf Registration Statement (and if such Shelf Registration
Statement contemplates an underwritten offering of a part or all of the
Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that the
matters to be covered by such opinion shall include the due
incorporation of the Issuer, the Guarantor and their material
subsidiaries; the qualification of the Issuer, the Guarantor and their
material U.S. subsidiaries to transact business as foreign
corporations; the due authorization, execution and delivery of the
relevant agreement of the type
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<PAGE>
referred to in Section 3(d)(xiv) hereof; the due authorization,
execution, authentication and issuance, and the validity and
enforceability, of the Registrable Securities; the absence of material
legal or governmental proceedings involving the Issuer; the absence of
a breach by the Issuer or any of its subsidiaries of, or a default
under, material agreements binding upon the Issuer or any subsidiary of
the Issuer; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration, the offering and
sale of the Registrable Securities, this Exchange and Registration
Rights Agreement or any agreement of the type referred to in Section
3(e)(xiv) hereof, except such approvals as may be required under state
securities or blue sky laws; the material compliance as to form of such
Shelf Registration Statement and any documents incorporated by
reference therein and of the Indentures with the requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, respectively; and, subject to
reasonable and customary limitations and exceptions; and, such counsel
shall also state that, as of the date of the opinion and of the Shelf
Registration Statement or most recent post-effective amendment thereto,
as the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented,
and from the documents incorporated by reference therein (in each case
other than the financial statements and related footnotes and schedules
and other financial information contained therein) of an untrue
statement of a material fact or the omission to state therein a
material fact necessary to make the statements therein not misleading
(in the case of such documents, in the light of the circumstances
existing at the time that such documents were filed with the Commission
under the Exchange Act)); (C) obtain a "cold comfort" letter or letters
from the independent certified public accountants of the Issuer
addressed to the selling holders of Registrable Securities, the
placement or sales agent, if any, therefor or the underwriters, if any,
thereof, dated (i) the effective date of such Shelf Registration
Statement and (ii) the effective date of any prospectus supplement to
the prospectus included in such Shelf Registration Statement or
post-effective amendment to such Shelf Registration Statement which
includes unaudited or audited financial statements as of a date or for
a period subsequent to that of the latest such statements included in
such prospectus (and, if such Shelf Registration Statement contemplates
an underwritten offering pursuant to any prospectus supplement to the
prospectus included in such Shelf Registration Statement or
post-effective amendment to such Shelf Registration Statement which
includes unaudited or audited financial statements as of a date or for
a period subsequent to that of the latest such state ments included in
such prospectus, dated the date of the closing under the underwriting
agreement relating thereto), such letter or letters to be in customary
form and covering such matters of the type customarily covered by
letters of such type; (D) deliver such documents and certificates,
including officers' certificates, as may be reasonably requested by any
holders of at least a 20% in aggregate principal amount of the
Registrable Securities at the time outstanding or the placement or
sales agent, if any, therefor and the managing underwriters, if any,
thereof to evidence the accuracy of the representations and warranties
made pursuant to clause (A) above or those contained in Section 5(a)
hereof and the compliance with or satisfaction of any agreements or
conditions contained in the underwriting agreement or other agreement
entered into by the Issuer or the Guarantor; and (E) undertake such
obligations relating to expense reimbursement, indemnification and
contribution as are provided in Section 6 hereof;
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<PAGE>
(xvi) notify in writing each holder of Registrable Securities
of any proposal by the Issuer to amend or waive any provision of this
Exchange and Registration Rights Agreement pursuant to Section 9(h)
hereof and of any amendment or waiver effected pursuant thereto, each
of which notices shall contain the text of the amendment or waiver
proposed or effected, as the case may be;
(xvii) in the event that any broker-dealer registered under
the Exchange Act shall underwrite any Registrable Securities or
participate as a member of an underwriting syndicate or selling group
or "assist in the distribution" (within the meaning of the Rules of
Fair Practice and the By-Laws of the National Association of Securities
Dealers, Inc. ("NASD") or any successor thereto, as amended from time
to time) thereof, whether as a holder of such Registrable Securities or
as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such broker-dealer in complying
with the requirements of such Rules and By-Laws, including by (A) if
such Rules or By-Laws shall so require, engaging a "qualified
independent underwriter" (as defined in the schedules thereto (or any
successor thereto)) to participate in the preparation of the Shelf
Registration Statement relating to such Registrable Securities, to
exercise usual standards of due diligence in respect thereto and, if
any portion of the offering contemplated by such Shelf Registration
Statement is an underwritten offering or is made through a placement or
sales agent, to recommend the yield of such Registrable Securities, (B)
indemnifying any such qualified independent underwriter to the extent
of the indemnification of underwriters provided in Section 6 hereof,
and (C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the
requirements of the Rules of Fair Practice of the NASD; and
(xviii) comply with all applicable rules and regulations of
the Commission, and make generally available to its security holders as
soon as practicable but in any event not later than eighteen months
after the effective date of such Shelf Registration Statement, an
earning statement of the Issuer, the Guarantor and their subsidiaries
complying with Section 11(a) of the Securities Act (including, at the
option of the Issuer, Rule 158 thereunder).
(f) In the event that the Issuer would be required, pursuant to Section
3(e)(vi)(F) above, to notify the selling holders of Registrable Securities, the
placement or sales agent, if any, therefor and the managing underwriters, if
any, thereof, as applicable, the Issuer shall without delay prepare and furnish
to each such holder, to each placement or sales agent, if any, and to each such
underwriter, if any, a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to purchasers of Registrable
Securities, such prospectus shall conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture Act and
the rules and regulations of the Commission thereunder and shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. Each holder of Registrable Securities
agrees that upon receipt of any notice from the Issuer pursuant to Section
3(e)(vi)(F) hereof, such holder shall forthwith discontinue the disposition of
Registrable Securities pursuant to the Shelf Registration Statement applicable
to such Registrable Securities until such holder shall have received copies of
such amended or supplemented prospectus, and if so directed by the Issuer, such
holder shall deliver to the Issuer, (at the Issuer's expense) all copies, other
than permanent file
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<PAGE>
copies, then in such holder's possession of the prospectus
covering such Registrable Securities at the time of receipt of such notice.
(g) The Issuer may require each holder of Registrable Securities as to
which any Shelf Registration pursuant to Section 2(b) is being effected to
furnish to the Issuer such information regarding such holder and such holder's
intended method of distribution of such Registrable Securities as the Issuer may
from time to time reasonably request in writing, but only to the extent that
such information is required in order to comply with the Securities Act. Each
such holder agrees to notify the Issuer as promptly as practicable of any
inaccuracy or change in information previously furnished by such holder to the
Issuer or of the occurrence of any event in either case as a result of which any
prospectus relating to such Shelf Registration contains or would contain an
untrue statement of a material fact regarding such holder or such holder's
intended method of disposition of such Registrable Securities or omits to state
any material fact regarding such holder or such holder's intended method of
disposition of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Issuer any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to such holder or the disposition of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
(h) Until the expiration of two years after the Closing Date, the
Issuer will not, and will not permit any of its "affiliates" (as defined in Rule
155) to, resell any of the Securities that have been reacquired by any of them
except pursuant to an effective registration statement under the Securities Act.
5. Registration Expenses.
The Issuer and the Guarantor, jointly and severally, agree to bear and
to pay or cause to be paid promptly, upon request, all expenses incident to the
Issuer's and the Guarantor's performance of or compliance with this Exchange and
Registration Rights Agreement, including (a) all Commission and any NASD
registration, filing and review fees and expenses, (b) all fees and expenses in
connection with the qualification of the Securities for offering and sale under
the State securities and blue sky laws referred to in Section 3(e)(x) hereof and
determination of their eligibility for investment under the laws of such
jurisdictions as any managing underwriters or the holders of such Registrable
Securities may designate, including any reasonable fees and disbursements of
counsel for the selling holders or underwriters in connection with such
qualification and determination, (c) all expenses relating to the preparation,
printing, production, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Securities for delivery and the
expenses of reproducing and distributing any underwriting agreements, agreements
among underwriters, selling agreements and "Blue Sky" or legal investment
memoranda and all other documents in connection with the offering, sale or
delivery of Securities to be disposed of (including certificates representing
the Securities), (d) messenger, telephone and delivery expenses of the Issuer
and the Guarantor relating to the offering, sale or delivery of Securities and
the preparation of documents referred in clause (c) above, (e) fees and expenses
of the Trustee under the Indentures, any agent of the Trustee and any counsel
for the Trustee and of any collateral agent or custodian, (f) internal expenses
of the Issuer and the Guarantors (including all salaries and expenses of
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<PAGE>
the Issuer's and the Guarantor's officers and employees performing legal or
accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Issuer and the Guarantor
(including the expenses of any opinions or "cold comfort" letters
required by or incident to such performance and compliance), (h) reasonable
fees, disbursements and expenses of any "qualified independent underwriter"
engaged pursuant to Section 3(e)(xvii) hereof (i) reasonable fees, disbursements
and expenses of one counsel for the holders of Registrable Securities retained
in connection with an Exchange Registration and a Shelf Registration, as
selected by the holders of at least a majority in aggregate principal amount of
the Registrable Securities being registered (which counsel shall be reasonably
satisfactory to the Issuer), (j) any fees charged by securities rating services
for rating the Securities and (k) fees, expenses and disbursements of any other
persons, including special experts, retained by the Issuer or the Guarantor in
connection with such registration (collectively, the "Registration Expenses").
To the extent that any Registration Expenses are incurred, assumed or paid by
any holder of Registrable Securities or any placement or sales agent therefor or
underwriter thereof, the Issuer and the Guarantor, jointly and severally, shall
reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor. It is
understood, however, that except as provided in this Section and in Section 6,
the holders of the Registrable Securities being registered shall pay all of
their own costs and expenses, including, but not limited to, all agency fees and
commissions and under writing discounts and commissions attributable to the sale
of such Registrable Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly, other
than the counsel and experts specifically refereed to above).
