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Exhibit 4.1
CONFORMED COPY
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WINSTAR COMMUNICATIONS, INC.
Issuer
$2,000,000,000 Aggregate Principal Amount of
Senior Notes Due 2010
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INDENTURE
Dated as of May 9, 2000
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UNITED STATES TRUST COMPANY
OF NEW YORK
Trustee
[c/m 7725-064]
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. 10.03
(c) .............................. 10.03
313(a) .............................. 7.06
(b)(1) .............................. N.A.
(b)(2) .............................. 7.06
(c) .............................. 10.02
(d) .............................. 7.06
314(a) .............................. 4.02; 4.12
10.02
(b) .............................. N.A.
(c)(1) .............................. 10.04
(c)(2) .............................. 10.04
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 10.05
(f) .............................. 4.12
315(a) .............................. 7.01
(b) .............................. 7.05; 10.02
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) .............................. 2.08
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. 10.01
N.A. means Not Applicable.
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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TABLE OF CONTENTS
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.................................................1
SECTION 1.02. Other Definitions..........................................35
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..........35
SECTION 1.04. Rules of Construction......................................36
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating............................................36
SECTION 2.02. Execution, Authentication and
Issuance of Securities......................37
SECTION 2.03. Registrar and Paying Agent.................................38
SECTION 2.04. Paying Agent To Hold Money in Trust........................39
SECTION 2.05. Securityholder Lists.......................................39
SECTION 2.06. Transfer and Exchange......................................40
SECTION 2.07. Replacement Securities.....................................41
SECTION 2.08. Outstanding Securities; When Securities Disregarded........42
SECTION 2.09. Temporary Securities.......................................42
SECTION 2.10. Cancellation...............................................43
SECTION 2.11. Defaulted Interest.........................................43
SECTION 2.12. CUSIP, ISIN and Common Code Numbers........................44
SECTION 2.13. Rights of Agent Members....................................44
SECTION 2.14. No Obligation of the Trustee...............................44
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee.........................................45
SECTION 3.02. Selection of Securities To Be Redeemed.....................45
SECTION 3.03. Notice of Redemption.......................................46
SECTION 3.04. Effect of Notice of Redemption.............................47
SECTION 3.05. Deposit of Redemption Price................................47
SECTION 3.06. Securities Redeemed in Part................................47
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ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities......................................47
SECTION 4.02. SEC Reports................................................48
SECTION 4.03. Limitation on Indebtedness.................................48
SECTION 4.04. Limitation on Restricted Payments..........................52
SECTION 4.05. Limitation on Restrictions on Distributions
from Restricted Group Members............................58
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock....................................................60
SECTION 4.07. Limitation on Affiliate Transactions.......................65
SECTION 4.08. Limitation on the Sale or Issuance of Capital
Stock of Restricted Group Members........................67
SECTION 4.09. Change of Control..........................................68
SECTION 4.10. Limitation on Liens........................................70
SECTION 4.11. Limitation on Sale/Leaseback Transactions..................70
SECTION 4.12. Compliance Certificate.....................................70
SECTION 4.13. Further Instruments and Acts...............................71
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets..................71
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default..........................................72
SECTION 6.02. Acceleration...............................................74
SECTION 6.03. Other Remedies.............................................75
SECTION 6.04. Waiver of Past Defaults....................................75
SECTION 6.05. Control by Majority........................................76
SECTION 6.06. Limitation on Suits........................................76
SECTION 6.07. Rights of Holders to Receive Payment.......................76
SECTION 6.08. Collection Suit by Trustee.................................77
SECTION 6.09. Trustee May File Proofs of Claim...........................77
SECTION 6.10. Priorities.................................................77
SECTION 6.11. Undertaking for Costs......................................78
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SECTION 6.12. Waiver of Stay or Extension Laws...........................78
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee..........................................78
SECTION 7.02. Rights of Trustee..........................................80
SECTION 7.03. Individual Rights of Trustee...............................80
SECTION 7.04. Trustee's Disclaimer.......................................80
SECTION 7.05. Notice of Defaults.........................................81
SECTION 7.06. Reports by Trustee to Holders..............................81
SECTION 7.07. Compensation and Indemnity.................................81
SECTION 7.08. Replacement of Trustee.....................................82
SECTION 7.09. Successor Trustee by Merger................................83
SECTION 7.10. Eligibility; Disqualification..............................83
SECTION 7.11. Preferential Collection of Claims Against Company..........84
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance...........84
SECTION 8.02. Conditions to Defeasance...................................85
SECTION 8.03. Application of Trust Money.................................87
SECTION 8.04. Repayment to Company.......................................87
SECTION 8.05. Indemnity for Government Obligations.......................87
SECTION 8.06. Reinstatement..............................................87
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders.................................88
SECTION 9.02. With Consent of Holders....................................88
SECTION 9.03. Compliance with Trust Indenture Act........................89
SECTION 9.04. Revocation and Effect of Consents and Waivers..............89
SECTION 9.05. Notation on or Exchange of Securities......................90
SECTION 9.06. Trustee To Sign Amendments.................................90
SECTION 9.07. Payment for Consent........................................90
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ARTICLE 10
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls..............................91
SECTION 10.02. Notices...................................................91
SECTION 10.03. Communication by Holders with Other Holders...............92
SECTION 10.04. Certificate and Opinion as to Conditions Precedent........92
SECTION 10.05. Statements Required in Certificate or Opinion.............92
SECTION 10.06. Rules by Trustee, Paying Agent and Registrar..............93
SECTION 10.07. Legal Holidays............................................93
SECTION 10.08. Governing Law.............................................93
SECTION 10.09. No Recourse Against Others................................93
SECTION 10.10. Successors................................................93
SECTION 10.11. Multiple Originals........................................93
SECTION 10.12. Table of Contents; Headings...............................94
Exhibit 1 - Form of Security
Exhibit 2 - Form of Conversion Certificate
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INDENTURE dated as of May 9, 2000, between WINSTAR
COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and UNITED STATES TRUST COMPANY OF NEW YORK,
a New York corporation (the "Trustee").
The Company is a party to the Credit Agreement (such term and
other capitalized terms used herein having the meanings specified below), under
which any Borrower, which is a Wholly Owned Subsidiary, may incur indebtedness
guaranteed by the Company. The Credit Agreement provides that, during any
Refinancing Period, Lucent may at any time and from time to time convert any
such indebtedness constituting Lucent Loans into the Company's unsecured Senior
Notes pursuant to Section 2.02 hereof (the "Securities"). Each party agrees as
follows for the benefit of the other party and for the equal and ratable benefit
of the Holders of the Securities:
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of an entity
outstanding on the date on which an interest in such entity is acquired, by
merger or otherwise (other than Indebtedness Incurred in connection with, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of transactions pursuant to which such
entity was acquired).
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner (other than Credit Suisse First Boston Private Equity Division
and any Affiliate of Credit Suisse First Boston Private Equity Division) of
Capital Stock representing 10% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of the Company
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2
or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Group Member, including any disposition by means
of a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Group Member
(other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a
Restricted Group Member);
(2) all or substantially all the assets of any
division or line of business of the Company or any
Restricted Group Member; or
(3) any other assets of the Company or any Restricted Group
Member outside of the ordinary course of business of the Company or
such Restricted Group Member
(other than, in the case of clauses (1), (2) and (3)
(A) a disposition by a Restricted Group Member to the
Company or by the Company or a Restricted Group Member to a
Restricted Group Member;
(B) for purposes of Section 4.06 only, a disposition
that constitutes a Restricted Payment permitted by Section
4.04 or a Permitted Investment;
(C) for purposes of Section 4.06 only, a sale of
shares of Capital Stock of an Unrestricted Subsidiary for Fair
Market Value;
(D) for purposes of Section 4.06 only, a
disposition of Receivables in a Qualified
Receivables Transaction; and
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(E) a disposition of assets with a fair market value
of less than $250,000 in a single transaction or series of
related transactions).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing:
(1) the sum of the products of numbers of years from the date
of determination to the dates of each successive scheduled principal
payment of or redemption or similar payment with respect to such
Indebtedness multiplied by the amount of such payment by
(2) the sum of all such payments.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Borrower" means WVF-I LLC, a Delaware limited liability
company, and any Replacement Borrower (as defined in the Credit Agreement), but
excluding any Released Borrower (as defined in the Credit Agreement).
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options,
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4
participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt
securities convertible into such equity.
"Change of Control" means the occurrence of any of the
following events:
(1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that for purposes of this clause
(1) such person shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
Holders bene ficially own (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company
than such other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors (for the purposes of this clause
(1), such other person shall be deemed to beneficially own any Voting
Stock of a Person (the "specified person") held by any other Person
(the "parent entity"), if such other person is the beneficial owner (as
defined above in this clause (1)), directly or indirectly, of more than
35% of the voting power of the Voting Stock of such parent entity and
the Permitted Holders beneficially own (as defined in this proviso),
directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent entity and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such
parent entity);
(2) individuals who on the Issue Date constituted the Board of
Directors (together with any new directors whose election by such Board
of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of 66-2/3% of the directors of the
Company then still in office who were either directors on the Issue
Date or whose election or nomination for election was previously so
approved)
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5
cease for any reason to constitute a majority of the Board of
Directors then in office;
(3) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(4) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company (determined on a consolidated basis) to another Person (other
than, in all such cases, a Person that is controlled by the Permitted
Holders), other than a transaction following which in the case of a
merger or consolidation trans action, securities that represented 100%
of the Voting Stock of the Company immediately prior to such trans
action (or other securities into which such securities are converted as
part of such merger or consolidation transaction) constitute at least a
majority of the voting power of the Voting Stock of the surviving
Person in such merger or consolidation transaction.
"Closing Date" means May 9, 2000.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Group Members
(including the total interest expense of unconsolidated Permitted International
Joint Ventures), plus, to the extent not included in such total interest
expense, and to the extent incurred by the Company or its Restricted Group
Members, without duplication:
(1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt
issuance cost;
(3) capitalized interest;
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(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Hedging Obligations;
(7) Preferred Stock dividends in respect of all Preferred
Stock of Restricted Group Members held by Persons other than the
Company or a Restricted Group Member (other than dividends payable
solely in Capital Stock (other than Disqualified Stock) of the issuer
of such Preferred Stock);
(8) interest incurred in connection with Investments in
discontinued operations;
(9) interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by (or secured by the
assets of) the Company or any Restricted Group Member; and
(10) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust;
excluding, however, a portion of any such interest expense or other item listed
in clauses (1) through (10) above to the extent included therein solely as an
expense or other item of an unconsolidated Permitted International Joint Venture
and equal to the Third Party Ownership Interest in such Permitted International
Joint Venture.
"Consolidated Leverage Ratio" as of any date of determination
means the ratio of (x) the aggregate amount of Indebtedness of the Company and
its Restricted Group Members as of such date of determination to (y) EBITDA for
the most recent four consecutive fiscal quarters ending at least 45 days prior
to such date of determination (the "Reference Period"); provided, however, that:
(1) if the transaction giving rise to the need to calculate
the Consolidated Leverage Ratio is an Incurrence of Indebtedness, the
amount of such Indebtedness shall be calculated after giving effect on
a pro forma
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basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of the Reference Period;
(2) if the Company or any Restricted Group Member has repaid,
repurchased, defeased or otherwise discharged any Indebtedness that
was outstanding as of the end of such fiscal quarter or if any
Indebtedness is to be repaid, repurchased, defeased or otherwise dis
charged on the date of the transaction giving rise to the need to
calculate the Consolidated Leverage Ratio (other than, in each case,
Indebtedness Incurred under any revolving credit agreement), the
aggregate amount of Indebtedness shall be calculated on a pro forma
basis and EBITDA shall be calculated as if the Company or such
Restricted Group Member had not earned the interest income, if any,
actually earned during the Reference Period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness;
(3) if since the beginning of the Reference Period the Company
or any Restricted Group Member shall have made any Asset Disposition,
the EBITDA for the Refer ence Period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Disposition for the Reference
Period or increased by an amount equal to the EBITDA (if negative)
directly attributable thereto for the Reference Period;
(4) if since the beginning of the Reference Period the Company
or any Restricted Group Member (by merger or otherwise) shall have made
an Investment in any Restricted Group Member (or any Person which
becomes a Restricted Group Member) or an acquisition of assets which
constitutes all or substantially all of a business or one or more
operating units of a business, EBITDA for the Reference Period shall be
calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of the Reference Period; and
(5) if since the beginning of the Reference Period any Person
that subsequently became a Restricted Group Member or was merged with
or into the Company or any Restricted Group Member since the beginning
of such Reference Period shall have made any Asset Disposition, any
Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or
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8
(4) above if made by the Company or a Restricted Group Member during
the Reference Period, EBITDA for the Reference Period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of the
Reference Period.