5. Representations and Warranties.
The Issuer and the Guarantor, jointly and severally, represents and
warrants to, and agrees with, the Purchasers and each of the holders from time
to time of Registrable Securities that:
(a) Each registration statement covering Registrable
Securities and each prospectus (including any preliminary or summary
prospectus) contained therein or furnished pursuant to Section 3(e) or
Section 3(d) hereof and any further amendments or supplements to any
such registration statement or prospectus, when it becomes effective or
is filed with the Commission, as the case may be, and, in the case of
an underwritten offering of Registrable Securities, at the time of the
closing under the underwriting agreement relating thereto, will conform
in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(e)(vi)(F) or Section
3(d)(iii)(F) hereof until (ii) such time as the Issuer furnishes an
amended or supplemented prospectus pursuant to Section 3(f) or Section
3(d)(iv) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished
pursuant to Section 3(e) or Section 3(d) hereof, as then amended or
supplemented, will conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and will not contain
an untrue statement of a material fact
-17-
<PAGE>
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Issuer by or on behalf of a holder of
Registrable Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus
referred to in Section 5(a) hereof, when they become or became
effective or are or were filed with the Commission, as the case may be,
will conform or conformed in all material respects to the requirements
of the Securities Act or the Exchange Act, as applicable, and none of
such documents will contain or contained an untrue statement of a
material fact or will omit or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Issuer
by or on behalf of a holder of Registrable Securities expressly for use
therein.
(c) The compliance by the Issuer and the Guarantor with all of
the provisions of this Exchange and Registration Rights Agreement and
the consummation of the transactions herein contemplated will not (i)
result in any violation of the provisions of the Memorandum and
Articles of Association of the Issuer, the Memorandum of Association or
Bye-laws of the Guarantor, (ii) result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Issuer or the Guarantor or any of their
subsidiaries is a party or by which the Issuer or the Guarantor or any
of their subsidiaries is bound or to which any of the property or
assets of the Issuer or the Guarantor or any of their subsidiaries is
subject, nor (iii) will such action result in any violation of any
existing statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Issuer, the
Guarantor or any of their subsidiaries or any of their properties
except, in the case of clauses (ii) and (iii) above, such breaches or
violations which would not, individually or in the aggregate, be
reasonably likely to have a material adverse change, in or affecting
the general affairs, management, financial position, shareholders'
equity or results of operations of the Issuer, the Guarantor and their
subsidiaries taken as a whole; and no consent, approval, authorization,
order, registration or qualification of or with any such governmental
agency is required for the issue and sale of the Securities or the
consummation by the Issuer or the Guarantor of the transactions
contemplated by this Registration Rights Agreement, except the
registration under the Securities Act of the Securities, qualification
of the Indenture, under the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under State or foreign securities or blue sky laws in
connection with the offering and distribution of the Securities.
(d) This Exchange and Registration Rights Agreement has been
duly authorized, executed and delivered by the Issuer and the
Guarantor.
6. Indemnification.
(a) Indemnification by the Issuer and the Guarantor. The Issuer and the
Guarantor, jointly and severally, will indemnify and hold harmless each of the
holders of
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<PAGE>
Registrable Securities included in a registration statement filed pursuant to
Section 2(a) or 2(b) hereof, and each person who participates as a placement or
sales agent or as an underwriter in any offering or sale of such Registrable
Securities against any losses, claims, damages or liabilities, joint or several,
to which such holder, agent or underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act, or any preliminary, final or summary prospectus
contained therein or furnished by the Issuer or the Guarantor to any such
holder, agent or underwriter, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, and will
reimburse such holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Issuer and the Guarantor shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, or preliminary, final or
summary prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Issuer or the Guarantor by
or on behalf of holders of Registrable Securities expressly for use therein;
(b) Indemnification by the Holders and any Agents and Underwriters. The
Issuer may require, as a condition to including any Registrable Securities in
any registration statement filed pursuant to Section 2(b) hereof and to entering
into any underwriting agreement with respect thereto, that the Issuer shall have
received an undertaking reasonably satisfactory to it from the holder of such
Registrable Securities and from each underwriter named in any such underwriting
agreement, severally and not jointly, to (i) indemnify and hold harmless the
Issuer and the Guarantor, and all other holders of Registrable Securities,
against any losses, claims, damages or liabilities to which the Issuer or the
Guarantor or such other holders of Registrable Securities may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Issuer to any such holder, agent or
underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Issuer or the Guarantor by or on behalf of such holder or underwriter expressly
for use therein, and (ii) reimburse the Issuer or the Guarantor for any legal or
other expenses reasonably incurred by the Issuer or the Guarantor in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such holder shall be required to undertake
liability to any person under this Section 6(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such holder from the sale of
such holder's Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an
-19-
<PAGE>
indemnifying party pursuant to the indemnification provisions of or contemplated
by this Section 6, notify such indemnifying party in writing of the commencement
of such action; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party other
than under the indemnification provisions of or contemplated by Section 6(a) or
6(b) hereof. In case any such action shall be brought against any indemnified
party and it shall notify an indemnifying party of the commencement thereof, and
such indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
noti fied, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 6(d) were determined by
pro rata allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no holder shall be required to contribute any
amount in excess
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<PAGE>
of the amount by which the dollar amount of the proceeds received by such holder
from the sale of any Registrable Securities (after deducting any fees, discounts
and commissions applicable thereto) exceeds the amount of any damages which such
holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter 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 holders' and any underwriters'
obligations in this Section 6(d) to contribute shall be several in proportion to
the principal amount of Registrable Securities registered or underwritten, as
the case may be, by them and not joint.
(e) The obligations of the Issuer and the Guarantor under this Section
6 shall be in addition to any liability which the Issuer or the Guarantor may
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director and partner of each holder, agent and underwriter and each
person, if any, who controls any holder, agent or underwriter within the meaning
of the Securities Act; and the obligations of the holders and any agents or
underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Issuer and the Guarantor (including any person who, with his
consent, is named in any registration statement as about to become a director of
the Issuer or the Guarantor) and to each person, if any, who controls the Issuer
or the Guarantor within the meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Shelf Registration are to be sold pursuant to an underwritten
offering, the managing underwriter or underwriters thereof shall be designated
by the holders of at least a majority in aggregate principal amount of the
Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Issuer.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may participate in
any underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 155.
Each of the Issuer and the Guarantor covenants to the holders of
Registrable Securities that to the extent it shall be required to do so under
the Exchange Act, it shall timely file the reports required to be filed by it
under the Exchange Act or the Securities Act (including the reports under
Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of
Rule 155 adopted by the Commission under the Securities Act) and the rules and
regulations adopted by the Commission thereunder, and shall take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemption provided by Rule 155 under the Securities Act, as such Rule may
be amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commis-
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<PAGE>
sion. Upon the request of any holder of Registrable Securities in connection
with that holder's sale pursuant to Rule 155, the Issuer or the Guarantor, as
applicable, shall deliver to such holder a written statement as to whether it
has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Issuer represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Registrable Securities or any other securities which
would be inconsistent with the terms contained in this Exchange and Registration
Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of their
respective obligations hereunder and that each party may be irreparably harmed
by any such failure, and accordingly agree that each party, in addition to any
other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of the respective obligations of any
other party under this Exchange and Registration Rights Agreement in accordance
with the terms and conditions of this Exchange and Registration Rights
Agreement, in any court of the United States or any State thereof having
jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Issuer or the
Guarantor, to it at 767 Fifth Avenue, Suite 5300, New York, New York 10153, c/o
RSL Communications, N. America, Inc., Attention: Avery Fischer, Esq. with a copy
to Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, Attention:
George Maguire, Esq., and if to a holder, to the address of such holder set
forth in the security register or other records of the Issuer, or to such other
address as the Issuer or any such holder may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange
and Registration Rights Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and the holders from
time to time of the Registrable Securities and the respective successors and
assigns of the parties hereto and such holders. In the event that any transferee
of any holder of Registrable Securities shall acquire Registrable Securities, in
any manner, whether by gift, bequest, purchase, operation of law or otherwise,
such transferee shall, without any further writing or action of any kind, be
deemed a beneficiary hereof for all purposes and such Registrable Securities
shall be held subject to all of the terms of this Exchange and Registration
Rights Agreement, and by taking and holding such Registrable Securities such
transferee shall be entitled to receive the benefits of, and be conclusively
deemed to have agreed to be bound by, all of the applicable terms and provisions
of this Exchange and Registration Rights Agreement. If the Issuer shall so
request, any such successor, assign or transferee shall acknowledge in writing
that such successor, assign, or transferee will acquire and hold the Registrable
Securities subject to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and Registration
Rights Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation
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<PAGE>
(or statement as to the results thereof) made by or on behalf of the Purchasers
or any holder of Registrable Securities, any director, officer or partner of
such holder, any agent or underwriter or any director, officer or partner
thereof, or any controlling person of any of the foregoing, and shall survive
delivery of and payment for the Registrable Securities pursuant to the Purchase
Agreement and the transfer and registration of Registrable Securities by such
holder and the consummation of each Exchange Offer.
(f) LAW GOVERNING. THIS EXCHANGE AND REGISTRATION RIGHTS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted for
convenience only, do not constitute a part of this Exchange and Registration
Rights Agreement and shall not affect in any way the meaning or interpretation
of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration Rights
Agreement and the other writings referred to herein (including the Indentures
and the form of Securities) or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement may be amended
and the observance of any term of this Exchange and Registration Rights
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Issuer and the holders of at least a majority in aggregate principal amount
of the Registrable Securities at the time outstanding. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears on
such Registrable Securities or is delivered to such holder. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of holders whose Registrable Securities are
being tendered pursuant to the Exchange Offer and that does not affect directly
or indirectly the rights of other holders whose Registrable Securities are not
being tendered pursuant to such Exchange Offer may be given by the holders of at
least a majority of the outstanding principal amount of Registrable Securities
being tendered or registered.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities shall be made available for inspection and copying on any business
day by any holder of Registrable Securities for proper purposes only (which
shall include any purpose related to the rights of the holders of Registrable
Securities under the Securities, the Indentures and this Agreement) at the
offices of the Issuer at the address thereof set forth in Section 9(c) above and
at the office of the Trustee under the Indentures.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
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<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Issuer, the Guarantors and you.
Very Truly Yours,
RSL Communications PLC
By: /s/ Itzhak Fisher
------------------------
Name:
Title:
RSL Communications, Ltd.