"Consolidated Net Income" means, for any period, the net
income (or loss) of the Company and its consolidated Restricted Group Members
and (without duplication) the Company's equity in the net income (or loss) of
any unconsolidated Permitted International Joint Ventures; provided, however,
that there shall not be included in such Consolidated Net Income:
(1) any net income (or loss) of any Person (other than the
Company) if such Person is not a Restricted Group Member, except that:
(A) subject to the exclusions contained in clauses
(4) and (7) below, the Company's equity in the net income of
any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the
Company or a Restricted Group Member as a dividend or other
distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Group Member, to the
limitations contained in clause (3) below); and
(B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such
Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the
Company, a Subsidiary or a Permitted International Joint Venture in a
pooling of interests transaction for any period prior to the date of
such acquisition;
(3) any net income (or loss) of any Restricted Group Member if
such Restricted Group Member is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Group Member, directly or indirectly, to the
Company, except that:
(A) subject to the exclusions contained in clauses
(4) and (7) below, the Company's equity in
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9
the net income of any such Restricted Group Member for such
period shall be included in such Consolidated Net Income up
to the aggregate amount of cash distributed or capable of
being distributed by such Restricted Group Member during such
period to the Company or another Restricted Group Member as a
dividend or other distribution (subject, in the case of a
dividend or other distribution paid to another Restricted
Group Member, to the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such
Restricted Group Member for such period shall be included in
determining such Consolidated Net Income;
(4) any gain (or loss) realized upon the sale or other
disposition of any assets of the Company, its consolidated Subsidiaries
or any other Person (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (or loss) realized upon the sale or
other disposition of any Capital Stock of any Person;
(5) extraordinary gains or losses;
(6) the cumulative effect of a change in
accounting principles after the Issue Date; and
(7) to the extent not otherwise excluded in accordance with
GAAP, the net income (or loss) of any unconsolidated Permitted
International Joint Venture in an amount that corresponds to the Third
Party Ownership Interest in the income of such Permitted International
Joint Venture on the last day of such period.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of the Investments or
return of capital to the Company or a Restricted Group Member to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under such covenant pursuant to Section
4.04(a)(3)(D).
"Conversion Certificate" has the meaning specified in Section
2.02.
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10
"Conversion Date" means, with respect to any Security, the
date on which such Security is deemed to be issued pursuant to Section 2.02. Any
Security issued upon any transfer or any exchange of a Security pursuant to
Section 2.06 or replacement of a Security pursuant to Section 2.07 shall be
deemed to have the same Conversion Date as its predecessor Security.
"Credit Agreement" means the credit agreement dated as of May
4, 2000, among the Borrower, the Company, the lenders from time to time party
thereto, The Bank of New York, as collateral agent, and Lucent, as
administrative agent (as may be amended, supplemented or modified from time to
time).
"Currency Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement or other similar agreement
designed to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Discount Notes" means the Company's 14-3/4% Senior Discount
Notes due 2010.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:
(1) matures or is mandatorily redeemable (other than for
Capital Stock that is not Disqualified Stock) pursuant to a sinking
fund obligation or otherwise;
(2) is convertible or exchangeable at the option
of the holder for Indebtedness or Disqualified Stock;
or
(3) is mandatorily redeemable or must be purchased
upon the occurrence of certain events or otherwise, in
whole or in part;
in each case on or prior to the ninety-first day after the Stated Maturity of
the Securities; provided, however, that
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11
any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or
"change of control" occurring prior to the ninety-first day after the Stated
Maturity of the Securities shall not constitute Disqualified Stock if:
(1) the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders
of such Capital Stock than the terms applicable to the Securities in
Section 4.06 and Section 4.09; and
(2) any such requirement only becomes operative after
compliance with such terms applicable to the Securities, including the
purchase of any Securities tendered pursuant thereto.
"EBITDA" for any period means the sum of Consolidated Net
Income, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated
Restricted Group Members; provided, however, that a portion of the
income tax expense of an unconsolidated Permitted International Joint
Venture equal to the percentage of the net income (net loss) of such
Permitted International Joint Venture allocated to the Company and its
Restricted Subsidiaries in accor dance with GAAP shall be included in
EBITDA regardless of whether deducted in calculating Consolidated Net
Income;
(2) Consolidated Interest Expense; provided, however, that the
portion of Consolidated Interest Expense attributable to an
unconsolidated Permitted International Joint Venture shall be included
in EBITDA regardless of whether deducted in calculating Consolidated
Net Income;
(3) depreciation and amortization expense of the Company and
its consolidated Restricted Group Members (excluding amortization
expense attributable to a prepaid operating activity item that was paid
in cash in a prior period); provided, however, that a portion of the
depreciation and amortization expense of an unconsolidated Permitted
International Joint Venture equal to the percentage of the net income
(net loss) of such Permitted International Joint Venture allocated to
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the Company and its Restricted Subsidiaries in accordance with GAAP
shall be included in EBITDA regardless of whether deducted in
calculating Consolidated Net Income; and
(4) all other noncash charges of the Company and its
consolidated Restricted Group Members (excluding any such noncash
charge to the extent that it represents an accrual of or reserve for
cash expenditures in any future period); provided, however, that a
portion of all other noncash charges of an unconsolidated Permitted
International Joint Venture equal to the percentage of the net income
(net loss) of such Permitted International Joint Venture allocated to
the Company and its Restricted Subsidiaries in accordance with GAAP
shall be included in EBITDA regardless of whether deducted in
calculating Consolidated Net Income;
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Group Member shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Restricted Group Members was included in
calculating Consolidated Net Income and only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Group Members without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to such
Restricted Group Members or its stockholders.
"Eligible Receivables" means, at any time, Receivables of the
Company and its Restricted Subsidiaries, as evidenced on the most recent monthly
consolidated balance sheet of the Company, arising in the ordinary course of
business of the Company or any Restricted Subsidiary.
"Euro Equivalent" means with respect to any monetary amount
in a currency other than euros, at any time for determination thereof, the
amount of euros obtained by converting such foreign currency involved in such
computation into euros at the spot rate for the purchase of euros with the
applicable foreign currency as published in The Wall Street Journal in the
"Exchange Rates" column under the heading "Currency Trading" on the date two
Business Days prior to such determination.
<PAGE>
13
"Euro Notes" means the Company's 12-3/4% Senior Notes due 2010
denominated in Euro.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Subordinated Notes" means the 10% Senior
Subordinated Notes due 2008 of the Company, the 15% Senior Subordinated Deferred
Interest Notes due 2007 of the Company and the 11% Senior Subordinated Deferred
Interest Notes due 2008 of the Company.
"Fair Market Value" means, with respect to any Property (other
than cash), the price that could be negotiated in an arm's-length free market
transaction for cash, between a willing seller and a willing buyer, neither of
whom is under pressure or compulsion to complete the transaction. Unless
otherwise specified, (1) in the case of items with a Fair Market Value in excess
of $1,000,000 but less than or equal to $12.5 million, Fair Market Value shall
be determined by the chief financial officer or treasurer of the Company acting
in good faith and, if such Fair Market Value is in excess of $2.0 million, shall
be evidenced by an Officers' Certificate and (2) in the case of items with a
Fair Market Value in excess of $12.5 million, Fair Market Value shall be
determined by the Board of Directors acting in good faith and shall be evidenced
by a resolution of the Board of Directors.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in
(1) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants,
(2) statements and pronouncements of the Financial Accounting
Standards Board,
(3) such other statements by such other entity as approved by
a significant segment of the accounting profession and
(4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements
in staff accounting bulletins and similar written state-
<PAGE>
14
ments from the accounting staff of the SEC. All ratios and computations
based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Global Security" has the meaning specified in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such Person (whether
arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or
otherwise); or
(2) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Group Member
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Person at the time it becomes a Restricted Group Member. The
term "Incurrence" when used as a noun shall have a correlative meaning. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Indebtedness.
<PAGE>
15
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(4) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, bank guarantee, banker's
acceptance, surety bond or performance bond;
(5) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock of such Person or, with respect to any Preferred Stock of any
Subsidiary or Restricted Group Member of such Person, the principal
amount of such Preferred Stock to be determined in accordance with the
Indenture (but excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1)
through (6) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets and the amount of the obligation
so secured; and
<PAGE>
16
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
the amount of Indebtedness of any unconsolidated Permitted International Joint
Venture shall be reduced by an amount that corresponds to the Third Party
Ownership Interest in such Permitted International Joint Venture.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means, in respect of a Person, any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
"Investee" means any Person (other than the Company or any
Restricted Group Member) in which the Company or any Restricted Group Member has
an Investment.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as Receivables on the balance sheet of the lender) or
other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person.
For purposes of the definitions of "Unrestricted Subsidiary",
"Restricted Payment" and "Permitted International Joint Venture", and for
purposes of Section 4.04 and Section 4.06:
(1) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary or other entity) of
the Fair Market Value of the net assets of any (A) Subsidiary of the
Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary or (B) Permitted International
<PAGE>
16
Joint Venture at the time that such entity is designated an Investee;
provided, however, that if any Permitted International Joint Venture
shall cease to satisfy the definition of "Permitted International Joint
Venture" and is not designated promptly as a Restricted Subsidiary or
an Unrestricted Subsidiary, it shall be deemed to have been designated
as an Investee; provided further, however, that upon a redesignation of
such Subsidiary as a Restricted Subsidiary or such Investee as a
Permitted International Joint Venture, the Company shall be deemed to
continue to have a permanent "Investment" in an Unrestricted Subsidiary
or Investee, as applicable, equal to an amount (if positive) equal to
(A) the Company's "Investment" in such entity at the time of such
redesignation less (B) the portion (proportionate to the Company's
equity interest in such entity) of the Fair Market Value of the net
assets of such entity at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted
Subsidiary or Investee shall be valued at its Fair Market Value at the
time of such transfer.
"Issue Date" means April 10, 2000.
"Issue Date 2008 Senior Notes" means the Company's 12-1/2%
Senior Notes due 2008.
"Issue Date Discount Notes" means Discount Notes issued on the
Issue Date.
"Issue Date Euro Notes" means Euro Notes issued on the Issue
Date.
"Issue Date Initial Senior Notes" means "Initial Securities"
as such term is defined in the indenture governing the Issue Date Senior Notes
dated as of the Issue Date, between the Company and United States Trust Company
of New York, as trustee.
"Issue Date Senior Notes" means the Company's 12-3/4% Senior
Notes due 2010.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Lucent" means Lucent Technologies Inc.
<PAGE>
18
"Lucent Loans" has the meaning specified in the Credit
Agreement.
"Marketable Securities" means, with respect to any Asset
Disposition, any readily marketable equity securities of a corporation whose
primary business is the Telecommunications Business that are (i) traded on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market and (ii) issued by a corporation having a total equity market
capitalization of not less than $250.0 million; provided, however, that the
excess of (A) the aggregate amount of securities of any one such corporation
held by the Company and any Restricted Group Member over (B) 20 times the
average daily trading volume of such securities during the 20 immediately
preceding trading days shall be deemed not to be Marketable Securities, as
determined on the date of the contract relating to such Asset Disposition.
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable
law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made
to minority interest holders in Restricted Group Members as a result of
such Asset Disposition; and
<PAGE>
19
(4) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted Group Member
after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Office.com" means Office.com Inc. and its successors.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Credit Facility" means one or more credit
agreements, loan agreements, lease agreements, commercial paper facilities,
Receivables facilities or similar facilities, secured or unsecured, providing
for revolving credit loans, term loans, sales of receivables or letters of
credit, entered into from time to time by the Company or its Restricted Group
Members, and including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified, restated or replaced from time to time. A
Vendor Financing that otherwise satisfies the foregoing definition will also
constitute a Permitted Credit Facility.
"Permitted Holders" means William J. Rouhana, Jr. (or in the
event of his incompetence or death, his estate, heirs, executor, administrator,
committee or other personal representative (collectively, "heirs")) or any
Person controlled, directly or indirectly, by William J. Rouhana, Jr. or his
heirs.
<PAGE>
20
"Permitted International Joint Venture" means any entity
(other than a Subsidiary of the Company) all or substantially all of whose
business is outside the U.S. and that (i) based on a determination of the Board
of Directors, the Company has, directly or indirectly, the requisite control
over such entity to prevent it from Incurring Indebtedness, or taking any other
action at any time, in contravention of any of the provisions of this Indenture
that apply to a Permitted International Joint Venture, (ii) the Company or a
Restricted Subsidiary owns at least 331/3% of the Voting Stock of such entity
and the Third Party Ownership Interest of such entity does not exceed 662/3%,
(iii) such entity is engaged primarily in aspects of the Telecommunications
Business directly related to the Company's business and (iv) the Company has
designated such entity as a Permitted International Joint Venture pursuant to a
resolution of the Board of Directors.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions. The Board of Directors may designate any Permitted
International Joint Venture to no longer be a Permitted International Joint
Venture and to be treated as an Investee; provided, however, that such
designation would be permitted under Section 4.04. Any such designation by the
Board of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Permitted Investment" means an Investment by the Company or
any Restricted Group Member in:
(1) the Company, a Restricted Group Member or a Person that
will, upon the making of such Investment, become a Restricted Group
Member; provided, however, that the primary business of such Restricted
Group Member is the Telecommunications Business;
(2) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Company or a
Restricted Group Member; provided, however, that such Person's primary
business is the Telecommunications Business;
<PAGE>
21
(3) cash and Temporary Cash Investments;
(4) Receivables owing to the Company or any
Restricted Group Member;
(5) Capital Stock of customers of the Company or any
Restricted Group Member received in exchange for products and services
provided in the ordinary course of business; provided, however, that
the value of such products and services (calculated as the
consideration received by the Company or such Restricted Group Member
for such products and services in a comparable arm's-length
transaction) shall not exceed $50.0 million during each successive
12-month period following the Issue Date;
(6) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(7) loans or advances to employees made in the ordinary course
of business consistent with past practices of the Company or such
Restricted Group Member or as part of a compensation scheme approved by
the Board of Directors in an amount not to exceed $5.0 million at any
one time outstanding;
(8) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the
Company or any Restricted Group Member or in satisfaction of judgments
or settlement of claims or disputes;
(9) shares of Capital Stock of an Unrestricted Subsidiary;
provided, however, that such shares are being acquired from the Company
or a Restricted Group Member; and
(10) any Person to the extent such Investment represents the
noncash portion (other than Marketable Securities) of the consideration
received for an Asset Disposition as permitted pursuant to Section
4.06.
<PAGE>
22
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under worker's
compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States
government bonds to secure surety or appeal bonds to which such Person
is a party, or deposits as security for contested taxes or import
duties or for the payment of rent or similar operational requirements,
in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other
proceedings for review and Liens arising solely by virtue of any
statutory or common law provision relating to banker's Liens, rights of
set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution; provided,
however, that (A) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by
the Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board and (B) such deposit account is not intended
by the Company or any Restricted Group Member to provide collateral to
the depository institution;
(3) Liens for taxes not yet subject to penalties for
nonpayment or which are being contested in good faith and by
appropriate proceedings promptly instituted and diligently concluded;
provided, however, that such Person has created a reserve or other
appropriate provision therefor as may be required by GAAP;
(4) Liens in favor of issuers of letters of credit, bank
guarantees, bankers' acceptances, surety bonds, bid bonds and
performance bonds issued pursuant to the request of and for the account
of such Person in the ordinary course of its business; provided,
however,
<PAGE>
23
that the Indebtedness in respect thereto is permitted to be Incurred by
Section 4.03;
(5) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
property or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially
impair their use in the operation of the business of such Person;
(6) Liens to secure Indebtedness permitted under the
provisions described in Section 4.03(b)(1), Section 4.03(b)(5), Section
4.03(b)(8) (but with respect to Section 4.03(b)(8) only to the extent
such Indebtedness constitutes Refinancing Indebtedness of Purchase
Money Indebtedness) and Section 4.03(b)(10); provided, however, that
any such Liens securing Indebtedness (other than Indebtedness pursuant
to a Permitted Credit Facility) described in Section 4.03(b)(5) (or
Refinancing Indebtedness thereof) may not extend to any property owned
by the Company or any of the Restricted Group Members other than the
property acquired with the proceeds from Indebtedness Incurred under
such Section 4.03(b)(5) and the proceeds therefrom;
(7) Liens existing on the Issue Date;
(8) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such
Person or a Permitted International Joint Venture; provided, however,
that the Liens may not extend to any other property owned by such
Person or any of its Restricted Group Members (other than assets and
property affixed or appurtenant thereto);
(9) Liens on property at the time such Person or any of its
Subsidiaries or Permitted International Joint Ventures acquires the
property, including any acquisition by means of a merger or
consolidation with or into such Person or a Subsidiary of such Person;
provided, however, that the Liens may not extend to any other property
owned by such Person or any of its
<PAGE>
24
Restricted Group Members (other than assets and property affixed or
appurtenant thereto);
(10) Liens in favor of the Company or any Restricted Group
Member on any property other than property of the Company;
(11) Liens securing Hedging Obligations consisting of (A)
Interest Rate Agreements or Currency Agreements directly related to
Indebtedness that is, and is permitted to be incurred under this
Indenture or (B) Currency Agreements used to hedge non-U.S. dollar
currency exposures of the Company and its Restricted Group Members,
entered into in accordance with customary industry practices for
companies in the Telecommunications Business with international
operations and not for purposes of speculation, in each case secured
by a Lien on the same property securing such Hedging Obligations;
(12) Liens incurred in the ordinary course of business of the
Company or any of its Restricted Group Members with respect to
obligations that do not exceed $10.0 million at any one time
outstanding; provided, however, that
(A) such obligations are not Incurred in
connection with the borrowing of money; and
(B) such Liens do not in the aggregate materially
detract from the value of the property or materially impair
the use thereof in the operation of business by the Company or
such Restricted Group Member;
(13) Liens on the Capital Stock of an Unrestricted
Subsidiary; and
(14) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by
any Lien referred to in the foregoing clauses (7), (8) or (9);
provided, however, that:
(A) such new Lien shall be limited to all or part of
the same property and assets that secured or, under the
written agreements pursuant to which the original Lien arose,
could secure the original Lien (plus improvements and
accessions to, such
<PAGE>
25
property or proceeds or distributions thereof); and
(B) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of
(x) the outstanding principal amount or, if greater, committed
amount of the Indebtedness described under clauses (7), (8) or
(9) at the time the original Lien became a Permitted Lien and
(y) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, related to such
refinancing, refunding, extension, renewal or replacement.
For purposes of this definition, the term "Indebtedness" shall be deemed to
include interest, fees and other amounts due on such Indebtedness.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"Preferred Stock Exchange Offer" means an offer by the Company
to exchange any and all of its Series C Preferred Stock (or the exchange
debentures issuable in respect of such Series C Preferred Stock in accordance
with its terms) for Discount Notes and Issue Date Senior Notes.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including Capital Stock in, and other securities of,
any other Person. For purposes of any calculation required pursuant to this
Indenture the value of any Property shall be its Fair Market Value.
<PAGE>
26
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (including
Capital Lease Obligations, Acquired Indebtedness, mortgage financings and
purchase money obligations) Incurred for the purpose of financing all or any
part of the cost of construction, installation, acquisition, lease, development
or improvement by the Company or any Restricted Group Member of any
Telecommunications Assets of the Company or any Restricted Group Member,
including any related note, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, as the same may be amended,
supplemented, modified or restated from time to time.
"Qualified Receivables Transaction" means an Incurrence of
Indebtedness of the Company or any Restricted Group Member pursuant to either
(1) credit facilities secured by Receivables or (2) Receivables purchase
facilities.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of money
and proceeds and products thereof in each case generated in the ordinary course
of business.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Group Member existing on the
Issue Date or Incurred in compliance with this Indenture, including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the
time such Refinancing Indebtedness is
<PAGE>
27
Incurred that is equal to or greater than the Average Life of the
Indebtedness being Refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or
if Incurred with original issue discount, the aggregate accreted value)
then outstanding (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary or a Permitted International Joint Venture that
Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a
Restricted Group Member that Refinances Indebtedness of an Unrestricted
Subsidiary.
"Refinancing Period" has the meaning specified in the Credit
Agreement.
"Restricted Group Member" means collectively each Restricted
Subsidiary and each Permitted International Joint Venture.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including
any payment in connection with any merger or consolidation involving
such Person) or similar payment to the direct or indirect holders of
its Capital Stock (other than dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock), rights to
purchase additional Capital Stock (other than Disqualified Stock) for
cash and dividends or distributions payable solely to the Company or a
Restricted Group Member, and other than pro rata dividends or other
distributions made by a Restricted Group Member that is not a Wholly
Owned Subsidiary to minority stockholders or holders of Third Party
Ownership Interests (or owners of an equivalent interest in the case of
a Restricted Group Member that is an entity other than a corporation)
or holders of Third Party Ownership Interests);
(2) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the
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28
Company or any direct or indirect parent of the Company held by any
Person or of any Capital Stock of a Restricted Group Member held by any
Affiliate of the Company (other than a Restricted Group Member),
including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Company that is not Disqualified
Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations of such Person (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the
date of such purchase, repurchase or other acquisition); or
(4) the making of any Investment (other than a Permitted
Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property owned by the Company or a Restricted Group Member on the Issue Date or
thereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Group Member transfers such property to a Person (other
than the Company or a Restricted Group Member) and the Company or a Restricted
Group Member leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien on property of the Company or any Restricted Group Member.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means:
(1) Indebtedness of the Company, whether outstanding on the
Issue Date or thereafter Incurred; and
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29
(2) accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent postfiling
interest is allowed in such proceeding) in respect of (A) indebtedness
of the Company for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment
of which the Company is responsible or liable
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Securities;
provided, however, that Senior Indebtedness shall not include:
(1) any obligation of the Company to any Subsidiary or
Permitted International Joint Venture;
(2) any liability for Federal, state, local or other taxes
owed or owing by the Company;
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities);
(4) any Indebtedness of the Company (and any accrued and
unpaid interest in respect thereof) which is subordinate or junior in
any respect to any other Indebtedness or other obligation of the
Company; or
(5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture.
"Securities" means the Securities issued under this Indenture.
"Series C Preferred Stock" means the Series C 14-1/4% Senior
Cumulative Exchangeable Preferred Stock due 2007 of the Company issued and
outstanding on the Issue Date.
"Significant Restricted Group Member" means any Restricted
Group Member that would be a "Significant Subsidiary" of the Company within the
meaning of Rule 1-02 under Regulation S-X promulgated by the SEC, assuming for
the purpose of this definition that a Permitted
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30
International Joint Venture that is not a Subsidiary of the Company is a
Subsidiary of the Company.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of Voting Stock is at the time
owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person;
or
(3) one or more Subsidiaries of such Person.