By: /s/ Itzhak Fisher
-------------------------
Name:
Title:
RSL COM U.S.A., Inc.
By: /s/ Itzhak Fisher
--------------------------
Name:
Title:
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Lehman Brothers Inc.
By: /s/ Goldman, Sachs & Co.
----------------------------------
(Goldman, Sachs & Co.)
On Behalf of Each of the Purchasers
<PAGE>
Exhibit A
RSL COMMUNICATIONS PLC
RSL COMMUNICATIONS, LTD.
RSL COM U.S.A., INC.
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE](1)
-------------------------------
The Depository Trust Company ("DTC") has identified you as a
DTC Participant through which beneficial interests in RSL Communications PLC's
(the "Issuer") $100,000,000 aggregate principal amount at maturity 12 7/8%
Senior Notes due 2010 and (U)100,000,000 aggregate principal amount at maturity
12 7/8% Senior Notes due 2010 (collectively, the "Notes") are held. The Notes
are unconditionally guaranteed as to payment of principal, interest and any
other amounts due thereon (the "Notes Guarantees") by RSL Communications, Ltd.
(the "Parent Guarantor") and RSL COM U.S.A., Inc. (the "Subsidiary Guarantor").
The Notes and the Notes Guarantees, collectively, are the "Securities".
The Issuer is in the process of registering the Securities
under the Securities Act of 1933 for resale by the beneficial owners thereof. In
order to have their Securities included in the registration statement,
beneficial owners must complete and return the enclosed Notice of Registration
Statement and Selling Securityholder Questionnaire.
It is important that beneficial owners of the Securities
receive a copy of the enclosed materials as soon as possible as their rights to
have the Securities included in the registration statement depend upon their
returning the Notice and Questionnaire by [DEADLINE FOR RESPONSE]. Please
forward a copy of the enclosed documents to each beneficial owner that holds
interests in the Securities through you. If you require more copies of the
enclosed materials or have any questions pertaining to this matter, please
contact [ ] , Attention:
[ ].
- --------
(1) Not less than 28 calendar days from date of mailing.
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<PAGE>
RSL Communications PLC
RSL Communications, Ltd.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Exchange and Registration Rights
Agreement (the "Exchange and Registration Rights Agreement"), between RSL
Communications PLC (the "Issuer"), RSL Communications, Ltd. (the "Parent
Guarantor"), RSL COM U.S.A., Inc. (the "Subsidiary Guarantor") and the
Purchasers named therein. Pursuant to the Exchange and Registration Rights
Agreement, the Issuer has filed with the United States Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (the "Shelf
Registration Statement") for the registration and resale under Rule 515 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Issuer's
$100,000,000 aggregate principal amount at maturity 12 7/8% Senior Notes due
2010 and (U)100,000,000 aggregate principal amount at maturity 12 7/8% Senior
Notes due 2010 (collectively, the "Notes"). The Notes are unconditionally
guaranteed as to payment of principal, interest and any other amounts due
thereon (the "Notes Guarantees") by RSL Communications, Ltd. (the "Parent
Guarantor") and RSL COM U.S.A., Inc. (the "Subsidiary Guarantor"). The Notes
Guarantee together with the Notes are the "Securities". A copy of the Exchange
and Registration Rights Agreement is attached hereto. All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined
below) is entitled to have the Registrable Securities beneficially owned by it
included in the Shelf Registration Statement. In order to have Registrable
Securities included in the Shelf Registration Statement, this Notice of
Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Issuer's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Beneficial owners of Registrable Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement and (ii)
may not use the Prospectus forming a part thereof for resales of Registrable
Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Furthermore, pursuant to the Exchange and Registration Rights Agreement, you may
be liable to the Issuer, the Guarantors and other selling securityholders for
any losses that result from inaccuracies or omissions in the information you are
requested to provide herein. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel
regarding the consequences of being named or not being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
The term "Registrable Securities" is defined in the Exchange and
Registration Rights Agreement.
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<PAGE>
ELECTION
The undersigned holder (the "Selling Securityholder") of
Registrable Securities hereby elects to include in the Shelf Registration
Statement the Registrable Securities beneficially owned by it and listed below
in Item (3). The undersigned, by signing and returning this Notice and
Questionnaire, agrees to be bound with respect to such Registrable Securities by
the terms and conditions of this Notice and Questionnaire and the Exchange and
Registration Rights Agreement, including, without limitation, Section 6 of the
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf
Registration Statement, the Selling Securityholder will be required to deliver
to the Issuer and Trustee the Notice of Transfer set forth in Appendix A to the
Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following
information to the Issuer and represents and warrants that such information is
accurate and complete:
<PAGE>
QUESTIONNAIRE
(a) Full Legal Name of Selling Securityholder:
--------------------------------------------------------
(i) Full Legal Name of Registered Holder (if
not the same as in (a) above) of
Registrable Securities Listed in Item
(3) below:
--------------------------------------------------------
(ii) Full Legal Name of DTC Participant (if
applicable and if not the same as (i)
above) Through Which Registrable
Securities Listed in Item (3) below are
Held:
--------------------------------------------------------
(b) Address for Notices to Selling
Securityholder:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Telephone: ----------------------------
Fax: ----------------------------
Contact Person: ----------------------------
(c) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(i) Principal amount of Registrable
Securities beneficially owned:
----------
CUSIP No(s). of such Registrable Securities:
------------------
(ii) Principal amount of Securities other
than Registrable Securities
beneficially owned:
CUSIP No(s). of such other Securities:
------------------------
<PAGE>
(iii) Principal amount of Registrable
Securities which the undersigned
wishes to be included in the Shelf
Registration Statement:
----------------
CUSIP No(s). of such Registrable Securities to be included in the Shelf
Registration Statement:
------------------------------------------------
(d) Beneficial Ownership of Other Securities of
the Issuer and the Guarantors:
Except as set forth below in this Item (5), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other securities
of the Issuer or either Guarantor, other than the Securities listed above in
Item (3).
State any exceptions here:
(e) Relationships with the Issuer and either
Guarantor:
Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship with
the Issuer or the Guarantor (or their predecessors or affiliates) during the
past three years.
State any exceptions here:
(f) Plan of Distribution:
Except as set forth below, the undersigned Selling
Securityholder intends to distribute the Registrable Securities listed above in
Item (3) only as follows (if at all): Such Registrable Securities may be sold
from time to time directly by the undersigned Selling Securityholder or,
alternatively, through underwriters, broker-dealers or agents. Such Registrable
Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which the Registered
Securities may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such exchanges
or services or in the over-the-counter market, or (iv) through the writing of
options. In connection with sales of the Registrable Securities or otherwise,
the Selling Securityholder may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Registrable
Securities in the course of hedging the positions they assume. The Selling
Securityholder may also sell Registrable Securities short and deliver
Registrable Securities to close out such short positions, or loan or pledge
Registrable Securities to broker-dealers that in turn may sell such securities.
-2-
<PAGE>
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M.
In the event that the Selling Securityholder transfers all or any
portion of the Registrable Securities listed in Item (3) above after the date on
which such information is provided to the Issuer, the Selling Securityholder
agrees to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure
of the information contained herein in its answers to Items (1) through (6)
above and the inclusion of such information in the Shelf Registration Statement
and related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Issuer and the Guarantor in connection
with the preparation of the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under
Section 3(d) of the Exchange and Registration Rights Agreement to provide such
information as may be required by law for inclusion in the Shelf Registration
Statement, the Selling Securityholder agrees to promptly notify the Issuer of
any inaccuracies or changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Shelf Registration Statement
remains in effect. All notices hereunder and pursuant to the Exchange and
Registration Rights Agreement shall be made in writing, by hand-delivery,
first-class mail, or air courier guaranteeing overnight delivery as follows:
(i) To the Issuer and the Guarantors:
(c/o RSL Communications, N. America, Inc.)
RSL Communications PLC
RSL Communications, Ltd.
[ ]
[ ]
Attention:
-3-
<PAGE>
(ii) With a copy to:
[ ]
[ ]
[ ]
Attention:
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Issuer 's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Issuer, the Guarantor and the Selling Securityholder (with respect to the
Registrable Securities beneficially owned by such Selling Securityholder and
listed
-5-
<PAGE>
in Item (3) above. This Agreement shall be governed in all respects by the laws
of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated: ________________
------------------------------------------
Selling Securityholder
Print/type full legal name of beneficial
owner of Registrable Securities)
By:
----------------------------------------
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE ISSUER'S COUNSEL AT:
[ ]
[ ]
[ ]
[ ]
-5-
<PAGE>
Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
RSL Communications PLC
c/o Trustee
[ ]
[ ]
[ ]
Attention: Trust Officer
Re: RSL Communications PLC (the "Issuer")
12 7/8% Senior Notes due 2010
Dear Sirs:
Please be advised that _____________________ has transferred
$___________ aggregate principal amount of the above-referenced Notes pursuant
to an effective Registration Statement on Form [___] (File No. 333-____) filed
by the Issuer.
We hereby certify that the prospectus delivery requirements,
if any, of the Securities Act of 1933, as amended, have been satisfied and that
the above-named beneficial owner of the Notes is named as a "Selling Holder" in
the Prospectus dated ___________, 199_ or in supplements thereto, and that the
aggregate principal amount of the Notes transferred are the Notes listed in such
Prospectus opposite such owner's name.