"Telecommunications Assets" means (a) any Property (other
than cash, cash equivalents and securities) used in the Telecommunications
Business; (b) for purposes of Section 4.03, Section 4.04 and Section 4.10 only,
Capital Stock of any Person, or (c) for all other purposes of this Indenture,
Capital Stock of a Restricted Group Member or a Person that becomes a
Restricted Group Member as a result of the acquisition of such Capital Stock by
the Company or another Restricted Group Member, in each case, acquired from any
Person (other than a Subsidiary of the Company or a Permitted International
Joint Venture) in a bona fide transaction; provided, however, that, in the case
of clause (b) or (c), such Person is primarily engaged in the
Telecommunications Business.
"Telecommunications Business" means the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through transmission
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31
facilities, (ii) constructing, creating, developing or producing communications
networks, related network transmission equipment, software, devices and content
for use in a communications or content distribution business, (iii) data center
management, computer and application outsourcing, computer systems integration,
reengineering of computer software, information services and web hosting and any
services related thereto or (iv) evaluating, participating or pursuing any other
activity or opportunity that is primarily related to those identified in (i),
(ii) or (iii) above or in furtherance thereof, including, without limitation,
any business conducted by the Company or any Restricted Group Member on the
Issue Date; provided, however, that the determination of what constitutes a
Telecommunications Business shall be made in good faith by the Board of
Directors.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States
of America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of
deposit, money market deposits, bankers' acceptances and repurchase
obligations maturing within 365 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of
$500,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act)
or any money-market fund sponsored by a registered broker dealer or
mutual fund distributor;
(3) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (1)
above entered into with a bank meeting the qualifications described in
clause (2) above;
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32
(4) investments in commercial paper, maturing not more than
270 days after the date of acquisition, issued by a corporation (other
than an Affiliate of the Company) organized and in existence under the
laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Group;
(5) investments in securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or
by any political subdivision or taxing authority thereof, and rated at
least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.;
(6) auction rate preferred stocks of any corporation maturing
within 90 days after the date of acquisition rated at least "A" by
Standard and Poor's Ratings Group; and
(7) any investment in a registered investment company
investing exclusively in investments of the types described in clauses
(1) through (6) above.
"Third Party Ownership Interest" in a Permitted International
Joint Venture means a percentage equal to the difference between 100% and the
percentage of the net income (net loss) of such Permitted International Joint
Venture allocated to the Company and its Restricted Subsidiaries in accordance
with GAAP.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
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33
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) Office.com;
(2) Winstar Credit Corp.;
(3) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and
(4) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company (other than
Capital Stock (other than Disqualified Stock) of the Company contributed to such
Unrestricted Subsidiary and promptly transferred by such Unrestricted Subsidiary
in exchange for Telecommunications Assets) or any other Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated or is the
obligor on any Indebtedness a default on which would result in a default on any
Indebtedness of the Company or a Restricted Subsidiary; provided, however, that
either (A) the Subsidiary to be so designated has total assets of $10,000 or
less or (B) if such Subsidiary has assets greater than $10,000, such designation
would be permitted under Section 4.04.
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (A) the Consolidated Leverage Ratio
would be no worse than the Consolidated Leverage Ratio determined immediately
prior to such designation, (B) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such designation would, if Incurred
at such time, have been permitted to be Incurred at such time for all purposes
of this Indenture and (C) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and
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34
an Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Dollar Equivalent" means with respect to any monetary
amount in a currency other than U.S. dollars, at any time for determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S. dollars with the applicable foreign currency as published in The Wall
Street Journal in the "Exchange Rates" column under the heading "Currency
Trading" on the date two Business Days prior to such determination.
Except as described in Section 4.03, whenever it is necessary
to determine whether the Company has complied with any covenant in this
Indenture or a Default has occurred and an amount is expressed in a currency
other than U.S. dollars, such amount will be treated as the U.S. Dollar
Equivalent determined as of the date such amount is initially determined in such
currency.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Vendor Financing" means any financing or other credit or
deferred payment arrangement provided by a supplier, manufacturer or lessor of
Telecommunications Assets or any Affiliate thereof.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
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35
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction"................................... 4.07
"Agent Members"........................................... 2.13
"Appendix"................................................ 2.01
"Bankruptcy Law".......................................... 6.01
"Change of Control Offer"................................. 4.09(b)
"covenant defeasance option".............................. 8.01(b)
"Custodian"............................................... 6.01
"Event of Default"........................................ 6.01
"Initial Lien"............................................ 4.10
"legal defeasance option"................................. 8.01(b)
"Legal Holiday"........................................... 10.07
"Offer"................................................... 4.06(b)
"Offer Amount"............................................ 4.06(c)(2)
"Offer Period"............................................ 4.06(c)(2)
"Paying Agent"............................................ 2.03
"Purchase Date"........................................... 4.06(c)(1)
"Registrar"............................................... 2.03
"Securities Authentication Order"......................... 2.02
"Successor Company"....................................... 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
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36
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater; and
(9) all references to the date the Securities were originally
issued shall refer to the Issue Date.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit 1 attached hereto, which is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Security shall be
dated the date of its authentication.
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37
Holders of Securities may request Securities to be issued in
the form of definitive, fully registered certificates or as one or more
definitive, fully registered permanent global Securities without interest
coupons with the global securities legend and restricted securities legend set
forth in Exhibit 1 hereto (each, a "Global Security"). Global Securities shall
be deposited on behalf of the purchasers of the Securities represented thereby
with the Trustee, at its principal corporate trust office, as custodian for the
Depository (or with such other custodian as the Depository may direct), and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as provided in Section
2.02, and shall be delivered by the Trustee to such Depository or pursuant to
such Depository's instructions or held by the Trustee as custodian for the
Depository. The aggregate principal amount of the Global Securities may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee as hereinafter provided.
SECTION 2.02. Execution, Authentication and Issuance of
Securities. The provisions of this Section 2.02 shall apply to the execution,
authentication and issuance of the Securities.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature on the Closing Date and deliver such signed
Securities to the Trustee on such date.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
On the Closing Date, the Company shall deliver to the Trustee
an irrevocable written instruction (the "Securities Authentication Order")
signed by two Officers of the Company (or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company) which directs the Trustee to
authenticate and deliver to, or as directed by, Lucent up to $2,000,000,000
aggregate principal amount of Securities, at such times and in such principal
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38
amounts as shall be specified by Lucent in one or more Conversion Certificates
(as defined below) delivered to the Trustee on any Business Day after the
Closing Date.
As used herein, "Conversion Certificate" means a writing
signed by an officer of Lucent substantially in the form of Exhibit 2 attached
hereto and specifying the information contemplated thereby. Lucent may in its
sole discretion elect to convert into Securities, from time to time, all or any
portion of the Lucent Loans outstanding under the Credit Agreement, by
delivering a Conversion Certificate to the Trustee; provided, that the aggregate
principal amount of all Securities authenticated and delivered by the Trustee
under this Indenture shall not exceed $2,000,000,000, except as provided in
Section 2.07.
The Trustee shall rely solely on the receipt of a Conversion
Certificate as conclusive evidence of its authorization to issue to, or as
directed by, Lucent the principal amount of Securities specified in the
Conversion Certificate, and no further act or evidence, written or oral, shall
be required by the Trustee, the Company or any other Person for the issuance of
Securities by the Trustee under this Indenture. A Conversion Certificate may be
delivered to the Trustee by facsimile, courier or in the manner specified in
Section 10.02. Each Security shall be authenticated and delivered by the Trustee
to, or directed by, Lucent within one (1) Business Day after receipt by the
Trustee of a Conversion Certificate, and the Conversion Date of each Security so
authenticated and delivered shall be deemed to be the date of receipt by the
Trustee of the relevant Conversion Certificate. Each Security authenticated,
issued and delivered by the Trustee in accordance with this Section 2.02 shall
constitute a valid, legal and binding obligation of the Company.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
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39
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any Wholly Owned Subsidiary incorporated or organized
within The United States of America may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee is
not the Registrar, the Company shall furnish to the Trustee, in writing at least
five Business Days before each interest
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40
payment date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. (a) All Securities issued
upon any transfer or exchange pursuant to the terms of the Indenture shall
evidence the same debt and shall be entitled to the same benefits under the
Indenture as the Securities surrendered upon such transfer or exchange.
(b) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name a
Security is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and none of
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
(c) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period beginning 15
Business Days before the mailing of a notice of an offer to repurchase or redeem
Securities or 15 Business Days before an interest payment date.
(d) The Securities shall be issued in registered form and
shall be transferable only upon the surrender of a Security for registration of
transfer. When a Security is presented to the Registrar or a co-registrar with a
request to register a transfer, the Registrar shall register the transfer as
requested if the requirements of this Indenture and Section 8-401(1) of the
Uniform Commercial Code are met. When Securities are presented to the Registrar
or a co-registrar with a request to exchange them for an equal principal amount
of Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registrations of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
certificated Securities and Global Securities at the Registrar's or
co-registrar's request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
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41
governmental charge payable upon exchange or transfer pursuant to Sections 3.06,
4.06, 4.09 and 9.05).
(e) The transfer and exchange of Global Securities or
beneficial interests therein shall be effected through the Depository, in
accordance with this Indenture and the procedures of the Depository therefor. A
transferor of a beneficial interest in a Global Security shall deliver to the
Registrar a written order given in accordance with the Depository's procedures
containing information regarding the participant account of the Depository to be
credited with a beneficial interest in the Global Security. The Registrar shall,
in accordance with such instructions instruct the Depository to credit to the
account of the Person specified in such instructions a beneficial interest in
the Global Security and to debit the account of the Person making the transfer
the beneficial interest in the Global Security being transferred.
(f) Each Global Security shall be transferred to the
beneficial owners thereof in the form of certificated Securities in an aggregate
principal amount equal to the principal amount of such Global Security, in
exchange for such Global Security, if (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice, (ii) an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of certificated
Securities under the Indenture.
In the event of the occurrence of the events specified in this
Section 2.06(f), the Company shall promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to
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42
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge the Holder for their expenses
in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities; When Securities
Disregarded. Securities outstanding at any time are all Securities authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section as not outstanding. A Security
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
Notwithstanding any other provisions of this Indenture to the
contrary, in determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be
disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in
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43
the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Trustee to deliver canceled Securities to
the Company. The Company may not issue new Securities to replace Securities it
has redeemed, paid or delivered to the Trustee for cancellation.
At such time as all beneficial interests in a Global Security
have either been exchanged for certificated Securities, redeemed, purchased or
canceled, such Global Security shall be returned to the Depository for
cancellation or retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is exchanged for
certificated Securities, redeemed, purchased or canceled, the principal amount
of Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
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SECTION 2.12. CUSIP, ISIN and Common Code Numbers. The Company
in issuing the Securities may use "CUSIP", "ISIN" or "Common Code" numbers (if
then generally in use) and, if so, the Trustee shall use "CUSIP" numbers, "ISIN"
or "Common Code" in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 2.13. Rights of Agent Members. Members of, or
participants in, the Depository ("Agent Members") shall have no rights under
this Indenture with respect to any Global Security held on their behalf by the
Depository or by the Trustee as the custodian of the Depository or under such
Global Security, and the Company, the Trustee and any agent of the Company or
the Trustee shall be entitled to treat the Depository as the absolute owner of
such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, (i) nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices of such Depository governing the
exercise of the rights of a holder of a beneficial interest in any Global
Security, and (ii) the registered Holder of a Global Security shall be entitled
to grant proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under the Indenture or the Securities.
SECTION 2.14. No Obligation of the Trustee. (a) The Trustee
shall have no responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in the Depository or other Person with
respect to the accuracy of the records of the Depository or its nominee or of
any participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depository) of any notice
(including any notice of redemption) or the payment of any amount, under or with
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45
respect to such Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Securities shall be
given or made only to or upon the order of the registered Holders (which shall
be the Depository or its nominee in the case of a Global Security). The rights
of beneficial owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the Depository. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depository with respect to its members, participants and any
beneficial owners.
(b) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depository
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of the Indenture, and to examine the same to determine substantial compliance as
to form with the express requirements hereof.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 30 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies
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46
with applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion shall deem to be fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations larger than $1,000. Securities and portions of them the Trustee
selects shall be in principal amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities
are to be redeemed, the identification and principal
amounts of the particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, ISIN or Common Code number, if any,
listed in such notice or printed on the Securities.
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At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given such
notice to the Holders), the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. In such event, the Company shall
provide the Trustee with the information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this
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Indenture money sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the SEC and provide the Trustee and
Securityholders with such annual reports and such information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and other reports to be so filed and provided at the times specified
for the filing of such information, documents and reports under such Sections.
The Company also shall comply with the other provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company will
not, and will not permit any Restricted Group Member to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company will be
entitled to Incur Indebtedness if, on the date of such Incurrence and after
giving effect thereto on a pro forma basis, the Consolidated Leverage Ratio
would be less than 6.0 to 1.
(b) Notwithstanding Section 4.03(a), so long as no Default has
occurred and is continuing, the Company and the Restricted Group Members will be
entitled to Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred pursuant to one or more Permitted
Credit Facilities; provided, however, that, after giving effect to any
such Incurrence, the aggregate principal amount of such Indebtedness
then outstanding does not exceed (A) the greater of (x) $1.0 billion
(which amount shall be increased to $1.15 billion upon the
effectiveness of an amendment to the indenture governing the Issue Date
Senior Notes that increases the amount in Section 4.03 (b)(1)(A)
therein from "$1.0 billion" to "$1.15 billion"), and (y) 85% of
Eligible Receivables less (B) the sum of (i) all principal payments
with respect to such Indebtedness (other than Indebtedness Incurred
pursuant to the revolving loan portion of a Permitted Credit Facility)
pursuant to Section 4.06(a)(3)(A) and
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(ii) the principal amount of such Indebtedness assumed by a transferee
in any Asset Disposition;
(2) Indebtedness owed to and held by the Company or a
Restricted Group Member; provided, however, that (A) any subsequent
issuance or transfer of any Capital Stock or the occurrence of any
other event which results in any such Restricted Group Member ceasing
to be a Restricted Group Member or any subsequent transfer of such
Indebtedness (other than to the Company or another Restricted Group
Member) shall be deemed, in each case, to constitute the Incurrence of
such Indebtedness by the obligor thereon and (B) if the Company is the
obligor on such Indebtedness, such Indebtedness is not secured and is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Securities;
(3) the Securities, the Issue Date 2008 Senior Notes, the
Issue Date Senior Notes, the Issue Date Discount Notes and the Issue
Date Euro Notes;
(4) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this Section
4.03(b)) and any exchange debentures issued in exchange for the Series
C Preferred Stock in accordance with its terms or Discount Notes or the
Issue Date Initial Senior Notes issued in exchange for such exchange
debentures or Series C Preferred Stock;
(5) Purchase Money Indebtedness; provided, however, that, to
the extent such Purchase Money Indebtedness is Incurred by a Restricted
Group Member, such Purchase Money Indebtedness shall be Incurred
pursuant to a Permitted Credit Facility or a Vendor Financing; provided
further, however, that the amount of such Purchase Money Indebtedness
does not exceed 100% of the cost and directly related expenses of the
construction, installation, acquisition, lease, insurance, shipping,
development or improvement of, or any service agreement, maintenance
agreement, warranty agreement or similar agreement in respect of, the
applicable Telecommunications Assets;
(6) Indebtedness of the Company in an amount which, when taken
together with the amount of all other Indebtedness of the Company
Incurred pursuant to this clause (6) and then outstanding, does not
exceed two times the sum of (x) the aggregate Net Cash Proceeds
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50
received by the Company from the issuance or sale of Capital Stock
(other than Disqualified Stock) of the Company (other than an issuance
or sale to a Subsidiary of the Company or a Permitted International
Joint Venture and other than an issuance or sale to an employee stock
ownership plan or to a trust established by the Company, any of its
Subsidiaries or any Permitted International Joint Venture for the
benefit of their employees) and (y) the fair market value of any
Capital Stock (other than Disqualified Stock) of the Company issued to
any Person (other than a Subsidiary of the Company or a Permitted
International Joint Venture) (i) in exchange for Telecommunications
Assets or (ii) in exchange for Capital Stock of another Person a
substantial majority of the assets of which consist of
Telecommunications Assets in a transaction pursuant to which such other
Person becomes a Restricted Group Member, in each case received or
issued, as the case may be, on or subsequent to February 1, 2000;
provided, however, that such Net Cash Proceeds or fair market value
have not served as a basis for making a Restricted Payment pursuant to
Section 4.04(a)(3)(B), Section 4.04(b)(1) or Section 4.04(b)(5);
(7) Indebtedness of a Restricted Group Member Incurred and
outstanding on or prior to the date on which such Subsidiary (in the
case of a Restricted Subsidiary) or an interest in such entity (in the
case of a Permitted International Joint Venture) was acquired by the
Company (other than Indebtedness Incurred in connection with, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Subsidiary (in the case of a Restricted Subsidiary) or an
interest in such entity (in the case of a Permitted International Joint
Venture) was acquired by the Company); provided, however, that on the
date of such acquisition and after giving pro forma effect thereto, the
Company would have been able to Incur at least $1.00 of additional
Indebtedness pursuant to Section 4.03(a);
(8) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (3), (4),
(5) or (7) of this Section 4.03(b) or this clause (8); provided,
however, that any Refinancing Indebtedness Incurred by a Restricted
Group Member in respect of Indebtedness Incurred pursuant to clause (5)
of this Section 4.03(b)
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51
is Incurred pursuant to a Permitted Credit Facility or a Vendor
Financing;
(9) Hedging Obligations consisting of (A) Interest Rate
Agreements or Currency Agreements directly related to Indebtedness
permitted to be Incurred by the Company pursuant to this Indenture;
provided, however, that the notional amount of any such Hedging
Obligation does not exceed the amount of Indebtedness to which such
Hedging Obligation relates or (B) Currency Agreements used to hedge
non-U.S. dollar currency exposures of the Company and its Restricted
Group Members, entered into in accordance with customary industry
practices for companies in the Telecommunications Business with
international operations and not for purposes of speculation;
(10) Indebtedness solely in respect of letters of credit, bank
guarantees, banker's acceptances, cash deposits, surety bonds, bid
bonds and performance bonds Incurred in the ordinary course of
business; provided, however, that such instruments or deposits do not
support any Indebtedness other than Indebtedness which, if Incurred by
the Company, would be permitted to be Incurred pursuant to another
provision of this Section 4.03;
(11) Indebtedness of the Company or a Restricted Group Member
consisting of a Guaranty of Indebtedness of a Restricted Group Member
permitted to be Incurred under this Indenture; provided, however, that
the entity providing the Guaranty would have been able to Incur such
Indebtedness under this Indenture; and
(12) Indebtedness of the Company or a Restricted Group Member
in an aggregate principal amount which, when taken together with all
other Indebtedness of the Company and the Restricted Group Members
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (11) of this Section 4.03(b) or
Section 4.03(a)) does not exceed $50.0 million.
(c) Notwithstanding the foregoing, the Company will not Incur
any Indebtedness pursuant to Section 4.03(b) (other than the Incurrence of (1)
any exchange debentures issued in exchange for the Series C Preferred Stock in
accordance with its terms or Discount Notes or Issue Date Initial Senior Notes
issued in exchange for such exchange debentures or Series C Preferred Stock and
(2) any
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52
Indebtedness issued in exchange for the Existing Subordinated Notes) if the
proceeds thereof are used, directly or indirectly, to Refinance any Subordinated
Obligations unless such Indebtedness shall be subordinated to the Securities to
at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.03, (1) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, the Company, in its sole
discretion, will classify such item of Indebtedness at the time of Incurrence
and only be required to include the amount and type of such Indebtedness in one
of the above clauses and (2) the Company will be entitled to divide and classify
an item of Indebtedness in more than one of the types of Indebtedness described
above.
(e) For purposes of determining compliance with any U.S.
dollar or euro-denominated restriction on the Incurrence of Indebtedness where
the Indebtedness Incurred is denominated in a different currency, the amount of
such Indebtedness will be the U.S. Dollar Equivalent or Euro Equivalent, as the
case may be, determined on the date of the Incurrence of such Indebtedness,
provided, however, that if any such Indebtedness denominated in a different
currency is subject to a Currency Agreement with respect to U.S. dollars or
euros, as the case may be, covering all principal, premium, if any, and interest
payable on such Indebtedness the amount of such Indebtedness expressed in U.S.