Dated:
Very truly yours,
------------------------
(Name)
By: ________________________
(Authorized Signature)
<PAGE>
================================================================================
EXHIBIT 10.1
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
-------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
-------------------
10 1/2% SENIOR NOTES DUE 2008
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of
December 8, 1998, between the Company, the Guarantor and the Trustee (the
"Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 10 1/2% Senior Notes
due 2008 (the "Securities");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 10.16 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the
Securities on the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.03 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
ARTICLE I
SUBSIDIARY GUARANTEE
SECTION 1.01. Guarantee. Subject to the provisions of this
Article One, the Subsidiary Guarantor 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 (including Special 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 the Issuer to the Holders or
the Trustee, all in accordance with the terms of such Security and this
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. The Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, 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 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 12.01 and
Section 12.02 (subject to Section 12.06) of the Indenture. The maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five of
the Indenture for the purposes of this Article One. In the
2
<PAGE>
event of any declaration of acceleration of such obligations as provided in
Article Five of the Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purpose of this Article One. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Five of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article One.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or the Subsidiary Guarantor, or
any custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Issuer, the Guarantor or the Subsidiary
Guarantor, any amount paid to the Trustee or such Holder in respect of a
Security, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Subsidiary Guarantor further agrees, to
the fullest extent that the Subsidiary Guarantor may lawfully do so, that, as
between the Subsidiary Guarantor, 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 Five of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Security on
account of such claim or other rights. If any amount shall be paid to the
Subsidiary Guarantor 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 the Subsidiary
Guarantor 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. The Subsidiary Guarantor acknowledges that the
Subsidiary Guarantor has received and will receive direct and indirect benefits
from the issuance of the Securities pursuant to the Indenture and that the
waivers set forth in this Section 1.01 are knowingly made in contemplation of
such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Security unless the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations Unconditional. Subject to Section
1.05, nothing contained in this Article One or elsewhere in the Indenture or in
the Securities is intended to or shall impair, as among the Subsidiary Guarantor
and the holders of the Securities, the obligation of the Subsidiary Guarantor,
which is absolute and unconditional, upon failure by the Issuer, 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 the Subsidiary Guarantor, nor shall
anything herein or therein prevent the holder of any Securities or the Trustee
on their behalf from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 of the
Indenture or to pursue any rights or remedies hereunder.
SECTION 1.03. Notice to Trustee. The Subsidiary Guarantor
shall give prompt written notice to the Trustee of any fact known to the
Subsidiary Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Guarantee pursuant to the provisions of this Article
One.
SECTION 1.05. Release of the Subsidiary Guarantor. The
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged from its obligations under this Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications.
5
<PAGE>
ARTICLE II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second Supplemental Indenture or the Securities, and it shall not be
responsible for any statement of the Issuer or the Guarantor or the Subsidiary
Guarantor in this Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder are in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon execution, this Second Supplemental
Indenture shall form a part of the Indenture and the Second Supplemental
Indenture and the Indenture shall be read, taken and construed as one and the
same instrument for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental
Indenture shall become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC
was hereto affixed in the presence of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
------------------------------
Name: Donald R. Shassian
Title:
By: /s/ Margaret B. Niche
------------------------------
Name: Margaret B. Niche
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert S. Peschler
------------------------------
Name: Robert S. Peschler
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
------------------------------
Name: Donald R. Shassian
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
------------------------------
Name: Joel Beckoff
Title:
<PAGE>
================================================================================
EXHIBIT 10.2
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
-----------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
-----------------------
9 1/8% SENIOR NOTES DUE 2008
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of
February 27, 1998, between the Company, the Guarantor and the Trustee (the
"Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 9 1/8% Senior Notes
due 2008 (the "Securities");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 10.16 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the
Securities on the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.03 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
Article I
SUBSIDIARY GUARANTEE
SECTION 1.01. Guarantee. Subject to the provisions of this
Article One, the Subsidiary Guarantor 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 (including Special 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 the Issuer to the Holders or
the Trustee, all in accordance with the terms of such Security and this
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. The Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, 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 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 12.01 and
Section 12.02 (subject to Section 12.06) of the Indenture. The maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five of
the Indenture for the purposes of this Article One. In the
2
<PAGE>
event of any declaration of acceleration of such obligations as provided in
Article Five of the Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purpose of this Article One. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Five of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article One.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or the Subsidiary Guarantor, or
any custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Issuer, the Guarantor or the Subsidiary
Guarantor, any amount paid to the Trustee or such Holder in respect of a
Security, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Subsidiary Guarantor further agrees, to
the fullest extent that the Subsidiary Guarantor may lawfully do so, that, as
between the Subsidiary Guarantor, 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 Five of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Security on
account of such claim or other rights. If any amount shall be paid to the
Subsidiary Guarantor 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 the Subsidiary
Guarantor 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. The Subsidiary Guarantor acknowledges that the
Subsidiary Guarantor has received and will receive direct and indirect benefits
from the issuance of the Securities pursuant to the Indenture and that the
waivers set forth in this Section 1.01 are knowingly made in contemplation of
such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Security unless the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations Unconditional. Subject to Section
1.05, nothing contained in this Article One or elsewhere in the Indenture or in
the Securities is intended to or shall impair, as among the Subsidiary Guarantor
and the holders of the Securities, the obligation of the Subsidiary Guarantor,
which is absolute and unconditional, upon failure by the Issuer, 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 the Subsidiary Guarantor, nor shall
anything herein or therein prevent the holder of any Securities or the Trustee
on their behalf from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 of the
Indenture or to pursue any rights or remedies hereunder.
SECTION 1.03. Notice to Trustee. The Subsidiary Guarantor
shall give prompt written notice to the Trustee of any fact known to the
Subsidiary Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Guarantee pursuant to the provisions of this Article
One.
SECTION 1.05. Release of the Subsidiary Guarantor. The
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged from its obligations under this Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications.
5
<PAGE>
Article II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second Supplemental Indenture or the Securities, and it shall not be
responsible for any statement of the Issuer or the Guarantor or the Subsidiary
Guarantor in this Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder are in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon execution, this Second Supplemental
Indenture shall form a part of the Indenture and the Second Supplemental
Indenture and the Indenture shall be read, taken and construed as one and the
same instrument for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental
Indenture shall become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC
was hereto affixed in the presence of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
------------------------------
Name:
Title:
By: /s/ Margaret B. Niche
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert Peschler
------------------------------
Name: Robert Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
------------------------------
Name:
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
------------------------------
Name:
Title:
<PAGE>
================================================================================
EXHIBIT 10.3
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
--------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
--------------------
12 1/5% SENIOR NOTES DUE 2006
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of
October 3, 1996, between the Company, the Guarantor and the Trustee (the
"Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 12 1/5% Senior Notes
due 2006 (the "Notes");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 5.07 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the Notes on
the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.05 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
Article I
SUBSIDIARY GUARANTEE
SECTION 1.01. Guarantee. Subject to the provisions of this
Article One, the Subsidiary Guarantor 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 (including Special Interest) on each Note, 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 Notes, to the extent lawful, and the due and punctual
performance of all other obligations of the Issuer to the Holders or the
Trustee, all in accordance with the terms of such Note and this Indenture and
(ii) in the case of any extension of time of payment or renewal of any Notes 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. The Subsidiary Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, the benefit of discussion, protest or
notice with respect to any such Note or the debt evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged as
to any such Note except by payment in full of the principal thereof and interest
thereon and as provided in Section 8.01 and Section 8.02 (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
Article One. In the event of any declaration of
2
<PAGE>
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 the Subsidiary Guarantor for the purpose of this Article One. 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 Notes under the Guarantee provided for in this
Article One.
If the Trustee or the Holder of any Note is required by any
court or otherwise to return to the Issuer or the Subsidiary Guarantor, or any
custodian, receiver, liquidator, trustee, sequestrator or other similar official
acting in relation to the Issuer, the Guarantor or the Subsidiary Guarantor, any
amount paid to the Trustee or such Holder in respect of a Note, this Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect. The Subsidiary Guarantor further agrees, to the fullest extent that the
Subsidiary Guarantor may lawfully do so, that, as between the Subsidiary
Guarantor, 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 Guarantee,
notwithstanding any stay, injunction or other prohibition extant under any
applicable bankruptcy law preventing such acceleration in respect of the
obligations guaranteed hereby.
Until such time as the Notes are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Note on account
of such claim or other rights. If any amount shall be paid to the Subsidiary
Guarantor in violation of the preceding sentence and the principal of, premium,
if any, and accrued interest on the Notes shall not have been paid in full, such
amount shall be deemed to have been paid to the Subsidiary Guarantor 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
Notes. The Subsidiary Guarantor acknowledges that the Subsidiary Guarantor has
received and will receive direct and indirect benefits from the issuance of the
Notes pursuant to the Indenture and that the waivers set forth in this Section
1.01 are knowingly made in contemplation of such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Note unless the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations Unconditional. Subject to Section
1.05, nothing contained in this Article One or elsewhere in the Indenture or in
the Notes is intended to or shall impair, as among the Subsidiary Guarantor and
the holders of the Notes, the obligation of the Subsidiary Guarantor, which is
absolute and unconditional, upon failure by the Issuer, to pay to the holders of
the Notes the principal of, premium, if any, and interest on the Notes 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 Notes and
creditors of the Subsidiary Guarantor, nor shall anything herein or therein
prevent the holder of any Notes or the Trustee on their behalf from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the Notes
to take any action to declare the Guarantee to be due and payable prior to the
Stated Maturity of the Notes pursuant to Section 6.02 of the Indenture or to
pursue any rights or remedies hereunder.
SECTION 1.03. Notice to Trustee. The Subsidiary Guarantor
shall give prompt written notice to the Trustee of any fact known to the
Subsidiary Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Guarantee pursuant to the provisions of this Article
One.
SECTION 1.05. Release of the Subsidiary Guarantor. The
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged from its obligations under this Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Notes or placement of the Notes on
creditwatch with negative implications.
Article II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second
5
<PAGE>
Supplemental Indenture or the Notes, and it shall not be responsible for any
statement of the Issuer or the Guarantor or the Subsidiary Guarantor in this
Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly
amended, the Indenture and the Notes issued thereunder are in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon execution, this Second Supplemental
Indenture shall form a part of the Indenture and the Second Supplemental
Indenture and the Indenture shall be read, taken and construed as one and the
same instrument for all purposes, and every holder of Notes heretofore or
hereafter authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental
Indenture shall become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC
was hereto affixed in the presence of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
------------------------------
Name:
Title:
By: /s/ Margaret B. Niche
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert Peschler
------------------------------
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
------------------------------
Name:
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
------------------------------
Name:
Title:
<PAGE>
===============================================================================
EXHIBIT 10.5
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
----------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
----------------------
12% SENIOR NOTES DUE 2008
===============================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of
November 9, 1998, between the Company, the Guarantor and the Trustee (the
"Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 12% Senior Notes due
2008 (the "Securities");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 10.16 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the
Securities on the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.03 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
Article I
SUBSIDIARY GUARANTEE
SECTION 1.01. Guarantee. Subject to the provisions of this
Article One, the Subsidiary Guarantor 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 (including Special 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 the Issuer to the Holders or
the Trustee, all in accordance with the terms of such Security and this
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. The Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, 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 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 12.01 and
Section 12.02 (subject to Section 12.06) of the Indenture. The maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five of
the Indenture for the purposes of this Article One. In the
2
<PAGE>
event of any declaration of acceleration of such obligations as provided in
Article Five of the Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purpose of this Article One. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Five of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article One.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or the Subsidiary Guarantor, or
any custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Issuer, the Guarantor or the Subsidiary
Guarantor, any amount paid to the Trustee or such Holder in respect of a
Security, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Subsidiary Guarantor further agrees, to
the fullest extent that the Subsidiary Guarantor may lawfully do so, that, as
between the Subsidiary Guarantor, 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 Five of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Security on
account of such claim or other rights. If any amount shall be paid to the
Subsidiary Guarantor 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 the Subsidiary
Guarantor 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. The Subsidiary Guarantor acknowledges that the
Subsidiary Guarantor has received and will receive direct and indirect benefits
from the issuance of the Securities pursuant to the Indenture and that the
waivers set forth in this Section 1.01 are knowingly made in contemplation of
such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Security unless the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations Unconditional. Subject to Section
1.05, nothing contained in this Article One or elsewhere in the Indenture or in
the Securities is intended to or shall impair, as among the Subsidiary Guarantor
and the holders of the Securities, the obligation of the Subsidiary Guarantor,
which is absolute and unconditional, upon failure by the Issuer, 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 the Subsidiary Guarantor, nor shall
anything herein or therein prevent the holder of any Securities or the Trustee
on their behalf from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 of the
Indenture or to pursue any rights or remedies hereunder.
SECTION 1.03. Notice to Trustee. The Subsidiary Guarantor
shall give prompt written notice to the Trustee of any fact known to the
Subsidiary Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Guarantee pursuant to the provisions of this Article
One.
SECTION 1.05. Release of the Subsidiary Guarantor. The
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged from its obligations under this Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications.
5
<PAGE>
Article II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second Supplemental Indenture or the Securities, and it shall not be
responsible for any statement of the Issuer or the Guarantor or the Subsidiary
Guarantor in this Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder are in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon execution, this Second Supplemental
Indenture shall form a part of the Indenture and the Second Supplemental
Indenture and the Indenture shall be read, taken and construed as one and the
same instrument for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental
Indenture shall become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC
was hereto affixed in the presence of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
------------------------------
Name:
Title:
By: /s/ Margaret B. Niche
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert S. Peschler
------------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
------------------------------
Name:
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
------------------------------
Name:
Title:
<PAGE>
================================================================================
EXHIBIT 10.5
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
----------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
----------------------------
10 1/8% SENIOR DISCOUNT NOTES DUE 2008
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of
February 27, 1998, between the Company, the Guarantor and the Trustee (the
"Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 10 1/8% Senior
Discount Notes due 2008 (the "Securities");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 10.16 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the
Securities on the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.03 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
ARTICLE I
SUBSIDIARY GUARANTEE
SECTION 1.01. Guarantee. Subject to the provisions of this
Article One, the Subsidiary Guarantor 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 (including Special 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 the Issuer to the Holders or
the Trustee, all in accordance with the terms of such Security and this
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. The Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, 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 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 12.01 and
Section 12.02 (subject to Section 12.06) of the Indenture. The maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five of
the Indenture for the purposes of this Article One. In the
2
<PAGE>
event of any declaration of acceleration of such obligations as provided in
Article Five of the Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purpose of this Article One. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Five of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article One.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or the Subsidiary Guarantor, or
any custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Issuer, the Guarantor or the Subsidiary
Guarantor, any amount paid to the Trustee or such Holder in respect of a
Security, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Subsidiary Guarantor further agrees, to
the fullest extent that the Subsidiary Guarantor may lawfully do so, that, as
between the Subsidiary Guarantor, 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 Five of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Security on
account of such claim or other rights. If any amount shall be paid to the
Subsidiary Guarantor 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 the Subsidiary
Guarantor 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. The Subsidiary Guarantor acknowledges that the
Subsidiary Guarantor has received and will receive direct and indirect benefits
from the issuance of the Securities pursuant to the Indenture and that the
waivers set forth in this Section 1.01 are knowingly made in contemplation of
such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Security unless the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations Unconditional. Subject to Section
1.05, nothing contained in this Article One or elsewhere in the Indenture or in
the Securities is intended to or shall impair, as among the Subsidiary Guarantor
and the holders of the Securities, the obligation of the Subsidiary Guarantor,
which is absolute and unconditional, upon failure by the Issuer, 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 the Subsidiary Guarantor, nor shall
anything herein or therein prevent the holder of any Securities or the Trustee
on their behalf from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 of the
Indenture or to pursue any rights or remedies hereunder.
SECTION 1.03. Notice to Trustee. The Subsidiary Guarantor
shall give prompt written notice to the Trustee of any fact known to the
Subsidiary Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Guarantee pursuant to the provisions of this Article
One.
SECTION 1.05. Release of the Subsidiary Guarantor. The
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged from its obligations under this Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications.
5
<PAGE>
ARTICLE II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second Supplemental Indenture or the Securities, and it shall not be
responsible for any statement of the Issuer or the Guarantor or the Subsidiary
Guarantor in this Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder are in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon execution, this Second Supplemental
Indenture shall form a part of the Indenture and the Second Supplemental
Indenture and the Indenture shall be read, taken and construed as one and the
same instrument for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental
Indenture shall become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC
was hereto affixed in the presence of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
-----------------------------------
Name:
Title:
By: /s/ Margaret B. Niche
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert S. Peschler
-----------------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
-----------------------------------
Name:
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.6
================================================================================
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
----------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
----------
10% SENIOR DISCOUNT NOTES DUE 2008
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of March
16, 1998, between the Company, the Guarantor and the Trustee (the "Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 10% Senior Discount
Notes due 2008 (the "Securities");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 10.16 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the
Securities on the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.03 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
ARTICLE I
SUBSIDIARY GUARANTEE
SECTION 1.01. Guarantee. Subject to the provisions of this Article One,
the Subsidiary Guarantor 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
(including Special 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 the Issuer to the Holders or the Trustee, all in
accordance with the terms of such Security and this 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. The Subsidiary Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of merger or bankruptcy of the Issuer, any right to require a proceeding
first against the Issuer, 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 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 12.01 and Section 12.02 (subject to Section
12.06) of the Indenture. The maturity of the obligations guaranteed hereby may
be accelerated as provided in Article Five of the Indenture for the purposes of
this Article One. In the
2
<PAGE>
event of any declaration of acceleration of such obligations as provided in
Article Five of the Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purpose of this Article One. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Five of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article One.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or the Subsidiary Guarantor, or
any custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Issuer, the Guarantor or the Subsidiary
Guarantor, any amount paid to the Trustee or such Holder in respect of a
Security, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Subsidiary Guarantor further agrees, to
the fullest extent that the Subsidiary Guarantor may lawfully do so, that, as
between the Subsidiary Guarantor, 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 Five of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Security on
account of such claim or other rights. If any amount shall be paid to the
Subsidiary Guarantor 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 the Subsidiary
Guarantor 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. The Subsidiary Guarantor acknowledges that the
Subsidiary Guarantor has received and will receive direct and indirect benefits
from the issuance of the Securities pursuant to the Indenture and that the
waivers set forth in this Section 1.01 are knowingly made in contemplation of
such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Security unless the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations Unconditional. Subject to Section 1.05,
nothing contained in this Article One or elsewhere in the Indenture or in the
Securities is intended to or shall impair, as among the Subsidiary Guarantor and
the holders of the Securities, the obligation of the Subsidiary Guarantor, which
is absolute and unconditional, upon failure by the Issuer, 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 the Subsidiary Guarantor, nor shall
anything herein or therein prevent the holder of any Securities or the Trustee
on their behalf from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 of the
Indenture or to pursue any rights or remedies hereunder.
SECTION 1.03. Notice to Trustee. The Subsidiary Guarantor shall give
prompt written notice to the Trustee of any fact known to the Subsidiary
Guarantor which would prohibit the making of any payment to or by the Trustee in
respect of the Guarantee pursuant to the provisions of this Article One.
SECTION 1.05. Release of the Subsidiary Guarantor. The Subsidiary
Guarantor shall be automatically and unconditionally released and discharged
from its obligations under this Guarantee (i) upon any sale, exchange or
transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications.
5
<PAGE>
ARTICLE II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second Supplemental Indenture or the Securities, and it shall not be
responsible for any statement of the Issuer or the Guarantor or the Subsidiary
Guarantor in this Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly amended, the
Indenture and the Securities issued thereunder are in all respects ratified and
confirmed and all the terms, conditions and provisions thereof shall remain in
full force and effect. Upon execution, this Second Supplemental Indenture shall
form a part of the Indenture and the Second Supplemental Indenture and the
Indenture shall be read, taken and construed as one and the same instrument for
all purposes, and every holder of Securities heretofore or hereafter
authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental Indenture shall
become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any number of
copies of this Second Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One signed copy
is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC was hereto affixed in the presence
of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
--------------------------------
Name:
Title:
By: /s/ Margaret B. Niche
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert S. Peschler
--------------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
--------------------------------
Name:
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
--------------------------------
Name:
Title:
<PAGE>
================================================================================
EXHIBIT 10.7
RSL COMMUNICATIONS PLC
As Issuer
RSL COMMUNICATIONS, LTD.
As Guarantor
RSL COM U.S.A., INC.
As Subsidiary Guarantor
TO
THE CHASE MANHATTAN BANK,
As Trustee
------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 22, 2000
------------------------
9 7/8% SENIOR NOTES DUE 2009
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of February 22, 2000
(the "Second Supplemental Indenture"), between RSL Communications PLC, a United
Kingdom corporation, as issuer (hereinafter called the "Issuer"), RSL
Communications, Ltd., a Bermuda corporation, as guarantor (hereinafter called
the "Guarantor"), RSL COM U.S.A., Inc., a Delaware corporation, as guarantor
(hereinafter called the "Subsidiary Guarantor"), and The Chase Manhattan Bank, a
corporation duly organized and existing under the laws of the State of New York,
as Trustee (hereinafter called the "Trustee").
Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Indenture, dated as of May
13, 1999, between the Company, the Guarantor and the Trustee (the "Indenture").
Recitals
WHEREAS, the Issuer, the Guarantor and the Trustee entered
into the Indenture pursuant to which the Issuer issued its 9 7/8% Senior Notes
due 2009 (the "Securities");
WHEREAS, the Issuer desires to issue its euro denominated
senior notes due 2010 (the "Euro Notes") and its dollar denominated senior notes
due 2010 (the "Dollar Notes") in an aggregate principal amount of up to
approximately $230,000,000 (or the U.S. dollar equivalent);
WHEREAS, the Subsidiary Guarantor has substantially benefited
from the issuance of the Notes and expects to substantially benefit from the
issuance of the Dollar Notes and the Euro Notes;
WHEREAS, to facilitate the offering of the Dollar Notes and
the Euro Notes, the Subsidiary Guarantor is fully, unconditionally and
irrevocably guaranteeing, on an unsubordinated basis, all of the obligations of
the Issuer under the Dollar Notes, the Euro Notes and the indentures pursuant to
which they will be issued;
WHEREAS, Section 10.16 of the Indenture provides that the
Subsidiary Guarantor may not guarantee any Indebtedness of the Issuer unless the
Subsidiary Guarantor simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of payment of the
Securities on the terms provided herein;
<PAGE>
WHEREAS, the Boards of Directors of the Issuer, the Guarantor
and the Subsidiary Guarantor have authorized the execution of the Second
Supplemental Indenture and its delivery to the Trustee;
WHEREAS, the Company and the Guarantor have delivered an
Opinion of Counsel to the Trustee pursuant to Section 9.03 of the Indenture;
WHEREAS, all other actions necessary to make this Second
Supplemental Indenture a legal, valid and binding obligation of the parties
hereto in accordance with its terms and the terms of the Indenture have been
performed; and
WHEREAS, the Issuer, the Guarantor, the Subsidiary Guarantor
and the Trustee desire to enter into, execute and deliver this Second
Supplemental Indenture in compliance with the provisions of the Indenture.
NOW, THEREFORE, the Issuer, the Guarantor and the Trustee
hereby agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes:
ARTICLE I
SUBSIDIARY GUARANTEE
SECTION 1.01. GuaranteeSECTION 5.01. Guarantee. Subject to the
provisions of this Article One, the Subsidiary Guarantor 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 (including Special 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 the
Issuer to the Holders or the Trustee, all in accordance with the terms of such
Security and this 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. The Subsidiary Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger or bankruptcy
of the Issuer, any right to require a proceeding first against the Issuer, 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
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
12.01 and Section 12.02 (subject to Section 12.06) of the Indenture. The
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Five of the Indenture for the purposes of this Article One. In the
2
<PAGE>
event of any declaration of acceleration of such obligations as provided in
Article Five of the Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for the
purpose of this Article One. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Five of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Guarantee provided for in this Article One.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Issuer or the Subsidiary Guarantor, or
any custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Issuer, the Guarantor or the Subsidiary
Guarantor, any amount paid to the Trustee or such Holder in respect of a
Security, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Subsidiary Guarantor further agrees, to
the fullest extent that the Subsidiary Guarantor may lawfully do so, that, as
between the Subsidiary Guarantor, 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 Five of the Indenture for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Until such time as the Securities are fully and finally paid,
including all interest, premium, principal and liquidated damages with respect
thereto, the Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which they may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of their obligations
under this Guarantee and this 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 the
Issuer 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 the Issuer, directly or indirectly, in cash or
other property or by setoff or in any other manner, payment or Security on
account of such claim or other rights. If any amount shall be paid to the
Subsidiary Guarantor 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 the Subsidiary
Guarantor 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. The Subsidiary Guarantor acknowledges that the
Subsidiary Guarantor has received and will receive direct and indirect benefits
from the issuance of the Securities pursuant to the Indenture and that the
waivers set forth in this Section 1.01 are knowingly made in contemplation of
such benefits.
3
<PAGE>
The Guarantee set forth in this Section 1.01 shall not be or
become valid or obligatory for any purpose with respect to a Security unless the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 1.02. Obligations UnconditionalSECTION 5.02.
Obligations Unconditional. Subject to Section 1.05, nothing contained in this
Article One or elsewhere in the Indenture or in the Securities is intended to or
shall impair, as among the Subsidiary Guarantor and the holders of the
Securities, the obligation of the Subsidiary Guarantor, which is absolute and
unconditional, upon failure by the Issuer, 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 the Subsidiary Guarantor, nor shall anything herein
or therein prevent the holder of any Securities or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture.
Without limiting the foregoing, nothing contained in this
Article One will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee to be due and payable
prior to the Stated Maturity of the Securities pursuant to Section 5.02 of the
Indenture or to pursue any rights or remedies hereunder.
SECTION 1.03. Notice to TrusteeSECTION 5.03. Notice to
Trustee. The Subsidiary Guarantor shall give prompt written notice to the
Trustee of any fact known to the Subsidiary Guarantor which would prohibit the
making of any payment to or by the Trustee in respect of the Guarantee pursuant
to the provisions of this Article One.
SECTION 1.05. Release of the Subsidiary Guarantor. The
Subsidiary Guarantor shall be automatically and unconditionally released and
discharged from its obligations under this Guarantee (i) upon any sale, exchange
or transfer, to any Person not an Affiliate of the Guarantor, of all of the
Guarantor's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, the Subsidiary Guarantor (which sale, exchange
or transfer is not prohibited by the Indenture) or (ii) at any time, so long as
in the case of this clause (ii) Standard & Poor's Corporation, or any successor,
is notified by the Issuer of the proposed termination of the Guarantee of the
Subsidiary Guarantor and advises the Issuer that such termination would not
result in a downgrade of the rating on the Securities or placement of the
Securities on creditwatch with negative implications.
5
<PAGE>
ARTICLE II
MISCELLANEOUS
SECTION 2.01. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Second Supplemental Indenture or the Securities, and it shall not be
responsible for any statement of the Issuer or the Guarantor or the Subsidiary
Guarantor in this Second Supplemental Indenture.
SECTION 2.02. Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder are in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon execution, this Second Supplemental
Indenture shall form a part of the Indenture and the Second Supplemental
Indenture and the Indenture shall be read, taken and construed as one and the
same instrument for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound hereby.
SECTION 2.03. Effectiveness. This Second Supplemental
Indenture shall become effective as of the date first above written.
SECTION 2.05. Governing Law. THIS SECOND SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 2.05. Counterpart Originals. The parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Second Supplemental Indenture.
5
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and duly attested, all as of the day and year first above
written.
The Company Seal of RSL COMMUNICATIONS PLC
was hereto affixed in the presence of:
[Seal]
RSL COMMUNICATIONS PLC,
By: /s/ Donald R. Shassian
-----------------------------------
Name:
Title:
By: /s/ Margaret B. Niche
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By: /s/ Robert S. Peschler
-----------------------------------
Name: Robert S. Peschler
Title: Assistant Vice President
RSL COMMUNICATIONS, LTD.,
By: /s/ Donald R. Shassian
-----------------------------------
Name:
Title:
<PAGE>
RSL COM U.S.A., INC.
By: /s/ Joel Beckoff
-----------------------------------
Name:
Title:
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement No. 333-___ of RSL
Communications, Ltd. on Form S-4 or our report dated March 2, 2000 (May 1, 2000
as to the summarized financial information of RSL COM U.S.A. appearing in Note
19), appearing in the Prospectus, which is part of this Registration Statement,
and to the reference to us under the headings "Selected Consolidated Financial
Data" and "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
New York, New York
May 5, 2000
<PAGE>
Exhibit 99.1
RSL COMMUNICATIONS PLC
Offer for all outstanding
12 7/8% Senior Dollar Notes Due 2010
in Exchange for
12 7/8% Senior Dollar Exchange Notes Due 2010
and all outstanding 12 7/8% Senior Euro Notes due 2010
in Exchange for
12 7/8% Senior Euro Exchange Notes due 2010
Pursuant to the Prospectus, dated ___________, 2000
Guaranteed as to payment of Principal and Interest
by RSL Communications, Ltd.
RSL COM U.S.A., Inc.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON _____________, 2000, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
FOR THE DOLLAR NOTES ONLY: Delivery To: The Chase Manhattan Bank, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission Number: By Hand:
The Chase Manhattan Bank (212) 638-7380/81 The Chase Manhattan Bank
55 Water Street Confirm by Telephone: 55 Water Street
Room 235, North Building (212) 638-0828 Room 235, North Building
New York, NY 10051 New York, NY 10051
Attn: Carlos Esteves Attn: Carlos Esteves
</TABLE>
By Overnight Courier:
The Chase Manhattan Bank
55 Water Street
Room 235, North Building
New York, NY 10051
Attn: Carlos Esteves
FOR THE EURO NOTES ONLY: Delivery To: The Chase Manhattan Bank, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission Number: By Hand:
The Chase Manhattan Bank (55-171) _________ The Chase Manhattan Bank
9 Thomas Moore Street, 5th Floor Confirm by Telephone: 9 Thomas Moore Street, 5th Floor
London E1W 1YT (55-171) 777-5517 London E1W 1YT
U.K. U.K.
Attn: Philip Wilson Attn: Philip Wilson
</TABLE>
By Overnight Courier:
The Chase Manhattan Bank
9 Thomas Moore Street, 5th Floor
London E1W 1YT U.K.
Attn: Philip Wilson
Delivery of this instrument to an address other than as set forth
above, or transmission of instruction via facsimile other than as set forth
above, will not constitute a valid delivery.
<PAGE>
The undersigned acknowledges that he or she has received and reviewed
the Prospectus, dated ___________, 2000, (the "Prospectus"), of RSL
Communications PLC ("RSL PLC"), and this Letter of Transmittal (the "Letter"),
which together constitute RSL PLC's offer (the "Exchange Offer") to exchange an
aggregate principal amount of up to US$100,000,000 of its 12 7/8% Senior Dollar
Exchange Notes Due 2010 (the "New Dollar Notes") of RSL PLC for a like principal
amount of the issued and outstanding 12 7/8% Senior Dollar Notes Due 2010 (the
"Old Dollar Notes") of RSL PLC from the holders thereof and an aggregate
principal amount of up to 100,000,000 of its 12 7/8% Senior Euro Exchange
Notes due 2010 (the "New Euro Notes" and, together with the New Dollar Notes,
the "New Notes") of RSL PLC for a like principal amount of the issued and
outstanding 12 7/8% Senior Euro Notes due 2010 (the "Old Euro Notes" and,
together with the Old Dollar Notes, the "Old Notes") of RSL PLC from the holders
thereof.
For each Old Dollar Note and each Old Euro Note accepted for exchange,
the holder of such Old Dollar Note or Old Euro Note, as the case may be, will
receive a New Dollar Note or a New Euro Note, having a principal amount equal to
that of the surrendered Old Dollar Note or Old Euro Note, as the case may be.
The New Notes will bear interest from the most recent date to which interest has
been paid on the Old Notes, or, if no interest has been paid on the Old Notes,
from February 22, 2000. Accordingly, registered holders of New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from February 22, 2000. Old Notes accepted for exchange use will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
of Old Notes whose Old Notes are accepted for exchange will not receive any
payment in respect of accrued interest on such Old Notes.
This Letter is to be completed by a holder of Old Notes if either
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the book-entry depositary at The Depository Trust Company, in the
case of the Old Dollar Notes, or Euroclear and Clearstream, in the case of the
Old Euro Notes (in either case, the "Book-Entry Transfer Facility"), pursuant to
the procedures set forth in "The Exchange Offers--Book-Entry Transfer" section
of the Prospectus and an Agent's Message is not delivered. Tenders by book-entry
transfer may also be made by delivering an Agent's Message in lieu of this
Letter. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation (as defined below), which states that the
Book-Entry Transfer Facility has received an express acknowledgment from the
tendering participant, which acknowledgment states that such participant has
received and agrees to be bound by, and makes the representations and warranties
contained in, this Letter and that RSL PLC may enforce this Letter against such
participant. Holders of Old Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Old Notes into the Book-Entry Depositary's
account at the Book-Entry Transfer Facility (the "Book-Entry Confirmation") and
all other documents required by this Letter to the Exchange Agent on or prior to
the Expiration Date, must tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offers--Guaranteed Delivery
Procedures" section of the Prospectus. See Instruction 1. Delivery of documents
to the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange offer.
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
the Old Notes should be listed on a separate signed schedule affixed hereto.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ---------------------------------------------------------------------------------------------------------------------
1 2 3
- ---------------------------------------------------------------------------------------------------------------------
Aggregate
Principal
Name(s) and Address(es) of Registered Holder(s) Amount of Principal
Certificate Old Amount
(Please fill in, if blank) Number(s)* Note(s) Tendered**
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Old Notes represented by the Old Notes
indicated in column 2. See Instruction 2. Old Dollar Notes tendered
hereby must be in denominations of principal amount of US$1,000 and any
integral multiple thereof. Old Euro Notes must be in denominations of
principal amount of 1,000 See Instruction 1.
- --------------------------------------------------------------------------------
|_| Check here if tendered Old Notes are being delivered by book-entry transfer
made to an account maintained by the Exchange Agent with the Book-Entry
Transfer Facility and complete the following:
Name of Tendering Institution
----------------------------------------------
Account Number
-------------------------------------------------------------
Transaction Code Name
------------------------------------------------------
By crediting the Old Dollar Notes to the Book-Entry Depositary's
account at DTC's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting to the Book-Entry Depositary a computer-generated message (an
"Agent's Message") in which the holder of the Old Dollar Notes acknowledges and
agrees to be bound by the terms of, and makes the representations and warranties
contained in, this Letter, the participant in the Book-Entry Transfer Facility
confirms on behalf of itself and the beneficial owners of such Old Dollar Notes
all provisions of this Letter (including all representations and warranties)
applicable to it and such beneficial owner as fully as if it had completed the
information required herein and executed and transmitted this Letter to the
Exchange Agent.
<PAGE>
|_| Check here if tendered Old Notes are being delivered pursuant to a Notice
of Guaranteed Delivery previously sent to the Exchange Agent and complete
the following:
Name(s) of Registered Holder(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution that Guaranteed Delivery
If delivered by Book-Entry Transfer, Complete the Following: Account Number
Transaction Code Name
|_| Check here if you are a broker-dealer and wish to receive 10 additional
copies of the Prospectus and 10 copies of any amendments or supplements
thereto.
Name:
----------------------------------------------------------------------
Address:
-------------------------------------------------------------------
---------------------------------------------------------------------------
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offers,
the undersigned hereby tenders to RSL PLC the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance of
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, RSL PLC all rights, title and interest
in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that RSL PLC will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim where the same are accepted by RSL PLC. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes and that neither the holder of such Old Notes nor
any such other person is an "affiliate," as defined in Rule 505 under the
Securities Act of 1933, as amended (the "Securities Act"), of RSL PLC, RSL
Communications, Ltd. ("RSL COM") or RSL U.S.A., Inc. ("RSL USA").
The undersigned also acknowledges that these Exchange Offers are being
made in reliance on an interpretation by the staff of the SEC (the "Commission")
that the New Notes issued in exchange for the Old Notes pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of RSL PLC, RSL COM
or RSL USA within the meaning of Rule 505 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangements with any person
to participate in the distribution of such New Notes. If the undersigned is not
a broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of New Notes. If the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes, it represents that the Old Notes to be exchanged for the New Notes
were acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus in connection with
any resale of such New Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by RSL PLC to be necessary or desirable to complete the sale,
assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer -- Withdrawal of Tenders"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
<PAGE>
The undersigned, by completing the box entitled "Description of Old
Notes" above and signing this letter, will be deemed to have tendered the Old
Notes as set forth in such box above.
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 5)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be issued in the name of and sent to someone other than the person
or persons whose signature(s) appear(s) on this Letter above, or if Old Notes
delivered by the Book-Entry Transfer Facility other than the account Notes to:
indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)
------------------------------------------------------------------------
(Please Type or Print)
- --------------------------------------------------------------------------------
(Please Type or Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
(Complete Substitute Form W-9)
Name(s)
------------------------------------------------------------------------
(Please Type or Print)
- --------------------------------------------------------------------------------
(Please Type or Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
|_| Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
- --------------------------------------------------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 5)
To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this letter above or to such person or persons at an
address other than shown in the book-entry transfer which are not accepted for
exchange box entitled "Description of Old Notes" on this are to be returned by
credit to an account maintained at Letter above. Mail: New Notes and/or Old
Notes
Name(s)
------------------------------------------------------------------------
(Please Type or Print)
- --------------------------------------------------------------------------------
(Please Type or Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
Important: This letter or a facsimile hereof (together with the
certificates for Old Notes or a book-entry confirmation and all other
required documents or the Notice of Guaranteed Delivery) must be
received by the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
Dated: ____________________, 2000
x , 2000
------------------------------------ -----------------------------
x , 2000
------------------------------------ -----------------------------
Signature(s) of Owner Date
Area Code and Telephone Number
-----------------------------
If a holder is tendering any Old Notes, this Letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s):
------------------------------------------------------------------------
(Please Type or Print)
Capacity:
-----------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:
--------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name and Firm)
Dated: ______________, 2000
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
for the 12 7/8% Senior Dollar Exchange
Notes Due 2010 in Exchange for the 12 7/8% Senior Dollar Notes Due 2010
and the 12 7/8% Senior Euro
Exchange Notes due 2010 in Exchange for the 12 7/8% Senior Euro Notes due 2010
of RSL Communications PLC
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
This letter is to be completed by noteholders either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange Offers
- -- Book-Entry Transfer" section of the Prospectus and an Agent's Message is not
delivered. Tenders by book-entry transfer may also be made by delivering an
Agent's Message in lieu of this Letter of Transmittal. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility to and
received by the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgement from the tendering participant, which acknowledgement states
that such participant has received and agrees to be bound by, and makes the
representations and warranties contained in, the Letter of Transmittal and that
RSL PLC may enforce the Letter of Transmittal against such participant.
Certificates for all physically tendered Old Notes, or Book-Entry Confirmation,
as the case may be, as well as a properly completed and duly executed Letter (or
manually signed facsimile hereof or Agent's Message in lieu thereof) and any
other documents required by this Letter, must be received by the Exchange Agent
at the address set forth herein or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Dollar Notes tendered hereby must be in denominations of principal
amount of US$1,000 and any integral multiple thereof. Old Euro Notes tendered
hereby must be in denominations of principal amount of 1,000 and any integral
multiple thereof.
Noteholders whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offers -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution, (ii) prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by RSL PLC (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed Letter (or facsimile
thereof or Agent's Message in lieu thereof) with any required signature
guarantees and any other documents required by this Letter will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) the certificates for
all physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, together with a properly completed and duly
executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with
any required signature guarantees and all other documents required by this
Letter, are received by the Exchange Agent within three NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Old Notes are sent by mail, it is suggested that the mailing
be made sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
See "The Exchange Offers" section of the Prospectus.
<PAGE>
2. Partial Tenders (not applicable to noteholders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted certificate
are to be tendered, the tendering holder(s) should fill in the aggregate
principal amount of Old Notes to be tendered in the box above entitled
"Description of Old Notes -- Principal Amount at Maturity Tendered." A reissued
certificate representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificate without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Old Notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the New Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder
or holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing, and, unless waived by RSL PLC, proper
evidence satisfactory to RSL PLC of their authority to so act must be submitted.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an officer or correspondent in the United States (an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Notes) who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
5. Special Issuance and Delivery Instructions.
Tendering holders of Old Notes should indicate in the applicable box
the name and address to which New Notes issued pursuant to the Exchange Offer
and/or substitute certificates evidencing Old Notes not exchanged are to be
issued or sent, if different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the employer identification
or social security number of the person named must also be indicated.
Noteholders tendering Old Notes by book-entry transfer may request that Old
Notes not exchanged be credited to such account maintained at the Book-Entry
Transfer Facility as such noteholder may designate hereon. If no such
<PAGE>
instructions are given, such Old Notes not exchanged will be returned to the
name or address of the person signing this Letter.
5. Tax Identification Number.
U.S. Federal income tax law generally requires that a tendering holder
whose Old Notes are accepted for exchange must provide RSL PLC (as payer) with
such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form
W-9 below, which in the case of a tendering holder who is an individual, is his
or her social security number. If RSL PLC is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
US$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may result in backup withholding in an amount
equal to 31% of all reportable payments made after the exchange. If withholding
results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give RSL PLC a completed Form W-8, Certificate of
Foreign Status. These forms may be obtained from the Exchange Agent. If the Old
Notes are in more than one name or are not in the name of the actual owner, such
holder should consult the W-9 Guidelines for information on which TIN to report.
If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to RSL PLC within 60
days, backup withholding will begin and continue until such holder furnishes its
TIN to RSL PLC.
6. Transfer Taxes.
RSL PLC will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
RSL PLC or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or an
Agent's Message in lieu thereof, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
8. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
<PAGE>
9. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYER'S NAME: THE CHASE MANHATTAN BANK
<TABLE>
<S> <C> <C>
- ------------------------------- ------------------------------------------ -----------------------------------------
Part I -- Please provide the Taxpayer TIN:
Identification Number ("TIN") of the ----------------------------------
SUBSTITUTE person submitting this Letter of Social Security Number or
Transmittal in the box
Form W-9 Employer Identification Number
--------------------------------------------------------------------------------------
Department of the Treasury Part II-- TIN applied for
Internal Revenue Service
--------------------------------------------------------------------------------------
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I
am waiting for a number to be issued to me.
Payer's Request for Taxpayer (2) I am not subject to(2) I am not subject to backup withholding either because: (a)
Identification Number ("TIN") I am exempt from backup withholding, or (b) I have not been notified by the
and Certification Internal Revenue Service (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding, and
(3) Any other information provided on this form is true and correct.
Signature Date:
-------------------------------------------- ---------------
- ----------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or dividends on your tax return and you have not been
notified by the IRS that you are not longer subject to backup withholding.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of the
exchange, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
- ------------------------------------------- ---------------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY FOR
RSL COMMUNICATIONS PLC
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of RSL Communications PLC ("RSL PLC") made pursuant to the
Prospectus, dated ___________, 2000 (the "Prospectus"), if certificates for old
12 7/8% dollar notes and old 12 7/8% euro notes of RSL PLC are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach The Chase
Manhattan Bank (the "Exchange Agent") prior to 5:00 p.m., New York City time, on
the Expiration Date of the Exchange Offer. Such form may be delivered or
transmitted by telegram, telex, facsimile transmission, mail or hand delivery to
the Exchange Agent as set forth below.
Delivery To: The Chase Manhattan Bank, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission Number: By Hand:
The Chase Manhattan Bank (212) 638-7380/81 The Chase Manhattan Bank
55 Water Street Confirm by Telephone: 55 Water Street
Room 235, North Building (212) 638-0828 Room 235, North Building
New York, NY 10051 New York, NY 10051
Attn: Carlos Esteves Attn: Carlos Esteves
</TABLE>
By Overnight Courier:
The Chase Manhattan Bank
55 Water Street
Room 235, North Building
New York, NY 10051
Attn: Carlos Esteves
FOR THE EURO NOTES ONLY: Delivery To: The Chase Manhattan Bank, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission Number: By Hand:
The Chase Manhattan Bank (55-171) _________ The Chase Manhattan Bank
9 Thomas Moore Street, 5th Floor Confirm by Telephone: 9 Thomas Moore Street, 5th Floor
London E1W 1YT (55-171) 777-5517 London E1W 1YT
U.K. U.K.
Attn: Philip Wilson Attn: Philip Wilson
</TABLE>
By Overnight Courier:
The Chase Manhattan Bank
9 Thomas Moore Street, 5th Floor
London E1W 1YT U.K.
Attn: Philip Wilson
Delivery of this instrument to an address other than as set forth
above, or transmission of instructions via facsimile other than as set forth
above, will not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to RSL PLC
the principal amount of old 12 7/8% dollar and old 12 7/8% euro notes set forth
below, pursuant to the guaranteed delivery procedure described in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus.
Principal Amount of old 12 7/8% dollar notes tendered:*
<PAGE>
<TABLE>
<S> <C>
US$
------------------------------------------
If old 12 7/8% dollar notes will be delivered by
Certificate Nos. (if available): book-entry transfer to The Depository Trust Company
provide account number.
- ---------------------------------------------
Total Principal Amount Represented by old 12 7/8%
dollar notes certificate(s):
US$ Account Number
------------------------------------------ -------------------------------
</TABLE>
* Must be in denominations of principal amount at maturity of US$1,000 and
any integral multiple thereof.
<TABLE>
<S> <C>
Principal Amount of old 12 7/8% euro notes tendered:**
- ----------------------------------------
If old 12 7/8% euro notes will be delivered by
Certificate Nos. (if available): book-entry transfer to The Depository Trust Company
provide account number.
- ---------------------------------------------
Total Principal Amount Represented by old 12 7/8%
euro notes certificate(s):
Account Number
- ---------------------------------------- -------------------------------
</TABLE>
** Must be in denominations of principal amount at maturity of 1,000 and any
integral multiple thereof.
<PAGE>
PLEASE SIGN HERE
X
--------------------------------------------------- -----------------
Signature(s) of Owner(s) or Authorized Signatory Date
Area Code and Telephone Number:
-----------------------------------
Must be signed by the holder(s) of old 12 7/8% dollar notes and old
12 7/8% euro notes as their name(s) appear(s) on certificates for old 12 7/8%
dollar notes and old 12 7/8% euro notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
Please print name(s) and address(es)
Name(s):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Capacity:
------------------------------------------------------------------
Address(es):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the certificates representing the principal amount of old
12 7/8% dollar notes and old 12 7/8% euro notes tendered hereby in proper form
for transfer, or timely confirmation of the book-entry transfer of such old
12 7/8% dollar notes and old 12 7/8% euro notes into the Exchange Agent's
account at The Depository Trust Company pursuant to the procedures set forth in
"The Exchange Offers -- Guaranteed Delivery Procedures" section of the
Prospectus, together with one or more properly completed and duly executed
Letters of Transmittal (or facsimile thereof or Agent's Message in lieu thereof)
and any required signature guarantee and any other documents required by the
Letter of Transmittal, will be received by the Exchange Agent at the address set
forth above, no later than three New York Stock Exchange trading days after the
Expiration Date.
- ----------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ----------------------------------- -------------------------------------
Address Title
Name:
- ----------------------------------- --------------------------------
Zip Code (Please Type or Print)
<PAGE>
Area Code and Tel. No. Dated:
-------------------- ----------------------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD 12 7/8% DOLLAR NOTES OR OLD 12 7/8% EURO
NOTES WITH THIS FORM. CERTIFICATES FOR OLD 12 7/8% DOLLAR NOTES OR OLD 12 7/8%
EURO NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR EXECUTED LETTER OF
TRANSMITTAL.
<PAGE>
Exhibit 99.3
RSL COMMUNICATIONS PLC
OFFER FOR ALL OUTSTANDING
12 7/8% SENIOR DOLLAR NOTES DUE 2010
IN EXCHANGE FOR
12 7/8% SENIOR DOLLAR EXCHANGE NOTES DUE 2010
AND FOR ALL OUTSTANDING
12 7/8% SENIOR EURO NOTES DUE 2010
IN EXCHANGE FOR
12 7/8% SENIOR EURO EXCHANGE NOTES DUE 2010
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated __________, 2000
(the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the Offer (the "Exchange Offer") of RSL
Communications PLC ("RSL PLC") to exchange its 12 7/8% Senior Dollar Exchange
Notes due 2010 (the "New Dollar Notes") for its outstanding 12 7/8% Senior
Dollar Notes due 2010 (the "Old Dollar Notes") and its 12 7/8% Senior Euro
Exchange Notes due 2010 (the "New Euro Notes" and together with the New Dollar
Notes, the "New Notes") for its outstanding 12 7/8% Senior Euro Notes due 2010
(the "Old Euro Notes" and together with the Old Dollar Notes, the "Old Notes"),
upon the terms and subject to the conditions described in the Prospectus and the
Letter of Transmittal. The Exchange Offer is being made in order to satisfy
certain obligations of RSL PLC contained in the Registration Rights Agreement
dated February 22, 2000, by and among RSL PLC and the other signatories thereto.
This material is being forwarded to you as the beneficial owner of the
Old Notes carried by us in your account but not registered in your name. A
TENDER OF SUCH OLD NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf the Old Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offers. The Exchange Offers will expire at 5:00 p.m.,
New York City time, on ______________, 2000, unless extended by RSL PLC. Any Old
Notes tendered pursuant to the Exchange Offers may be withdrawn at any time
before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offers are for any and all Old Notes.
2. The Exchange Offers are subject to certain conditions set forth
in the Prospectus in the section captioned "The Exchange
Offers--Conditions".
3. Any transfer taxes incident to the transfer of Old Notes from the
holder to RSL PLC will be paid by RSL PLC, except as otherwise provided
in the Instructions in the Letter of Transmittal.
5. The Exchange Offers expire at 5:00 p.m., New York City time, on
_________, 2000, unless extended by RSL PLC.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OLD NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFERS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offers made by RSL
Communications PLC with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated
below:
AGGREGATE PRINCIPAL AMOUNT OF
OLD NOTES
12 7/8% Senior Dollar Notes due 2010
-------------------------------------
12 7/8% Senior Euro Notes due 2010
-------------------------------------
Please do not tender any Old Notes held by
you for my account.
Dated:________, 2000
-------------------------------------
-------------------------------------
Signature(s)
-------------------------------------
-------------------------------------
-------------------------------------
Please print name(s) here
-------------------------------------
-------------------------------------
Address(es)
-------------------------------------
Area Code and Telephone Number
-------------------------------------
Tax Identification or
Social Security No(s).
<PAGE>
None of the Old Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Old Notes held by us for
your account.