dollars or euros will be as provided in such Currency Agreement. The principal
amount of any Refinancing Indebtedness Incurred in the same currency as the
Indebtedness, being Refinanced will be the Euro Equivalent or U.S. Dollar
Equivalent, as appropriate, of the Indebtedness Refinanced, except to the extent
that (1) such U.S. Dollar Equivalent or Euro Equivalent was determined based on
a Currency Agreement, in which case the Refinancing Indebtedness will be
determined in accordance with the preceding sentence, and (2) the principal
amount of the Refinancing Indebtedness exceeds the principal amount of the
Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent or Euro
Equivalent of such excess, as appropriate, will be determined on the date such
Refinancing Indebtedness is Incurred.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company will not, and will not permit any
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53
Restricted Group Member, directly or indirectly, to make a Restricted Payment if
at the time the Company or such Restricted Group Member makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) after giving effect thereto on a pro forma basis, the
Company is not entitled to Incur an additional $1.00 of Indebtedness
pursuant to Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of
(without duplication):
(A) the amount of (x) cumulative EBITDA during the
period (taken as a single accounting period) beginning on the
first day of the fiscal quarter of the Company beginning after
the Issue Date and ending on the last day of the most recent
fiscal quarter ending at least 45 days prior to the date of
such Restricted Payment minus (y) the product of 1.5 times
cumulative Consolidated Interest Expense during such period;
plus
(B) subject to Section 4.04(c), 100% of the aggregate
Net Cash Proceeds received by the Company from the issuance or
sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale
to a Subsidiary of the Company or a Permitted International
Joint Venture and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the
Company, any of its Subsidiaries or any Permitted
International Joint Venture for the benefit of their
employees); provided, however, that such Net Cash Proceeds
have not served as a basis to make a Restricted Payment
pursuant to Section 4.04(b)(1) or Section 4.04(b)(5); plus
(C) the amount by which Indebtedness of the Company
or a Restricted Group Member is reduced on the Company's
consolidated balance sheet upon the conversion or exchange
(other than by a Subsidiary of the Company or a Permitted
International Joint Venture) subsequent to the Issue Date of
any Indebtedness of the Company or a Restricted Group
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54
Member for or into Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or the
fair value of any other property (other than Capital Stock of
the Company that is not Disqualified Stock), distributed by
the Company or a Restricted Group Member upon such conversion
or exchange); plus
(D) an amount equal to the sum of (x) the net
reduction in the Investments (other than Permitted
Investments) made by the Company or any Restricted Group
Member in any Person resulting from repurchases, repayments
or redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment, proceeds representing
the return of capital (excluding dividends and distributions),
in each case received by the Company or any Restricted
Group Member, and (y) if an Unrestricted Subsidiary is
designated as a Restricted Group Member or an Investee is
designated as a Restricted Group Member or becomes a
Restricted Subsidiary, the portion (proportionate to the
Company's equity interest in such Subsidiary or Investee) of
the fair market value of the net assets of such Unrestricted
Subsidiary or Investee at the time such Unrestricted
Subsidiary is designated a Restricted Group Member or such
Investee is designated as a Restricted Group Member or becomes
a Restricted Subsidiary; provided, however, that the foregoing
sum shall not exceed, in the case of any such Person,
Unrestricted Subsidiary or Investee, the amount of Investments
(excluding Permitted Investments) previously made (and treated
as a Restricted Payment and included in the calculation of the
amount of Restricted Payments) by the Company or any
Restricted Group Member in such Person, Unrestricted
Subsidiary or Investee.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) subject to Section 4.04(c), any Restricted Payment made
out of the Net Cash Proceeds of the substantially concurrent sale of
(or specified with particularity at the time of the sale of, and
subsequently made with such Net Cash Proceeds of), or made by exchange
for, Capital Stock (other than Disqualified Stock) of the Company
(other than Capital Stock issued or sold to a Subsidiary of the Company
or
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a Permitted International Joint Venture or an employee stock ownership
plan or to a trust established by the Company, any of its Subsidiaries
or any Permitted International Joint Venture for the benefit of their
employees); provided, however, that such Net Cash Proceeds have not
served as a basis for making any other Restricted Payment; provided
further, however, that (A) such Restricted Payment shall be excluded in
the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from any such sale (to the extent so used for such
Restricted Payment) shall be excluded from the calculation of amounts
under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent
sale of (or specified with particularity at the time of the sale of,
and subsequently made with such proceeds of), Indebtedness which is
permitted to be Incurred pursuant to Section 4.03; provided, however,
that such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.04; provided, however, that at the
time of payment of such dividend, no other Default shall have occurred
and be continuing (or result therefrom); provided further, however,
that such dividend shall be included in the calculation of the amount
of Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the
Company from employees, former employees, directors or former directors
of the Company, any of its Subsidiaries or any Permitted International
Joint Venture (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the terms of
agreements (including employment agreements) or plans (or amendments
thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or
sell, shares of such Capital Stock; provided, however, that the
aggregate amount of
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such repurchases and other acquisitions (other than repurchases and
acquisitions made pursuant to agreements in effect on the Issue Date)
shall not exceed $5.0 million in any calendar year (with unused amounts
being carried forward indefinitely); provided further, however, that
such repurchases and other acquisitions shall be included in the
calculation of the amount of Restricted Payments;
(5) subject to Section 4.04(c), Investments in any Person a
substantial majority of the assets of which consist of
Telecommunications Assets; provided, however, that the Fair Market
Value of all such Investments made pursuant to this clause (5)
(measured on the date each such Investment was made) and then
outstanding, does not exceed the sum of $100.0 million, plus the sum
of (x) the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of Capital Stock (other than Disqualified Stock)
of the Company (other than an issuance or sale to a Subsidiary of the
Company or a Permitted International Joint Venture and other than an
issuance or sale to an employee stock ownership plan or to a trust
established by the Company, any of its Subsidiaries or any Permitted
International Joint Venture for the benefit of their employees) and
(y) the fair market value of any Capital Stock (other than
Disqualified Stock) of the Company issued to any Person (other than a
Subsidiary of the Company or a Permitted International Joint Venture)
(i) in exchange for Telecommunications Assets or (ii) in exchange for
Capital Stock of another Person a substantial majority of the assets
of which consist of Telecommunications Assets in a transaction
pursuant to which such other Person becomes a Restricted Group Member,
in each case received or issued, as the case may be, subsequent to
February 1, 2000; provided, however, that such Net Cash Proceeds or
fair market value have not served as a basis for making any other
Restricted Payment; provided further, however, that (A) such
Investments shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from any such
issuance or sale of Capital Stock (to the extent so used for such
Restricted Payment) shall be excluded from the calculation of amounts
under Section 4.04(a)(3)(B);
(6) Investments in any Person whose primary business it is to
directly (or indirectly through subsidiaries) own or hold licenses
granted by the Federal Communications Commission or any other
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57
governmental entity with authority to grant telecommunications or
radio frequency licenses or authorizations; provided, however, that the
Company or a Restricted Group Member shall, at the time of making such
Investment, have an active role in the management or operation of such
Person and in the provision of telecommunications services by such
Person; provided further, however, that such Investment shall be
included in the calculation of the amount of Restricted Payments;
(7) the exchange or purchase and retirement of (A) the Series
C Preferred Stock for (i) exchange debentures in accordance with the
terms of the Series C Preferred Stock or (ii) cash or Indebtedness of
the Company or (B) the Existing Subordinated Notes for cash or
Indebtedness of the Company; provided, however, that such exchange or
purchase and retirement shall be excluded in the calculation of the
amount of Restricted Payments;
(8) cash payments in lieu of the issuance of fractional shares
in connection with stock splits or upon the conversion into Capital
Stock of the Company (other than Disqualified Stock) of any security of
the Company or any convertible Indebtedness of the Company; provided,
however, that such exchange and retirement shall be excluded in the
calculation of the amount of Restricted Payments;
(9) Investments in Office.com, the fair market value of which
(measured on the date each such Investment is made) does not exceed
(x) in the case of an Investment to be made on or immediately after the
Issue Date, $50.0 million, and (y) during each of the three 12-month
periods following the Issue Date, $25.0 million per year (with unused
annual amounts being carried over to future periods even if such
periods occur after the third anniversary of the Issue Date); provided,
however, that such Investments shall be excluded in the calculation of
the amount of Restricted Payments; and
(10) Investments, the aggregate Fair Market Value (measured on
the date each such Investment was made) of which, when taken together
with the Fair Market Value of all other Investments made pursuant to
this clause (10) then outstanding, does not exceed $10.0 million;
provided, however, that such Investment
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58
shall be included in the calculation of the amount of Restricted
Payments.
(c) The amounts determined pursuant to Section 4.04(a)(3)(B),
Section 4.04(b)(1) and Section 4.04(b)(5) based on Net Cash Proceeds received
from the issuance or sale of Capital Stock (or the Fair Market Value of Capital
Stock issued) shall be reduced to the extent such Net Cash Proceeds or Fair
Market Value have served as the basis for Incurring any Indebtedness pursuant to
Section 4.03(b)(6) and such Indebtedness (including any Refinancings thereof)
remains outstanding.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Group Members. The Company will not, and will not permit any
Restricted Group Member to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Group Member to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Group Member or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or a Restricted Group Member or (c) transfer any of its property or assets to
the Company or a Restricted Group Member, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a
Restricted Group Member pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Group Member on or prior to
the date on which such Subsidiary (in the case of a Restricted
Subsidiary) or an interest in such entity (in the case of a Permitted
International Joint Venture) was acquired by the Company (other than
Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary (in the case of a Restricted Subsidiary) or entity (in the
case of a Permitted International Joint Venture) became a Restricted
Group Member or was acquired by the Company) and outstanding on such
date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in
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59
Section 4.05(1) or Section 4.05(2) or this clause (3) or contained in
any amendment to an agreement referred to in Section 4.05(1) or Section
4.05(2) or this clause (3); provided, however, that the encumbrances
and restrictions with respect to such Restricted Group Member contained
in any such refinancing agreement or amendment are no less favorable to
the Securityholders than encumbrances and restrictions with respect to
such Restricted Group Member contained in such predecessor agreements;
(4) any encumbrance or restriction pursuant to a Permitted
Credit Facility; provided, however, that (a) the outstanding
Indebtedness under such Permitted Credit Facility does not exceed the
amounts permitted under Section 4.03(b)(1), Section 4.03(b)(5) and
Section 4.03(b)(8) (but with respect to Section 4.03(b)(8) only to the
extent such Indebtedness constitutes Refinancing Indebtedness of
Purchase Money Indebtedness), (b) such restrictions (other than
following an event of default under such Permitted Credit Facility)
permit dividends and distributions necessary to permit the Company to
satisfy its obligations on the Securities, and (c) the chief financial
officer of the Company determines in good faith that (1) any such
restrictions contained in any such Permitted Credit Facility are no
more restrictive, taken as a whole, than those contained in a credit
facility with terms that are commercially reasonable for a borrower
engaged in a business comparable to the Company that has substantially
comparable Indebtedness, and (2) any such restrictions will not
materially affect the Company's ability to make principal, premium or
interest payments on the Securities;
(5) any encumbrance or restriction arising under any
applicable law or action or at the request of a governmental regulatory
authority;
(6) in the case of clause (c) above, any such encumbrance or
restriction consisting of customary non assignment provisions in
leases, including leases in respect of data centers and indefeasible
rights of use, governing leasehold interests to the extent such
provisions restrict the transfer of the lease or the property leased
thereunder;
(7) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of the Company
or a Restricted Group
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60
Member to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages;
(8) in the case of clause (c) above, restrictions imposed in
connection with the grant or acquisition of radio frequency spectrum
(to the extent such restrictions restrict the transfer of such radio
frequency spectrum) or common carrier licenses or their equivalent (to
the extent such restrictions restrict the transfer of such licenses);
(9) in the case of clause (c) above, restrictions relating to
the property or assets of an unconsolidated Permitted International
Joint Venture, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of the
property or assets of the Permitted International Joint Venture in any
material respect;
(10) in the case of clause (c) above, customary provisions
arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of the property or assets of the Company or any
Restricted Group Member in any material respect; and
(11) any restriction with respect to a Restricted Group Member
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Group Member pending the closing of such sale or
disposition.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company will not, and will not permit any Restricted Group Member
to, directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Group Member receives
consideration at the time of such Asset Disposition at least equal to
the Fair Market Value (including as to the value of all noncash
consideration), of the shares and assets subject to such Asset
Disposition;
(2) at least 75% of the consideration thereof received by the
Company or such Restricted Group Member
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61
is in the form of cash or cash equivalents, Marketable Securities or
Telecommunications Assets; and
(3) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted
Group Member, as the case may be)
(A) first, to the extent the Company or such
Restricted Group Member elects (or is required by the terms of
any Indebtedness), to prepay, repay, redeem or purchase (x)
Senior Indebtedness of the Company that is either secured
Indebtedness or has a Stated Maturity prior to the Stated
Maturity of the Securities or (y) Indebtedness (other than any
Disqualified Stock) of a Restricted Group Member (in each case
other than Indebtedness owed to the Company or an Affiliate of
the Company) within one year from the later of the date of
such Asset Disposition or the receipt of such Net Available
Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause
(A), to the extent the Company elects, to acquire
Telecommunications Assets within one year from the later of
the date of such Asset Disposition or the receipt of such Net
Available Cash; and
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A) and (B), to make an offer to the holders of the Securities
(and to holders of other Senior Indebtedness that have a right
to be included in such offer) to purchase Securities (and such
other Senior Indebtedness) pursuant to and subject to the
conditions contained in Section 4.06(b);
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Group Member shall permanently retire such Indebtedness (other than
Indebtedness Incurred pursuant to the revolving loan portion of a Permitted
Credit Facility) and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased.
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62
Notwithstanding the foregoing provisions of this Section 4.06,
the Company and the Restricted Group Members will not be required to apply any
Net Available Cash in accordance with this Section 4.06 except to the extent
that the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this Section 4.06 exceeds $5.0 million. Pending
application of Net Available Cash pursuant to this Section 4.06, such Net
Available Cash shall be invested in Permitted Investments.
For the purposes of this Section 4.06, the following are
deemed to be cash or cash equivalents:
(1) the assumption of Indebtedness of the Company or any
Restricted Group Member and the release of the Company or such
Restricted Group Member from all liability on such Indebtedness in
connection with such Asset Disposition; and
(2) securities received by the Company or any Restricted Group
Member from the transferee that are promptly converted by the Company
or such Restricted Group Member into cash or cash equivalents.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Indebtedness) pursuant to Section
4.06(a)(3)(C), the Company shall purchase Securities tendered pursuant to an
offer by the Company for the Securities (and such other Senior Indebtedness)
(the "Offer") at a purchase price of 100% of their principal amount (or, if
other than the Securities, 100% of their principal amount or, in the event such
other Senior Indebtedness was issued with significant original issue discount,
100% of the accreted value thereof), without premium, plus accrued but unpaid
interest (or, in respect of such other Senior Indebtedness, such lesser price,
if any, as may be provided for by the terms of such Senior Indebtedness) in
accordance with the procedures (including prorationing in the event of
oversubscription) set forth in Section 4.06(c). If the aggregate purchase price
of Securities (and any other Senior Indebtedness) tendered pursuant to the Offer
exceeds the Net Available Cash allotted to their purchase, the Company shall
select the Securities and other Senior Indebtedness to be purchased on a pro
rata basis but in round denominations, which in the case of the Securities will
be denominations of $1,000 principal amount or multiples thereof. The Company
shall not be required to make an Offer to purchase Securities (and other Senior
Indebtedness) pursuant to this Section 4.06 if the Net Available Cash available
therefor is less than
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63
$10.0 million (which lesser amount shall be carried forward for purposes of
determining whether such an Offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition). Upon completion of an Offer, the
amount of Net Available Cash that served as the basis for such Offer will be
reset at zero for purposes of Section 4.06(a).
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorating as described in Section 4.06(b) in the
event the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Company which the Company in good faith believes will enable such Holders
to make an informed decision (which at a minimum will include (A) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports describing
Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (B) a description of material developments in
the Company's business, if any, subsequent to the date of the latest of such
Reports, and (C) if material, appropriate pro forma financial information) and
all instructions and materials necessary to tender Securities pursuant to the
Offer, together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (A) the amount of the Offer (the
"Offer Amount"), including information as to any other Senior Indebtedness
included in the Offer, (B) the allocation of the Net Available Cash from the
Asset Dispositions pursuant to which such Offer is being made and (C) the
compliance of such allocation with the provisions of Section 4.06(a) and (b). On
such date, the Company shall also irrevocably deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust) in Temporary Cash Investments, maturing on
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64
the last day prior to the Purchase Date or on the Purchase Date if funds are
immediately available by open of business, an amount equal to the Offer Amount
to be held for payment in accordance with the provisions of this Section. If the
Offer includes other Senior Indebtedness, the deposit described in the preceding
sentence may be made with any other paying agent pursuant to arrangements
satisfactory to the Trustee. Upon the expiration of the period for which the
Offer remains open (the "Offer Period"), the Company shall deliver to the
Trustee for cancellation the Securities or portions thereof which have been
properly tendered to and are to be accepted by the Company. The Trustee shall,
on the Purchase Date, mail or deliver payment (or cause the delivery of payment)
to each tendering Holder in the amount of the purchase price. In the event that
the aggregate purchase price of the Securities delivered by the Company to the
Trustee is less than the Offer Amount applicable to the Securities, the Trustee
shall deliver the excess to the Company immediately after the expiration of the
Offer Period for application in accordance with this Section 4.06.
(3) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than two Business Days prior to
the Purchase Date, a telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. Holders whose Securities are purchased
only in part shall be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A
Security shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations
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65
in connection with the repurchase of Securities pursuant to this Section. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue of its compliance with such securities
laws or regulations.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The
Company will not, and will not permit any Restricted Group Member to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction") unless:
(1) the terms of the Affiliate Transaction are no less
favorable to the Company or such Restricted Group Member than those
that could be obtained at the time of the Affiliate Transaction in
arm's-length dealings with a Person who is not an Affiliate;
(2) if such Affiliate Transaction or series of related
Affiliate Transactions involves an amount in excess of $12.5 million,
the terms of the Affiliate Transaction are set forth in writing and
either (A) a committee of the Board of Directors a majority of whose
members are disinterested with respect to such transaction or (B) a
majority of the non-employee directors of the Company disinterested
with respect to such Affiliate Transaction have determined in good
faith that the criteria set forth in clause (1) are satisfied and that
the relevant Affiliate Transaction is in the best interest of the
Company or such Restricted Group Member and have approved the relevant
Affiliate Transaction as evidenced by a Board Resolution; and
(3) if such Affiliate Transaction or series of related
Affiliate Transactions involves an amount in excess of $25.0 million,
the Board of Directors shall also have received a written opinion from
an investment banking firm, accounting firm or appraisal firm of
national prominence that is not an Affiliate of the Company to the
effect that such Affiliate Transaction is fair, from a financial
standpoint, to the Company and its Restricted Group Members.
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66
(b) The provisions of Section 4.07(a) will not prohibit:
(1) any Investment (other than a Permitted Investment) or
other Restricted Payment, in each case permitted to be made pursuant to
Section 4.04;
(2) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan,
program or arrangement, related trust agreement or any other similar
arrangement for or with any employee, officer or director heretofore
or hereafter entered into in the ordinary course of business, including
vacation, health, insurance, deferred compensation, retirement, savings
or other similar plans;
(3) the payment of compensation, performance of
indemnification or contribution obligations, or an issuance, grant or
award of stock, options, or other equity-related interests or other
securities, to employees, officers or directors in the ordinary course
of business;
(4) the payment of reasonable fees to directors of the Company
and its Restricted Group Members who are not employees of the Company
or its Restricted Group Members;
(5) any transaction with a Restricted Group Member or joint
venture or similar entity that would constitute an Affiliate
Transaction solely because the Company or a Restricted Group Member
owns an equity interest in or otherwise controls such Restricted Group
Member, joint venture or similar entity;
(6) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company; and
(7) transactions with respect to the provision of
Telecommunications Business services, including wireline or wireless
transmission capacity, the lease or sharing or other use of cable or
fiber optic lines, equipment, rights-of-way or other access rights
between the Company or any Restricted Group Member and any other
Person; provided, however, that, in the case of this clause (7), such
transaction complies with Section 4.07(a)(1) and is in the best
interest of the Company or such Restricted Group Member.
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67
SECTION 4.08. Limitation on the Sale or Issuance of Capital
Stock of Restricted Group Members. The Company
(i) will not and will not permit any Restricted Group Member
to issue, transfer, convey, sell or otherwise dispose of any Capital Stock of
any Restricted Group Member other than to the Company or a Restricted Group
Member and
(ii) will not permit any Person other than the Company or a
Restricted Group Member to own any Capital Stock of any Restricted Group Member,
other than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Group Member
except, in each case, for:
(a) a sale, transfer, conveyance or other disposition by the
Company or a Restricted Group Member of 100% of the Capital Stock of a
Restricted Group Member sold in a transaction not prohibited by Section
4.06;
(b) an issuance, sale, transfer, conveyance or other
disposition of the Capital Stock of a Restricted Group Member sold in a
transaction not prohibited by Section 4.06 if, after giving effect
thereto, such Restricted Group Member remains a Restricted Group Member
and the Net Cash Proceeds of such issuance (other than an issuance by a
Permitted International Joint Venture), sale, transfer, conveyance or
other disposition are applied in accordance with Section 4.06;
(c) an issuance, sale, transfer, conveyance or other
disposition of Capital Stock of a Restricted Group Member such that,
(1) immediately after giving effect thereto, such
Restricted Group Member would no longer constitute a
Restricted Group Member,
(2) any remaining Investment in such Restricted Group
Member by the Company or any other Restricted Subsidiary would
have been permitted to be made at such time under Section 4.04
(and for purposes of Section 4.04, such Investment will be
deemed to have been made at such time) and
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(3) the Net Cash Proceeds of such issuance (other
than an issuance by a Permitted International Joint Venture),
sale, transfer, conveyance or other disposition are applied in
accordance with Section 4.06;
(d) Capital Stock of a Restricted Group Member issued and
outstanding on the Issue Date or the date of formation of such
Restricted Group Member and, in each case, held by Persons other than
the Company or any Restricted Group Member and any additional Capital
Stock (other than Disqualified Stock) issued as dividends or
distributions on such Capital Stock or pursuant to preemptive or
similar rights;
(e) Capital Stock of a Restricted Group Member issued and
outstanding prior to the time that such Person becomes a Restricted
Group Member; and
(f) any non-convertible Preferred Stock constituting
Indebtedness and permitted to be Incurred under Section 4.03.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.09(b).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and
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69
capitalization, each after giving effect to such Change of Control);
(3) the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than two Business Days prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(f) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue of its compliance
with such securities laws or regulations.
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SECTION 4.10. Limitation on Liens. The Company will not, and
will not permit any Restricted Group Member to, directly or indirectly, Incur
or suffer to exist or become effective any Lien (the "Initial Lien") of any
nature whatsoever on any of its property (including Capital Stock), whether
owned at the Issue Date or thereafter acquired, or upon any income or profits
therefrom (other than Permitted Liens) to secure any Indebtedness, without
effectively providing that the Securities shall be secured (1) equally and
ratably with (or prior to) the Indebtedness so secured for so long as such
Indebtedness is so secured or (2) in the event such Indebtedness constitutes
Subordinated Obligations, prior to such Indebtedness for so long as such
Indebtedness is so secured.
Any Lien created for the benefit of the Holders of the
Securities pursuant to this Section shall provide by its terms that such Lien
shall be automatically and unconditionally released and discharged upon the
release and discharge of the Initial Lien.
SECTION 4.11. Limitation on Sale/Leaseback Transactions. The
Company will not, and will not permit any Restricted Group Member to, directly
or indirectly, enter into, assume, guarantee or otherwise become liable with
respect to any Sale/Leaseback Transaction with respect to any property unless:
(1) the Company or such Restricted Group Member would be
entitled to (A) Incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction
pursuant to Section 4.03 and (B) create a Lien on such property
securing such Attributable Debt without equally and ratably securing
the Securities pursuant to Section 4.10;
(2) the net proceeds received by the Company or any Restricted
Group Member in connection with such Sale/Leaseback Transaction are at
least equal to the Fair Market Value of such property; and
(3) the Company applies the proceeds of such
transaction in compliance with Section 4.06.
SECTION 4.12. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they
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71
would normally have knowledge of any Default and whether or not the signers know
of any Default that occurred during such period. If they do, the certificate
shall describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
ss. 314(a)(4).
SECTION 4.13. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a)
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, directly or
indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia and the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satis factory to the Trustee, all the
obligations of the Company under the Securities, this Indenture and the
Registration Rights Agreement;
(2) immediately after giving pro forma effect to such
transaction (and treating any Indebtedness which becomes an obligation
of the Successor Company or any Subsidiary as a result of such
transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving pro forma effect to such
transaction, the Consolidated Leverage Ratio of the Successor Company
shall be no worse than the Consolidated Leverage Ratio of the Company
determined immediately prior to such transaction;
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72
(4) if, as a result of any such transaction, property or
assets of the Successor Company would become subject to a Lien subject
to Section 4.10, the Successor Company shall have secured the
Securities as required by said Section; and
(5) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture;
provided, however, that clauses (3) and (4) will not be applicable to (A) a
Restricted Subsidiary consolidating with, merging into or transferring all or
part of its properties and assets to the Company or (B) the Company merging with
an Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, but the predecessor Company in the
case of a conveyance, transfer or lease shall not be released from the
obligation to pay the principal of and interest on the Securities.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default"
occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon declaration or otherwise, or
(ii) fails to redeem or purchase Securities when required pursuant to
this Indenture or the Securities;
(3) the Company fails to comply with Section 5.01;
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(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10 or 4.11 (other than a failure to
purchase Securities when required under Section 4.06 or 4.09) and such
failure continues for 30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4) above) and such failure continues for 60
days after the notice specified below;
(6) Indebtedness of the Company or any Restricted Group Member
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $25.0
million, or its foreign currency equivalent at the time;
(7) the Company or any Significant Restricted Group Member
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Restricted Group Member in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Restricted Group Member or for any substantial
part of its property; or
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(C) orders the winding up or liquidation of the
Company or any Significant Restricted Group Member;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess
of $25.0 million or its foreign currency equivalent at the time is
entered against the Company or any Restricted Group Member, remains
outstanding for a period of 60 consecutive days following the entry of
such judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is 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.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5) or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Securities notify the Company of the Default and the Company
does not cure such Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (4),
(5) or (9), its status and what action the Company is taking or proposes to take
with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs
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and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the Securities by notice to the Company and the
Trustee, may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company occurs, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security (ii) a Default arising
from the failure to redeem or purchase any Security when required pursuant to
this Indenture or (iii) a Default in respect of a provision that under Section
9.02 cannot be amended without the consent of each Securityholder affected. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
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76
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of
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principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make 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 its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall
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mail to each Securityholder and the Trustee a notice that states the record
date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall 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
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise 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 Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) 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 or obligations
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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. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur 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 to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
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(h) 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 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Inden-
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ture or in any document issued in connection with the sale of the Securities or
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee may have separate counsel and the Company
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shall pay the fees and expenses of such counsel. The Company need not reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall
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mail a notice of its succession to Securityholders. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that
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there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (1) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (2) all outstanding Securities have become due and payable,
whether at maturity or on a redemption date as a result of the mailing of a
notice of redemption pursuant to Article 3 hereof and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity or upon redemption
all outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and
if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Sections 8.01(c) and 8.01(d),
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company.
(b) Subject to Sections 8.01(c), 8.01(d) and 8.02, the Company
at any time may terminate (1) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (2) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and 4.11 and the operation
of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Restricted Group
Members) and the limitations contained in Sections 5.01(a)(3) and (4) ("covenant
defeasance option"). The Company may exercise its legal defeasance option not-
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85
withstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Restricted Group Members) or because of the failure of the Company to comply
with Section 5.01(a)(3) or (4).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding Sections 8.01(a) and 8.01(b) above, the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and
7.08 and in this Article 8 shall survive until the Securities have been paid in
full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05
shall survive.
(d) Notwithstanding Sections 8.01(a) and 8.01(b) above, this
Indenture shall remain in effect regardless of satisfaction of the conditions
set forth in Section 8.01(a), and the Company may not exercise its legal
defeasance option or covenant defeasance option, so long as any loans are
outstanding under the Credit Agreement or any commitments to make loans
thereunder remain in effect.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations for
the payment of principal of and interest on the Securities to maturity
or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as
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will be sufficient to pay principal and interest when due on all the
Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (B) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Security holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such cove nant defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
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Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company 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.
<PAGE>
88
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Security holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities or to
secure the Securities;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender
<PAGE>
89
offer or exchange for the Securities). However, without the consent of each
Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal amount of or extend the Stated
Maturity of any Security;
(4) reduce the amount payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any changes in the ranking or priority of any
Security that would adversely affect the Securityholders; or
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subse quent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subse-
<PAGE>
90
quent Holder may revoke the consent or waiver as to such Holder's Security or
portion of the Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Securityholder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
<PAGE>
91
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be
in writing and delivered in person, mailed by first-class mail or transmitted by
facsimile (with written confirmation of receipt) addressed as follows:
if to the Company:
Winstar Communications, Inc.
685 Third Avenue
Thirty-first Floor
New York, New York 10017
Facsimile: 212-584-4001
Attention of General Counsel
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Facsimile: 212-852-1627
Attention of Corporate Trust Division
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration
<PAGE>
92
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such individual, he
has made such examination or
<PAGE>
93
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
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.07. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 10.08. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws 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 10.09. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 10.10. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 10.11. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
<PAGE>
94
SECTION 10.12. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE>
95
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
WINSTAR COMMUNICATIONS, INC.,
by
/s/Frederic E. Rubin
----------------------------------
Name: Frederic E. Rubin
Title: Senior Vice President,
Treasurer
UNITED STATES TRUST COMPANY OF NEW YORK,
by
/s/Margaret M. Ciesmelewski
----------------------------------
Name: Margaret M. Ciesmelewski
Title: Assistant Vice President
<PAGE>
EXHIBIT 1
[FORM OF SECURITY]
[Global Securities Legend]*
UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY GLOBAL SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
--------------------
*/[If the Security is to be issued in global form add the Global Securities
Legend and the attachment to Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL
SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".]
<PAGE>
No.: _______________________ $________________________
CUSIP No.: _________________
ISIN No.: __________________
Common Code No.: ___________
Senior Notes Due 2010
Winstar Communications, Inc., a Delaware corporation, promises
to pay to _________________________________________, or its registered assigns,
the principal sum of _______________________________________ Dollars on April
15, 2010.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: _______________
WINSTAR COMMUNICATIONS, INC.,
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
----------------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
Senior Notes Due 2010
1. Interest
Winstar Communications, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at a rate per annum (the "Specified Interest
Rate") equal to (i) the "Yield to Worst Call" on the Company's 12-3/4% Senior
Notes due 2010 (issued under an indenture dated as of the Issue Date, between
the Company and the Trustee), as published by Bloomberg L.P. under the heading
"Yields to Call" at 4 p.m. on the Conversion Date of this Security (or such
other time on such date as shall be agreed by the Company and the Holders of
this Security), as calculated using a bid price quoted as of 4 p.m. on such date
by the Holders of this Security (or as of such other time on such date as shall
be agreed by the Company and the Holders of this Security) plus (ii) 2.00%.
The Company will pay interest semiannually on April 15 and
October 15 of each year, commencing on the first such date after the Conversion
Date of this Security. Interest on this Security will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the Conversion Date of this Security. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company will pay interest
on overdue principal at 1% per annum in excess of the Specified Interest Rate
for this Security and will pay interest on overdue installments of interest at
such higher rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the April 1 or October 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified
<PAGE>
2
by The Depository Trust Company. The Company will make all payments in respect
of a certificated Security (including principal, premium and interest) by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such account no
later than 30 days immediately preceding the relevant due date for payment (or
such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of May 9, 2000 (the "Indenture"), between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the
Company. The Securities issued on any Conversion Date, and all Securities issued
upon the transfer, exchange or replacement thereof, will be treated as a single
class for all purposes under the Indenture. The Indenture contains covenants
that limit the ability of the Company and its Restricted Group Members to incur
additional indebtedness; pay dividends or distributions on, or redeem or
repurchase capital stock; make investments; issue or sell capital stock of
Restricted Group Members; engage in transactions with affiliates; create liens
on assets; transfer or sell assets; guarantee indebtedness; restrict dividends
or other payments of Restricted Group Members; consolidate, merge or transfer
all or substantially all of its assets and the assets of its subsidiaries;
<PAGE>
3
and engage in sale/leaseback transactions. These covenants are subject to
important exceptions and qualifications.
The Indenture limits the original aggregate principal amount
of the Securities to $2,000,000,000 (subject to Section 2.07 of the Indenture).
5. Optional Redemption
Except as set forth below, the Company shall not be entitled
to redeem the Securities at its option prior to April 15, 2005.
On and after April 15, 2005, the Company shall be entitled at
its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice. The redemption price with respect to any such
redemption of all or a portion of this Security shall be the sum of the
principal amount of this Security so redeemed, plus accrued interest thereon to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), plus
a redemption premium equal to the principal amount of this Security so redeemed
multiplied by the Premium Percentage as of the redemption date. The "Premium
Percentage" as of any redemption date shall be a percentage determined by
multiplying the Specified Interest Rate for this Security by the percentage set
forth below opposite the period during which such redemption date occurs:
12-Month Period
Commencing on
April 15, of Redemption
the Year Indicated Price
------------------ ----------
2005 50%
2006 33-1/3%
2007 16-2/3%
2008 and thereafter 0.00%
In addition, prior to April 15, 2003, the Company shall be
entitled at its option on one or more occasions to redeem Securities in an
aggregate principal amount not to exceed 35% of the aggregate principal amount
of the Securities originally issued with the net cash proceeds from one or more
Public Equity Offerings; provided, however, that (1) at least 65% of such
aggregate principal amount of Securities remains outstanding immediately after
the occurrence of each such redemption (other than Securities held, directly or
indirectly, by the Company or its
<PAGE>
4
Affiliates); and (2) each such redemption occurs within 90 days after the
closing date of the related Public Equity Offering. The redemption price with
respect to any such redemption of all or any portion of this Security shall be
the sum of the principal amount of this Security so redeemed, plus accrued and
unpaid interest thereon to the redemption date, plus a redemption premium equal
to the principal amount of this Security so redeemed multiplied by a percentage
equal to the Specified Interest Rate for this Security.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 principal amount may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a
<PAGE>
5
period of 15 days before a selection of Securities to be redeemed or 15 days
before an interest payment date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
10. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee shall be
entitled to amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure the Securities, or to add additional covenants or surrender rights and
powers conferred on the Company, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make any change
that does not adversely affect the rights of any Securityholder.
<PAGE>
6
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon acceleration or otherwise, or failure by the Company to
purchase Securities when required; (iii) failure by the Company to comply with
other agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company if the amount accelerated (or so unpaid) exceeds $25.0 million; (v)
certain events of bankruptcy or insolvency with respect to the Company and the
Significant Restricted Group Members; and (vi) certain judgments or decrees for
the payment of money in excess of $25.0 million. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in the interest of the Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
<PAGE>
7
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
16. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
18. CUSIP, ISIN and Common Code Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. To the
extent such numbers have been issued, the Company has caused ISIN and Common
Code numbers to be similarly printed on the Securities and has similarly
instructed the Trustee. No representation is made as to the accuracy of such
numbers either as printed on the Securities or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
19. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
<PAGE>
8
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD
BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written
request and without charge to the Security holder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
Winstar Communications, Inc.
685 Third Avenue
Thirty-first Floor
New York, NY 10019
Attention: General Counsel
<PAGE>
--------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________________________________ agent to transfer
this Security on the books of the Company. The agent may substitute another to
act for him.
--------------------------------------------------------------------------------
Date: Your Signature:
---------------------- -------------------------------------
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Sign exactly as your name appears on the other side of this Security.
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
<S> <C>
Date of Amount of decrease in increase in Principal amount of this of authorized officer
Exchange amount of this Global of this Global Security (following such Trustee or Securities
decrease or increase) Custodian
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture,
state the amount in principal amount: $___________
Date: Your Signature:
------------------ -------------------------------
(Sign exactly as your name appears on
the other side of this Security.)
Signature Guarantee:
----------------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT 2
FORM OF CONVERSION CERTIFICATE
Conversion Certificate
Pursuant to Section 2.02 of the Indenture, dated as of May 9,
2000 (the "Indenture"), by and among Winstar Communications, Inc. (the
"Company"), and United States Trust Company of New York, as trustee (the
"Trustee"), the undersigned officer of Lucent Technologies Inc. ("Lucent")
hereby certifies (capitalized terms used but not defined herein have the
meanings given to them in the Indenture):
1. A Refinancing Period has commenced and is continuing
and all of the conditions precedent under the Credit
Agreement to the conversion into Securities of Lucent
Loans outstanding under the Credit Agreement have
been satisfied.
2. The aggregate principal amount of Securities that the
Trustee is hereby instructed to authenticate and
deliver as set forth below (together with the
aggregate principal amount of Securities that the
Trustee has been instructed to authenticate and
deliver, but that the Trustee has not yet
authenticated and delivered, pursuant to any other
Conversion Certificates that have been or are being
delivered by Lucent to the Trustee) does not exceed
the aggregate principal amount of Lucent Loans
outstanding under the Credit Agreement.
The Trustee is hereby instructed to authenticate and deliver
the aggregate principal amount of the Securities set forth below pursuant to the
Securities Authentication Order, dated as of the Closing Date, and in accordance
with the following additional instructions:
(a) aggregate principal amount: $
----------------
(b) registered in the name of:
------------------
(c) deliver to the offices of:
------------------
(d) time of delivery:
---------------------------
(e) check form in which the Securities are to be issued:
|_| definitive, fully registered certificates
|_| Global Security
<PAGE>
2
This is a Conversion Certificate as such term is defined in
the Indenture, and the date of receipt hereof by the Trustee (which if not a
Business Day shall be the immediately succeeding Business Day) shall be deemed
to be the Conversion Date of the Securities authenticated and delivered pursuant
to the instructions set forth herein.
IN WITNESS WHEREOF, Lucent has caused this certificate to be
executed in its corporate name by a duly authorized officer of Lucent.
Dated:
---------------
LUCENT TECHNOLOGIES INC.,
By:
--------------------------------
Name:
Title:
