SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 29, 1999
UNITED INTERNATIONAL HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-21974 84-1116217
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification #)
incorporation)
4643 SOUTH ULSTER STREET, SUITE 1300, DENVER, CO 80237
(Address of Principal Executive Office)
(303) 770-4001
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
- ----------------------
On April 29, 1999, an indirect wholly owned subsidiary of United International
Holdings, Inc. ("UIH" or the "Company"), acquired a 60% interest in VTR
Hipercable S.A. ("VTRH"), a Chilean company that is the largest provider of
wireline and "wireless" cable television and digital direct-to-home satellite
services and a growing provider of telephone services in Chile. This
acquisition, combined with the 40% interest in VTRH that is owned by another
indirect wholly owned subsidiary of the Company, gives UIH an indirect 100%
interest in VTRH. The purchase price for the 60% interest in VTRH was
approximately $258 million in cash, which included repayment of advances from
the other shareholders of VTRH and certain other expenses. In addition, the
Company provided capital for VTRH to prepay approximately $126 million of
existing bank indebtedness and a promissory note from the Company to one of the
other shareholders of VTRH.
To finance the prepayment of VTRH's indebtedness and a portion of the
purchase price for the VTRH acquisition, the Company concurrently sold in a
private transaction $208.9 million of 10 7/8% Senior Discount Notes due 2009
(the "Notes"). The remaining portion of the acquisition was funded with cash on
hand and approximately $145 million borrowed under a Senior Secured Credit
Facility between VTRH and a syndicate of banks (the "Bank Facility").
The Bank Facility consists of two tranches--Tranche A, which is a
single term loan facility with an aggregate principal amount of $140 million,
substantially all of which was borrowed for the VTRH acquisition, and Tranche B,
which is a three-year term loan facility, with an aggregate principal amount of
up to $80 million. Both tranches have been guaranteed by VTRH and its
subsidiaries. The banks are in the process of syndicating the final
approximately $50 million of the Bank Facility. The Company has agreed to
participate in the syndication as necessary.
The Notes have essentially the same terms as the Company's outstanding
10 3/4% Senior Secured Discount Notes due 2008, except for the maturity and
coupon rate and that the Notes are not secured.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
- -------------------------------------------
(C) EXHIBITS
10.1 Promise Agreement entered into as of October 15, 1998, among UIH Latin
America, Inc., VTR S.A. and Compania Nacional de Telefonos, Telefonica
del Sur S.A.
10.2 Credit Agreement dated as of April 28, 1999, among UIH Chile Holding
S.A., the subsidiary guarantors named therein, Toronto Dominion
(Texas), Inc., TD Securities (USA), Inc. and Citibank, N.A.
10.3 Indenture dated as of April 29, 1999, between the Company and Firstar
Bank of Minnesota, N.A., as Trustee.
10.4 Note Purchase Agreement dated as of April 29, 1999, among the Company
and the purchasers named therein.
10.5 Registration Rights Agreement dated as of April 29, 1999, among the
Company and the purchasers named therein.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
UNITED INTERNATIONAL HOLDINGS, INC.
DATE: May 7, 1999 By: /S/ Valerie L. Cover
--------------------------------
Valerie L. Cover
Controller
4
EXECUTION VERSION
PROMISE AGREEMENT
Entered Into as of October 15, 1998
among
UIH LATIN AMERICA, INC.,
VTR S.A.
and
COMPANIA NACIONAL DE TELEFONOS, TELEFONICA DEL SUR S.A.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ONE: DEFINITIONS........................................................1
TWO: CURRENT SHARE/EQUITY INTEREST OF PARTIES...........................9
THREE: PROMISED AGREEMENTS.............................................10
FOUR: CLOSING; TERMINATION.............................................10
FIVE: REPRESENTATIONS AND WARRANTIES OF VTR............................15
SIX: REPRESENTATIONS AND WARRANTIES OF UIH.............................17
SEVEN: CONDITIONS TO CLOSING...........................................18
EIGHT: CONDUCT PENDING THE CLOSING.....................................20
NINE: AGREEMENTS REGARDING CERTAIN OTHER MATTERS.......................23
TEN: POST CLOSING ADJUSTMENT...........................................25
ELEVEN: RIGHT OF FIRST REFUSAL.........................................26
TWELVE: SURVIVAL.......................................................29
THIRTEEN: INDEMNIFICATION..............................................29
FOURTEEN: ARBITRATION..................................................32
FIFTEEN: APPLICABLE LAW; JURISDICTION..................................34
SIXTEEN: ENTIRE AGREEMENT; OTHER AGREEMENTS............................34
SEVENTEEN: NOTICES.....................................................34
EIGHTEEN: CONFIDENTIALITY; PRESS RELEASES..............................37
NINETEEN: EXPENSES.....................................................38
TWENTY: SEVERABILITY...................................................38
TWENTY ONE: COUNTERPARTS...............................................38
TWENTY TWO: NON-ASSIGNMENT.............................................38
TWENTY THREE: SECTION HEADINGS.........................................39
ii
<PAGE>
EXHIBITS:
A - Form of Amendment to Shareholders Agreement
B - Form of Amendment to Newcom Shareholders Agreement
C - Form of Indemnification Agreements
D - Form of License Agreement
E - Form of Public Deeds for Hipercable
F - Form of Public Deed for Newcom
G - LD Purchase Agreement
ANNEXES:
A - Form of Opinion of General Counsel of VTR
B - Form of Opinion of General Counsel of CNT
C - Form of Opinion of Outside Counsel to VTR and CNT
D - Form of Opinion of United States Counsel to UIH
E - Form of Opinion of Chilean Counsel to UIH
SCHEDULES:
Schedule 1.1 - Key Employees
Schedule 5(b) - Seller Required Consents or Filings
Schedule 5(g)(i) and (ii) - Employee Lists
Schedule 6(b) - UIH Required Consents or Filing
Schedule 9(b) - June 30 Hipercable Financial Statements
iii
<PAGE>
PROMISE AGREEMENT
This Promise Agreement was entered into as of the 15th day of October,
1998, by UIH LATIN AMERICA, INC., a corporation duly incorporated and validly
existing under the laws of the State of Colorado, United States of America, duly
represented by Juan Guillermo Levine Contreras, representation which will be
herein accredited (together "UIH"), both with domicile in 4643 South Ulster St.,
Suite 1300, Denver, CO 80237, U.S.A., VTR S.A., a stock company incorporated and
validly existing under the laws of the Republic of Chile, duly represented by
Blas Tomic Errazuriz, representation which will be herein accredited (together
"VTR"), both with domicile in Av. Andres Bello 2711 - Piso 6, Santiago, Chile,
and COMPANIA NACIONAL DE TELEFONOS, TELEFONICA DEL SUR S.A., a stock company
incorporated and validly existing under the laws of the Republic of Chile, duly
represented by Blas Tomic Errazuriz, representation which will be herein
accredited (together "CNT"), both with domicile in Av. Andres Bello 2711 - Piso
6, Santiago, Chile.
The Parties agree as follows:
ONE: DEFINITIONS
As used herein, unless the context requires otherwise, the following
terms when capitalized have the following meanings (terms defined in the
singular to have the same meanings when used in the plural and VICE VERSA):
ACQUISITION FINANCING: The actual advance of funds at the Closing for
the acquisition of the Seller Shares and the Newcom Shares by one or more
lenders or equity participants or both, on terms and in amounts that are
satisfactory to UIH in its sole discretion.
ADDITIONAL AMOUNT: An amount equal to simple interest at the rate of 12
percent per annum on the Purchase Price accrued from the Initial Termination
Date until the Closing Date.
ADJUSTMENT NOTICE: As defined in Article 10.
AFFILIATE: Affiliate means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control with,
such other Person at the time at which the determination of affiliation is being
made. The term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or similar ownership interests.
1
<PAGE>
AGREEMENT: This Promise Agreement (including the Exhibits and Schedules
attached hereto).
AMENDMENT TO SHAREHOLDERS AGREEMENT: The Amendment to Shareholders
Agreement executed by each of VTR, CNT and UIH Chile, Inc. on the date hereof,
in the form attached hereto as Exhibit A.
AMENDMENT TO NEWCOM SHAREHOLDERS AGREEMENT: The Amendment to Newcom
Shareholders Agreement executed by each of VTR and UIH Chile, Inc. on the date
hereof, in the form attached hereto as Exhibit B.
ANNUAL BUDGET: As defined in the Shareholders Agreement.
ARBITRATION COURT: As defined in Article 14.
ASSETS: For any Person, all of the properties, Equipment, Systems,
Licenses and other assets, privileges, rights, interests, claims and goodwill of
such Person, real and personal, tangible and intangible, of every type and
description, whether owned or leased or otherwise possessed, used, held for use
or usable in a business and whether or not reflected on the balance sheet or
other accounts of such Person.
BONA FIDE OFFER: As defined in Section 11(a).
BUSINESS DAY: Any day other than a Saturday, Sunday or other day on
which banks in the State of New York, U.S.A., or Santiago, Chile are authorized
or obligated by law or executive order to close.
CIAC: As defined in Article 14.
CLOSING: As defined in Section 4(a)
CLOSING DATE: As defined in Section 4(a).
CNT: As defined in the recitals.
CNT SHARES: As defined in Section 11(a).
COMPANIES: Hipercable and each of the Subsidiaries.
COMPANY BUSINESSES: As defined in the Shareholders Agreement.
CONSIDERATION: As defined in Section 4(b)(i).
2
<PAGE>
CONTRACT: For any Person, any contract, mortgage, deed of trust, bond,
lease, License, note, franchise, certificate, option, warrant, right, or such
other instrument, document or written agreement, and any oral obligation, right
or agreement to which such Person is a party, nominee, signatory, or of which
such Person is a beneficiary, or by which such Person or any Assets or
securities of such Person are bound, including, without limitation, any License.
CONTROVERSY: As defined in Article 14.
CTC: Compania de Telecomunicaciones de Chile, S.A., a Chilean stock
company, together with its Affiliates, successors, and any assignees of CTC's
rights under the Pledge.
CTC MOBILE PURCHASE AGREEMENT: The Stock Purchase Agreement dated June
14, 1996 between VTR and CTC.
DOLLARS OR US$: Dollars, the lawful currency of the United States of
America.
DUE DILIGENCE MAE DETERMINATION: As defined in Section 9(b).
DUE DILIGENCE REVIEW: As defined in Section 9(b).
EQUIPMENT: Any and all equipment, materials or other Property related
to the production, transmission, retransmission or reception of voice, video or
data signals (electronic or optical, digital or analog) included in the Assets
of Hipercable or any of the Subsidiaries, including, without limitation,
electronic devices, trunk and distribution cables; amplifiers; power supplies;
conduit; cables and pedestals; grounding and pole hardware, fiber optic cables,
installed subscriber devices, network interface units (including, without
limitation, customer interface units, drop lines, converters, encoders,
transformers behind television sets and fittings); "headend" (origination,
transmission and distribution system, equipment including, without limitation,
switching, repeating and regenerating equipment); hardware; tools; inventory;
spare parts; maps and engineering data; vehicles; microwave equipment; studios
and other broadcast facilities and other equipment for origination of local
programming; and all other tangible property and facilities owned, used or held
by Hipercable or any Subsidiary for use in the Systems.
EXCHANGE RATE: For any date, the exchange rate between Dollars and
Chilean Pesos referred to in Number Six of Chapter I of Title I of the
"Compendium of Foreign Exchange Regulations" published by the Central Bank of
Chile in the Diario Oficial de Chile on such date (known as the dolar observado)
or, if such rate is not in effect, the official rate designated by the Central
Bank of Chile for the purpose of replacing such rate.
EXTENSION NOTICE: As defined in Section 4(a).
3
<PAGE>
FINAL MAE DETERMINATION: As defined in Section 9(b).
FINANCING PARTIES: As defined in Section 8(d).
GAAP: Generally accepted accounting principles as used in the United
States of America as in effect on the date hereof.
GOVERNING DOCUMENTS: The estatutos, articles or certificate of
incorporation or association, bylaws or other governing documents of any entity.
GOVERNMENTAL AUTHORITY: Any court, administrative agency or commission
or other governmental or quasi-governmental agency, instrumentality or official,
domestic or foreign.
HIPERCABLE: VTR Hipercable S.A., a Chilean stock company.
HIPERCABLE FINANCIAL STATEMENTS: As defined in Section 5(f).
INDEMNIFICATION AGREEMENTS: The Indemnification Agreements, to be
executed by each of Quinenco and SBCI at the Closing, in the forms attached
hereto as Exhibit C.
INDEMNIFIED PERSONS: As defined in Section 13(a).
INDEMNIFYING PARTY: As defined in Section 13(a).
ING CREDIT FACILITY: Credit Agreement, entered into by and between
Hipercable and ING Baring (U.S.) Capital Corporation as Administrative Agent;
and ING Baring (U.S.) Capital Corporation and the Toronto Dominion Bank as
Co-Arrangers, among others, and Security Documents thereto as defined therein;
Master Subordination Agreement, entered into by and between VTR S.A., UIH Chile,
Inc., as the Subordinated Creditors, Hipercable and ING Baring (U.S.) Capital
Corporation as Administrative Agent; and Support Agreement, entered into by and
between Hipercable, VTR S.A., UIH Chile, Inc. and ING Baring (U.S.) Capital
Corporation as Administrative Agent; all of the above dated as of August 26,
1997.
INITIAL TERMINATION DATE: The date that is a number of days after the
date hereof equal to (i) 150 PLUS (ii) the number of days after November 30,
1998, if any, that the Hipercable Financial Statements are delivered to UIH
pursuant to Section 5(f).
JUDGMENT: Any judgment, writ, order, decree or ruling of or by any
court, judge, justice or magistrate, including any bankruptcy court or judge,
and any order of or by any Governmental Authority.
4
<PAGE>
KEY EMPLOYEES: Those employees listed on Schedule 1.1 hereof.
LAW: The civil law, the common law, and any statute, ordinance, code or
other law, rule, regulation, order, technical or other standard, requirement or
procedure enacted, adopted, promulgated, applied or followed in any country or
its political subdivisions or by any Governmental Authority or court of any
country or its political subdivisions.
LD PURCHASE AGREEMENT: The Promise Agreement and the "Acuerdo de Uso de
Marca Comercial", both executed by and between VTR and CTC on December 18, 1997,
attached hereto as Exhibit G.
LICENSE AGREEMENT: The License Agreement to be executed by Hipercable
and VTR at the Closing, in the form attached hereto as Exhibit D, granting
Hipercable the exclusive right, pursuant to a 99-year license, to use the "VTR"
name in the multi-channel television, local telephony and internet businesses in
Chile, and in all other telecommunications businesses in Chile subject only to
the following limitations: (i) if CTC completes the acquisition of VTR Larga
Distancia in accordance with the LD Purchase Agreement or other arrangement, CTC
and/or any of its subsidiaries devoted to the long distance telephony business
shall have the right to use the trademark "VTR Larga Distancia" in the long
distance telephony and data transmission (excluding internet services)
businesses in Chile for a period of two years from the consummation of such
transaction; or (ii) if CTC does not complete the acquisition of VTR Larga
Distancia in accordance with the LD Purchase Agreement, VTR shall have the right
to use, and to license to third parties, but not to CTC or any of its
Affiliates, the name VTR in the long distance telephony and data transmission
and internet businesses in Chile, but shall not have the right to use the name
"VTR" in conjunction with the names "Internet" or "Web."
LICENSES: All franchises, concessions, licenses, permits, operating
authorizations and other agreements and approvals issued by or pending with
Governmental Authorities, utilities, providers of programming or other entities
and all material rightsofway, satellite, microwave or other transmission
agreements, pole or underground construction or usage agreements and all other
agreements necessary to construct, own and operate a System in a specified
geographical area in compliance with applicable Laws.
LIEN: Any security agreement, financing statement (whether or not
filed), conditional sale or other title retention agreement; any lease,
consignment or bailment given for security purposes; any lien, charge,
restrictive agreement, mortgage, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including, without limitation, reservations,
rights of entry, possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, leases and Licenses) of any kind.
MATERIAL ADVERSE EFFECT: As defined in Section 9(b).
5
<PAGE>
NEWCOM: Newcom S.A., a Chilean stock company.
NEWCOM SHAREHOLDERS AGREEMENT: The Newcom Shareholders Agreement dated
as of July 11, 1997 by and among VTR S.A. and UIH Chile, Inc.
NOTICE OF ARBITRATION: As defined in Article 14.
OFFER: As defined in Section 11(a).
OFFERED SHARES: As defined in Section 11(a).
ORIGINAL PROMISE AGREEMENT: Promise Agreement dated June 27, 1996,
between United International Properties, Inc., and VTR, as amended.
PARTIES: Generic definition for Sellers and UIH, collectively, or for
VTR and UIH collectively in connection with the Newcom Shares.
PARTY: Generic definition for Sellers on the one hand, and UIH on the
other hand or for VTR on the one hand, and UIH on the other hand in connection
with the Newcom Shares.
PERSON: Any natural person, sociedad anonima, sociedad de
responsabilidad limitada, corporation, general or limited partnership, limited
liability company, joint venture, trust, association, unincorporated entity of
any kind or Governmental Authority.
PLEDGE: The Pledge of the CNT Shares pursuant to the Pledge Agreement.
PLEDGE AGREEMENT: The Pledge Agreement dated June 16, 1998, pursuant to
which shares of common stock of CNT are pledged by VTR to CTC to secure
repayment of VTR's obligations under the CTC Mobile Purchase Agreement.
PROMISED AGREEMENTS: As defined in Article 3.
PROMISSORY NOTE: The Public Deed dated June 27, 1997 evidencing
indebtedness of UIH to VTR in the original principal amount of US$ 7,770,251.
PROPOSED TRANSFEREE: As defined in Section 11(a).
PUBLIC DEEDS: The Public Deeds effecting the transfer of the Seller
Shares and the Newcom Shares to the UIH Parties, in the form set forth as
Exhibits E and F, respectively.
PURCHASE PRICE: The purchase price shall be an amount in Dollars equal
to (i) the sum of (a) US$ 236,500,000, plus (b) any capital contributions made
6
<PAGE>
to the Companies and/or Newcom by the Sellers (converted from Chilean Pesos to
Dollars at the Exchange Rate in effect on the date of such contribution) from
the date hereof until the Closing, LESS (ii) a number equal to 60% of the
difference between (x) Third Party Debt at Closing and (y) US$ 122,300,000;
provided, however that if Third Party Debt at Closing is less than US$
122,300,000, there will be no adjustment under this Clause (ii).
PURCHASER DESIGNEE: Any Person (i) a majority of the voting interests
of which is owned directly or indirectly by UIH, (ii) the minority ownership of
which is disclosed to Sellers, and (iii) that would not, as a result of such
Person's participation in the purchase of some or all of the Seller Shares
and/or the Newcom Shares pursuant to this Agreement, cause the Closing to be
unreasonably delayed as a result of regulatory or other approval requirements
that would not be applicable if UIH were the sole purchaser of the Seller Shares
and/or the Newcom Shares.
QUALIFIED COURIER: As defined in Article 17.
QUINENCO: Quinenco S.A., a Chilean stock company.
REAL PROPERTY: For any Person, all realty, towers, fixtures,
rightsofway, leasehold and other interests in real property, buildings,
improvements and constructionin-progress owned, leased, occupied, used or held
for use by such Person.
RELATED PARTY AGREEMENTS: The Technical Assistance Agreement and all
other Contracts (other than the License Agreement) between any of the Companies
or Newcom, on the one hand, and any Seller or any Affiliate of any Seller on the
other hand.
REQUIRED CONSENTS: The UIH Required Consents and the Seller Required
Consents.
RESTRICTION: With respect to any stock, any voting or other trust or
agreement, option, warrant, escrow, proxy, buysell or other share transfer
agreement, power of attorney or other Contract, arrangement or understanding or
any Judgment or Law that (i) grants to any Person the right to purchase or
otherwise acquire, or obligates any Person to sell or otherwise dispose of, or
otherwise results or may result in any Person's acquiring, any of such stock,
any of the proceeds of, or any distributions paid or payable with respect to,
any of such stock, or any interest in such stock, proceeds or distributions,
(ii) restricts or may restrict the transfer of, or the exercise of any voting
rights or the enjoyment of any other benefits arising by reason of ownership of,
any such stock, proceeds or distributions (other than restrictions on future
transfers that may be imposed under anti-monopoly Laws) or (iii) creates or may
create a Lien or purported Lien affecting such stock, proceeds or distributions,
in each case (i) through (iii) other than as a result of taxes owed by the
Companies and/or Newcom or applicable exchange controls.
7
<PAGE>
SBCI: SBC International, Inc., a Delaware corporation.
SELLER REQUIRED CONSENTS: As defined in Section 5(b).
SELLER SHARES: As defined in Article 2.
SELLERS: VTR and CNT, collectively.
SETTLEMENT DEED: As defined in Section 4(b)(iv)(A).
SHAREHOLDERS AGREEMENT: The Shareholders Agreement dated as of
September 6, 1996, among VTR, UIH Chile, Inc. (as successor to UIH) and CNT.
SUBSIDIARIES: VTR CABLE EXPRESS S.A.; CABLEVISION S.A.; RED DE
TELEVISION Y SERVICIO POR CABLE S.A.; VTR CABLE EXPRESS (CHILE) S.A.; VTR GALAXY
CHILE S.A.; VTR TELEFONICA S.A., VTR NET S.A.
SYSTEM: A complete cable television system, multi-point microwave
distribution service ("MMDS") or system for two-way data transfer or any other
pc-based application, direct broadcast satellite reception and distribution
system or system for local loop telephony consisting of appropriate equipment,
which is, or is capable of being, operated as an independent system without
interconnections (except in the case of local loop telephony and internet) to
other systems.
TECHNICAL ASSISTANCE AGREEMENT: The Management Agreement between VTR
Inversiones S.A., VTR Celular S.A., Telecable Sur S.A. (predecessor to VTR Cable
Express) and SBC International, Inc. dated February 6, 1995, as amended.
TERMINATION DATE: As defined in Section 4(d).
TAX: Any tax or payment of any kind required pursuant to any Law, to be
paid to any Governmental Authority.
THIRD PARTY DEBT: Any indebtedness of the Companies, on a consolidated
basis, and any indebtedness of Newcom, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof), or
representing capital lease obligations or the deferred and unpaid balance of the
purchase price of any property, except any such balance that constitutes an
accrued expense, accrued interest or trade payable incurred in the ordinary
course of business, if and to the extent any of the foregoing indebtedness
(other than letters of credit) would appear as a liability upon a balance sheet
of the Companies or Newcom prepared in accordance with GAAP, as well as all
8
<PAGE>
indebtedness of others secured by a Lien on any Asset of any of the Companies or
Newcom (whether or not such indebtedness is assumed by any of the Companies or
Newcom) and, to the extent not otherwise included, the Guarantee by any of the
Companies or Newcom of any indebtedness of any other Person (whether or not such
Guarantee would be required under GAAP to be reflected on a balance sheet).
TRANSFER: As defined in Section 11(a).
UF: A Chilean peso denominated monetary index which value is determined
monthly by the Central Bank of the Republic of Chile for each day of the
immediately succeeding month in accordance with Chapter 11.B.3. of the
Compendium of Financial Regulations of the Central Bank of the Republic of
Chile, according to the variation in the Indice de Precios al Consumidor during
the immediately preceding month, as determined by the National Institute of
Statistics of the Republic of Chile, and published in the Official Gazette under
the name of "Unidad de Fomento."
UIH: As defined in the recitals.
UIH PARTIES: As defined in Section 3(b)(iii).
UIH REQUIRED CONSENTS: As defined in Section 6(b).
VALUATION: The Valuation, as defined in the Original Promise Agreement.
VTR: As defined in the recitals.
VTR CONTROL GROUP: Mr. Andronico Luksic Abaroa, his family and their
descendants, and any Person or Persons controlled by any or all of them.
TWO: CURRENT SHARE/EQUITY INTEREST OF PARTIES
UIH owns 477,208 shares of Hipercable through UIH Chile, Inc., which
constitute approximately 34% of Hipercable's outstanding equity.
The Sellers own 926,345 shares of capital stock of Hipercable (the
"Seller Shares"), which constitute approximately 66% of Hipercable's outstanding
equity, of which 821,345 are owned by VTR and 105,000 are owned by CNT.
UIH owns 17,745 shares of Newcom through UIH Chile, Inc., which
constitutes 50% of Newcom's outstanding equity.
VTR owns 17,745 shares of Newcom (the "Newcom Shares"), which
constitutes 50% of Newcom's outstanding equity.
9
<PAGE>
Except as set forth in this Article Two, there are no outstanding or
authorized shares or other equity interests of Hipercable or Newcom or, except
as provided in this Agreement, the Shareholders Agreement or the Newcom
Shareholders Agreement, any rights to acquire any of the foregoing.
THREE: PROMISED AGREEMENTS
(a) Through this Agreement, the Parties agree to perform all actions
and execute the agreements set forth below (the "Promised Agreements").
(b) PROMISED AGREEMENTS. The Promised Agreements are as follows:
(i) AMENDMENT TO SHAREHOLDERS AGREEMENTS. UIH and the Sellers
agree to execute and deliver the Amendment to Shareholders Agreement and the
Amendment to Newcom Shareholders Agreement on the date hereof.
(ii) VALUATION: UIH and the Sellers agree to terminate the
Valuation immediately subject to the provisions of Article 4.
(iii) PURCHASE OF SELLER SHARES. Subject to the terms and
conditions of this Agreement, UIH or one or more Purchaser Designees (together
with UIH, the "UIH Parties") will, at the Closing, purchase from the Sellers all
of the Seller Shares and from VTR all of the Newcom Shares for the total
consideration provided in Section 4(b)(i), and each Party will complete the
other transactions required of such Party at the Closing.
(iv) REPAYMENT OF PROMISSORY NOTE. Subject to the terms and
conditions of this Agreement, UIH will, at the Closing, repay to VTR all sums
owing under the Promissory Note, including any accrued but unpaid interest
thereon through the Closing Date.
FOUR: CLOSING; TERMINATION
(a) CLOSING; CLOSING DATE. The closing of the purchase and sale of the
Seller Shares and the Newcom Shares (the "Closing") shall occur on the date (the
"Closing Date") that is five Business Days following the satisfaction or waiver
10
<PAGE>
of all conditions to the Closing (other than those that by their terms are to be
satisfied at the Closing, but subject to the satisfaction or waiver at or prior
to the Closing of all such conditions). The Parties agree this Agreement may be
terminated pursuant to Section 4(c)(ii) if the Closing has not occurred on or
before (i) the Initial Termination Date, or (ii) 30 days after the Initial
Termination Date if UIH has provided prior written notice to the Sellers (an
"Extension Notice") of its election, in the event that UIH has not obtained, but
reasonably expects to obtain, the Acquisition Financing, to extend the Initial
Termination Date up to an additional 30 days, such election to be at UIH's
option. If UIH delivers an Extension Notice in accordance with this Section
4(a), the Purchase Price shall be increased by the Additional Amount. In the
event that any such extension is due to a material breach by either of the
Sellers of its obligations hereunder, no Additional Amount shall be payable with
respect to such extension period.
(b) CLOSING TRANSACTIONS. At the Closing, the following shall occur:
(i) PAYMENT OF PURCHASE PRICE. The total consideration to be
paid to the Sellers for the purchase by the UIH Parties of the Seller Shares and
to VTR for the Newcom Shares (the "Consideration") shall be an amount equal to
the sum of (i) the Purchase Price PLUS (ii) the Additional Amount, if
applicable. As required by the Foreign Investment Regulations of Chile (DL 600),
the Consideration shall be paid in its Chilean currency equivalent calculated at
the rate of exchange actually obtained by the UIH Parties upon the exchange of
the Dollar amount of the Consideration against Chilean currency at a commercial
bank in Chile on the Closing Date. For this purpose, the commercial bank in
Chile shall be designated by the Sellers by means of a written notice to the UIH
Parties as soon as practicable prior to the Closing Date. Failing such
designation, or if the designated bank fails to complete the exchange
transaction, the UIH Parties shall be entitled to effect the exchange of the
Dollar amount of the Consideration into Chilean currency on the Closing Date at
any of the three largest commercial banks in Chile. US $1,500,000 of the
Purchase Price shall be allocated to the purchase of the Newcom Shares and US
$100,000 of the Purchase Price shall be allocated to payment in full of the
royalty under the License Agreement.
(ii) REPAYMENT OF PROMISSORY NOTE. UIH shall repay the
Promissory Note, according to its terms (including any interest accrued but
unpaid thereon through the Closing Date) by wire transfer of immediately
available funds to an account designated by VTR. VTR shall send written notice
to UIH designating such account not later than three Business Days prior to the
Closing Date.
(iii) UIH DOCUMENTS. UIH shall sign and deliver, or cause to
be delivered to Sellers, at the Closing, the following duly and fully executed
instruments, certificates, opinions and other documents:
(A) duly certified copies of resolutions of the Board
of Directors and, if required, the shareholders of each of the UIH
11
<PAGE>
Parties authorizing the execution, delivery and performance of this
Agreement and the Promised Agreements to which it is a party, which
resolutions shall be in full force and effect;
(B) a certificate signed by the President or a Vice
President of UIH certifying that (i) each of the conditions set forth
in Subsection (a)(ii) of Article Seven is then satisfied, and (ii) each
UIH Party has performed in all material respects all obligations to be
performed by it under this Agreement at or before the Closing; and
(C) opinions of counsel to UIH dated the Closing Date
in the forms attached as Annex D and E;
(iv) SELLER DOCUMENTS. Sellers shall sign and deliver, or
cause to be delivered, at the Closing, the following duly and fully executed
instruments, certificates, opinions and other documents:
(A) a duly executed settlement deed certifying that
the Promissory Note has been repaid in its entirety and no additional
amounts are due thereunder (the "Settlement Deed");
(B) duly certified copies of resolutions of the Board
of Directors and, if required, the shareholders of each of the Sellers
authorizing the execution, delivery and performance of this Agreement
and the Promised Agreements to which it is a party, which resolutions
shall be in full force and effect;
(C) a certificate signed by the President or a Vice
President of each Seller certifying that (i) each of the conditions
set forth in Subsection (b)(ii) of Article Seven is then satisfied, and
(ii) such Seller has performed in all material respects all obliga-
tions to be performed by it under this Agreement at or before the
Closing;
(D) opinions of counsel to VTR and CNT dated the
Closing Date, addressed to UIH in the forms attached as Annexes A,
B and C;
(E) the Indemnification Agreements, duly executed by
each of SBCI and Quinenco;
(F) the Public Deeds, duly executed by the Sellers;
(G) the License Agreement, duly executed by VTR and
Hipercable;
(H) the stock transfer ledger of Hipercable, each of
the Subsidiaries and Newcom, all minutes of meetings of each of the
board of directors and the shareholders of Hipercable, each of the
Subsidiaries and Newcom, and all other books and records of Hipercable,
each of the Subsidiaries and Newcom;
12
<PAGE>
(I) the certificates representing the Seller Shares
and the Newcom Shares in form reasonably acceptable to UIH;
(J) all documents and instruments required to
terminate the Technical Assistance Agreement, with respect to
Hipercable, the Subsidiaries and Newcom, and each other Related Party
Agreement, if any, the terms of which are less favorable to any of the
Companies or Newcom, as applicable, than would have been available in
an arms' length transaction on the date such contract was entered into,
in each case without any further obligation of any of the Companies or
Newcom except for any obligations owed with respect to any period prior
to the Closing; and
(K) such other documents and instruments as UIH may
reasonably request.
(c) EVENTS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(i) by mutual consent of the Parties;
(ii) by either Party, if the Closing shall not have
occurred on or prior to the Initial Termination Date
or, if UIH has delivered an Extension Notice pursuant
to Section 4(a), the date that is 30 days after the
Initial Termination Date, unless the failure to
effect the Closing by such time is due to the
material breach of any representation, warranty, or
covenant of such Party;
(iii) by either Party, if there shall be any law or
regulation of any competent authority that makes
consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited, or if any
judgment, injunction, order or decree of any
competent authority prohibiting such transaction is
entered and such judgment, injunction, order or
decree shall have become final and nonappealable;
(iv) by either Party if there is a material breach by the
other Party of any representation, warranty or
covenant; PROVIDED, that any such breach is not cured
(or cannot reasonably be expected to be cured) within
30 days following receipt by the breaching Party of
notice of such breach;
(v) by UIH upon sending written notice to Sellers of a
Final MAE Determination pursuant to Section 9(b).
13
<PAGE>
(d) EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to Section 4(c), or as required by applicable laws, subject
to this Section 4(d), all further obligations of the Parties under this
Agreement shall terminate on the date of such termination (the "Termination
Date") without further liability or obligation of either Party to the other
hereunder; PROVIDED, HOWEVER, that no Party shall be released from liability
hereunder if this Agreement is terminated and the transactions abandoned by
reason of (i) willful failure of such Party to have performed its obligations
hereunder or (ii) any knowing misrepresentation made by such Party of any matter
set forth herein, such liability not to exceed, in the aggregate for the UIH
Parties, on the one hand, and the Sellers, on the other hand, US$ 50,000,000.
Section 3(b)(i), 3(b)(ii), 4(d), 4(e), 4(f), and Articles 14 and 15, Section
16(a), Article 17 and Articles 19 through 23 (but only such Sections and
Articles) shall survive termination and shall remain in full force and effect.
Termination under this Section 4(d) shall not affect or limit any rights or
remedies of any of the parties to the Shareholders Agreement, the Newcom
Shareholders Agreement or the Original Promise Agreement under such agreements
with respect to any breach thereof.
(e) VALUATION UPON TERMINATION. In the event that this Agreement shall
be terminated pursuant to Section 4(c), or as required by applicable laws, each
of the Parties shall take such actions, and shall cause Hipercable to take such
actions, as are necessary to cause an Adjustment (as defined in the Original
Promise Agreement) to the UIH Equity Value (as defined in the Original Promise
Agreement) in accordance with clause (b) and the last paragraph of Article 11 of
the Original Promise Agreement, or at the election of VTR, by transferring
shares of Hipercable from VTR to the UIH Parties at a price of one Peso per
share if such transfer would not be in any way disadvantageous to UIH, in both
cases such that, following such Adjustment, the UIH Equity Value will be (i) 40%
if CNT has not executed the CNT Non-Compete Agreement, or (ii) 38% if CNT has
executed the CNT Non-Compete Agreement. The Parties shall cause the Adjustment
required under this Section 4(e) to be effected on or before the date that is 15
Business Days after the Termination Date. For purposes hereof, the term "CNT
Non-Compete Agreement" shall mean an Agreement in form and substance acceptable
to UIH and CNT pursuant to which CNT agrees to be bound by non-compete
provisions identical to the non-compete provisions contained in Section 5.1 of
the Shareholders Agreement as in effect on the day preceding the date hereof.
(f) PROMISSORY NOTE. In the event that this Agreement shall be
terminated pursuant to Section 4(c), or as required by applicable laws, UIH
shall have the option of (i) paying to VTR all amounts due and owing under the
Promissory Note, or (ii) having its ownership interest in Hipercable diluted in
accordance with the terms of the Promissory Note; PROVIDED, HOWEVER, that such
dilution shall occur only after giving effect to the Adjustment required under
Section 4(e). UIH shall give written notice to Sellers of its election hereunder
not less than 10 Business Days after any such termination. If UIH elects to
repay the Promissory Note under clause (i) of this Section 4(f), such payment
shall be made on or before the date that is 15 Business Days after the
14
<PAGE>
Termination Date by wire transfer of immediately available funds, in Dollars, to
an account designated by VTR not later than 12 Business Days after the
Termination Date. If UIH elects not to repay the Promissory Note but to be
diluted in accordance with the terms of the Promissory Note, such dilution shall
occur concurrently with, but after giving effect to, the Adjustment provided for
in Section 4(e) (i.e., after the UIH Equity Value has been adjusted to 40% or
38%, as applicable). Upon such payment or dilution, VTR shall duly execute and
deliver to UIH the Settlement Deed.
FIVE: REPRESENTATIONS AND WARRANTIES OF VTR
Each Seller severally as to such Seller, and not jointly, hereby
represents and warrants in favor of and covenants with UIH as set forth below:
(a) ORGANIZATION, CORPORATE POWER AND AUTHORIZATION. Such Seller is a
stock company duly organized and validly existing under the laws of Chile. Such
Seller has full corporate power and authority to enter into this Agreement and
the Promised Agreements and to perform its obligations and to consummate the
transactions contemplated by this Agreement and the Promised Agreements. The
execution, delivery and performance of this Agreement and the Promised
Agreements and the consummation of the transactions contemplated by this
Agreement and the Promised Agreements have been duly and validly authorized by
all necessary corporate actions on the part of such Seller. This Agreement is a
valid and binding obligation of such Seller and is enforceable against it in
accordance with its terms. When executed and delivered, each of the Promised
Agreements to which such Seller is a party will be a valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms. Each such Seller has previously delivered or made available to UIH
complete and accurate copies of all of its Governing Documents, as amended,
modified or restated to date and currently in effect.
(b) NO VIOLATION; CONSENTS. The execution and delivery of this
Agreement by such Seller, and the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby will not violate any
provision of the Governing Documents of such Seller or, assuming compliance with
the matters set forth on Schedule 5(b), any Law applicable to such Seller.
SCHEDULE 5(B) of this Agreement lists all Persons whose approval or consent, or
with whom the filing of any certificate, notice, application, report or other
document, is legally or contractually required, or is otherwise necessary, in
connection with the execution, delivery or performance of this Agreement and the
Promised Agreements by such Seller (any such approval, consent or filing
required to be obtained prior to the consummation of the transactions
contemplated hereunder, the "Seller Required Consents").
15
<PAGE>
(c) SELLER SHARES. The Seller Shares and the Newcom Shares to be
delivered to the UIH Parties at the Closing by such Seller pursuant to this
Agreement will, at the Closing, be duly authorized, validly issued and fully
paid, and will be free and clear of any Lien or Restriction except for any Lien
or Restriction created by any of the UIH Parties effective as of the Closing.
(d) NO PROCEEDINGS. Except as set forth in letter (e) of Schedule 5(b),
as of the date hereof, there are no actions, proceedings, claims or
investigations pending or to the knowledge of senior management of such Seller
threatened by or before any Governmental Authority to which such Seller is or
would be a party and which questions or would question the validity of this
Agreement or the Promised Agreements or seeks or would seek to restrain or
enjoin the consummation of the transactions contemplated by this Agreement or
the Promised Agreements.
(e) BROKERS, AGENTS, FINDERS, ETC. None of such Seller, nor any of its
Affiliates has employed or retained any broker, agent or finder, or agreed to
pay any finder's fee, commission or similar payment to any Person, on account of
this Agreement or the Promised Agreements or the transactions contemplated
hereby or thereby with respect to which UIH, Hipercable or Newcom or any
Affiliate of UIH, Hipercable or Newcom would be liable.
(f) FINANCIAL STATEMENTS. Sellers will deliver or cause to be delivered
to UIH on or before November 30, 1998, or as soon thereafter as is commercially
practicable, the audited consolidated balance sheet as of September 30, 1998,
and related consolidated statements of operations, stockholders equity and
changes in financial position (i) Hipercable and the Subsidiaries and (ii) of
Newcom, in each case for the nine months then ended (the "Hipercable Financial
Statements"). The Hipercable Financial Statements will present fairly in all
material respects the consolidated financial position and the results of
operations of (i) Hipercable and the Subsidiaries and (ii) Newcom, in each case
as of the dates and for the periods indicated, and will have been prepared in
accordance with GAAP. The Sellers shall bear the incremental costs incurred by
Hipercable and its Subsidiaries as a result of the audit undertaken to prepare
the Hipercable Financial Statements in addition to the year-end audit, it being
agreed that such incremental costs are UF 1,500 (one thousand five hundred).
(g) EMPLOYMENT MATTERS.
(i) Attached hereto as SCHEDULE 5(G)(I) is a list of all senior
managers of Hipercable as of the date hereof setting forth each such employee's
salary, position and number of years of employment with Hipercable. In addition,
Sellers have made available to UIH all employment agreements between such
employees and Hipercable. The Parties acknowledge that for purposes of this
Section 5(g)(i), senior managers of Hipercable are all employees of Hipercable,
any of the Subsidiaries or Newcom who have direct reporting responsibilities to
Alex Muller Arriagada or Jorge Salvatierra Pacheco. Except as set forth in
Schedule 5(g)(i), as of the date hereof no employee is a party to any material
16
<PAGE>
employment or consulting agreement or similar agreement with Hipercable, any
Subsidiary or Newcom. Schedule 5(g)(i) is complete and accurate in all material
respects as of the date hereof.
(ii) On or before the date that is thirty days after the date
hereof, such Seller will use its best efforts to cause Hipercable and Newcom, as
applicable, to deliver to UIH, to be attached hereto as SCHEDULE 5(G)(II), a
list of employees of Hipercable, each of the Subsidiaries and Newcom as of
August 31, 1998, such list to identify each employee's position, salary, number
of years of employment with Hipercable and the subject Subsidiary or Newcom, as
applicable. Upon delivery, such list will be complete and accurate in all
material respects.
(iii) The Parties acknowledge that certain employees of VTR
have provided services on behalf of Hipercable and the Subsidiaries but are not
employees of Hipercable any of the Subsidiaries or Newcom and such Persons will
not be deemed senior managers of Hipercable, Newcom or any Subsidiary.
(h) SHAREHOLDERS AGREEMENT. As of the date hereof, the senior
management of such Seller has no actual knowledge of any breach of the
Shareholders Agreement or the Newcom Shareholders Agreement by any of the UIH
Parties.
SIX: REPRESENTATIONS AND WARRANTIES OF UIH
Each of the UIH Parties jointly and severally represents and warrants
in favor of, and covenants with VTR and CNT as follows:
(a) ORGANIZATION, CORPORATE POWER AND AUTHORIZATION. Each UIH Party is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each UIH Party has full corporate
power and authority to enter into this Agreement and the Promised Agreements to
which it is a party and to perform its obligations and to consummate the
transactions contemplated by this Agreement and the Promised Agreements to which
it is a party. The execution, delivery and performance by such UIH Party of this
Agreement and the Promised Agreements to which it is a party and the
consummation of the transactions contemplated by this Agreement and the Promised
Agreements to which it is a party have been duly and validly authorized by all
necessary corporate actions on the part of such UIH Party. This Agreement is a
valid and binding obligation of each UIH Party and is enforceable against each
UIH Party in accordance with its terms. When executed and delivered, each of the
Promised Agreements to which such UIH Party is a party will be valid and binding
obligations of such UIH Party, enforceable against it in accordance with its
terms.
17
<PAGE>
(b) NO VIOLATION; CONSENTS. The execution and delivery of this
Agreement by each UIH Party, and the performance of its obligations hereunder
and the consummation of the transactions contemplated hereby will not violate
any provision of the Governing Documents of such UIH Party or, assuming
compliance with the matters set forth on Schedule 6(b), any Law applicable to
such UIH Party. SCHEDULE 6(B) of this Agreement lists all Persons whose approval
or consent, or with whom the filing of any certificate, notice, application,
report or other document, is legally or contractually required, or is otherwise
necessary, in connection with the execution, delivery or performance of this
Agreement and the Promised Agreements by each UIH Party (any such approval,
consent or filing required to be obtained prior to the consummation of the
transactions contemplated hereunder, the "UIH Required Consents").
(c) BROKERS, AGENTS, FINDERS, ETC. Neither any UIH Party nor any of its
Affiliates (other than Hipercable, the Subsidiaries and Newcom, as to which each
UIH Party makes no representation) has employed or retained any broker, agent or
finder, or agreed to pay any finder's fee, commission or similar payment to any
Person, on account of this Agreement or the Promised Agreements or the
transactions contemplated hereby or thereby with respect to which the Sellers or
any Affiliate of the Sellers would be liable.
(d) NO PROCEEDINGS. Except as set forth in letter (f) of Schedule 6(b),
as of the date hereof, there are no actions, proceedings, claims or
investigations pending or to the knowledge of such UIH Party's senior management
threatened by or before any Governmental Authority to which such UIH Party is or
would be a party and which questions or would question the validity of this
Agreement or the Promised Agreements or seeks or would seek to restrain or
enjoin the consummation of the transactions contemplated by this Agreement or
the Promised Agreements.
(e) SHAREHOLDERS AGREEMENT. As of the date hereof, the senior
management of each UIH Party has no actual knowledge of any breach of the
Shareholders Agreement or the Newcom Shareholders Agreement by any of the
Sellers.
SEVEN: CONDITIONS TO CLOSING
(a) CONDITIONS TO THE OBLIGATIONS OF THE SELLERS TO CLOSE.
The obligation of the Sellers to effect the Closing is subject to the
satisfaction (or waiver by the Sellers) prior to the Closing of the following
conditions:
(i) RECEIPT OF CONSENTS. All of the Required Consents shall
have been obtained or, in the case of filings, timely made, and shall be in full
force and effect.
18
<PAGE>
(ii) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. Each of
the representations and warranties made by UIH in Article Six and in the
Promised Agreements shall be true and complete in all material respects when
made and as of the Closing, with the same effect as if made at and as of the
time of Closing (except to the extent a representation or warranty is limited by
its terms to a specific date).
(iii) NO GOVERNMENTAL PROCEEDINGS. There shall not exist any
provision of applicable Law, or any Judgment, preventing consummation of the
transactions contemplated by this Agreement or the Promised Agreements,
questioning the legality or validity of such transactions or otherwise alleging
damage as the result of such transactions. None of the Parties to this Agreement
shall have been notified of a present intention by any Governmental Authority,
or the legal representative thereof, to commence an action or proceeding to
challenge or enjoin consummation of any of the transactions contemplated by this
Agreement or the Promised Agreements.
(iv) DUE DILIGENCE. UIH shall not have provided written notice
to Sellers of a Final MAE Determination.
(v) COMPLIANCE WITH COVENANTS. Each of the UIH Parties shall
have complied in all material respects with its covenants under this Agreement.
(b) CONDITIONS TO THE OBLIGATION OF UIH TO CLOSE. The obligation of the
UIH Parties to effect the Closing is subject to the satisfaction (or waiver by
the UIH Parties) prior to the Closing, of the following conditions:
(i) RECEIPT OF CONSENTS. All of the Required Consents shall
have been obtained or, in the case of filings, timely made, and shall be in full
force and effect.
(ii) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. Each of
the representations and warranties made by Sellers in Article Five or in the
Promised Agreements shall be true and complete in all material respects when
made and as of the Closing, with the same effect as if made at and as of the
time of Closing.
(iii) NO GOVERNMENTAL PROCEEDINGS. There shall not exist any
provision of applicable Law, or any Judgment, preventing consummation of the
transactions contemplated by this Agreement or the Promised Agreements,
questioning the legality or validity of such transactions or otherwise alleging
damage as the result of such transactions. None of the Parties to this Agreement
shall have been notified of a present intention by any Governmental Authority,
or the legal representative thereof, to commence an action or proceeding to
challenge or enjoin consummation of any of the transactions contemplated by this
Agreement or the Promised Agreements.
19
<PAGE>
(iv) FINANCING. UIH shall have received the Acquisition
Financing.
(v) NO MATERIAL ADVERSE EFFECT. There shall not have occurred
any events or circumstances that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the financial
condition, business, prospects or Assets of Hipercable, the Subsidiaries and
Newcom taken as a whole.
(vi) DUE DILIGENCE. UIH shall not have provided written notice
to Sellers of a Final MAE Determination.
(vii) COMPLIANCE WITH COVENANTS. The Sellers shall have
complied in all material respects with the Sellers' covenants under this
Agreement.
(viii) RELATED PARTY AGREEMENTS. Sellers shall have
terminated, or caused to be terminated, the Technical Assistance Agreement with
respect to Hipercable, Newcom and the Subsidiaries, and each other Related Party
Agreement, if any, the terms of which are less favorable to Hipercable, any
Subsidiary or Newcom, as applicable, than would have been available in an arms'
length transaction on the date such contract was entered into, in each case
without further obligation thereunder on the part of any of the Companies or
Newcom except with respect to any obligations with respect to any period prior
to the Closing.
(ix) EMPLOYMENT MATTERS. Sellers shall have complied with the
covenants set forth under Section 9(c).
EIGHT: CONDUCT PENDING THE CLOSING
Pending the Closing, and except as otherwise approved by the Parties in
writing, the Parties agree as set forth below.
(a) BUSINESS IN ORDINARY COURSE. The Sellers shall cause the Companies
and Newcom (i) to conduct their business in the ordinary course and in
compliance with all duly approved budgets and the Shareholders Agreement and the
Newcom Shareholders Agreement, as applicable, and (ii) not to make any material
management change or corporate reorganization without UIH's prior written
consent.
(b) REPRESENTATION AND WARRANTIES. The Sellers, on the one hand, and
the UIH Parties, on the other hand, will not take any action or omit to take any
action that would reasonably be expected to result in any of the representations
and warranties made in Articles Five or Six, respectively, being untrue or
incomplete in any material respect.
20
<PAGE>
(c) LITIGATION DURING INTERIM PERIOD. Each Party will advise the other
Party promptly of the assertion, commencement or threat of any claim,
litigation, proceeding or investigation of which the senior management of such
Party has knowledge where any material restraining order, injunction,
preliminary injunction, monetary damages or any other Judgment is or may be
sought to which any of the Companies or Newcom is a party or, to the knowledge
of the senior management of such Party, has been threatened to be made a party.
(d) FULL ACCESS. From the date hereof until the earlier of the Closing
or the termination of this Agreement, Sellers shall cause Hipercable, the
Subsidiaries and Newcom to afford to UIH as part of the Due Diligence Review
under Section 9(b), and each Person conducting a bona fide investigation of the
Companies and Newcom in connection with the Acquisition Financing (collectively,
the "Financing Parties"), and their respective bankers, attorneys, accountants
and other authorized representatives, full access to the offices, properties,
personnel, books and records of Hipercable, the Subsidiaries and Newcom, during
normal business hours and upon reasonable notice, in order that UIH and the
Financing Parties may have full opportunity to make such reasonable
investigations as they shall desire to make of the affairs of the Companies and
Newcom. Such access shall be subject to reasonable procedures agreed to by
Hipercable and UIH to ensure minimum disruption of the ongoing business
operations of Hipercable; provided however, that such procedures shall not in
any way prohibit, materially impair or unreasonably delay access by UIH or the
Financing Parties to personnel, properties or books and records. The Parties
agree to coordinate all requests for information through one or more executive
officers of Hipercable designated by Sellers and reasonably acceptable to UIH;
provided, however, that such coordination shall not in any way prohibit,
materially impair or unreasonably delay access by UIH or the Financing Parties
to personnel, properties or books and records. UIH and each other Person
participating in such investigation shall first execute a non-disclosure
agreement with respect to the receipt of confidential information related to any
of the Companies or Newcom, in such form as is customary for similar
investigations (provided that with respect to UIH, such non-disclosure agreement
shall only apply to confidential information regarding the Sellers or their
respective shareholders). Sellers will cause the officers, employees and agents
of the Companies and Newcom, and will use reasonable efforts to cause the
attorneys and accountants of the Companies and Newcom, to cooperate fully with
UIH and the Financing Parties.
(e) ASSISTANCE IN OBTAINING REQUIRED APPROVALS. Each of the Parties
shall take, and shall use all reasonable efforts to cause the Companies to take
all reasonable legal and regulatory steps to obtain the Required Consents prior
to the Closing, including, without limitation, any applicable consents of the
Anti-Monopoly Commission and the Foreign Investment Commission, and will keep
each other fully informed of their progress in such regard. Each Party will
cooperate with the other Party and will use all reasonable efforts to obtain, as
promptly as practicable, all of the Required Consents and to maintain each such
Required Consent in full force and effect through the Closing Date. Each of the
21
<PAGE>
Parties shall use all reasonable efforts to cause the parties to the ING Credit
Facility to agree upon all Required Consents and/or amendments thereto, pursuant
to this Agreement and the Promised Agreements.
(f) PROHIBITION ON DIVIDEND PAYMENTS AND ISSUANCE OR REPURCHASE OF
SHARES; REPAYMENT OF THIRD PARTY DEBT. Sellers shall cause each of the Companies
and Newcom not to pay any dividends, redeem or repurchase any shares of its
capital stock, issue any equity or debt securities or any rights with respect
thereto or reduce its capital except, as permitted under the Shareholders
Agreement or the Newcom Shareholders Agreement, as applicable. No Third Party
Debt may be repaid (other than interest and principal paid as it becomes due and
owing under the existing terms of such Third Party Debt).
(g) DELIVER FINANCIAL STATEMENTS. The Sellers will cause Hipercable and
Newcom to provide to UIH all financial statements and records, including balance
sheets, statements of operations, changes in shareholders' equity and statements
of change in the financial position of the Companies and Newcom in accordance
with past practice prior to the Closing, but in any event no less frequently
than monthly. It is expressly understood that, except for the representations
and warranties set forth in Article 5, the Sellers make no representation or
warranty with respect to the accuracy or completeness of the information set
forth in such materials.
(h) KEEPING THE PARTIES INFORMED. Each Party will promptly inform the
other Party in writing of the occurrence of any event that would reasonably be
expected to cause any material breach of the representations or warranties made
by such Party in this Agreement. Each Party will also keep the other Party
informed regarding the status of any Required Consents and filings and any other
matters relating to this Agreement or the transactions contemplated by this
Agreement.
(i) SHAREHOLDERS AGREEMENTS. Each of the Parties will comply with their
respective obligations under the Shareholders Agreement and under the Newcom
Shareholders Agreement.
(j) ACQUISITION FINANCING: UIH will use reasonable efforts to obtain
the Acquisition Financing as promptly as commercially practicable and prior to
the Initial Termination Date.
(k) LICENSE AGREEMENT. On the Closing Date, VTR will execute and
deliver the License Agreement and will have full legal and corporate authority
to perform each of its obligations thereunder. Each of the representations and
warranties of VTR set forth in the License Agreement will be true and accurate
at and as of the Closing Date. The Parties will cause each of Hipercable, the
Subsidiaries and Newcom not to transfer or encumber any ownership or other
interest to trademarks and tradenames currently owned or utilized by Hipercable,
any of the Subsidiaries or Newcom after the date hereof, it being understood
22
<PAGE>
that such trademarks and/or tradenames are currently pledged or in the process
of being pledged pursuant to the ING Credit Facility to secure outstanding
indebtedness of such parties.
(l) PURCHASER DESIGNEES. Promptly after making a final determination
regarding which, if any, Affiliates of UIH will be Purchaser Designees, UIH
shall provide written notice thereof to Sellers.
NINE: AGREEMENTS REGARDING CERTAIN OTHER MATTERS
(a) FUNDING OF THE COMPANIES PENDING THE CLOSING. From the date hereof
through the earlier of (i) the Closing, or (ii) termination of this Agreement,
interim funding of Hipercable, the Subsidiaries and Newcom shall be in
accordance with any duly approved budgets, the Shareholders Agreement and the
Newcom Shareholders Agreement, as applicable. During such period, VTR, CNT and
UIH each agrees to contribute cash funds to Hipercable in accordance with the
Annual Budget, the Shareholders Agreement and not to elect to have its ownership
interest in Hipercable diluted in lieu of making such cash contributions.
(b) DUE DILIGENCE REVIEW. From the date hereof through the Closing
Date, UIH shall be entitled to conduct a comprehensive review ("Due Diligence
Review") of the Companies and Newcom, in accordance with Section 8(d),
including, without limitation, all aspects of the ownership, operations,
management, Assets, Contracts, rights, liabilities, finances of the Companies
and Newcom and all other matters that UIH believes in good faith to be relevant
to an assessment of the value of the Companies and Newcom. If on or prior to the
Closing, UIH reasonably determines that (a) the unaudited consolidated financial
statements of Hipercable and the Subsidiaries as of and for the period ended
June 30, 1998 (attached hereto as Schedule 9(b)) were not fairly presented in
all material respects in accordance with Chilean generally accepted accounting
principles or (b) Hipercable, the Subsidiaries and Newcom do not own or have in
full force and effect all authorizations, permits, Assets, Contracts, or
Licenses necessary to carry on the business of Hipercable, any of the
Subsidiaries or Newcom as presently conducted or as contemplated by the Business
Plan (subject to contingencies in the Business Plan), or Hipercable, any of the
Subsidiaries or Newcom is in breach or noncompliance of any such authorizations,
permits, Contracts, Licenses or applicable Laws or any litigation or
governmental proceeding exists or is pending or threatened with respect to which
Hipercable, any of the Subsidiaries or Newcom is a party, in each case (a) or
(b) which has had or would reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the financial condition, business,
prospects or assets of Hipercable, the Subsidiaries and Newcom taken as a whole
(a "Material Adverse Effect"), UIH will promptly notify the Sellers of such
determination (a "Due Diligence MAE Determination"). If Hipercable and Newcom
have not within a reasonable period of time after receipt of the Due Diligence
MAE Determination taken action to remedy any matters described in the Due
Diligence MAE Determination so that such matters do not have or would not
23
<PAGE>
reasonably be expected to have a Material Adverse Effect, UIH may at any time
thereafter but prior to the Closing Date provide written notice to Sellers (a
"Final MAE Determination") that a condition to Closing has not been satisfied
and the Parties shall have no obligation to Close.
(c) NO SOLICITATION OF HIPERCABLE EMPLOYEES.
(i) Each of the Sellers agrees that neither it nor any of its
Affiliates will employ, contract with (as a consultant, advisor or otherwise) or
solicit the employment or services of any of Hipercable's senior management
personnel for a period of one year beginning on the date hereof (the "Transition
Period"); provided, however, that this Section 9(c) will not prohibit any Seller
from making a solicitation to the general public through an advertisement in a
newspaper or another publication (print or electronic) or otherwise as long as
no member of Hipercable's senior management is employed by, or provides services
to, any Seller or their respective Affiliates during the Transition Period. For
purposes of this clause (c)(i), "Hipercable's senior management" refers to the
senior managers of Hipercable as defined in Section 5(g)(i), together with their
respective successors.
(ii) From and after the date hereof, Sellers shall use
reasonable efforts (which shall not require any payments by Sellers to the Key
Employees) to cause the Key Employees, as soon as practicable after the date
hereof but in no event later than the date that is 60 days after the date
hereof, to enter into employment agreements with Hipercable. The Key Employees
that voluntarily decide to execute employment agreements with Hipercable, shall
be hired by Hipercable on terms and conditions no less favorable than those set
forth in their current employment agreements, in which case Hipercable will
assume the obligations regarding the years of employment of the Key Employees
under their current employment agreements.
(iii) In the event any of the Key Employees does not enter
into employment agreements with Hipercable, after the expiration of the 60 day
period mentioned in Section 9(c)(ii) and for the remainder of the Transition
Period, the Sellers must reassign such Key Employees, to the extent permitted by
the relevant employment agreements or upon agreement with such employees, to a
position that is not directly competitive with the business of the Companies or
Newcom. In the event that the abovementioned amendment of the employment
agreements or reassignation does not take place, the Sellers must terminate
their employment bond with such employees and shall not reemploy the Key
Employees for the remainder of the Transition Period. In addition, each Seller
shall ensure that such Key Employees do not, during the Transition Period,
advise, consult with or assist either Seller, or any Affiliate of either Seller,
in any manner with respect to any business that is directly competitive with the
business of the Companies or Newcom.
24
<PAGE>
(iv) As soon as practicable, and in any event not later than
60 days after the date hereof, Sellers and UIH shall take such actions as are
necessary, and as provided for in the Shareholders Agreement, to appoint a new
General Manager of Hipercable.
TEN: POST CLOSING ADJUSTMENT
Not less than three Business Days prior to the Closing Date, Sellers
shall provide written certification to UIH of Third Party Debt as of the Closing
(calculated at the Exchange Rate in effect on the date that is four Business
Days prior to the Closing), providing a reasonably detailed description of each
material component of such Third Party Debt. Not less than 30 days following the
Closing, nor more than 90 days following the Closing, UIH shall notify the
Sellers of its determination of the amount of Third Party Debt at Closing
("Adjustment Notice") providing a reasonably detailed calculation of such Third
Party Debt and whether any adjustment to the Purchase Price is required as a
result of the amount of such Third Party Debt. Promptly following the receipt of
the Adjustment Notice, the Sellers shall verify such calculation of Third Party
Debt and UIH shall provide complete access to the records of the Companies to
the Sellers and their accountants for the purpose of such verification, using
procedures similar to those set forth in Section 8(d) with respect to the Due
Diligence Review. Not later than 30 days after receipt of the Adjustment Notice
the Sellers shall notify UIH in writing (the "Response Notice") as to whether
they agree with the calculation in the Adjustment Notice. If Sellers fail to
provide such Response Notice within 30 days of receipt of the Adjustment Notice,
the calculation of Third Party Debt set forth in the Adjustment Notice shall be
final and binding on both Parties. If Sellers agree with the calculation in the
Adjustment Notice, or if Sellers fail to deliver a Response Notice within 30
days after receipt of the Adjustment Notice, the Sellers or the UIH Parties, as
the case may be, shall promptly make any payments required as a result of the
amount of the Third Party Debt at Closing. If the Sellers disagree, they shall
include in the Response Notice a reasonably detailed calculation of the amount
of Third Party Debt that they assert existed at Closing. The Parties shall
promptly attempt to reconcile their respective determinations as to the amount
of Third Party Debt as of Closing. If the Parties are unable to agree upon the
amount of Third Party Debt within 20 days after receipt of the Response Notice,
either Party may refer the matter to KPMG Peat Marwick, LLP or another
independent certified public accountant acceptable to the Parties, who shall
promptly determine the amount of Third Party Debt at the Closing, and whose
decision shall be final and binding upon both Parties. Any adjustment to the
Purchase Price shall be paid within 10 days following the date that the
accountants communicate the amount of Third Party Debt at the Closing to the
Parties. The Parties acknowledge that payments required under this Article Ten
are not subject to any limitation set forth in Article 13.
25
<PAGE>
ELEVEN: RIGHT OF FIRST REFUSAL
(a) RIGHT OF FIRST REFUSAL. If, at any time on or before the date that
is three years from the date hereof, VTR desires to sell, assign, or otherwise
transfer (each, a "Transfer"), directly or indirectly, any or all of its shares
of capital stock of CNT or any rights in connection therewith ("CNT Shares")
pursuant to a bona fide offer (the "Bona Fide Offer") from any Person other than
UIH, VTR or any of their respective Affiliates (the "Proposed Transferee"), it
shall first submit a written offer (the "Offer") to Transfer such CNT Shares
(the "Offered Shares") to the UIH Parties on the same terms and conditions as
set forth in the Bona Fide Offer. The Offer shall set forth all material terms
included in the Bona Fide Offer. The Offer shall provide that the UIH Parties
shall be afforded the same rights to conduct a due diligence investigation as
the Proposed Transferee, which investigation will begin as soon as possible
after delivery of the Offer. The Offer shall not include any terms not included
in the Bona Fide Offer. The Offer shall further state that the UIH Parties may
acquire, in accordance with the provisions of this Agreement, all (but not fewer
than all) of the Offered Shares on the terms and other conditions set forth
therein. If any portion of the consideration offered in the Bona Fide Offer is
not in cash, the value of such consideration shall be deemed for all purposes
under this Agreement to be the value determined in accordance with an appraisal
conducted by an independent appraiser agreed upon by UIH and VTR. No Transfer to
an Affiliate of VTR (an "Affiliate Transferee") shall be permitted hereunder
unless (i) such Affiliate Transferee shall first agree in writing to be bound by
the terms of this Article 11, and (ii) Sellers guarantee to UIH performance of,
and remain fully liable for any breach by, such Affiliate Transferee of its
obligations as set forth in this Article 11. For purposes hereof, any event or
circumstance that results in a change of control of VTR or an Affiliate
Transferee shall be deemed a Transfer of CNT Shares subject to this Article 11.
A change of control shall have occurred with respect to VTR or an Affiliate
Transferee if at any time VTR or such Affiliate Transferee ceases to be
controlled, directly or indirectly, by one or more members of the VTR Control
Group.
(b) CONFIRMATION OF BONA FIDE OFFER. UIH shall be permitted to review
the terms of the Bona Fide Offer to confirm that it is bona fide and subject
only to conditions that would reasonably be expected to be satisfied, by review
of the documents involved in such Bona Fide Offer including any financing
required thereunder. If review of such documents and of such financing by UIH
would violate a confidentiality obligation of VTR to the Proposed Transferee, or
of the Proposed Transferee to any third party, UIH shall designate a recognized
investment banker, law firm or both (the "UIH Advisors"), each reasonably
satisfactory to VTR, who shall at UIH's expense confirm (i) that the offer
contains and accurately reflects all material terms and conditions set forth in
the Bona Fide Offer (including all written documents between VTR and the
Proposed Transferee related to the Bona Fide Offer) and that such terms and
conditions are no more favorable to the Proposed Transferee than the terms and
conditions set forth in the Offer, (ii) that there are no terms or conditions
included in the Offer that are not included in the Bona Fide Offer, and (iii)
26
<PAGE>
that financing has been obtained, subject to no condition which, in the
reasonable judgment such UIH Advisors, is likely to be unsatisfied, or based on
the evidence provided, such UIH Advisors expect that financing for the Transfer
to the Proposed Transferee will be obtained. The determination of the UIH
Advisors shall not affect the right of VTR to sell the Offered Shares to the
Proposed Transferee in accordance with the terms of this Article 11 if no UIH
Party elects to purchase the Offered Shares within the 60-day period set forth
in Section 11(c) by delivering notice of such election in accordance with
Section 11(c); provided, however, that in the event that prior to the end of
such 60-day period, UIH delivers written notice to VTR that any material term
applicable to the sale to the Proposed Transferee has not been included in the
Offer or has not been accurately reflected in such Offer, VTR shall revise the
Offer and UIH Party shall be provided a reasonable time to respond to such
revised Offer. As soon as practicable after receipt of notice by UIH that it has
designated the UIH Advisors under this Section 11(b), VTR shall deliver to each
such designee copies of the Bona Fide Offer and all written materials related to
the Bona Fide Offer, subject to the UIH Advisors executing standard and
customary confidentiality agreements, which agreements shall be delivered to
such UIH Advisors by VTR within three Business Days after receipt of notice from
UIH of their designation. The Parties shall use all commercially reasonable
efforts to cause such confidentiality agreements to be executed as soon as
possible after delivery of the Offer Notice. In the event that such agreements
are not executed within five days after UIH notifies VTR of the identity of the
UIH Advisors, unless such failure to execute the agreements is caused by the
unreasonable failure to execute such agreements by the UIH Advisors, the 60-day
period within which the UIH Parties must deliver a Purchase Notice shall be
extended for a number of days equal to the total number of days required to
obtain the execution of the confidentiality agreements by all parties thereto.
(c) ELECTION TO PURCHASE; CLOSING. If one or more of the UIH Parties
elects to purchase the Offered Shares in accordance with the terms of the Offer,
the subject UIH Parties shall communicate in writing such election to purchase
(a "Purchase Notice") to VTR within 60 days of the date the Offer was made. VTR
agrees that any Purchase Notice delivered by any UIH Party will provide that the
Offered Shares must be delivered to such UIH Party free and clear of any Liens
or Restrictions including, without limitation, the Pledge but excluding Liens or
Restrictions created by any of the UIH Parties effective as of the Closing, and
that such condition shall be deemed to be in accordance with the terms of the
Offer, even if a similar qualification is not included in the Bona Fide Offer.
Such election shall be irrevocable, valid, legally binding and enforceable
against the UIH Parties (to the same extent as the Bona Fide Offer would, upon
acceptance thereof by Sellers, be irrevocable, valid, legally binding and
enforceable against the Proposed Transferee) subject to the obtaining of
required regulatory approvals and the expiration of any waiting periods mandated
by applicable Law, and the Parties agree to cooperate in making any filings and
obtaining any such approvals to allow the UIH Parties to exercise their rights
hereunder. The Transfer of the Offered Shares to the subject UIH Parties
pursuant to this Section 11(c) shall be made at 11:00 A.M. Chile time at the
principal offices of UIH in Santiago on the later of (i) the date that is 120
27
<PAGE>
days following the date the subject UIH Parties deliver the Purchase Notice to
VTR (or if not a Business Day, then on the next succeeding Business Day) and
(ii) the date that is five Business Days after all regulatory approvals for such
transaction have been obtained and any applicable waiting period has expired.
Such Transfer shall be effected by VTR's delivery to the subject UIH Parties of
a certificate or certificates evidencing the Offered Shares to be purchased
together with an executed contract for Transfer containing the representations,
warranties, covenants and all other terms included in the Offer, and the
delivery by such UIH Parties to VTR of the purchase price therefor in cash, by
wire transfer of immediately available funds to an account designated by VTR,
which account shall be designated at least three Business Days prior to such
closing date.
(d) SALE UPON ELECTION NOT TO PURCHASE. In case none of the UIH Parties
elects to accept the Offer, or if such 60-day period of acceptance lapses
without any of the UIH Parties electing to purchase the Offered Shares in
accordance with Section 11(c), all (but not fewer than all) of the Offered
Shares may be transferred by VTR to the Proposed Transferee at any time prior to
the later of (i) the date 180 days after the date the Offer was rejected in
writing or is deemed to have been rejected by not having been accepted within
the 60-day period specified in Section 11(c), or (ii) the date five Business
Days after all regulatory approvals for such transaction have been obtained and
any applicable waiting period has expired with the limitation that the same
number of shares as offered to the UIH Parties shall be Transferred to the
Proposed Transferee (x) at the same or higher aggregate price or price per
Offered Share as set forth in the Offer, (y) subject to all of the terms and
conditions set forth in the Offer, and (z) subject to no material terms more
favorable to the Proposed Transferee than those set forth in the Offer. If the
Proposed Transferee does not carry out its purchase within the 180-day period
referred to above, or else withdraws its offer or introduces any changes thereto
that would be inconsistent with the limitation set forth in the immediately
preceding sentence, the Offered Shares may not be sold, assigned or otherwise
transferred unless previously offered to the UIH Parties pursuant to this
Article 11. Any Offered Shares that go unsold within such period shall continue
subject to the requirements of this Article 11.
(e) NO PLEDGE OF SHARES. For a period of three years beginning on the
date hereof, VTR shall not pledge or encumber, or permit to exist any Lien or
Restriction (other than the Pledge or the Pledge Agreement) on or with respect
to, any CNT Shares owned by VTR. During such three-year period, VTR shall not
amend or modify the Pledge or consent to any such amendment or modification
(except for any amendment or modification releasing CNT Shares which serve as
Security under the Pledge), without the prior written consent of UIH, which
consent shall not be unreasonably withheld or delayed.
(f) DEFAULT UNDER PLEDGE. If at any time during the three-year period
beginning on the date hereof, senior management of VTR becomes aware that there
has occurred or is reasonably likely to occur any event or circumstance (each a
"Default") that permits or would permit CTC to exercise any right under the
28
<PAGE>
Pledge Agreement (an "Execution Right") to execute against any CNT Shares
pledged as collateral thereunder (whether or not CTC's ability to exercise such
right is subject to any notice requirement, cure period, compliance with
foreclosure or similar procedures under applicable Law, or any similar
requirement), VTR shall as soon as feasible provide written notice to UIH of the
Default and of the terms and requirements applicable to the exercise by CTC of
the Execution Right. At such time VTR shall, to the maximum extent permitted by
applicable Law, take one or more of the following remedial actions: (i) repay
the Pledge Agreement in full and release the Pledge, (ii) cause the CNT Shares
to be released from the Pledge by substituting other collateral therefor, (iii)
cure the Default, or (iv) provide UIH with the option of purchasing all of the
CNT Shares owned by VTR (including the CNT Shares subject to the Pledge) to UIH
for a purchase price equal to (A) the total number of CNT Shares to be
purchased, multiplied by (B) the CNT Share Price; provided that in connection
with such purchase UIH shall repay the entire outstanding balance on the Loan,
such repayment amount to be deducted from the CNT Purchase Price and the Pledge
shall be released in its entirety prior to or simultaneously with such
repayment. For purposes hereof, the term "CNT Share Price" shall mean the
average closing price for CNT Shares for the thirty-day period ending on the
date immediately preceding the date of the closing on the purchase of the CNT
Shares as reported by the Bolsa de Comercio de Santiago.
TWELVE: SURVIVAL
Any breach of a representation, warranty, covenant or agreement
involving actual fraud will survive the Closing for the maximum period provided
for under Chilean law. The representations and warranties contained in Section
5(f) shall survive the Closing and will terminate on the date that is one year
after the date of delivery of the Hipercable Financial Statements to UIH
pursuant to Section 5(f). All other representations, warranties and covenants of
the Parties in this Agreement will survive the Closing for three years after the
date hereof. A claim under this Agreement will be timely and may be pursued so
long as the claim is asserted through written notice to the other Party given
during the period pursuant to which such representation, warranty or covenant
survives.
THIRTEEN: INDEMNIFICATION
(a) GENERAL. The UIH Parties jointly and severally, and the Sellers,
severally and not jointly (the "Indemnifying Party") agree to indemnify and hold
harmless the other Party, any entity controlling, controlled by or under common
control with such Party, and all directors, officers, stockholders, employees
and agents of any of the foregoing (the "Indemnified Persons") from and against
all losses, claims, demands, damages, Judgments, costs, liabilities (or actions
29
<PAGE>
or proceedings in respect thereof) and expenses (including, without limitation,
reasonable attorneys' fees and expenses incurred in investigating, preparing,
defending against or prosecuting any litigation or claim indemnified against
under this Agreement) (collectively "Losses") of any kind paid, incurred or
suffered as a result of, relating to or arising out of (i) the inaccuracy when
made or deemed made of any representation or warranty made by the Indemnifying
Party in or pursuant to this Agreement, and (ii) the failure by the Indemnifying
Party to comply with any of its obligations under this Agreement.
(b) NOTICE; DEFENSE OF THIRD PARTY CLAIMS. Any Person that wishes to
assert the right to be indemnified under this Article 13 with respect to any
claim or demand or action by a third party against such Indemnified Person (a
"Third Party Claim") in respect of which a claim may be made against an
Indemnifying Party shall notify the Indemnifying Party as soon as practicable of
any such claim or demand or the commencement of such action (in any event such
Person shall use its best efforts to provide such notice within 10 days), but
the failure so to notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability that it may have to any Indemnified Person
unless, and only to the extent that, such failure results in prejudice to the
Indemnifying Party in the conduct of the defense of such claim. If any such
action is brought against any Indemnified Person and it notifies the
Indemnifying Party of the commencement thereof, the Indemnifying Party will be
entitled to participate in and, to the extent that it elects by delivering
written notice to the Indemnified Person within 15 days after receiving notice
from the Indemnified Person of the assertion of such claim, to assume the
defense of the action, with counsel reasonably satisfactory to the Indemnified
Person, and after such notice from the Indemnifying Party to the Indemnified
Person, the Indemnifying Party will not be liable to the Indemnified Person for
any legal or other expenses except as provided below. The Indemnified Person
shall not settle, compromise or discharge any claim or demand for which it is
indemnified hereunder or admit to any liability with respect to such claim or
demand without the prior written consent of the Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Person will have the right to
employ its own counsel and to participate in the defense or settlement in any
such action, but the fees, expenses and other charges of such counsel will be at
the expense of such Indemnified Person unless (i) otherwise agreed in writing by
the Indemnifying Parties, or (ii) a material conflict or potential material
conflict exists (based on written advice of counsel to the Indemnified Person)
between the Indemnified Person and the Indemnifying Party in the defense of such
action, or (iii) the Indemnifying Party has not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action. In each of the cases specified in
clauses (i) through (iii) of the preceding sentence, the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
Indemnifying Party, but the Indemnifying Party shall not be obligated to pay the
fees, disbursements or other charges of more than one counsel for all
Indemnified Persons in respect of any action or series of related actions. All
such fees, disbursements and other charges will be reimbursed by the
Indemnifying Party promptly as they are incurred. An Indemnifying Party shall
not, without the prior written consent of each person entitled to
30
<PAGE>
indemnification hereunder, effect any settlement of any pending or threatened
action in respect of which such person is or could have been a party and
indemnification could have been sought hereunder from such Indemnifying Party,
unless the settlement includes an unconditional release of such person from all
liability in respect of claims that are the subject matter of such action.
Nothing in this Section 13(b) shall apply to or otherwise affect the right of
Indemnified Persons to be indemnified hereunder for Losses incurred by such
Indemnified Persons which do not result from Third Party Claims, provided notice
of such claims is given in accordance with Article 12.
(c) LIMITATION ON SELLERS' LIABILITY.
(i) Subject to Section 13(e), VTR shall be liable to the
Indemnified Persons for any Losses only to the extent such Losses exceed an
aggregate amount equal to $5,000,000 or the foreign currency equivalent thereof
measured at the Exchange Rate as of the date of such Loss (the "DEDUCTIBLE
AMOUNT") and then only for Losses in excess of the Deductible Amount up to an
aggregate maximum amount equal to 89.3% of the Purchase Price (the "VTR MAXIMUM
AMOUNT") or the foreign currency equivalent thereof measured at the Exchange
Rate as of the date of payment.
(ii) Subject to Section 13(e), CNT shall be liable to the
Indemnified Persons for any Losses only to the extent such Losses exceed an
aggregate amount equal to the Deductible Amount and then only for Losses in
excess of the Deductible Amount up to an aggregate maximum amount equal to 10.7%
of the Purchase Price (the "CNT MAXIMUM AMOUNT") or the foreign currency
equivalent thereof measured at the Exchange Rate as of the date of payment.
(d) LIMITATION ON UIH PARTIES' LIABILITY. Subject to Section 13(e), the
UIH Parties shall be liable to the Indemnified Persons only for Losses up to an
aggregate maximum amount equal to 40% multiplied by (Purchase Price divided by
0.6) (the "UIH MAXIMUM AMOUNT"), or the foreign currency equivalent thereof
measured at the Exchange Rate as of the date of payment, with respect to which
amount the UIH Parties shall be jointly and severally liable.
(e) NO LIMITATION ON INDEMNIFICATION FOR BREACH OF COVENANTS REGARDING
COMPLIANCE WITH SHAREHOLDERS AGREEMENTS. Notwithstanding any other provision of
this Agreement, (i) the Sellers shall be obligated to indemnify each Indemnified
Person hereunder for the full amount of all Losses suffered by such Indemnified
Person resulting from, relating to or arising out of any breach by the Sellers
of Section 8(i) of this Agreement without regard to whether such Losses exceed
the Deductible Amount, the VTR Maximum Amount or the CNT Maximum Amount, it
being agreed by the Parties that such Losses will not to be subject to the
provisions of Section 13(c) hereof; and (ii) the UIH Parties shall be obligated
to indemnify each Indemnified Person hereunder for the full amount of all Losses
31
<PAGE>
suffered by such Indemnified Person resulting from, relating to or arising out
of any breach by the UIH Parties of Section 8(i) of this Agreement, it being
agreed by the Parties that such Losses will not be subject to the provisions of
Section 13 (d) hereof. For purposes of this Section 13(e), "Losses" shall not
include the discounted buy-out remedy set forth in Section 4.4 of the
Shareholders Agreement and the Newcom Shareholders Agreement.
(f) SELLERS' INDEMNIFICATION FOR CERTAIN REPRESENTATIONS AND
WARRANTIES. Notwithstanding anything to the contrary contained herein, only 60%
of Losses related to the Companies, and 50% of Losses related to Newcom,
resulting from any breach or inaccuracy of the representations and warranties
set forth in Section 5(f) or Section 5(g)(i) or (ii) shall be deemed Losses
hereunder. Nothing in this Section 13(f) shall limit or affect the rights and
remedies available to the parties to the Shareholders Agreement and the parties
to the Newcom Shareholders Agreement with respect to any breach of either or
both such agreements which breach occurred prior to the date hereof.
(g) SPECIFIC PERFORMANCE. The Parties acknowledge that, in addition to
any other remedy available to the Parties hereunder, the Arbitration Court shall
be authorized, at the request of the non-defaulting Party, to require specific
performance of a Party's obligations hereunder (including, without limitation,
the obligations of Sellers under Section 9(c) and of VTR under Article 11) in
the event of any material breach hereof by such Party.
(h) INDEMNIFICATION AS SOLE REMEDY. Subject to Sections 13(f) and
Section 13(g), and except with respect to claims of actual fraud, the indemnity
provided herein as it relates to this Agreement and the transactions
contemplated by this Agreement shall be the sole and exclusive remedy of the
Seller Indemnified Persons with respect to any and all claims for Losses
sustained, incurred or suffered as a result of any breach of this Agreement and
the transactions contemplated hereby, including, without limitation, any such
claims arising under or based upon any Laws, and the Parties on behalf of the
Indemnified Persons waive any right to pursue any other remedies to the fullest
extent permitted under applicable Laws with respect to such claims for Losses.
FOURTEEN: ARBITRATION
Any difference, controversy, conflict, issue or difficulty arising
between the Parties in respect of the validity, nullity, termination,
construction, scope, applicability or breach of this Agreement or otherwise for
whatever reason directly or indirectly in connection herewith and in respect of
any other matter which the Parties may enter into as a result of the matters
agreed and regulated under this Agreement (the "Controversy"), shall first be
the object of bona fide direct negotiations between the Parties. If the Parties
fail to reach an understanding in this regard within 30 days following the date
one or both of the Parties has initiated negotiations to resolve the
Controversy, then either Party shall have the right to initiate arbitral
proceedings by giving written notice to the other Party (the "Notice of
Arbitration").
The Controversy shall be exclusively settled by a Chilean Arbitral
Tribunal or Tribunal Arbitrador, which shall act as Arbitrator or Arbitro
Arbitrador and shall be composed of three arbitrators (the "Arbitration Court").
The Arbitration Court may act as often as necessary upon request by either or
both Parties, and its awards shall be unappealable. The Parties hereby expressly
waive any remedies which they could have asserted during or after the
32
<PAGE>
arbitration with the exception of requests for clarification or interpretation
and the remedy of complaint recurso de queja.
The three arbitrators shall be appointed as set forth in this Article
Fourteen. Within 15 days after receipt of the Notice of Arbitration, the
claimant shall select one arbitrator and the respondent shall select one
arbitrator. Within ten days of their selection, the two arbitrators shall select
the third arbitrator, who will be the arbitrator presiding over the arbitration
court. If the claimant or the respondent fail to appoint an arbitrator as
required hereunder, or if the two arbitrators so selected are unable to agree on
the appointment of the third arbitrator within twenty days after the Notice of
Arbitration, then such arbitrator(s) shall be selected by the Santiago Section
of the Inter-American Commercial Arbitration Commission (the "IACAC") pursuant
to the rules of procedure of the IACAC, except that the arbitrator(s) shall be
appointed within 35 days after the date of the Notice of Arbitration. The
arbitrator(s) so selected by the IACAC shall be fluent in Spanish and English
and shall have had considerable experience in arbitrating international
commercial disputes.
The Arbitration Court shall always be authorized to establish the
procedural rules for the arbitral proceedings, even upon the Parties'
disagreement in that respect. In reaching a determination, the Arbitration Court
shall consider common legal principles under Chilean law generally applicable to
the Controversy, provided, however, that to the extent those principles are
inconsistent with the intent of the Parties under this Agreement or the Promised
Agreements, the provisions of this Agreement and the Promised Agreements shall
prevail.
The place of arbitration shall be Santiago, Chile and the Spanish
language shall be used throughout the arbitral proceedings (although the
arbitrators may communicate with and take testimony from the Parties in English
to the extent they deem it helpful). Unless the Parties otherwise agree in
writing, the final arbitral award shall be rendered within 120 days of the
Notice of Arbitration. The arbitral award shall be in U.S. Dollars and shall
include interest from the date of the action giving rise to such award. The
arbitral award shall be final and binding upon the Parties, and judgment may be
entered thereon upon the application of any Party in any court of competent
jurisdiction. Each Party shall bear the costs of preparing and presenting its
case with respect to any arbitral proceeding. Other costs of arbitration
(including the fees and expenses of the arbitrators) will be borne as provided
in the arbitral award.
33
<PAGE>
FIFTEEN: APPLICABLE LAW; JURISDICTION
This Agreement shall be governed in accordance with the laws of the
Republic of Chile. For all legal intents and purposes derived here from, the
Parties establish their legal address in the City and District of Santiago, and
subject themselves to the jurisdiction of its Courts of Justice, without
prejudice to Article Fourteen.
SIXTEEN: ENTIRE AGREEMENT; OTHER AGREEMENTS
(a) ENTIRE AGREEMENT. This Agreement, the Promised Agreements and the
other agreements to be delivered at the Closing constitute the entire agreement
between the Parties with respect to the subject matter hereof and thereof and,
except as provided in Section 16(b), supersede all other previous agreements,
understandings and negotiations between the Parties, both written and oral, in
respect to the subject matter hereof and thereof. The Parties have neither made
nor relied upon any representation, statement, inducement, promise, covenant,
condition or guarantee not stipulated expressly herein.
(b) OTHER AGREEMENTS. The Parties shall cause the Original Promise
Agreement, the Shareholders Agreement and the Newcom Shareholders Agreement to
be terminated upon the Closing. Upon such termination and notwithstanding any
provisions that would survive pursuant to Section 8.2 of the Shareholders
Agreement and the Newcom Shareholders Agreement (i) the sole remedies for any
breach of either or both such Shareholder Agreements that occurred on or after
the date hereof shall be as set forth in Section 13(e), and (ii) the sole
remedies for any breach of either or both such Shareholder Agreements that
occurred prior to the date hereof shall be the remedies set forth in the
Shareholders Agreement or the Newcom Shareholders Agreement, as applicable,
which remedies shall survive the termination of such agreements in accordance
with the terms thereof; provided, however, that upon the Closing, the discounted
buy-out remedy set forth in Section 4.4 of each of the Shareholders Agreement
and the Newcom Shareholders Agreement shall terminate and shall no longer be
available to any party to such agreements with respect to any such breach.
SEVENTEEN: NOTICES
All notices, requests or other communications to the Parties shall be served in
writing and sent to the address or telecopier number stated by said Party herein
below, whether in person, or by Federal Express or another reputable
international courier (a "Qualified Courier") for next Business Day delivery (or
its nearest equivalent) or telecopy transmission followed by courier, or else to
34
<PAGE>
any other address or telecopier number that said Party may specify hereinafter
by means of a notice sent to each other Party as provided in this Article.
If to the Sellers:
VTR S.A.
Avenida Andres Bello N(degree) 2711, piso 6
Las Condes, Santiago
Attn: Sr. Jorge Salvatierra
Telephone: (562) 310-1492
Telecopy: (562) 310-1560
Compania Nacional de Telefonos, Telefonica del Sur S.A.
Avenida Andres Bello N(degree) 2711, piso 6
Las Condes, Santiago
Attn: Sr. Blas Tomic
Telephone: (562) 310-1491
Telecopy: (562) 310-1560
with copies to:
Quinenco S.A.
Agustinas 972, oficina 701
Santiago Centro, Santiago
Attn: Guillermo Luksic C.
Telephone: (562) 698-3580
Telecopy: (562) 672-8552
SBC International, Inc.
175 E. Houston, Room 10-A-50
San Antonio, TX 78205
Attn: President
Telephone: (210) 351-5000
Telecopy: (210) 351-5166
35
<PAGE>
SBC Communications Inc.
175 E. Houston, Room 1146
San Antonio, TX 78205
Attn: General Attorney and Assistant General Counsel
Telephone: (210) 351-3476
Telecopy: (210) 351-3488
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attn: Earl Weiner
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
If to UIH:
UIH Latin America, Inc.
4643 South Ulster St., Suite 1300
Denver, CO 80237 U.S.A.
Attn: President
Telephone: (303) 770-4001
Telecopy: (303) 770-4207
with copies to:
United International Holdings, Inc.
4643 South Ulster St., Suite 1300
Denver, CO 80237 U.S.A.
Attn: General Counsel
Telephone: (303) 770-4001
Telecopy: (303) 770-4207; and
Holme Roberts & Owen LLP
1700 Lincoln Street
Suite 4100
Denver, CO 80203 U.S.A.
Attn: W. Dean Salter
Telephone: (303) 861-7000
Telecopy: (303) 866-0200
Any notice or other communication sent in accordance with this Article
Seventeen shall be deemed given (a) if sent by Qualified Courier, three Business
Days after being delivered to the Qualified Courier, (b) if sent by telecopy,
when the sending machine receives electronic confirmation of receipt from the
receiving machine, or (c) otherwise, when personally delivered to such address
(or when delivery at such address is refused).
36
<PAGE>
EIGHTEEN: CONFIDENTIALITY; PRESS RELEASES
(a) CONFIDENTIAL INFORMATION.
(i) All confidential information with respect to the business,
operations or prospects of any of the Companies or Newcom (whether written or
oral) is hereinafter referred to as "Confidential Information". The term
Confidential Information will not, however, include information which (A) is or
becomes publicly available other than as a result of a disclosure by any of the
Sellers or any of their respective directors, officers, employees, Affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents (collectively, the "Seller Representatives"), or (B)
is or becomes available to Sellers from a source (other than from the Companies
or Newcom, or their respective directors, officers, employees, Affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents (the "Company Representatives") which, to the best of
Sellers' knowledge after due inquiry, is not prohibited from disclosing such
information to Seller by a legal, contractual or fiduciary obligation to the
Company.
(ii) Each of the Sellers hereby agrees that it and each of the
Seller Representatives (A) will keep the Confidential Information confidential
and will not (except as required by applicable law, regulation or legal process,
and only after compliance with clause (iii) below), without UIH's prior written
consent, disclose any Confidential Information in any manner whatsoever, and (B)
will not use any Confidential Information for any commercial purpose (other than
as necessary or appropriate in furtherance of the Company Businesses prior to
the Closing).
(iii) If Seller or any of the Seller Representatives are
requested pursuant to, or required by, applicable law, regulation or legal
process to disclose any of the Confidential Information, Sellers will, if
permitted by applicable Law, exercise all reasonable efforts to notify UIH
promptly so that UIH or the Companies may seek a protective order or other
appropriate remedy or, in UIH's sole discretion, waive compliance with the terms
of this Section 18(a). In the event that no such protective order or other
remedy is obtained, or that UIH waives compliance with the terms of this
Agreement, the Sellers or the Sellers Representatives, as applicable, will
furnish only that portion of the Confidential Information which, upon advice of
counsel, is legally required and will exercise all reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded the Confidential
Information.
(b) PRESS RELEASES. The initial press release by the Parties with
respect to this Agreement shall be a joint press release and thereafter the
Parties shall inform each other in advance of the making of any press release or
other public statements with respect to the transactions contemplated hereby and
of any filings with any Governmental Authority or with any securities exchange
with respect hereto.
37
<PAGE>
NINETEEN: EXPENSES
Each of the Parties shall pay its own expenses in connection with the
preparation and negotiation of this Agreement.
TWENTY: SEVERABILITY
In the event that any provision of this Agreement, or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties hereto further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
TWENTY ONE: COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the Parties hereto and
delivered to the other Parties hereto, it being understood that all Parties
hereto need not sign the same counterpart.
TWENTY TWO: NON-ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder may be
assigned by any Party without the prior consent of the other Party, provided,
however, that UIH may assign its rights, but not its obligations, hereunder to
any Purchaser Designee without the consent of any other Party.
38
<PAGE>
TWENTY THREE: SECTION HEADINGS
The paragraph and section headings of this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
39
<PAGE>
EXECUTED as of the date set forth on page 1.
VTR S.A.
By: /S/ Blas Tomic
---------------------------------------
Its: Director
---------------------------------------
COMPANIA NACIONAL DE
TELEFONOS, TELEFONICA DEL
SUR, S.A.
By: /S/ Blas Tomic
---------------------------------------
Its: Director
---------------------------------------
UIH LATIN AMERICA, INC.
By: /S/ Juan Guillermo Levine Contreras
---------------------------------------
Its: Agent
---------------------------------------
40
[EXECUTION COPY]
************************************************************
UIH CHILE HOLDING S.A.
and
SUBSIDIARY GUARANTORS
-----------------------------
CREDIT AGREEMENT
Dated as of April 29, 1999
------------------------------
TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent
TD SECURITIES (USA), INC.
and
CITIBANK, N.A.,
as Co-Arrangers
************************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
PAGE
----
Section 1. Definitions and Accounting Matters...............................1
1.01 Certain Defined Terms.........................................1
1.02 Accounting Terms and Determinations..........................16
1.03 Tranches.....................................................16
1.03 Newcom.......................................................16
Section 2. Commitments, Loans, Notes and Prepayments.......................16
2.01 Loans........................................................16
2.02 Borrowings...................................................17
2.03 Commitment Reductions and Termination;
Commitment Increases.........................................17
2.04 Commitment Fees..............................................17
2.05 Lending Offices..............................................17
2.06 Several Obligations; Remedies Independent....................17
2.07 Notes........................................................18
2.08 Optional Prepayments.........................................18
2.09 Mandatory Prepayments........................................18
Section 3. Payments of Principal and Interest..............................19
3.01 Repayment of Loans...........................................19
3.02 Interest.....................................................19
Section 4. Payments; Pro Rata Treatment; Computations; Etc.................19
4.01 Payments.....................................................19
4.02 Pro Rata Treatment...........................................19
4.03 Computations.................................................20
4.04 Minimum Amounts..............................................20
4.05 Certain Notices..............................................20
4.06 Non-Receipt of Funds by the Administrative Agent.............20
4.07 Sharing of Payments, Etc.....................................21
Section 5. Yield Protection, Etc...........................................22
5.01 Additional Costs.............................................22
5.02 Alternative Interest Rate....................................23
5.03 Illegality...................................................24
5.04 Chilean Taxes................................................24
5.05 Compensation.................................................25
Section 6. Guarantee.......................................................26
6.01 The Guarantee................................................26
6.02 Obligations Unconditional....................................26
6.03 Reinstatement................................................27
6.04 Subrogation..................................................27
6.05 Remedies.....................................................27
6.06 Continuing Guarantee.........................................27
6.07 Rights of Contribution.......................................27
6.08 General Limitation on Guaranty Obligations...................28
Section 7. Conditions Precedent............................................28
7.01 Initial Loan.................................................28
7.02 Initial and Subsequent Loans.................................32
(i)
<PAGE>
PAGE
----
7.03 Pro Forma Compliance ........................................32
7.04 Consummation of the Merger...................................33
Section 8. Representations and Warranties..................................33
8.01 Corporate Existence..........................................33
8.02 Financial Condition..........................................33
8.03 Litigation...................................................33
8.04 No Breach....................................................33
8.05 Action.......................................................34
8.06 Approvals....................................................34
8.07 Legal Form...................................................34
8.08 Ranking......................................................34
8.09 Taxes........................................................34
8.10 Commercial Activity; Absence of Immunity.....................35
8.11 Material Agreements and Liens................................35
8.12 Environmental Matters........................................35
8.13 Capitalization...............................................35
8.14 Subsidiaries, Etc............................................36
8.15 Properties and Assets........................................36
8.16 True and Complete Disclosure.................................36
8.17 Investment Holding Company Act...............................37
8.18 Use of Credit................................................37
8.19 Solvency.....................................................37
8.20 No Default on Purchase Agreement.............................37
8.21 Ownership of Collateral......................................37
8.22 Liens, etc...................................................37
8.23 Year 2000....................................................37
Section 9. Covenants of the Obligor........................................38
9.01 Financial Statements, Etc....................................38
9.02 Litigation...................................................39
9.03 Existence, Etc...............................................40
9.04 Insurance....................................................40
9.05 Prohibition of Fundamental Changes...........................40
9.06 Limitation on Liens..........................................41
9.07 Indebtedness.................................................42
9.08 Investments..................................................43
9.09 Restricted Payments..........................................44
9.10 Capital Expenditures.........................................45
9.11 Total Debt to EBITDA Ratio...................................45
9.12 Debt Service Coverage Ratio..................................45
9.13 Senior Debt to EBITDA Ratio..................................46
9.14 Interest Coverage Ratio......................................46
9.15 Governmental Approvals.......................................46
9.17 Lines of Business............................................46
9.18 Transactions with Affiliates.................................47
9.19 Use of Proceeds..............................................47
9.20 Minimum Telephony Revenue....................................47
9.21 Certain Obligations in Respect of Subsidiaries...............48
9.22 Insurance....................................................48
9.23 Post-Closing Collateral Matters..............................48
9.24 Post-Closing Acquisition/Merger Matters......................50
9.25 Assumption Agreement.........................................50
(ii)
<PAGE>
PAGE
----
Section 10. Events of Default..............................................51
Section 11. The Administrative Agent.......................................53
11.01 Appointment, Powers and Immunities..........................53
11.02 Reliance by Administrative Agent............................54
11.03 Defaults....................................................54
11.04 Rights as a Lender..........................................54
11.05 Indemnification.............................................55
11.06 Non-Reliance on Administrative Agent and Other Lenders......55
11.07 Failure to Act..............................................55
11.08 Resignation or Removal of Administrative Agent..............55
11.09 Consents under Other Basic Documents........................56
Section 12. Miscellaneous..................................................56
12.01 Waiver......................................................56
12.02 Notices.....................................................56
12.03 Expenses....................................................56
12.04 Indemnification.............................................57
12.05 Amendments, Etc.............................................57
12.06 Successors and Assigns......................................57
12.07 Assignments and Participations..............................58
12.08 Survival....................................................59
12.09 Captions; Integration.......................................59
12.10 Counterparts................................................59
12.11 Judgment Currency...........................................59
12.12 Governing Law...............................................60
12.13 Jurisdiction; Service of Process; Venue.....................60
12.14 No Immunity.................................................61
12.15 Waiver of Jury Trial........................................61
12.16 Use of English Language.....................................61
12.17 Confidentiality.............................................61
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Subsidiaries and Investments
SCHEDULE III - Material Litigation
SCHEDULE IV - Properties and Assets
SCHEDULE V - Equity Rights
EXHIBIT A-1 - Form of Tranche A Note
EXHIBIT A-2 - Form of Tranche B Note
EXHIBIT B-1 - Form of Agreement to Grant a Pledge Without Conveyance
EXHIBIT B-2 - Form of Commercial Pledge Agreement
EXHIBIT B-3 - Form of Pledge Without Conveyance
EXHIBIT B-4 - Form of Real Property Mortgage
EXHIBIT B-5 - Form of Stock Pledge Agreement
EXHIBIT B-6 - Form of Conditional Assignment
EXHIBIT C - Form of Public Deed Evidencing Subsidiaries' Guarantee
(iii)
<PAGE>
EXHIBIT D-1 - Form of Opinion of Chilean Counsel to the Obligors
EXHIBIT D-2 - Form of Opinion of New York Counsel to the Administrative Agent
EXHIBIT D-3 - Form of Opinion of Chilean Counsel to the Administrative Agent
EXHIBIT D-4 - Form of Opinion of U.S. Counsel to the Obligors
EXHIBIT D-5 - Form of Opinion of Cayman Islands Counsel to the Obligors
EXHIBIT E - Form of Compliance Certificate
(iv)
<PAGE>
CREDIT AGREEMENT dated as of April 29, 1999 among:
(a) UIH CHILE HOLDING S.A., a corporation duly organized and
validly existing under the laws of the Republic of Chile ("Acquisition
Co.");
(b) Newcom and each of the Persons that (upon consummation of
the Merger) will be Subsidiaries of the Company and are identified
under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto
(including Newcom, individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors"; and the Subsidiary
Guarantors collectively with the Company, the "Obligors");
(c) each of the lenders that is a signatory hereto identified
under the caption "LENDERS" on the signature pages hereto or that,
pursuant to Section 12.07(b) hereof, shall become a "Lender" hereunder
(individually, a "Lender" and, collectively, the "Lenders"); and
(d) TORONTO DOMINION (TEXAS), INC., as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Obligors have requested that the Lenders make loans to the Company,
the Lenders are willing to make loans to the Company on the terms and conditions
of this Agreement and, accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"Acquisition" shall mean, collectively, (a) the acquisition by
Acquisition Co. of all of the outstanding shares of capital stock of Hipercable,
other than the shares owned by UIH Chile, Inc., pursuant to the Purchase
Agreement and (b) the Newcom Acquisition.
"Acquisition Co." is defined in the preamble.
"Affiliate" shall mean any Person (other than any Wholly Owned
Subsidiary of the Company) that directly or indirectly controls, or is under
common control with, or is controlled by, the Company and, if such Person is an
individual, any member of the immediate family (including parents, spouse,
children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Administrative Agent's Account" shall mean account no. 6550-6-52270
(for the account of Toronto Dominion (Texas), Inc., reference: VTR Hipercable
S.A.) of the Administrative Agent maintained at Bank of America NT & SA (ABA No.
026009593), or such other account at such other bank in New York City as the
Administrative Agent shall specify from time to time to the Company and the
Lenders.
"Agreement to Grant a Pledge Without Conveyance" shall mean one or more
Chilean public deeds constituting an agreement to grant a pledge without
conveyance (promesa de prenda sin desplazamiento) of the Obligors' network of
cables and wires, executed by each Obligor and delivered to the Administrative
Agent for the benefit of the Lenders, substantially in the form of Exhibit B-1
hereto.
<PAGE>
"Applicable Margin" shall mean 5.00% per annum; provided that the
"Applicable Margin" shall be increased on each date set forth in Schedule A
below to the applicable percentage set forth opposite such date:
Schedule A
Date Applicable Margin
April 29, 2001 5.50%
July 29, 2001 6.00%
October 29, 2001 6.50%
January 29, 2002 7.00%
"Application Date" shall mean, with respect to any Net Disposition
Proceeds, Net Equity Proceeds or Net Debt Proceeds, the earlier of (x) the date
the Company is permitted by the Central Bank of Chile or the regulations thereof
to effect mandatory prepayments pursuant to paragraph (b), (c) or (d),
respectively, of Section 2.09 and (y) ten Business Days after receipt by the
Company or any of its Subsidiaries of such Net Disposition Proceeds, Net Equity
Proceeds or Net Debt Proceeds, respectively.
"Basic Documents" shall mean, collectively, this Agreement, the Notes,
the Effective Subordination Documents and the Security Documents.
"Box Lease Financing" shall mean any financing of converter boxes for
cable television systems or direct- to-home systems pursuant to which the
Company or one of its Subsidiaries leases such boxes from a third party, on
behalf of its subscribers, where the subscriber agrees to make rental payments
to the Company or such Subsidiary sufficient to cover the lease payments due to
the third party.
"Business Day" shall mean (a) any day on which commercial banks are not
authorized or required to close in New York City or Santiago, Chile and (b) if
such day relates to a borrowing of, a payment or prepayment of principal of or
interest on, or an Interest Period for, a Loan or a notice by the Company with
respect to any such borrowing, payment or prepayment, any day on which dealings
in Dollar deposits are carried out in the London interbank market.
"Cable Subscribers" shall mean subscribers to the multi-channel
television services (including wireline, wireless and DBS television services)
provided by the Obligors.
"Capital Expenditures" shall mean, for any period, expenditures made by
the Company or any of its Subsidiaries to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements, but
excluding repairs) during such period computed in accordance with GAAP.
"Capital Lease Obligations" shall mean, for any Person, all obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Chile" shall mean the Republic of Chile.
"Chilean Taxes" shall mean all present and future income, stamp,
registration and other taxes and levies, imposts, deductions, charges,
compulsory loans and withholdings whatsoever, and all interest, penalties or
similar amounts with respect thereto, now or hereafter imposed, assessed, levied
or collected by (a) Chile or any political subdivision or taxing authority
thereof or therein, or by any federation or association of or with which Chile
may be a member or associated, on or in respect of this Agreement, the Loans,
the Notes, the other Basic Documents, the recording, registration, notarization
or other formalization of any thereof, the enforcement thereof or the
introduction thereof in any judicial proceedings, or on or in respect of any
payments of principal, interest, premiums, charges, fees or other amounts made
on, under or in respect of any thereof, or (b) any other jurisdiction from or
-2-
<PAGE>
through which payments to or for account of any Lenders hereunder are made as a
result or consequence of such payments (excluding, however, income or franchise
taxes imposed on a Lender by a jurisdiction as a result of such Lender being
organized under the laws of such jurisdiction or of its Lending Office being
located in such jurisdiction).
"Citibank" shall mean Citibank, N.A., a national banking association
organized under the laws of the United States of America.
"Closing Date" shall mean the date upon which the initial Loan
hereunder is made.
"Closing Date Contribution" shall mean a financing consisting of the
following:
(a) Closing Date Equity, or
(b) Closing Date Debt, or
(c) some combination thereof,
in an aggregate amount at least equal to U.S.$250,000,000 (less expenses of up
to U.S.$6,500,000 incurred in connection with the Closing Date Equity), of which
at least U.S.$150,000,000 (less such expenses) consists of Closing Date Equity.
"Closing Date Debt" shall mean a loan made by State Street Bank and
Trust Company to the Company on or prior to the Closing Date on terms and
conditions satisfactory to the Required Lenders, which terms shall include,
without limitation, the following:
(a) the subordination thereof to the prior payment in full of
the Company's obligations hereunder pursuant to Effective Subordination
Documents,
(b) no cash payments shall be required to be made in respect
thereof prior to the later of (x) six months after the Principal
Payment Date and (y) the payment in full in cash of all amounts payable
by the Obligors hereunder, and
(c) the final maturity thereof shall occur no earlier than six
months after the Principal Payment Date.
"Closing Date Equity" shall mean a cash contribution (or some other
substantially equivalent tax-advantaged form of investment that is satisfactory
to the Lenders) made by UIH, one of its Affiliates or other Persons acceptable
to the Majority Lenders on or prior to the Closing Date to the common equity
capital of the Company.
"Collateral" shall mean all of the Property of the Obligors covered by
the Security Documents.
"Commercial Pledge Agreement" shall mean a Chilean public deed
constituting a commercial pledge (prenda comercial) of all existing trademarks
owned by any of the Obligors, executed by the respective Obligors and delivered
to the Administrative Agent for the benefit of the Lenders, substantially in the
form of Exhibit B-2 hereto.
"Commitment Percentage" shall mean, with respect to any Lender, the
ratio, expressed as a percentage, of (a) the aggregate Commitments of such
Lender, to (b) the aggregate Commitments of all Lenders.
-3-
<PAGE>
"Commitment Termination Date" shall mean December 31, 2000.
"Commitments" shall mean the Tranche A Loan Commitments and the Tranche
B Loan Commitments.
"Company" shall mean (a) prior to the Merger, Acquisition Co., and (b)
from and after the Merger, Hipercable.
"Conditional Assignment" shall mean a Chilean public deed constituting
a conditional assignment of rights (cesion condicional de derechos) of (x)
leaseholds held by any Obligor, which leaseholds represent pole rental
agreements covering the services provided to the percentage of the total number
of Cable Subscribers that is required by Section 9.23(a) hereof, and (y) any
material part of the Obligors' network of cables and wires that is leased by any
Obligor, in each case executed by the applicable Obligors and delivered to the
Administrative Agent for the benefit of the Lenders, substantially in the form
of Exhibit B-6 hereto.
"Debt Service" shall mean, for any period (the "Retrospective Period"),
the sum for the Company and its Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) of the following:
(a) the sum of (i) all Interest Expense for such Retrospective
Period (including, without limitation, all interest in respect of
Subordinated Debt paid in cash during such Retrospective Period) less
(ii) any interest in respect of Subordinated Debt accrued, but not
actually paid, during such Retrospective Period plus
(b) all payments of principal of Indebtedness (including,
without limitation, the principal component of any payments in respect
of Capital Lease Obligations) scheduled to be made during the period of
four consecutive fiscal quarters commencing immediately after the
Retrospective Period, other than the following:
(x) any mandatory prepayments of Loans made pursuant
to Section 2.09 hereof, and
(y) any scheduled payments of principal of the Loans.
"Debt Service Coverage Ratio" shall mean, as at any date, the ratio of
the following:
(a) for any of the following dates:
(i) June 30, 1999, the product of (x) EBITDA for the
period of three consecutive months ending on, or most recently
ended prior to, such date times (y) four,
(ii) September 30, 1999, the product of (x) EBITDA
for the period of two fiscal quarters ending on, or most
recently ended prior to, such date times (y) two,
(iii) December 31, 1999, the product of (x) EBITDA
for the period of three fiscal quarters ending on, or most
recently ended prior to, such date times (y) 1.33, and
(iv) any date after December 31, 1999, EBITDA for the
period of four consecutive fiscal quarters ending on, or most
recently ended prior to, such date, to
(b) Debt Service for the period of four consecutive fiscal
quarters ending on, or most recently ended prior to, such date.
"Default" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
-4-
<PAGE>
"Default Interest Period" shall mean, during any period while any
principal of a Loan, interest thereon or any other amount owing hereunder is in
default, each successive period as the Administrative Agent shall from time to
time (with the consent of the Majority Lenders) choose; provided that (a) no
such period shall exceed three months, (b) the first such period shall commence
as of the date on which such principal, interest or other amount became due and
each succeeding such period shall commence upon the expiry of the immediately
preceding such period, and (c) in the absence of or pending such consent from
the Majority Lenders, each Default Interest Period shall have a duration of one
week.
"Disposition" shall mean any disposition of any Property of the Company
or any of its Subsidiaries made after the date hereof, other than the following:
(a) a disposition made in the ordinary course of business,
(b) a disposition made pursuant to Section 9.05(d)(iii)
hereof, and
(c) the Galaxy Disposition.
"Dividend Payment" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Company or of any warrants, options or other rights to
acquire the same, but excluding dividends payable solely in shares of common
stock of the Company.
"Dollars" and "U.S.$" shall mean lawful money of the United States of
America.
"DTH License" shall mean a license granted to the Company or any of its
Subsidiaries by the Chilean Sub- Secretary of Telecommunications (Subsecretaria
de Telecomunicaciones) for the provision of direct-to-home broadcasting
services.
"EBITDA" shall mean, for any period, the sum, for the Company and its
Subsidiaries (determined on a consolidated basis, without duplication, in
accordance with GAAP), of the following:
(a) net operating income for such period (calculated before
income taxes, Interest Expense, extraordinary and unusual items and
income or loss attributable to equity in Affiliates), plus
(b) depreciation and amortization (to the extent deducted in
determining net operating income) for such period.
"Effective Subordination Documents" shall mean, with respect to any
Indebtedness, the following (which shall be in form and substance reasonably
satisfactory to the Administrative Agent):
(a) the agreement of the holder or holders of such
Indebtedness (or of a payment agent responsible for receipt of payments
in connection with such Indebtedness) to remit to the Administrative
Agent all payments made in respect of such Indebtedness that are not
permitted under Section 9.09(a) or that would result in an Event of
Default under Section 10(e) hereof;
(b) the agreement of the holder or holders of such
Indebtedness (or, to the extent that any such holder grants a 100%
participation interest in such Indebtedness to a Person acceptable to
the Administrative Agent (a "Participant"), such Participant) grants to
the Administrative Agent for the benefit of the Lenders a first
priority Lien on its interest in such Indebtedness; and
(c) in the event that there is a Participant with respect to
such Indebtedness, the participation agreement creating and governing
such participation.
-5-
<PAGE>
"Eligible Assignee" shall mean, at any time, (a) a Lender, (b) an
affiliate of a Lender, (c) a Person that is a bank, or a qualified financial
institution duly registered with the Central Bank of Chile for the purpose of
the income tax law of Chile or (d) any other Person approved by the Company and
the Administrative Agent (which approval shall not be unreasonably withheld or
delayed).
"Environmental Claim" shall mean, with respect to any Person, any
written or oral notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (a) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (b) circumstances forming the basis of any violation, or alleged
violation, by such Person of any Environmental Law.
"Environmental Laws" shall mean any and all present and future Chilean
laws, rules or regulations, and any orders or decrees, in each case as now or
hereafter in effect, relating to the regulation or protection of the environment
or human health or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes
into the indoor or outdoor environment.
"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' agreements) for
the issuance, sale, registration or voting of, or securities convertible into,
any additional shares of capital stock of any class, or partnership or other
ownership interests of any type in, such Person.
"Eurodollar Rate" shall mean, with respect to any Loan for any Interest
Period or Default Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/16 of 1%) reported, at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) on the date two Business Days
prior to the first day of such Interest Period or Default Interest Period, on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
as the London interbank offered rate for Dollar deposits having a term
comparable to the duration of such Interest Period and in an amount equal to or
greater than U.S.$1,000,000.
"Event of Default" shall have the meaning assigned to such term in
Section 10 hereof.
"Excess Cash Flow" shall mean, for any fiscal year, the sum of:
(a) EBITDA for such period, minus
(b) extraordinary cash losses for such period, plus
(c) extraordinary cash gains for such period, minus
(d) Capital Expenditures made during such period to the extent
permitted by Section 9.11 hereof, minus
(e) all scheduled payments of principal of Indebtedness
(including, without limitation, the principal component of any payments
in respect of Capital Lease Obligations) made during such period and
all interest in respect of Indebtedness paid during such period, minus
(f) corporate taxes actually paid by the Company or any of its
Subsidiaries during such period, plus
(g) the amount of the net decrease in Working Capital (or
minus the net increase in Working Capital) of the Company and its
Subsidiaries for such period.
-6-
<PAGE>
"Excess Post-Closing Financing" shall mean the proceeds of any
Post-Closing Financing which, when taken together with the proceeds of any
Post-Closing Contribution, are in excess of the Post-Closing Required Amount and
are not used to prepay Closing Date Debt.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged on such Business Day on such transactions as
determined by the Administrative Agent.
"GAAP" shall mean generally accepted accounting principles in Chile as
in effect on December 31, 1998.
"Galaxy Disposition" shall mean a disposition by the Company of any or
all or its interest in, or all or any part of the Property of, VTR Galaxy Chile,
S.A., so long as the aggregate consideration received by the Obligors in
connection therewith shall not exceed U.S.$15,000,000 (or the equivalent in
other currencies).
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall
have a correlative meaning.
"Hazardous Material" shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls, (b) any chemicals or other materials or substances
which are now or hereafter become defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants", "pollutants" or words of similar import under any
Environmental Law and (c) any other chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated under any
Environmental Law.
"Hedge Agreement" shall mean, for any Person, an interest rate swap,
cap or collar agreement, currency swap agreement, currency hedge agreement or
similar arrangement between such Person and one or more financial institutions
providing for the transfer or mitigation of interest risks or currency risks
either generally or under specific contingencies.
"Hipercable" shall mean VTR Hipercable S.A., a corporation organized
under the laws of Chile.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such other Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services (other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
-7-
<PAGE>
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered); (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person; provided, that "Indebtedness" shall not include the
outstanding obligations of VTR Cable Express S.A. to Inversiones Esmeralda S.A.,
in an aggregate principal amount not exceeding the lesser of (x) U.S.$1,600,000
and (y) after all or a portion of the amounts outstanding in respect of such
obligations have been paid or otherwise reduced, the amount outstanding in
respect of such obligations after such payment or reduction, to the extent that
the same have been duly defeased and as to which the holder of such obligations
has no recourse to any Obligor.
"ING Credit Agreement" shall mean the credit agreement, dated as of
August 26, 1997, among Hipercable, the subsidiary guarantors identified on the
signature pages thereto, the various lenders identified on the signature pages
thereto and ING Baring (U.S.) Capital Corporation, as administrative agent.
"Interest Coverage Ratio" shall mean, as at any date, the ratio of the
following:
(a) for any of the following dates:
(i) June 30, 1999, the product of (x) EBITDA for the
period of three consecutive months ending on, or most recently
ended prior to, such date times (y) four,
(ii) September 30, 1999, the product of (x) EBITDA
for the period of two fiscal quarters ending on, or most
recently ended prior to, such date times (y) two,
(iii) December 31, 1999, the product of (x) EBITDA
for the period of three fiscal quarters ending on, or most
recently ended prior to, such date times (y) 1.33, and
(iv) any date after December 31, 1999, EBITDA for the
period of four consecutive fiscal quarters ending on, or most
recently ended prior to, such date, to
(b) the sum of (i) Interest Expense for the period set forth
in clause (a) above for which EBITDA is being calculated (and if for a
period of less than four fiscal quarters, annualized as provided in
said clause (a) (including, without limitation, all interest in respect
of Subordinated Debt paid in cash during such period) less (ii) any
interest in respect of Subordinated Debt accrued, but not actually
paid, during for the period set forth in clause (a) above for which
EBITDA is being calculated (and if for a period of less than four
fiscal quarters, annualized as provided in said clause (a)).
"Interest Expense" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis, without duplication,
in accordance with GAAP) of the following: (a) all interest in respect of
Indebtedness accrued or capitalized during such period (whether or not actually
paid during such period), plus (b) the net amounts payable (or minus the net
amounts receivable) under Hedge Agreements (to the extent hedging interest rate
risks) accrued during such period (whether or not actually paid or received
during such period).
"Interest Period" shall mean, with respect to any Loan, each period
commencing on the date such Loan is made or the last day of the next preceding
Interest Period for such Loan and ending on the numerically corresponding day in
the third calendar month thereafter, except that each Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing, each Interest Period that would otherwise
end on a day that is not a Business Day shall end on the next succeeding
Business Day (or, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day).
-8-
<PAGE>
"Investment" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
sale); (b) the making of any deposit with, or advance, loan or other extension
of credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such other Person), but excluding any such advance, loan
or extension of credit having a term not exceeding 90 days representing the
purchase price of inventory, services or supplies sold by such Person in the
ordinary course of business); (c) the entering into any Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such other Person; or (d) the entering into of any Hedge
Agreement.
"Lending Office" shall mean, for each Lender, the "Lending Office" of
such Lender (or of an affiliate of such Lender) designated on the signature
pages hereof or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to the Administrative Agent
and the Company as the office at which its Loans are to be made and maintained.
"License and Concession Pledge Agreement" shall mean a Chilean public
deed constituting a commercial pledge (prenda comercial) of all existing
licenses and concessions owned by any of the Obligors, executed by the
respective Obligors and delivered to the Administrative Agent for the benefit of
the Lenders, in form and substance satisfactory to the Adminstrative Agent.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Basic Documents, a Person
shall be deemed to own subject to a Lien any Property that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.
"Loans" shall mean the Tranche A Loans and the Tranche B Loans.
"Majority Lenders" shall mean Lenders holding at least 51% of the
aggregate outstanding principal amount of the Loans or, if the Loans shall not
have been made, at least 51% of the Commitments.
"Management Agreements" shall mean (a) the Technical Assistance
Agreement, dated the Closing Date, between the Company and UIHLA Management,
Inc. and (b) the Management Agreement, dated the Closing Date, between the
Company and UIHLA Management, Inc.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the Property, business, operations, financial condition, liabilities or
capitalization of the Obligors (taken as a whole), (b) the ability of the
Obligors and the Stock Pledgors (taken as a whole) to perform their respective
material obligations under such of the Basic Documents and the Purchase
Agreement to which they are parties, (c) the validity or enforceability of any
of the Basic Documents or the Purchase Agreement, (d) the rights and remedies of
the Lenders and the Administrative Agent under any of the Basic Documents or (e)
the timely payment of the principal of or interest on the Loans or other amounts
payable in connection therewith.
"Merger" shall mean the merger of Acquisition Co. into Hipercable, with
Hipercable being the surviving entity of such merger, and the cancellation by
Hipercable of the shares of Hipercable acquired by Acquisition Co. in the
Acquisition.
"Net Debt Proceeds" shall mean, with respect to any Excess Post-Closing
Financing, the sum of:
-9-
<PAGE>
(a) the gross cash proceeds received by the Company or any of
its Subsidiaries from such Excess Post-Closing Financing (including any
cash payments received by way of deferred payment of principal pursuant
to a permitted promissory note or installment receivable or otherwise,
but only as and when received); minus
(b) all (i) reasonable and customary fees and expenses
actually paid by the Company or its Subsidiaries in connection
therewith and (ii) underwriters' discounts and commissions in
connection therewith not payable to the Company, any of its
Subsidiaries or any of their Affiliates.
"Net Disposition Proceeds" shall mean the sum of:
(a) the gross cash proceeds received by the Company or any of
its Subsidiaries from any Disposition; minus
(b) (i) all reasonable and customary legal, investment
banking, brokerage, accounting, financial advisory, title, recording,
and other fees and expenses actually incurred by the Company and its
Subsidiaries in connection with such Disposition, (ii) all taxes
actually paid or estimated by the Company (in good faith) to be payable
in cash in connection with such Disposition; provided, however, that
if, after the payment of all taxes with respect to such Disposition,
the amount of estimated taxes, if any, pursuant to clause (ii) above
exceeded the amount of taxes actually paid in cash in respect of such
Disposition, the aggregate amount of such excess shall be immediately
payable, pursuant to clause (b) of Section 2.09, as Net Disposition
Proceeds, (iii) the amount of income taxes payable (assuming the
taxpayer is subject to taxation at the highest applicable marginal rate
and determined without regard to any other tax items of the Company or
the taxpayer) by the taxpayers arising from such Disposition (provided
that a certificate is delivered to the Administrative Agent,
satisfactory in form and substance to the Administrative Agent, by
Price Waterhouse Coopers LLC (or other independent public accountants
of nationally recognized standing, with the prior written approval of
the Administrative Agent) at the time of such Disposition setting forth
in detail the calculation of such amount, (iv) if permitted hereunder
or otherwise by the Majority Lenders, the aggregate amount of any
Indebtedness which is secured by such asset and required to be repaid
from such gross cash proceeds and (v) the amount of any reserve or
escrow established in respect of any claims or liabilities of or
payable by the Company or its Subsidiaries in respect of such
Disposition.
"Net Equity Proceeds" shall mean, in the case of the issuance,
placement or sale of equity securities or other ownership interests (whether
pursuant to a public or private offering, but excluding (x) any issuance of
securities or other ownership interests to employees of the Company or any of
its Subsidiaries, (y) any Post-Closing Equity, and (z) a SaskTel Transaction)
from and after the date hereof, the sum of:
(a) the gross cash proceeds received by the Company or any of
its Subsidiaries from such issuance, placement or sale of equity
securities or other ownership interests (including any cash payments
received by way of deferred payment of principal pursuant to a
permitted promissory note or installment receivable or otherwise, but
only as and when received); minus
(b) all (i) reasonable and customary legal, investment
banking, brokerage, accounting, financial advisory, title, recording,
and other fees and expenses actually paid by the Company or its
Subsidiaries in connection therewith and (ii) underwriters' discounts
and commissions in connection therewith not payable to the Company, any
of its Subsidiaries or any of their Affiliates.
"Newcom" shall mean Newcom S.A., a Chilean corporation.
"Newcom Acquisition" shall mean the acquisition by Acquisition Co. of
all of the outstanding shares of Newcom not currently owned by UIH Chile, Inc.,
pursuant to the Purchase Agreement.
-10-
<PAGE>
"Nortel Debt" shall mean accounts payable owing by the Company or any
of its Subsidiaries to Northern Telecom Inc.
"Notes" shall mean the Tranche A Notes and the Tranche B Notes.
"Permitted Investments" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) deposits maintained with Citibank N.A. (or any of its
affiliates) and certificates of deposit issued by any other bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
U.S.$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; and (c) commercial paper rated A-1 or better or P-1 by Standard &
Poor's Corporation or Moody's Investors Services, Inc., respectively, maturing
not more than 90 days from the date of acquisition thereof.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Pledge Without Conveyance" shall mean one or more Chilean public deeds
constituting a pledge without conveyance (prenda sin desplazamiento) of the
Obligors' network of cables and wires, executed by each Obligor and delivered to
the Administrative Agent for the benefit of the Lenders, substantially in the
form of Exhibit B-3 hereto.
"Post-Closing Contribution" shall mean a financing arrangement (other
than a Post-Closing Financing) entered into by the Company after the Closing
Date, consisting of the following:
(a) Post-Closing Equity, or
(b) Post-Closing Debt, or
(c) some combination of the foregoing.
"Post-Closing Debt" shall mean financing provided by UIH or one of its
Affiliates after the Closing Date on terms and conditions satisfactory to the
Required Lenders, which terms shall include, without limitation, the following:
(a) the subordination thereof to the prior payment in full of
the Company's obligations hereunder pursuant to Effective Subordination
Documentation,
(b) no cash payments shall be required to be made in respect
thereof prior to the later of (x) six months after the Principal
Payment Date and (y) the payment in full in cash of all amounts payable
by the Obligors hereunder,
(c) the final maturity thereof shall occur no earlier than six
months after the Principal Payment Date, and
(d) the Lenders' receipt of appropriate legal opinions with
respect to Chilean law matters raised by the subordination of the
Post-Closing Debt.
"Post-Closing Equity" shall mean a cash contribution (or some other
substantially equivalent tax-advantaged form of investment that is satisfactory
to the Required Lenders) made by UIH, one of its Affiliates or other Persons
acceptable to the Majority Lenders after the Closing Date to the common equity
capital of the Company.
-11-
<PAGE>
"Post-Closing Financing" shall mean a financing (other than a
Post-Closing Contribution and other than other Indebtedness permitted under
Section 9.07 hereof) entered into by the Company after the Closing Date on terms
and conditions satisfactory to the Required Lenders, which terms shall include,
without limitation, the following:
(a) the subordination thereof to the prior payment in full of
the Company's obligations hereunder,
(b) no cash payments shall be required to be made in respect
thereof prior to the later of (x) six months after the Principal
Payment Date and (y) the payment in full in cash of all amounts payable
by the Obligors hereunder,
(c) the final maturity thereof shall occur no earlier than six
months after the Principal Payment Date, and
(d) the Lenders' receipt of appropriate legal opinions with
respect to Chilean law matters raised by the subordination of the
Post-Closing Financing.
"Post-Closing Required Amount" shall mean an amount equal to the
greater of (a) U.S.$70,000,000, and (b) the amount, reasonably determined by the
Required Lenders, sufficient to fund all of the free cash flow deficit projected
by the Company's current business plan.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan, interest thereon or any other amount owing hereunder that is not paid when
due (whether at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise), a rate per annum for each Default Interest Period
equal to (a) 3% plus (b) the Applicable Margin plus (c) the Eurodollar Rate for
such Default Interest Period.
"Principal Payment Date" shall mean April 29, 2002.
"Principal Subsidiaries" shall mean VTR Cable Express S.A. and VTR
Telefonica S.A.
"Process Agent" has the meaning given to that term in Section 12.13(b)
hereof.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" shall mean the Promise Agreement, dated as of
October 15, 1998, among UIH Latin America, Inc., VTR S.A. and Compania Nacional
de Telefonos, Telefonica del Sur S.A., including the Exhibits and Schedules
thereto.
"Quarterly Dates" shall mean the last Business Day of each March, June,
September and December of each year.
"Real Property Mortgage" shall mean one or more Chilean mortgages
constituting a civil mortgage (hipoteca sobre bienes raices) of real property
owned by each Obligor, executed by each Obligor and delivered to the
Administrative Agent for the benefit of the Lenders, substantially in the form
of Exhibit B-4 hereto.
"Regulations A, U and X" shall mean, respectively, Regulations A, U and
X of the Board of Governors of the Federal Reserve System of the United States
of America (or any successor), as the same may be modified and supplemented and
in effect from time to time.
"Regulatory Change" shall mean, with respect to any Lender (or any
Lending Office or bank holding company of which such Lender is a subsidiary),
-12-
<PAGE>
any change after the date of this Agreement in law or regulations or the
adoption or making after such date of any interpretation, directive or request
applying to a class of financial institutions including such Lender (or such
Lending Office or such bank holding company) of or under any law or regulations
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
Hazardous Materials into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata.
"Relevant Parties" shall mean Acquisition Co., any Subsidiary of
Acquisition Co., Hipercable, any Subsidiary of Hipercable, and any Stock
Pledgor.
"Required Lenders" shall mean Lenders holding at least 66-2/3% of the
aggregate outstanding principal amount of the Loans or, if the Loans shall not
have been made, at least 66-2/3% of the Commitments.
"SaskTel Transaction" shall mean one or more transactions pursuant to
which SaskTel International ("SaskTel") acquires an equity interest in the
Company, so long as (a) the aggregate consideration paid by SaskTel for such
acquisition does not exceed U.S.$50,000,000, (b) such acquisition occurs on or
before December 31, 1999, and (c) SaskTel grants to the Lenders (pursuant to
documents in form and substance satisfactory to the Administrative Agent, and
together with such legal opinions as the Administrative Agent may request) a
first priority perfected Lien upon such equity interest.
"Security Documents" shall mean, collectively, each Agreement to Grant
a Pledge Without Conveyance, the Commercial Pledge Agreement, each Real Property
Mortgage, each Pledge Without Conveyance, the Stock Pledge Agreement, and each
Conditional Assignment.
"Senior Debt" shall mean, at any time, the aggregate amount of
Indebtedness of the Company and its Subsidiaries (on a consolidated basis) at
such time (excluding (x) Subordinated Debt, (y) up to U.S.$15,000,000 of Box
Lease Financing and (z) any Nortel Debt).
"Senior Debt to EBITDA Ratio" shall mean, as at any date, the ratio of
the following:
(a) the aggregate amount Senior Debt on such date, to
(b) for any of the following dates:
(i) June 30, 1999, the product of (x) EBITDA for the
period of three consecutive months ending on, or most recently
ended prior to, such date times (y) four,
(ii) September 30, 1999, the product of (x) EBITDA
for the period of two fiscal quarters ending on, or most
recently ended prior to, such date times (y) two,
(iii) December 31, 1999, the product of (x) EBITDA
for the period of three fiscal quarters ending on, or most
recently ended prior to, such date times (y) 1.33, and
(iv) any date after December 31, 1999, EBITDA for the
period of four consecutive fiscal quarters ending on, or most
recently ended prior to, such date.
"Stock Pledge Agreement" shall mean the Chilean public deed
constituting a commercial pledge of shares (prenda sobre acciones) executed by
-13-
<PAGE>
the Stock Pledgors, Acquisition Co., the Company and other Obligors and
delivered to the Administrative Agent for the benefit of the Lenders,
substantially in the form of Exhibit B-5 hereto, and granted pursuant to and in
accordance with Law No. 4287 of Chile.
"Stock Pledgors" shall mean each Person owning any capital stock of the
Company, which, on the Closing Date, consists of UIH Chile, Inc., a Colorado
corporation, and UIH Chile Ventures, Inc., a Cayman Islands company.
"Subordinated Debt" shall mean Indebtedness in respect of Closing Date
Debt, Post-Closing Debt and the Post-Closing Financing.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"TD" shall mean Toronto Dominion (Texas), Inc.
"Telecommunications License" shall mean the licenses granted to the
Company or any of its Subsidiaries by the Chilean Under Secretary of
Telecommunications (Subsecretaria de Telecomunicaciones) for the provision of
telecommunications services (other than direct-to-home broadcasting).
"Telephony Revenue" shall mean, as at any date, the aggregate amount of
revenue generated by the provision of telephony services by the Obligors during
the period of four consecutive fiscal quarters ending on such date (net of
reserves for doubtful accounts), provided that
(a) Telephony Revenue for June 30, 1999 shall be the product
of (x) the aggregate amount of revenue generated by the provision of
telephony services by the Obligors during the fiscal quarter ending on
such date (net of reserves for doubtful accounts), times (y) four,
(b) Telephony Revenue for September 30, 1999 shall be the
product of (x) the aggregate amount of revenue generated by the
provision of telephony services by the Obligors during the period of
two consecutive fiscal quarters ending on such date (net of reserves
for doubtful accounts), times (y) two, and
(c) Telephony Revenue for December 31, 1999, shall be the
product of (x) the aggregate amount of revenue generated by the
provision of telephony services by the Obligors during the period of
three consecutive fiscal quarters ending on such date (net of reserves
for doubtful accounts), times (y) 1.33.
"Telephony Subscribers" shall mean subscribers to telephony services
provided by the Obligors.
"Total Debt to EBITDA Ratio" shall mean, as at any date, the ratio of:
(a) all Indebtedness of the Company and its Subsidiaries on
such date (other than any Closing Date Debt), to
(b) the following:
(i) for June 30, 1999, the product of (x) EBITDA for
the period of three consecutive months ending on, or most
recently ended prior to, such date times (y) four,
-14-
<PAGE>
(ii) for September 30, 1999, the product of (x)
EBITDA for the period of two fiscal quarters ending on, or
most recently ended prior to, such date times (y) two,
(iii) for December 31, 1999, the product of (x)
EBITDA for the period of three fiscal quarters ending on, or
most recently ended prior to, such date times (y) 1.33, and
(iv) at all times after December 31, 1999, EBITDA for
the period of four consecutive fiscal quarters ending on, or
most recently ended prior to, such date.
"Tranche" shall have the meaning assigned to such term in Section 1.03
hereof.
"Tranche A Loan Commitment" shall mean for each Lender, the obligation
of such Lender to make a single Tranche A Loan in an aggregate amount up to but
not exceeding the amount set opposite the name of such Lender on the signature
page hereof under the caption Tranche A Loan Commitment. The aggregate principal
amount of the Tranche A Loan Commitments is U.S.$140,000,000.
"Tranche A Loans" shall mean Loans provided by Section 2.01(a) hereof.
"Tranche A Notes" shall mean the promissory notes provided for by
Section 2.07(a) hereof and all promissory notes delivered in substitution or
exchange thereof, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Tranche B Loan Commitment" shall mean for each Lender, the obligation
of such Lender to make one or more Tranche B Loans in an aggregate amount up to
but not exceeding the amount set opposite the name of such Lender on the
signature page hereof under the caption Tranche B Loan Commitment (as such
amount may be reduced from time to time, or increased, pursuant to Section 2.03
hereof). The aggregate principal amount of the Tranche B Loan Commitments on the
Closing Date is U.S.$30,000,000.
"Tranche B Loans" shall mean Loans provided by Section 2.01(b) hereof.
"Tranche B Notes" shall mean the promissory notes provided for by
Section 2.07(b) hereof and all promissory notes delivered in substitution or
exchange thereof, in each case as the same shall be modified and supplemented
and in effect from time to time.
"UIH" shall mean United International Holdings, Inc., a Delaware
corporation, and its legal successors.
"VTR Larga Distancia Lease Agreements" shall mean:
(a) the lease agreement N(degree) 9609007, dated as of
February 1, 1997, between VTR Telefonica S.A. and Comunicaciones
Mundiales S.A.,
(b) the lease agreement N(degree) 97003008, dated as of
February 1, 1997, between VTR Telefonica S.A. and VTR Larga Distancia
S.A.,
(c) the agreement N(degree) 01071998 for the provision of
telecommunication services, dated as of July 1, 1998, between VTR
Cablexpress (Chile) S.A. and VTR Larga Distancia S.A., and
(d) the agreement N(degree) 02071998 for the provision of
telecommunication services, dated as of July 1, 1998, between VTR
Cablexpress (Chile) S.A. and VTR Larga Distancia S.A.
"Wholly Owned Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests are directly or indirectly owned or controlled by
-15-
<PAGE>
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
"Working Capital" shall mean, at any time of determination, the sum of
(a) the consolidated current assets of the Company and its
Subsidiaries at such time (other than cash and cash equivalents held by
the Company and its Subsidiaries), minus
(b) the consolidated current liabilities of the Company and
its Subsidiaries at such time (other than the current portion of
outstanding Loans).
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
that used in the audited consolidated financial statements of the Company and
its consolidated Subsidiaries referred to in Section 8.02 hereof (except for
changes concurred with by the Company's independent public accountants), and all
financial statements, certificates and reports as to financial matters required
to be furnished hereunder shall be in Dollars.
1.03 Tranches. Loans and Commitments hereunder are distinguished by
"Tranche." Loans of a "Tranche" refers to whether such Loans are Tranche A Loans
or Tranche B Loans. Commitments of a "Tranche" refers to whether such
Commitments are Tranche A Loan Commitments or Tranche B Loan Commitments.
1.03 Newcom. For all purposes of this Agreement and the other Basic
Documents, Newcom shall be deemed to be a Wholly Owned Subsidiary of the Company
and, consequently, a "Subsidiary Guarantor" and an "Obligor." Without limiting
the effect of the foregoing, all of the financial statements furnished to the
Lenders pursuant to Section 9.01 hereof shall include financial information with
respect to Newcom as if it were a Wholly Owned Subsidiary of the Company.
Section 2. Commitments, Loans, Notes and Prepayments.
2.01 Loans.
(a) Tranche A Loans. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make a single term loan to the Company in
Dollars on the Closing Date in an aggregate principal amount up to but not
exceeding the amount of the Tranche A Loan Commitment of such Lender. Amounts in
respect of Tranche A Loans that have been prepaid cannot be reborrowed.
(b) Tranche B Loans. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make one or more term loans to the Company in
Dollars during the period commencing on the Closing Date and ending on the
Commitment Termination Date in an aggregate principal amount up to but not
exceeding the amount of the Tranche B Loan Commitment of such Lender. Amounts in
respect of Tranche B Loans that have been prepaid cannot be reborrowed.
2.02 Borrowings. The Company shall give the Administrative Agent notice
of each borrowing hereunder as provided in Section 4.05 hereof. Not later than
1:00 p.m. New York time on the date specified for each borrowing hereunder, each
Lender shall make available the amount of the Loan or Loans to be made by it on
such date to the Administrative Agent, at the Administrative Agent's Account, in
immediately available funds, for account of the Company. The amount so received
by the Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same in
-16-
<PAGE>
immediately available funds, in an account of the Company maintained at
Citibank, N.A. (or any other account of the Company maintained at another bank
in Santiago, Chile designated by the Company).
2.03 Commitment Reductions and Termination; Commitment Increases.
(a) The Company shall have the right at any time or from time to time
to terminate or reduce the aggregate unused amount of the Tranche B Loan
Commitments; provided that (x) the Company shall give notice of each such
termination or reduction as provided in Section 4.05 hereof and (y) each partial
reduction shall be in an aggregate amount at least equal to U.S.$3,000,000 (or a
larger multiple of U.S.$500,000).
(b) The Company has the right, on one or more occasions, to increase
the Tranche B Commitments by up to U.S.$50,000,000, provided that (i) no Lender
hereunder shall be obligated to increase its Commitments, (ii) if any such
additional Tranche B Commitments are to be provided by Persons that are not then
Lenders, such Persons shall be Eligible Assignees, (iii) any such increase shall
be pursuant to a supplement hereto (in form and substance satisfactory to the
Adminstrative Agent) entered into by the Obligors, the Adminstrative Agent and
the Lender providing the additional Tranche B Commitments, (iv) after giving
effect thereto, the Tranche B Loan Commitments, the outstanding Tranche B Loans
and the outstanding Tranche A Loans shall be re-allocated (with appropriate
assignments of outstanding Loans, purchased from existing Lenders at par) so
that each Lender holds each Class of Loans and Commitments in the same pro rata
portion, (v) unless such re-allocation occurs on the last day of Interest
Period, the Company shall pay to each Lender compensation due under Section 5.05
hereof resulting from such reallocation as if such re-allocation constituted a
voluntary prepayment of Loans, and (vi) the Company shall take all such actions
as may be necessary so that each such Lender providing additional Tranche B
Commitments shall benefit from the Liens on the Collateral created by the
Security Documents.
2.04 Commitment Fees. The Company shall pay to the Administrative Agent
for account of each Lender a commitment fee on the daily average unused amount
of each of such Lender's Tranche B Loan Commitment, for the period from and
including the date of this Agreement to but not including the earlier of the
date such Tranche B Loan Commitment is terminated and the Commitment Termination
Date, in each case at a rate per annum equal to 2.50%. Accrued commitment fees
shall be payable in arrears on each Quarterly Date and on the earlier of the
date such Commitment is terminated and the Commitment Termination Date.
2.05 Lending Offices. The Loans made by each Lender shall be made and
maintained at such Lender's Lending Office.
2.06 Several Obligations; Remedies Independent. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Administrative Agent shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender, and
no Lender shall have any obligation to the Administrative Agent or any other
Lender for the failure by such Lender to make any Loan required to be made by
such Lender. Without prejudice to the provisions of Section 10 hereof, to the
extent they require action on the part of the Majority Lenders to accelerate the
maturity of the Loans, the amounts payable by the Company at any time hereunder
and under the Notes to each Lender shall be a separate and independent debt and
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement and the Notes, and it shall not be necessary for any other Lender
or the Administrative Agent to consent to, or be joined as an additional party
in, any proceedings for such purposes.
2.07 Notes.
(a) Tranche A Notes. The Tranche A Loan made by each Lender shall be
evidenced by one or more promissory notes of the Company substantially in the
form of Exhibit A-1 hereto, dated the date of such Tranche A Loan, payable to
the order of such Lender in a principal amount equal to the amount of such
Lender's Tranche A Loan and otherwise duly completed.
-17-
<PAGE>
(b) Tranche B Notes. Each Tranche B Loan made by each Lender shall be
evidenced by one or more promissory notes of the Company substantially in the
form of Exhibit A-2 hereto, dated the date of such Tranche B Loan, payable to
the order of such Lender in a principal amount equal to the amount of such
Lender's Tranche B Loan and otherwise duly completed.
2.08 Optional Prepayments. Subject to Section 4.04 hereof, the Company
shall have the right to prepay Loans at any time commencing three months after
the Closing Date and from time to time thereafter, provided that the Company
shall give the Administrative Agent notice of each such prepayment as provided
in Section 4.05 hereof (and, upon the date specified in any such notice of
prepayment, the amount to be prepaid shall become due and payable hereunder).
Each prepayment of Loans under this Section shall be without any penalty or
premium, except as may be required under Section 5.05 hereof.
2.09 Mandatory Prepayments.
(a) From Excess Cash Flow. On the last day of the first Interest Period
ending after the earlier of (i) the receipt by the Lenders of the annual
financial statements of the Company referred to in Section 9.01(b) hereof and
(ii) the date by which such annual financial statements are required to be
furnished to the Lenders pursuant to said Section, commencing with the annual
financial statements for the fiscal year of the Company ending on December 31,
2000, the Company shall prepay the Loans in an aggregate amount equal to 50%
(or, if the Post-Closing Financing has not been consummated and/or a
Post-Closing Contribution has not been made in an aggregate amount at least
equal to the Post-Closing Required Amount on or prior to December 31, 2000,
100%) of Excess Cash Flow for such fiscal year.
(b) From Net Disposition Proceeds. On or before the tenth Business Day
following the Application Date relating to any Net Disposition Proceeds, the
Company shall prepay the Loans in an aggregate amount equal to 100% of such Net
Disposition Proceeds. The Company agrees to apply to the Central Bank of Chile,
no later than the Business Day following receipt of such Net Disposition
Proceeds, for approval to make such prepayment.
(c) From Net Equity Proceeds. On or before the tenth Business Day
following the Application Date relating to any Net Equity Proceeds, the Company
shall prepay the Loans in an aggregate amount equal to 50% of such Net Equity
Proceeds. The Company agrees to apply to the Central Bank of Chile, no later
than the Business Day following receipt of such Net Equity Proceeds, for
approval to make such prepayment.
(d) From Net Debt Proceeds. On or before the tenth Business Day
following the Application Date relating to any Net Debt Proceeds in respect of
any Excess Post-Closing Financing, the Company shall prepay the Loans in an
aggregate amount equal to 100% of such Net Debt Proceeds. The Company agrees to
apply to the Central Bank of Chile, no later than the Business Day following
receipt of such Net Debt Proceeds, for approval to make such prepayment.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans. The Company hereby promises to pay to the
Administrative Agent for account of each Lender the principal of such Lender's
Loans on the Principal Payment Date.
3.02 Interest. The Company hereby promises to pay to the Administrative
Agent for account of each Lender interest on the unpaid principal amount of each
Loan made by such Lender for the period from and including the date of such Loan
to but excluding the date such Loan shall be paid in full, at a rate per annum,
for each Interest Period relating thereto, equal to the Eurodollar Rate for such
Loan for such Interest Period plus the Applicable Margin. Notwithstanding the
foregoing, the Company hereby promises to pay to the Administrative Agent for
account of each Lender interest at the applicable Post-Default Rate on any
principal of any Loan made by such Lender and on any other amount payable by the
Company hereunder or under the Notes held by such Lender to or for account of
such Lender, that shall not be paid in full when due (whether at stated
-18-
<PAGE>
maturity, by acceleration, by mandatory prepayment or otherwise), for the period
from and including the due date thereof to but excluding the date the same is
paid in full. Accrued interest on each Loan shall be payable in arrears on the
last day of each Interest Period therefor and upon the payment or prepayment
thereof (but only on the principal amount so paid or prepaid), except that
interest payable at the Post-Default Rate shall be payable from time to time on
demand. Promptly after the determination of any interest rate provided for
herein or any change therein, the Administrative Agent shall give notice thereof
to the Lenders to which such interest is payable and to the Company.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by any Obligor under this
Agreement and the Notes, and, except to the extent otherwise provided therein,
all payments to be made by the Obligors under any other Basic Document, shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at the Administrative Agent's Account,
not later than 1:00 p.m. New York time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day).
(b) The Company shall, subject to Section 4.02 hereof, at the time of
making each payment under this Agreement or any Note for account of any Lender,
specify to the Administrative Agent (which shall so notify the intended
recipient(s) thereof) the Loans or other amounts payable by the Company
hereunder to which such payment is to be applied (and in the event that the
Company fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(c) Each payment received by the Administrative Agent under this
Agreement or any Note for account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for account of such Lender's Lending Office for the Loan or other obligation in
respect of which such payment is made.
(d) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing of Loans of a Tranche under Section 2.01 hereof shall
be made from the Lenders holding Commitments of such Tranche, each payment of
commitment fee under Section 2.04 hereof shall be made for account of the
Lenders having Tranche B Loan Commitments, and each termination or reduction of
the amount of Tranche B Loan Commitments under Section 2.03 hereof shall be
applied to the Tranche B Loan Commitments of the Lenders, pro rata according to
the amounts of their respective Tranche B Loan Commitments; (b) each payment or
prepayment (whether optional or mandatory) of principal of Loans by the Company
shall be made for account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of such Loans held by them; and (c) each
payment of interest on Loans by the Company shall be made for account of the
Lenders pro rata in accordance with the amounts of interest on such Loans then
due and payable to the respective Lenders.
4.03 Computations. Interest on Loans and commitment fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable.
-19-
<PAGE>
4.04 Minimum Amounts. Except for mandatory prepayments made pursuant to
Section 2.09 hereof, each partial prepayment of principal of Loans shall be in
an aggregate amount at least equal to U.S.$5,000,000 or a larger multiple of
U.S.$1,000,000. Each borrowing of Tranche B Loans shall be in an aggregate
amount at least equal to U.S.$5,000,000 or a larger multiple of U.S.$1,000,000.
4.05 Certain Notices. Notices by the Company to the Administrative
Agent of terminations or reductions of the Tranche B Loan Commitments, of
borrowings and optional prepayments of Loans, shall be irrevocable and shall be
effective only if received by the Administrative Agent not later than 10:00 a.m.
New York time on the third Business Day prior to the date of the relevant
termination, reduction, borrowing or prepayment. Each such notice of borrowing
shall specify the Tranche and amount (subject to Sections 4.02 and 4.04 hereof)
of each Loan to be borrowed and the date of borrowing (which shall be a Business
Day). Each such notice of optional prepayment shall specify the amount (subject
to Sections 4.02 and 4.04 hereof) of each Loan to be prepaid and the date of
prepayment (which shall be a Business Day). The Administrative Agent shall
promptly (and, if the Administrative Agent receives such notice by 10:00 a.m. on
any Business Day, on the same Business Day) notify the Lenders of the contents
of each such notice.
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"Payor") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, provided that if neither the recipient(s)
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be
made by the Company to the Lenders, the Company and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the Post-Default Rate
(and, in case the recipient(s) shall return the Required Payment to the
Administrative Agent, without limiting the obligation of the Company
under Section 3.02 hereof to pay interest to such recipient(s) at the
Post-Default Rate in respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds of a
Loan to be made by the Lender to the Company, the Payor and the Company
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest
provided for such Required Payment pursuant to Section 3.02 hereof
(and, in case the Company shall return the Required Payment to the
Administrative Agent, without limiting any claim the Company may have
against the Payor in respect of the Required Payment).
4.07 Sharing of Payments, Etc.
(a) The Company and each Subsidiary Guarantor agrees that, in addition
to (and without limitation of) any right of set-off, banker's lien or
-20-
<PAGE>
counterclaim a Lender and its Affiliates may otherwise have, each Lender shall
be entitled, at its option, to offset balances held by it (including any
deposits, whether general or special, time or demand, or provisional or final,
and including certificates of deposit) for account of the Company or any
Subsidiary Guarantor, or other Indebtedness of such Lender held by the Company
or any Subsidiary Guarantor, at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans, to
the extent due and payable, or any other amount then due and payable to such
Lender hereunder (regardless of whether such balances are then due to the
Company or such Subsidiary Guarantor), in which case it shall promptly notify
the Company and the Administrative Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Obligor payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement or any other Basic Document through the exercise of any
right of set-off, banker's lien or counterclaim or similar right or otherwise
(other than from the Administrative Agent as provided herein), and, as a result
of such payment, such Lender shall have received a greater percentage of the
principal of or interest on the Loans or such other amounts then due hereunder
or thereunder by such Obligor to such Lender than the percentage received by any
other Lender, it shall promptly purchase from such other Lenders participations
in (or, if and to the extent specified by such Lender, direct interests in) the
Loans or such other amounts, respectively, owing to such other Lenders (or in
interest due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
pro rata in accordance with the unpaid principal of and/or interest on the Loans
or such other amounts, respectively, owing to each of the Lenders. To such end
all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other Indebtedness or
obligation of any Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lender entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) The Company shall pay directly to each Lender from time to time
such amounts as such Lender may reasonably determine to be necessary to
compensate such Lender for any costs that such Lender determines are
attributable to its making or maintaining of any Loans or its obligation to make
any Loans hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any Loans or such obligation (such increases in costs
and reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that:
(i) shall subject any Lender (or its Lending Office or the
bank holding company of which it is a subsidiary) to any tax, duty or
other charge in respect of such Loans or its Notes or changes the basis
of taxation of any amounts payable to such Lender under this Agreement
or its Notes in respect of Loans (excluding changes in the rate of tax
on the overall net income of such Lender or of such Lending Office by
-21-
<PAGE>
the jurisdiction in which such Lender has its principal office or such
Lending Office or such bank holding company); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Lender
(including, without limitation, any of such Loans or any deposits
referred to in the definition of "Eurodollar Rate" in Section 1.01
hereof), or any commitment of such Lender (including, without
limitation, the Commitments of such Lender hereunder).
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Lender from time to time on request such amounts as such Lender may reasonably
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
that it determines are attributable to the maintenance by such Lender (or any
Lending Office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) of any
court or governmental or monetary authority (i) following any Regulatory Change
or (ii) implementing any risk-based capital guideline or other requirement
(whether or not having the force of law and whether or not the failure to comply
therewith would be unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord, of capital in respect of its Commitments or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Lending Office or
such bank holding company) to a level below that which such Lender (or any
Lending Office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request). For purposes of this
Section 5.01(b), "Basle Accord" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
(c) Each Lender shall notify the Company of any event occurring after
the date of this Agreement entitling such Lender to compensation under paragraph
(a) or (b) of this Section 5.01 as promptly as practicable, but in any event
within 45 days, after such Lender obtains actual knowledge thereof; provided
that (i) if any Lender fails to give such notice within 45 days after it obtains
actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date 45 days prior to the date that such
Lender does give such notice, (ii) no Lender shall be entitled to compensation
under paragraph (a) or (b) of this Section 5.01 for any period in excess of 120
days prior to the date of notice from such Lender to the Company (irrespective
of the date on which such Lender had actual knowledge of the event giving rise
to the request for compensation), (iii) any such Lender shall be entitled to
compensation under paragraphs (a) and (b) of this Section 5.01 only if such
Lender is requesting similar compensation from other borrowers similarly
situated, and (iv) each Lender will designate a different Lending Office for the
Loans of such Lender if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole opinion of such Lender,
be disadvantageous to such Lender, except that such Lender shall have no
obligation to designate a Lending Office located in the United States of
America. Each Lender will furnish to the Company a certificate setting forth the
basis and amount of each request by such Lender for compensation under paragraph
(a) or (b) of this Section 5.01. Determinations and allocations by any Lender
for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to paragraph (a) or (b) of this Section 5.01, or of the effect of
capital maintained pursuant to paragraph (b) of this Section 5.01, on its costs
or rate of return of maintaining Loans or its obligation to make Loans, or on
amounts receivable by it in respect of Loans, and of the amounts required to
compensate such Lender under this Section 5.01, shall be conclusive, provided
that such determinations and allocations are made on a reasonable basis.
(d) Provided that no Default shall have occurred and be continuing, the
Company may, at any time, replace any Lender (x) as to which the Company is
-22-
<PAGE>
obligated to make payments under this Section 5.01 (unless such Lender has since
changed its Lending Office so as to eliminate the obligation of the Company to
make such payments), or (y) which has given the Company the notice contemplated
by Section 5.03 hereof, by giving not less than ten Business Days' prior notice
to the Administrative Agent (who shall promptly notify such Lender), that it
intends to replace such Lender with one or more lenders (including but not
limited to one or more Lenders under this Agreement) selected by the Company
that (i) have agreed to replace such Lender as provided in this Section 5.01(d),
(ii) are reasonably acceptable to the Administrative Agent and (iii) enter into
an assignment agreement with such Lender (in form reasonably acceptable to such
Lender). Upon the effective date of any replacement under this paragraph and as
a condition to such replacement, the replacement lender or lenders shall pay to
the Lender being replaced the principal of the Loans held by such Lender and the
Company shall pay to such Lender all accrued interest on such Loans and all
other amounts owing to such Lender hereunder (including any amounts payable
under Section 5.05 hereof as if such Loans were being prepaid by the Company)
whereupon each such replacement lender (if not already a Lender) shall become a
"Lender" for all purposes of this Agreement. Each Lender agrees to execute and
deliver such instruments, and take such other actions, as may be required by the
Central Bank of Chile in order to effect the replacement of such Lender pursuant
to this Section 5.01(d).
5.02 Alternative Interest Rate. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Eurodollar Rate for
any Interest Period or Default Interest Period:
(a) the Administrative Agent reasonably determines (so long as
the Administrative Agent is making substantially the same determination
with respect to other borrowers (situated similarly to the Company) to
which it has made loans), which determination shall be conclusive, that
interest rate reported for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Loans as provided herein;
or
(b) the Majority Lenders reasonably determine (so long as they
are making substantially the same determination with respect to other
borrowers (situated similarly to the Company) to which they
respectively have made loans), which determination shall be conclusive,
and notify the Administrative Agent that the relevant rates of interest
referred to in the definition of "Eurodollar Rate" in Section 1.01
hereof upon the basis of which the rate of interest for Loans for such
Interest Period or Default Interest Period is to be determined are not
likely to adequately cover the cost to such Lenders of making or
maintaining Loans for such Interest Period or Default Interest Period;
then the Administrative Agent shall give the Company and each Lender prompt
notice thereof and:
(i) During the 15-day period next succeeding the date of any
such notice (the "Negotiation Period"), the Administrative Agent (in
consultation with such Lenders) and the Company will negotiate in good
faith for the purpose of agreeing upon an alternative, mutually
acceptable basis (the "Substitute Basis") for determining the rate of
interest to be applicable to the Loans for such Interest Period or
Default Interest Period;
(ii) If at the expiry of the Negotiation Period, the Majority
Lenders and the Company have agreed upon a Substitute Basis and the
Administrative Agent has received confirmation from its Chilean counsel
that such Substitute Basis has received all necessary governmental
approvals and consents, the Substitute Basis shall be retroactive to,
and take effect from, the beginning of such Interest Period or Default
Interest Period;
(iii) If at the expiry of the Negotiation Period, a Substitute
Basis shall not have been agreed upon as aforesaid or the
Administrative Agent shall not have received the above mentioned
confirmation as to requisite governmental approvals or consents, the
Administrative Agent shall forthwith notify each Lender of such failure
to agree to receive such confirmation and, within five Business Days
after receipt of such notice (or as soon thereafter as may be
practicable), each such Lender shall notify the Company (through the
-23-
<PAGE>
Administrative Agent) of the cost to such Lender (as determined by it
in good faith and on commercially reasonable terms) of funding and
maintaining such Loan for such Interest Period or Default Interest
Period (which shall be substantially the same cost that such Lender
quotes to other borrowers (similarly situated to the Company in similar
situations) to which it has made loans); and the interest payable to
such Lender on such Loan for such Interest Period shall be interest at
a rate per annum equal to the Applicable Margin above the cost to such
Lender of funding and maintaining such Loan for such Interest Period or
Default Interest Period as so notified by such Lender (or, as to any
principal of such Loan or other amount payable to such Lender on or in
respect of such Loan which is then past due, 3% plus the Applicable
Margin above such cost); and
(iv) The procedures specified in clauses (i), (ii) and (iii)
above shall apply to each Interest Period or Default Interest Period
succeeding the first Interest Period or Default Interest Period to
which they were applied unless and until the Administrative Agent shall
determine in consultation with the Majority Lenders that the conditions
referred to in clause (a) or clause (b) above no longer exist and so
notifies the Company and the Lenders, whereupon interest on such Loans
shall again be determined in accordance with the provisions of Section
3.02 hereof commencing on the first day of the Interest Period or
Default Interest Period next succeeding the date of such notice.
5.03 Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Lending Office to
honor its obligation to make or maintain any of its Loans hereunder (and, in the
reasonable opinion of such Lender, the designation of a different Lending Office
would either not avoid such unlawfulness or would be disadvantageous to the
Lender), then such Lender shall promptly notify the Company thereof (through the
Administrative Agent) and such Lender's obligation to make Loans shall be
suspended until such time as such Lender may again make and maintain Loans and,
if any of such Lender's Loans are then outstanding, the Company shall, upon the
request of such Lender, promptly prepay the principal of such Loans together
with accrued interest thereon.
5.04 Chilean Taxes.
(a) All payments on account of the principal of and interest on the
Loans, fees and all other amounts payable hereunder by the Obligors to or for
the account of the Administrative Agent or any Lender, including, without
limitation, amounts payable under clause (b) of this Section 5.04, shall be made
free and clear of and without reduction or liability for Chilean Taxes. The
Obligors will pay all Chilean Taxes for their own respective accounts, prior to
the date on which penalties attach thereto, except for any Chilean Taxes (other
than Chilean Taxes imposed on or in respect of any amount payable hereunder,
under the Notes or under any other Basic Document) the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained, so long as no claim for such Chilean Taxes is
made on the Administrative Agent or any Lender.
(b) Each of the Obligors shall indemnify the Administrative Agent and
each Lender against, and reimburse the Administrative Agent and each Lender on
demand for, any Chilean Taxes and any loss, liability, claim or expense,
including interest, penalties and legal fees, which the Administrative Agent or
such Lender (as the case may be) may incur at any time arising out of or in
connection with any failure of the Company or any Subsidiary Guarantor to make
any payment of Chilean Taxes when due.
(c) In the event that any Obligor is required by applicable law, decree
or regulation to deduct or withhold Chilean Taxes from any amounts payable on,
under or in respect of this Agreement or the Loans (including, without
limitation, the Chilean income taxes referred to in clause (e) of this Section
5.04), such Obligor shall promptly pay the Person entitled to such amount such
additional amounts as may be required, after the deduction or withholding of
Chilean Taxes to enable such Person to receive from such Obligor, on the due
date thereof, an amount equal to the full amount stated to be payable to such
Person under this Agreement.
-24-
<PAGE>
(d) Each Obligor shall furnish to the Administrative Agent, upon the
request of any Lender (through the Administrative Agent), together with
sufficient certified copies for distribution to each Lender requesting the same
original official tax receipts in respect of each payment of Chilean Taxes
required under this Section 5.04, within 30 days after the date such payment is
made, and the Obligors shall promptly furnish to the Administrative Agent at its
request or at the request of any Lender (through the Administrative Agent) any
other information, documents and receipts that the Administrative Agent or such
Lender may reasonably require to establish to its satisfaction that full and
timely payment has been made of all Chilean Taxes required to be paid under this
Section 5.04.
(e) Each Obligor represents and warrants to the Lenders and the
Administrative Agent that, on and as of the date of this Agreement, none of this
Agreement, any other Basic Document, or the execution or delivery by any Obligor
of this Agreement or any other Basic Document, is subject to any Chilean Taxes,
and no payment to be made by any Obligor under this Agreement is subject to any
Chilean Taxes, except for Chilean income taxes at the rate of 4% on interest
payable by the Company hereunder, certain other Chilean Taxes of up to a rate of
35% on amounts payable by the Company hereunder (other than interest on and
principal of the Loans) and Chilean stamp taxes at the rate of 1.2% on the
amount of each Loan, in each case required to be withheld and paid by the
Company.
5.05 Compensation. The Company shall pay to the Administrative Agent
for account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender reasonably determines is attributable to:
(a) any payment or mandatory or optional prepayment of a Loan
made by such Lender for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 10 hereof) on a date
other than the last day of an Interest Period for such Loan; or
(b) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 7 hereof to be satisfied) to borrow a Loan from
such Lender on the date for such borrowing specified in the relevant
notice of borrowing given pursuant to Section 2.02 hereof, or any
failure by the Company for any reason to prepay a Loan from such Lender
on the date specified in the relevant notice of prepayment given
pursuant to Section 2.08 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid, or
not borrowed (other than the portion thereof that represents the Applicable
Margin) for the period from the date of such payment, prepayment, or failure to
borrow to the last day of the then current Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan that would
have commenced on the date specified for such borrowing) at the applicable rate
of interest for such Loan provided for herein over (ii) the amount of interest
that otherwise would have accrued on such principal amount at a rate per annum
equal to the interest component of the amount such Lender would have bid in the
London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Lender).
Section 6. Guarantee.
6.01 The Guarantee. The Subsidiary Guarantors hereby irrevocably
jointly and severally guarantee to each Lender and the Administrative Agent and
their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest on the Loans made by the Lenders to, and the Notes held by each
Lender of, the Company and all other amounts from time to time owing to the
Lenders or the Administrative Agent by the Company under this Agreement and
under the Notes and by any Obligor under any of the other Basic Documents, in
each case strictly in accordance with the terms thereof (and giving effect to
any amendment or modification of such terms) (such obligations being herein
-25-
<PAGE>
collectively called the "Guaranteed Obligations"). The Subsidiary Guarantors
hereby further jointly and severally agree that if the Company shall fail to pay
in full when due (whether at stated maturity, by acceleration or otherwise) any
of the Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.
6.02 Obligations Unconditional. The obligations of the Subsidiary
Guarantors under Section 6.01 hereof are absolute and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Company under this Agreement, the Notes
or any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 6.02 that the obligations of the
Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and
several, under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Subsidiary Guarantors hereunder
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance
with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or the Notes or any other agreement or instrument
referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Agreement or the Notes or any other agreement or instrument referred to
herein or therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of,
the Administrative Agent or any Lender or Lenders as security for any
of the Guaranteed Obligations shall fail to be perfected.
The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed
against the Company under this Agreement or the Notes or any other agreement or
instrument referred to herein or therein, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
6.03 Reinstatement. The obligations of the Subsidiary Guarantors under
this Section 6 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Company in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise and the Guarantors jointly and
severally agree that they will indemnify the Administrative Agent and each
Lender on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Administrative Agent or such Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
6.04 Subrogation. The Subsidiary Guarantors hereby jointly and
severally agree that until the payment and satisfaction in full of all
Guaranteed Obligations and the expiration and termination of the Commitments of
the Lenders under this Agreement they shall not exercise any right or remedy
-26-
<PAGE>
arising by reason of any performance by them of their guarantee in Section 6.01
hereof, whether by subrogation or otherwise, against the Company or any other
guarantor of any of the Guaranteed Obligations or any security for any of the
Guaranteed Obligations. Any amount paid to any Subsidiary Guarantor on account
of any such subrogation rights prior to the payment in full of all Guaranteed
Obligations shall be held in trust for the benefit of the Administrative Agent
and the Lenders and each holder of a Note and, forthwith upon receipt by any
Subsidiary Guarantor, be turned over to the Administrative Agent in the exact
form received by such Subsidiary Guarantor (duly indorsed by such Subsidiary
Guarantor to the Administrative Agent, if required) and credited and applied
against the Guaranteed Obligations, whether matured or unmatured, in accordance
with the terms of this Agreement.
6.05 Remedies. The Subsidiary Guarantors jointly and severally agree
that, as between the Subsidiary Guarantors and the Lenders, the obligations of
the Company under this Agreement and the Notes may be declared to be forthwith
due and payable as provided in Section 10 hereof (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 10) for purposes of Section 6.01 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against the Company and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the Company) shall forthwith become due and payable by the Subsidiary
Guarantors for purposes of said Section 6.01.
6.06 Continuing Guarantee. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
6.07 Rights of Contribution. The Subsidiary Guarantors hereby agree, as
between themselves, that if any Subsidiary Guarantor shall become an Excess
Funding Subsidiary Guarantor (as defined below) by reason of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
Guarantor shall, on demand of such Excess Funding Subsidiary Guarantor (but
subject to the next sentence), pay to such Excess Funding Subsidiary Guarantor
an amount equal to such Subsidiary Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the Properties, debts and
liabilities of such Excess Funding Subsidiary Guarantor) of the Excess Payment
(as defined below) in respect of such Guaranteed Obligations. The payment
obligation of a Subsidiary Guarantor to any Excess Funding Subsidiary Guarantor
under this Section 6.07 shall be subordinate and subject in right of payment to
the prior payment in full of the obligations of such Subsidiary Guarantor under
the other provisions of this Section 6 and such Excess Funding Subsidiary
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations.
For purposes of this Section 6.07, (i) "Excess Funding Subsidiary
Guarantor" shall mean, in respect of any Guaranteed Obligations, a Subsidiary
Guarantor that has paid an amount in excess of its Pro Rata Share of such
Guaranteed Obligations, (ii) "Excess Payment" shall mean, in respect of any
Guaranteed Obligations, the amount paid by an Excess Funding Subsidiary
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and
(iii) "Pro Rata Share" shall mean, for any Subsidiary Guarantor, the ratio
(expressed as a percentage) of (x) the amount by which the aggregate present
fair saleable value of all Properties of such Subsidiary Guarantor (excluding
any shares of stock of any other Subsidiary Guarantor) exceeds the amount of all
the debts and liabilities of such Subsidiary Guarantor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Subsidiary Guarantor hereunder and any obligations of any
other Subsidiary Guarantor that have been Guaranteed by such Subsidiary
Guarantor) to (y) the amount by which the aggregate fair saleable value of all
Properties of the Company and all of the Subsidiary Guarantors exceeds the
amount of all the debts and liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of the
Company and the Subsidiary Guarantors hereunder) of the Company and all of the
Subsidiary Guarantors, all as of the Closing Date. If any Subsidiary becomes a
Subsidiary Guarantor hereunder subsequent to the Closing Date, then for purposes
of this Section 6.07 such subsequent Subsidiary Guarantor shall be deemed to
have been a Subsidiary Guarantor as of the Closing Date and the aggregate
present fair saleable value of the Properties, and the amount of the debts and
-27
<PAGE>
liabilities, of such Subsidiary Guarantor as of the Closing Date shall be deemed
to be equal to such value and amount on the date such Subsidiary Guarantor
becomes a Subsidiary Guarantor hereunder.
6.08 General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 6.01 hereof would otherwise, taking into account the provisions of
Section 6.07 hereof, be held or determined to be void, invalid or unenforceable,
or subordinated to the claims of any other creditors, on account of the amount
of its liability under said Section 6.01, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without
any further action by such Subsidiary Guarantor, any Lender, the Administrative
Agent or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
Section 7. Conditions Precedent.
7.01 Initial Loan. The obligation of any Lender to make its initial
Loan hereunder is subject to the conditions precedent that the initial borrowing
of Loans hereunder shall occur on or before April 30, 1999 and that the
Administrative Agent shall have received the following documents, each of which
shall be satisfactory to the Administrative Agent (and, with respect to the
documents described in paragraphs (f), (g), (h), (i), (j), (p) and (t) below,
Citibank) in form and substance:
(a) Corporate Documents. The following documents, each
certified as indicated below:
(i) for each Obligor, a notarized copy of its
organizational documents (estatutos sociales), as amended and
in effect on the Closing Date, and for each Stock Pledgor, a
copy of its certificate of incorporation and its by-laws (or
other organization documents), as amended and in effect on the
Closing Date, certified by the President or a senior officer
of such Stock Pledgor as true and complete copies thereof;
(ii) for each of the Obligors and each Stock Pledgor,
a certificate of the President, the General Manager (Gerente
General) or other senior officer of such Obligor or such Stock
Pledgor, as the case may be, dated the Closing Date and
certifying (A) that attached thereto is a true and complete
copy of resolutions duly adopted by the board of directors of
such Obligor or such Stock Pledgor, as the case may be,
authorizing the execution, delivery and performance of such of
the Basic Documents to which such Obligor or such Stock
Pledgor, as the case may be, is or is intended to be a party
and the Loans hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and
effect, and (B) as to the incumbency and specimen signature of
each officer of such Obligor or such Stock Pledgor, as the
case may be, executing such of the Basic Documents to which
such Obligor or such Stock Pledgor, as the case may be, is
intended to be a party and each other document to be delivered
by such Obligor or such Stock Pledgor, as the case may be,
from time to time in connection therewith (and the
Administrative Agent and each Lender may conclusively rely on
such certificate until it receives notice in writing from such
Obligor or such Stock Pledgor, as the case may be, to the
contrary); and
(iii) for each of the Obligors and each Stock
Pledgor, a certificate of another officer or authorized
representative of such Obligor or such Stock Pledgor, as the
case may be, as to the incumbency and specimen signature of
the President, the General Manager (Gerente General) or senior
officer of such Obligor or such Stock Pledgor, as the case may
be, signing the applicable certificate referred to in clause
(ii) above.
-28-
<PAGE>
(b) Officer's Certificate. A certificate of the President, the
General Manager or other senior officer of the Company, dated the
Closing Date (i) to the effect set forth in Sections 7.02(a) and
7.02(b) hereof and (ii) to the effect that, as of the Closing Date and
after giving effect to the initial Loans hereunder and the other
transactions contemplated hereby, each of the Obligors will have
sufficient cash flow to enable it to pay its debts as they mature and
will not have defaulted in the payment of any of its obligations.
(c) Closing Date Contribution. Evidence that the Closing Date
Contribution shall have been duly made in compliance with all
applicable laws, statutes and regulations and that the proceeds
thereof, together with all Loans made on the Closing Date, shall be
used, and in an amount sufficient, to finance the Acquisition, to
refinance amounts outstanding under the ING Credit Agreement and to pay
any fees and expenses payable hereunder on the Closing Date.
(d) Acquisition; Merger etc. A copy of the Purchase Agreement
(together with all exhibits and schedules thereto, and copies of the
form of all opinions, certificates and other writings to be delivered
pursuant thereto), certified by the President or a senior officer of
the Company to be true and complete, together with
(i) evidence that, immediately following the making
of the initial Loans hereunder, the Acquisition shall have
been duly consummated in compliance with all applicable laws,
statutes and regulations,
(ii) a public deed prepared by the Company
transcribing the minutes of the shareholders' meeting for each
of Acquisition Co. and Hipercable approving the Merger, and
the abstracts thereof, in appropriate form for publication in
the Diario Oficial de la Republica de Chile and filing with
the Registro de Comercio del Conservador de Bienes Raices de
Santiago,
(iii) evidence that, immediately following the making
of the initial Loans hereunder, the Merger shall have been
duly consummated in compliance with all applicable laws,
statutes and regulations, except for the required publication
in the Diario Oficial de la Republica de Chile and the
required registration with the Registro de Comercio del
Conservador de Bienes Raices de Santiago, and
(iv) evidence that, immediately following the
consummation of the Merger, Acquisition Co and Hipercable
shall enter into an agreement in which Hipercable expressly
assumes the obligations of Acquisition Co. hereunder.
(e) Security Documents.
(i) Stock Pledge Agreement. The Stock Pledge
Agreement, duly executed and delivered by the parties thereto,
and duly notarized by a notary public in Chile, together with
(x) the certificates identified therein as representing all of
the issued and outstanding capital stock of each of the
Obligors, and (y) a certificate of a notary public in Chile to
the effect that the Liens created by the Stock Pledge
Agreement have been duly noted in the Stock Registry Book of
such Obligor, having attached thereto copies of the pages of
such book on which such notations have been made.
(ii) Real Property Mortgages. A Real Property
Mortgage for each Obligor, duly executed and delivered by such
Obligor, and duly notarized by a notary public in Chile.
(iii) Commercial Pledge Agreement. The Commercial
Pledge Agreement, duly executed and delivered by the Company,
and duly notarized by a notary public in Chile.
-29-
<PAGE>
(iv) Agreement to Grant a Pledge Without Conveyance.
An Agreement to Grant a Pledge Without Conveyance for each
Obligor, duly executed and delivered by such Obligor and duly
notarized by a notary public in Chile.
(v) Pledge Without Conveyance. A Pledge Without
Conveyance for each Obligor, duly executed and delivered by
such Obligor and duly notarized by a notary public in Chile.
(f) Opinion of Chilean Counsel to the Obligors. An opinion,
dated the Closing Date, of Carey y Cia. Ltda., counsel to the Obligors,
substantially in the form of Exhibit D-1 hereto (and each Obligor
hereby instructs such counsel to deliver such opinion to the Lenders
and the Administrative Agent).
(g) Opinion of Special New York Counsel to the Administrative
Agent. An opinion, dated the Closing Date, of Mayer, Brown & Platt,
special New York counsel to the Administrative Agent, substantially in
the form of Exhibit D-2 hereto (and the Administrative Agent hereby
instructs such counsel to deliver such opinion to the Lenders).
(h) Opinion of Special Chilean Counsel to the Administrative
Agent. An opinion, dated the Closing Date, of Philippi, Yrarrazaval,
Pulido y Brunner, special Chilean counsel to the Administrative Agent,
substantially in the form of Exhibit D-3 hereto (and the Administrative
Agent hereby instructs such counsel to deliver such opinion to the
Lenders).
(i) Opinion of U.S. Counsel to the Obligors. An opinion, dated
the Closing Date, of Holme Roberts & Owen LLP, counsel to the Obligors,
substantially in the form of Exhibit D-4 hereto (and each Obligor
hereby instructs such counsel to deliver such opinion to the Lenders
and the Administrative Agent).
(j) Opinion of Cayman Islands Counsel to the Obligors. An
opinion, dated the Closing Date, of W.S. Walker & Co., Cayman Islands
counsel to the Obligors, substantially in the form of Exhibit D-5
hereto (and each Obligor hereby instructs such counsel to deliver such
opinion to the Lenders and the Administrative Agent).
(k) Insurance Endorsement and Acknowledgment. Each policy of
insurance covering tangible Property of the Obligors, together with a
copy of a notice to each insurer under such policies advising it of the
assignment of such policy to the Administrative Agent.
(l) Licenses. A copy of each of the DTH License and the
Telecommunications License, in each case duly certified by an officer
of the Company to be a true and correct copy of the original thereof.
(m) Process Agent. An acceptance by the Process Agent of its
appointment as the agent for service of process of each Obligor, duly
executed and delivered by the Process Agent.
(n) Authorization and Registration. Evidence of the
authorization (which shall have been obtained prior to the execution of
this Agreement) by and registration with the Central Bank of Chile of
the financial terms of the Loans and substantially all of the other
terms and conditions of the Loans.
(o) Subsidiaries' Guarantee. A Chilean public deed (escritura
publica) evidencing the Subsidiary Guarantors' guarantee of the
Guaranteed Obligations, substantially in the form of Exhibit C hereto,
duly executed and delivered by each Subsidiary Guarantor, and duly
notarized by a notary public in Chile.
(p) Effective Subordination Documents. Effective Subordination
Documents for the Closing Date Debt, duly executed and delivered by the
parties thereto.
-30-
<PAGE>
(q) Repayment of Existing Indebtedness. Evidence that the
principal of and interest on, and all other amounts owing in respect
of, the Indebtedness listed in Part A of Schedule I to be repaid on the
Closing Date shall have been (or shall be simultaneously) paid in full,
that any commitments to extend credit under the agreements or
instruments relating to such Indebtedness shall have been canceled or
terminated and that all Guarantees in respect of, and all Liens
securing, any such Indebtedness shall have been released. In addition,
the Administrative Agent shall have received from any Person holding
any Lien securing any such Indebtedness, such releases and other
instruments, in each case in proper form for recording, as the
Administrative Agent shall have requested to release and terminate of
record the Liens securing such Indebtedness.
(r) Sources and Uses. A certificate of the President or a
senior financial officer of the Company setting forth the amount of
Indebtedness referred to in the foregoing clause (q) and the sources of
the funds to be used to repay such Indebtedness.
(s) Adverse Litigation or Proceeding. A certificate or
certificates of each Obligor signed on its behalf by the President or a
senior officer thereof to the effect that (and each Lender shall be
satisfied in its good faith judgment that) no litigation or proceeding
exists (or, in the case of litigation or similar proceedings by any
government or governmental or regulatory authority, agency or
instrumentality, shall be threatened) with respect to the making or
consummation of the Acquisition, the Merger, the Closing Date
Contribution or the transactions contemplated hereby, and no law or
regulation shall have been proposed, promulgated or deemed applicable
to the Acquisition, the Merger, the Closing Date Contribution or the
transactions contemplated hereby which would prevent or impose a
materially adverse condition on the Acquisition, the Merger, the
Closing Date Contribution or the transactions contemplated hereby.
(t) Management Agreements. The Management Agreements, duly
executed and delivered by the parties thereto.
(u) Other Documents. Such other documents as the
Administrative Agent or any Lender or special New York counsel to the
Administrative Agent may reasonably request and are reasonably
available to the Company.
The obligation of any Lender to make its initial Loan hereunder is also subject
to (i) the condition that no event shall have occurred that is reasonably likely
to result in a material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of Acquisition Co.,
Hipercable and their respective Subsidiaries (taken as a whole) since December
31, 1998, (ii) the condition that no material adverse change shall have occurred
in the loan syndication or financial or capital markets generally or in Chile,
or in the market conditions for loans or debt securities issued by Chilean
companies, and (iii) the condition that no law prevents or imposes materially
adverse conditions on the transactions contemplated by the Purchase Agreement
and the Basic Documents, and (iv) the payment by the Company of such fees as the
Company shall have agreed to pay to any Lender or the Administrative Agent in
connection herewith, including, without limitation, the reasonable fees and
expenses of Mayer, Brown & Platt, special New York counsel to the Administrative
Agent in connection with the negotiation, preparation, execution and delivery of
this Agreement and the Notes and the other Basic Documents and the making of the
Loans hereunder (to the extent that statements for such fees and expenses have
been delivered to the Company).
7.02 Initial and Subsequent Loans. The obligation of any Lender to make
any Loan to the Company upon the occasion of each borrowing hereunder (including
the initial borrowing) is subject to the satisfaction of the following further
conditions precedent:
(a) Both immediately prior to the making of such Loan and also
after giving effect thereto and to the intended use thereof, no Default
shall have occurred and be continuing.
-31-
<PAGE>
(b) Both immediately prior to the making of such Loan and also
after giving effect thereto and to the intended use thereof, the
representations and warranties made by the Company in Section 5.04(e)
hereof and Section 8 hereof, and by each Obligor in each of the other
Basic Documents to which it is a party, shall be true and complete on
and as of the date of the making of such Loan with the same force and
effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date).
(c) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated hereby shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent
shall have received such other documents and legal opinions in respect
of any aspect or consequence of the transactions contemplated hereby as
it shall reasonably request.
(d) Such Lender shall have received one or more Notes
evidencing such Loan.
(e) The Company shall have paid (or shall concurrently pay)
any Chilean stamp taxes (as described in Section 5.04(e)) which are
then due and payable in respect of such Loan.
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in clauses (a), (b), (d)
and (e) above (both as of the date of such notice and, unless the Company
otherwise notifies the Administrative Agent prior to the date of such borrowing,
as of the date of such borrowing).
7.03 Pro Forma Compliance. The obligation of any Lender to make any
Loan to the Company upon the occasion of each borrowing hereunder (including the
initial borrowing) during any fiscal quarter of the Company is subject to the
satisfaction of the further condition precedent that, after giving effect to the
making of such Loan, the Company shall be in compliance, on a pro forma basis,
as of the last day of the immediately preceding fiscal quarter, with its
obligations under Sections 9.09, 9.10, 9.11, 9.12, 9.13, 9.14 and 9.20 hereof
and no other Default would be continuing (and each Lender shall have received a
certificate of the chief financial officer of the Company demonstrating
compliance with the foregoing condition).
7.04 Consummation of the Merger. The obligation of any Lender to make
any Tranche B Loan to the Company upon the occasion of each borrowing of Tranche
B Loans hereunder (including the initial borrowing of Tranche B Loans) is
subject to the condition precedent that, the Administrative Agent shall have
received evidence that, immediately following the making of the initial Tranche
B Loan hereunder, the Merger shall have been duly consummated.
Section 8. Representations and Warranties. Each Obligor represents and
warrants to the Administrative Agent and the Lenders that:
8.01 Corporate Existence. Each of the Company and the other Obligors:
(a) is a sociedad anonima or other entity duly organized, validly existing and
in good standing under the laws of Chile; (b) has all requisite corporate or
other power necessary to own its assets and carry on its business as now being
or as proposed to be conducted, (c) has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted (except where the
failure to have the same could reasonably be expected to have a Material Adverse
Effect); and (d) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could (either
individually or in the aggregate) have a Material Adverse Effect.
8.02 Financial Condition. Hipercable has heretofore furnished to each
of the Lenders the consolidated balance sheets of Hipercable and the Principal
Subsidiaries as at December 31, 1998 and the related consolidated statements of
-32-
<PAGE>
income, retained earnings and cash flow of Hipercable and the Principal
Subsidiaries for the fiscal year ended on said date, with the opinion thereon of
Price Waterhouse, certified public accountants to Hipercable and VTR Cable
Express S.A., and Price Waterhouse, certified public accountants to VTR
Telefonica S.A. All such financial statements are complete and correct in all
material respects and fairly present the consolidated financial condition of
Hipercable and each of the Principal Subsidiaries in accordance with GAAP
applied on a consistent basis. None of Hipercable nor any of the other Obligors
has on the date hereof any material contingent liabilities, liabilities for
taxes, material forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in said balance sheets as at said dates. Since December 31, 1998,
there has been no material adverse change in the consolidated financial
condition, operations, business or prospects taken as a whole of Hipercable and
the other Obligors from that set forth in said financial statements as at said
date.
8.03 Litigation. Except as set forth in Schedule III hereto, there are
no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the knowledge
of any Obligor) threatened against any Obligor that, if adversely determined
could (either individually or in the aggregate) have a Material Adverse Effect
or purport to affect in any material respect the legality, validity or
enforceability of the Acquisition, the Merger, the Purchase Agreement or any
Basic Document.
8.04 No Breach. None of the Merger and the Acquisition, the execution
and delivery of this Agreement, the Notes, the other Basic Documents and the
Purchase Agreement, the consummation of the transactions herein and therein
contemplated or compliance with the terms and provisions hereof and thereof will
conflict with or result in a breach of, or require any consent under, the
charter or estatutos sociales of any Obligor, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which any
Obligor is a party or by which any of them or any of their Property is bound or
to which any of them is subject, or constitute a default under any such
agreement or instrument, or (except for the Liens created pursuant to the
Security Documents) result in the creation or imposition of any Lien upon any
Property of any Obligor pursuant to the terms of any such agreement or
instrument.
8.05 Action. Each of Acquisition Co. and Hipercable have all necessary
corporate power, authority and legal right to consummate the Acquisition and the
Merger; and the consummation of the Acquisition and the Merger have been duly
authorized by all necessary corporate action on the part of each of Acquisition
Co. and Hipercable (including, without limitation, any required shareholder
approvals). On the Closing Date, after giving effect to the making of the
initial Loans hereunder, the Acquisition shall have been duly consummated and,
except for the required publication in the Diario Oficial de la Republica de
Chile and the required registration with the Registro de Comercio del
Conservador de Bienes Raices de Santiago, the Merger shall have been duly
consummated. Each Obligor has all necessary corporate power, authority and legal
right to execute, deliver and perform its obligations under such of the Basic
Documents and the Purchase Agreement to which it is a party; the execution,
delivery and performance by each Obligor of such of the Basic Documents and the
Purchase Agreement to which it is a party have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and each of this Agreement and the Purchase
Agreement has been duly and validly executed and delivered by each Obligor and
constitutes, and each of the Notes and the other Basic Documents to which it is
a party when executed and delivered by such Obligor (in the case of the Notes,
for value) will constitute, its legal, valid and binding obligation, enforceable
against each Obligor in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights.
8.06 Approvals. Except for the registration with the Central Bank of
Chile of the financial terms and conditions of the Loans and the registrations,
filings and other actions required by Section 7.01 hereof (all of which have
been duly made, are in full force and effect and are not subject to appeal), no
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency, or any securities exchange,
or any other Person are necessary for (a) the consummation of the Acquisition
and the Merger or (b) the execution, delivery or performance by any Obligor of
such of the Basic Documents and the Purchase Agreement to which it is a party or
for the legality, validity or enforceability hereof or thereof.
-33-
<PAGE>
8.07 Legal Form. This Agreement and each other Basic Document is in
proper legal form under the law of Chile for the enforcement thereof against
each Obligor under such law, and if this Agreement and each other Basic Document
were stated to be governed by such law, they would constitute legal, valid and
binding obligations of each Obligor under such law, enforceable in accordance
with their respective terms; provided, however, that in order to enforce this
Agreement and each other Basic Document not in the Spanish language in Chile,
such documents must be accompanied with an official translation into Spanish.
All formalities required in Chile for the validity and enforceability of this
Agreement and each other Basic Document (including, without limitation, any
necessary registration, recording or filing with any court or other authority in
Chile) have been accomplished, and no Chilean Taxes (other than Chilean stamp
taxes described in Section 5.04(e)) are required to be paid and except as
required by Section 7.01 hereof, no notarization is required, for the validity
and enforceability thereof.
8.08 Ranking. This Agreement and each other Basic Document and the
obligations evidenced hereby and thereby are and will at all times be direct and
unconditional general obligations of the Company and the Subsidiary Guarantors,
and will at all times rank (i) in right of payment at least pari passu with, and
(ii) in right of collateral security senior to, all other Indebtedness and all
Hedge Agreements of the Obligors, whether now existing or hereafter outstanding,
subject to statutorily preferred exceptions. There exists no Lien (including any
Lien arising out of any attachment, judgment or execution), security interest or
other encumbrance, nor any segregation or other preferential arrangement of any
kind, on, in or with respect to any of the Property or revenues of any Obligor,
except as expressly permitted by Section 9.06 hereof.
8.09 Taxes. Each of the Company and the other Obligors has filed all
income tax returns and all other material tax returns that are required to be
filed by it and has paid all taxes due pursuant to such returns or pursuant to
any assessment received by the Company or such Obligor. The charges, accruals
and reserves on the books of each of the Company and the other Obligors in
respect of taxes and other governmental charges are, in the opinion of the
Company and such Obligor, adequate.
8.10 Commercial Activity; Absence of Immunity. Each Obligor is subject
to civil and commercial law with respect to its obligations under each of the
Basic Documents to which it is a party. The execution, delivery and performance
by each Obligor of each Basic Document to which it is a party constitute private
and commercial acts rather than public or governmental acts. None of the
Obligors, nor any of their respective Properties or revenues, is entitled to any
right of immunity in any jurisdiction from suit, court jurisdiction, judgment,
attachment (whether before or after judgment), set-off or execution of a
judgment or from any other legal process or remedy relating to the obligations
of such Obligor under any of the Basic Documents to which it is a party.
8.11 Material Agreements and Liens.
(a) Part A of Schedule I hereto is a complete and correct description
of all outstanding Indebtedness or Hedge Agreements of any of the Obligors
(specifying which such Indebtedness is to be repaid on the Closing Date) and
Part B of Schedule I hereto is a list, as of the date of this Agreement, of each
credit agreement, loan agreement, indenture, purchase agreement, guarantee,
letter of credit or other arrangement providing for or otherwise relating to any
Indebtedness, Hedge Agreements or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Company or any other Obligor
(other than any such Indebtedness, Hedge Agreements or other extensions of
credit to be repaid in full on the Closing Date), and the aggregate principal or
face amount outstanding or that may become outstanding under each such
arrangement is correctly described in Part A of said Schedule I.
(b) Part C of Schedule I hereto is a complete and correct list, as of
the date of this Agreement, of each Lien securing Indebtedness or Hedge
Agreements of any Person and covering any Property of the Company or any other
Obligor (other than any Liens to be released and discharged of record on the
Closing Date), and the aggregate Indebtedness or Hedge Agreements secured (or
that may be secured) by each such Lien and the Property covered by each such
Lien is correctly described in Part C of said Schedule I.
-34-
<PAGE>
8.12 Environmental Matters. Each of the Company and the other Obligors
has obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business as
now being or as proposed to be conducted, except to the extent failure to have
any such permit, license or authorization would not (either individually or in
the aggregate) have a Material Adverse Effect. Each of such permits, licenses
and authorizations is in full force and effect and each of the Company and the
other Obligors is in compliance with the terms and conditions thereof, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not (either individually or in the aggregate) have a Material
Adverse Effect.
8.13 Capitalization. As of the date of this Agreement, after giving
effect to the Merger, the authorized capital stock of the Company consists of
shares of common stock, no par value, each of which shares is duly and validly
issued and outstanding, is free and clear of any Liens (other than Liens created
pursuant to the Basic Documents) and will be fully paid and nonassessable. As of
the date of this Agreement, after giving effect to the Merger, approximately 66%
of such issued and outstanding shares are owned beneficially and of record by
UIH Chile Ventures, Inc. (or such lesser percentage as shall represent the
number of shares owned by UIH Chile Ventures, Inc. after giving effect to any
Closing Date Equity made by a Person acceptable to the Majority Lenders) and
approximately 34% of such issued and outstanding shares are owned beneficially
and of record by UIH Chile, Inc. (or such lesser percentage as shall represent
the number of shares owned by UIH Chile, Inc. after giving effect to any Closing
Date Equity made by a Person acceptable to the Majority Lenders). Except as set
forth on Schedule V hereto, (x) there are no outstanding Equity Rights with
respect to the Company and (y) there are no outstanding obligations of the
Company or any other Obligor to repurchase, redeem, or otherwise acquire any
shares of capital stock of the Company.
8.14 Subsidiaries, Etc.
(a) Set forth in Part A of Schedule II hereto is a complete and correct
list, as of the date of this Agreement (but after giving effect to the
consummation of the Merger), of all of the Subsidiaries of the Company, together
with, for each such Subsidiary, (i) the jurisdiction of organization of such
Subsidiary, (ii) each Person holding ownership interests in such Subsidiary and
(iii) the nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed in Part A of Schedule II hereto, (x) each of the
Company and the other Obligors owns, free and clear of Liens, and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule II hereto, (y) all of the issued
and outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person.
(b) Set forth in Part B of Schedule II hereto is a complete and correct
list, as of the date of this Agreement, of all Investments (other than
Investments disclosed in Part A of said Schedule II hereto) held by the Company
or any other Obligor in any Person and, for each such Investment, (x) the
identity of the Person or Persons holding such Investment and (y) the nature of
such Investment. Except as disclosed in Part B of Schedule II hereto, each of
the Company and the other Obligors owns, free and clear of all Liens, all such
Investments.
(c) None of the Subsidiary Guarantors is subject to any indenture,
agreement, instrument or other arrangement of the type described in Section
9.21(b) hereof.
(d) Newcom is a Wholly Owned Subsidiary of UIH Chile, Inc.
(e) On the date hereof, each of Stock Pledgors is a Wholly Owned
Subsidiary of UIH.
(f) Acquisition Co. has not engaged in any business, or incurred any
liabilities, other than in connection with the transactions contemplated by the
Acquisition, the Merger, and this Agreement and the other Basic Documents.
-35-
<PAGE>
8.15 Properties and Assets. None of the Obligors has any interests in
any real property except for the property described in Part A of Schedule IV
hereto. None of the Obligors owns any material personal property (including
equipment, satellite dishes and wire networks) except for the property described
in Part B of Schedule IV hereto. None of the Obligors is party to any material
contracts, agreements or other arrangements except for those described in
Schedules I and II hereto and those described in Part C of Schedule IV hereto,
and none of the Obligors is in default of any of its material obligations under
any of such contracts, agreements or other arrangements. Each of the Obligors
owns, free and clear of all Liens (other than the Liens permitted pursuant to
Section 9.06), has good and marketable title to and enjoys peaceful and
undisturbed possession of, or holds pursuant to valid leaseholds, all material
Properties that are necessary for the operation and conduct of their respective
businesses as conducted on the date hereof.
8.16 True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Obligors to the Administrative Agent or any Lender in connection with the
negotiation, preparation or delivery of this Agreement and the other Basic
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole do not contain any untrue statement of fact or omit to
state any fact necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading in any material
respects. All written information furnished after the date hereof by the Company
and the other Obligors to the Administrative Agent and the Lenders in connection
with this Agreement and the other Basic Documents and the transactions
contemplated hereby and thereby will be true, complete and accurate in every
material respect, or (in the case of projections) based on good faith estimates,
on the date as of which such information is stated or certified. There is no
fact known to the Company or any other Obligor that could have a Material
Adverse Effect that has not been disclosed herein, in the other Basic Documents
or in a report, financial statement, exhibit, schedule, disclosure letter or
other writing furnished to the Lenders for use in connection with the
transactions contemplated hereby or thereby.
8.17 Investment Holding Company Act. None of the Obligors is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the United States Investment Company Act of 1940, as
amended.
8.18 Use of Credit. None of the Obligors is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
Stock, and no part of the proceeds of any extension of credit hereunder will be
used to buy or carry Margin Stock, as that term is used in Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System.
8.19 Solvency. Each of the Obligors has sufficient cash flow to enable
it to pay its debts as they mature and has not defaulted in the payment of any
of its obligations.
8.20 No Default on Purchase Agreement. Each Obligor, and each other
Person, that is a party to the Purchase Agreement has performed or complied in
all material respects with all agreements and conditions contained in the
Purchase Agreement to the extent required to be performed or complied with on or
prior to the making of the initial Loan hereunder.
8.21 Ownership of Collateral. Each of the Obligors is the sole and
beneficial owner of the Collateral and no Lien exists or will exist upon the
Collateral at any time (and no right or option to acquire the same exists in
favor of any Person), except for the Liens created in favor of the
Administrative Agent under the Security Documents.
8.22 Liens, etc. Each Lien created by the Security Documents
constitutes a valid and perfected Lien on the Property intended to be covered
thereby (other than any immaterial items of Property) in favor of the
Administrative Agent, free and clear of all other Liens (other than Liens
permitted under Section 9.06 hereof); and none of the Basic Documents has been
-36-
<PAGE>
terminated or ceased to be in full force and effect, and none of the Obligors
has contested the enforceability of any thereof.
8.23 Year 2000. In connection with the computer software relevant for
the normal operation of the business of each of the Company and the other
Obligors, (i) each of the Company and the other Obligors is aware of the risks
associated with the date change from December 31, 1999 to January 1, 2000, (ii)
each of the Company and the other Obligors is taking, or has taken, appropriate
steps to remedy any foreseeable problems relating to the year 2000 date change
that might materially adversely affect its business, both prior to and following
January 1, 2000, and (iii) each of the Company and the other Obligors will
complete all year 2000 required modification, validation and implementation, by
October 31, 1999, to the extent that failure to do so would have a Material
Adverse Effect.
Section 9. Covenants of the Obligors. Each Obligor covenants and agrees
with the Lenders and the Administrative Agent that, so long as any Commitment or
Loan is outstanding and until payment in full of all amounts payable by the
Company hereunder:
9.01 Financial Statements, Etc. The Company shall deliver to each of
the Lenders:
(a) as soon as available and in any event within 45 days after
the end of each quarterly fiscal period of each fiscal year of the
Company,
(x) a consolidated statement of income, retained
earnings and cash flow of the Company and its Subsidiaries for
such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the
related consolidated balance sheets of the Company and its
Subsidiaries as at the end of such period, setting forth in
each case (A) a reconciliation to generally accepted
accounting principles in the United States of America, and (B)
in comparative form (i) the corresponding figures for the
corresponding periods in the preceding fiscal year, and (ii)
the corresponding figures for the corresponding periods from
the financial projections previously delivered to the
Administrative Agent, accompanied by a certificate of a senior
financial officer of the Company, which certificate shall
state that said financial statements fairly present the
financial condition and results of operations of the Company
and its Subsidiaries, in each case in accordance with
generally accepted accounting principles in Chile,
consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments),
(y) a consolidated statement of revenue of each of
the Company's telephony operations ("Telephony Operations")
and the Company's cable operations ("Cable Operations") for
such period, together with information setting forth gross
margins, subscribers, churn, net additions, revenue per unit
and Capital Expenditures for such period for Telephony
Operations and Cable Operations, and
(z) a report setting forth, for each of the Northern,
Southern, Santiago and Central Regions of Chile, for each
Obligor, the number of Telephony Subscribers, the number
(reasonably approximated in accordance with industry
standards) of homes and apartments passed by telephony
systems, in each case as at the beginning of such period and
as at the end of such period,
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company,
(x) consolidated statements of income, retained
earnings and cash flow of the Company and its Subsidiaries,
and separately for each of the Principal Subsidiaries, for
such fiscal year and the related consolidated balance sheets
-37-
<PAGE>
of the Company and its Subsidiaries, and separately for each
of the Principal Subsidiaries, as at the end of such fiscal
year, setting forth (A) a reconciliation to generally accepted
accounting principles in the United States of America, and (B)
in each case in comparative form (i) the corresponding
consolidated figures for the preceding fiscal year, and (ii)
the corresponding figures from the financial projections
previously delivered to the Administrative Agent, and
accompanied by an opinion thereon of independent certified
public accountants of recognized international standing, which
opinion shall state that said consolidated financial
statements fairly present the consolidated financial condition
and results of operations of the Company and its Subsidiaries,
and of each of the Principal Subsidiaries, as at the end of,
and for, such fiscal year in accordance with generally
accepted accounting principles in Chile, and a certificate of
such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default, and
(y) a consolidated statement of revenue of each of
the Company's Telephony Operations and the Company's Cable
Operations for such period, together with information setting
forth gross margins, subscribers, churn, net additions,
revenue per unit and Capital Expenditures for such period for
Telephony Operations and Cable Operations;
(c) as soon as available and in any event within 30 days after
the end of each month, a report setting forth, separately for each
Obligor,
(x) the number of Cable Subscribers and Telephony
Subscribers, the number (reasonably approximated in accordance
with industry standards) of homes and apartments passed by
cable and telephony systems, the number of such Cable
Subscribers subscribing for basic service and the number
subscribing for premium services, and the number of Telephony
Subscribers who are also Cable Subscribers, in each case as at
the beginning of such period and as at the end of such period,
(y) the number of Cable Subscribers and Telephony
Subscribers installed, disconnected and reconnected during
such month, and
(z) a consolidated statement of revenue of each of
the Company's Telephony Operations and the Company's Cable
Operations for such period, together with information setting
forth gross margins, revenue per unit and Capital Expenditures
for such period for Telephony Operations and Cable Operations;
(d) promptly upon their becoming available, copies of all
reports or other filings, if any, that the Company have filed or made
with any Chilean governmental agency or securities exchange;
(e) promptly after the Company knows or has reason to believe
that any Default has occurred, a notice of such Default describing the
same in reasonable detail and, together with such notice or as soon
thereafter as possible, a description of the action that the Company
has taken or proposes to take with respect thereto;
(f) (i) as soon as practicable and in any event not later than
15 days prior to the commencement of each fiscal year, the budget for
the Company and its Subsidiaries for such fiscal year prepared on a
monthly basis in such detail as shall be satisfactory to the Required
Lenders, and (ii) no later than 30 days, and no earlier than 60 days,
prior to the consummation of any Post-Closing Financing, the Company's
business plan, in such scope and detail as the Administrative Agent may
reasonably request, for the period beginning on the date thereof and
ending on December 31, 2005; and
(g) from time to time such other information regarding the
financial condition, operations, business or prospects of the Company
or any of its Subsidiaries as any Lender or the Administrative Agent
may reasonably request.
-38-
<PAGE>
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
senior financial officer of the Company in substantially the form of Exhibit E
hereto (i) to the effect that no Default has occurred and is continuing (or, if
any Default has occurred and is continuing, describing the same in reasonable
detail and describing the action that the Company has taken or proposes to take
with respect thereto) and (ii) setting forth in reasonable detail the
computations necessary to determine whether the Company is in compliance with
Sections 9.07, 9.09, 9.10, 9.11, 9.12, 9.13, 9.14 and 9.20 hereof as of the end
of the respective quarterly fiscal period or fiscal year.
9.02 Litigation. The Company will promptly give to each Lender notice
of all legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and any material development in
respect of such legal or other proceedings, affecting the Company or any of its
Subsidiaries, except proceedings that, if adversely determined, would not
(either individually or in the aggregate) have a Material Adverse Effect and
would not purport to affect, to any material extent, the legality, validity or
enforceability of the Acquisition, the Merger, the Purchase Agreement or any of
the Basic Documents.
9.03 Existence, Etc. Each of the Company and the other Obligors will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises, including,
without limitation, the Telecommunications License and (prior to the
Galaxy Disposition) the DTH License and such other telecommunications
and cable licenses and permits of the Obligors as necessary for them to
engage in the business of providing cable television and direct-to-
home broadcasting services in Chile, but excluding any that are
transferred to another Obligor or are made redundant in connection with
a merger permitted under Section 9.05 hereof;
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities
(including, without limitation, any laws or regulations relating to
employee pensions and employee other benefits and all Environmental
Laws) if failure to comply with such requirements could (either
individually or in the aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any
of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained;
(d) maintain all of its Properties used or useful in its
business in good working order and condition, ordinary wear and tear
excepted;
(e) keep adequate records and books of account, in which
complete entries will be made in accordance with generally accepted
accounting principles in Chile consistently applied; and
(f) permit representatives of any Lender or the Administrative
Agent, at its own cost and expense, during normal business hours, to
examine, copy and make extracts from its books and records (other than
documents to which the Company or the relevant Subsidiary is required,
pursuant to an agreement with a third party, to maintain confidential),
to inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by
such Lender or the Administrative Agent (as the case may be).
9.04 Insurance. Each of the Company and the other Obligors will
maintain insurance with financially sound and reputable insurance companies, and
with respect to Property and risks of a character usually maintained by
corporations engaged in Chile in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts
customarily maintained by such corporations. The Obligors shall provide that all
policies of insurance covering any tangible Property of any of the Obligors
entered into after the date hereof are promptly delivered to the Agent, duly
endorsed to the Agent for the benefit of the Lenders.
-39-
<PAGE>
9.05 Prohibition of Fundamental Changes.
(a) Neither the Company nor any other Obligor will enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution).
(b) Neither the Company nor any other Obligor will acquire any material
business or Property from, or capital stock of, or be a party to any acquisition
of, any Person except for the Acquisition, purchases of inventory and other
Property to be sold or used in the ordinary course of business, Investments
permitted under Section 9.08 hereof, and Capital Expenditures permitted under
Section 9.10 hereof.
(c) Neither the Company nor any other Obligor will convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or a substantial part of its business or Property, whether now
owned or hereafter acquired (including, without limitation, receivables and
leasehold interests). Neither the Company nor any other Obligor will convey,
sell, lease, transfer or otherwise dispose of, any of its Property, whether now
owned or hereafter acquired, (x) for less than its fair market value (as
determined in good faith by a senior financial officer of the Company) and (y)
unless the proceeds thereof are applied to prepay Loans to the extent required
by Section 2.09(b).
(d) Notwithstanding the foregoing provisions of this Section 9.05:
(i) Acquisition Co. and Hipercable may consummate the Merger
and the Newcom Acquisition;
(ii) any Subsidiary of the Company may be merged or
consolidated with or into: (i) the Company if the Company shall be the
continuing or surviving corporation or (ii) any other such Subsidiary;
(iii) any Subsidiary of the Company may sell, lease, transfer
or otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise and whether or not for fair market value) to
the Company or a Wholly Owned Subsidiary of the Company; and
(iv) the Company may consummate the Galaxy Disposition.
9.06 Limitation on Liens. Neither the Company nor any other Obligor
will create, incur, assume or suffer to exist any Lien upon any of its Property,
whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and listed in Part B
of Schedule I hereto (excluding, however, following the making of the
initial Loans hereunder, Liens securing Indebtedness to be repaid with
the proceeds of such Loans, as indicated on said Schedule I);
(c) Liens imposed by any governmental authority for taxes,
assessments, customs duties or charges not yet due or that are being
contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the
Company or the affected Subsidiaries, as the case may be, in accordance
with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business that are not overdue for a period of more than 30 days or that
are being contested in good faith and by appropriate proceedings and
Liens securing judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under Section 10(i) hereof;
-40-
<PAGE>
(e) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto that, in the aggregate, are not material in amount, and that do
not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business
of the Company or any of its Subsidiaries; and
(h) Liens upon real and/or tangible personal Property acquired
after the date hereof (by purchase, construction or otherwise) by the
Company or any of its Subsidiaries, each of which Liens either (A)
existed on such Property before the time of its acquisition and was not
created in anticipation thereof or (B) was created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of
such Property; provided that (i) no such Lien shall extend to or cover
any Property of the Company or such Subsidiary other than the Property
so acquired and improvements thereon and (ii) the principal amount of
Indebtedness secured by any such Lien shall at no time exceed 80% of
the fair market value (as determined in good faith by a senior
financial officer of the Company) of such Property at the time it was
acquired (by purchase, construction or otherwise);
provided, that in no event shall the Company or any other Obligor create, incur,
assume or suffer to exist any Lien upon the Telecommunications License or (prior
to the Galaxy Disposition) the DTH License.
9.07 Indebtedness. Neither the Company nor any other Obligor will, nor
will it permit any of its Subsidiaries to, create, incur or suffer to exist any
Indebtedness except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on the date hereof and listed in
Part A of Schedule I hereto (excluding, however, following the making
of the initial Loans hereunder, the Indebtedness to be repaid with the
proceeds of such Loans, as indicated on said Schedule I), and any
Indebtedness incurred solely to refinance such Indebtedness;
(c) the Subordinated Debt;
(d) Indebtedness of Subsidiaries of the Company to the Company
or to other Subsidiaries of the Company and Indebtedness of the Company
to any of its Subsidiaries;
(e) additional unsecured Indebtedness of the Company and its
Subsidiaries, the proceeds of which shall be used for working capital
by the Company and its Subsidiaries, in an aggregate amount at any one
time outstanding not exceeding U.S.$15,000,000 (or the equivalent in
other currencies);
(f) additional Indebtedness of the Company and its
Subsidiaries consisting of Indebtedness secured by Liens permitted by
Section 9.06(h) hereof and Capital Lease Obligations, in an aggregate
amount at any one time outstanding not exceeding:
-41-
<PAGE>
(i) prior to the first date on which Senior Debt to
EBITDA Ratio is less than or equal to 2.0 to 1 (as evidenced
by financial statements delivered by the Company to the
Lenders), U.S.$5,000,000 (or its equivalent in other
currencies), and
(ii) thereafter, U.S.$20,000,000 (or its equivalent
in other currencies);
but only to the extent that such Indebtedness satisfies each
of the following conditions:
(x) the final maturity of such Indebtedness
is after April 29, 2002,
(y) less than half of the original amount of
such Indebtedness is scheduled to be repaid on or
prior to April 29, 2002, and
(z) all of the terms thereof (including,
without limitation, the final maturity thereof and
the scheduled amortization thereof) are satisfactory
to the Majority Lenders.
(g) additional Indebtedness of the Company and its
Subsidiaries consisting of Box Lease Financing in an aggregate amount
at any one time outstanding not exceeding U.S.$15,000,000;
(h) additional Indebtedness of the Company and its
Subsidiaries consisting of Nortel Debt in an aggregate amount at any
one time outstanding up to but not exceeding U.S.$5,000,000.
9.08 Investments. Neither the Company nor any other Obligor will make
or permit to remain outstanding any Investments except:
(a) Investments outstanding on the date hereof and identified
in Part B of Schedule II hereto;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Company in any Subsidiary Guarantor;
(e) Investments by the Company and its Subsidiaries in capital
stock of Subsidiaries of the Company to the extent outstanding on the
date of the financial statements of the Company and its Subsidiaries
referred to in Section 8.02 hereof and advances by the Company and its
Subsidiaries to Subsidiaries of the Company in the ordinary course of
business;
(f) Hedge Agreements required or permitted to be entered into
under Section 9.16 hereof;
(g) additional Investments to the extent that the
consideration therefor consists solely of capital stock of the Company
or any of its Affiliates, so long as (i) such Investments are made in
Chilean entities, (ii) such Investments are in the lines of business
described in Section 9.17 hereof, (iii) the Company grants the
Administrative Agent a first priority perfected Lien upon any equity
interest held or acquired in respect of such Investments, and (iv)
after giving effect thereto, there would be no Default under Section
10(j) hereof; and
(h) additional Investments, so long as:
(i) such Investments are made in Chilean entities,
(ii) such Investments are in the lines of business
described in Section 9.17 hereof, and
-42-
<PAGE>
(iii) if such Investments is made:
(A) prior to the date (the "Change Date") on
which there shall have been consummated a
Post-Closing Financing and/or a Post-Closing
Contribution in an aggregate amount at least equal to
the Post-Closing Required Amount, the aggregate
amount of all such Investments made prior to the
Change Date shall not exceed U.S.$5,000,000, and
(B) on and after the Change Date, the
aggregate amount of all such Investments made on and
after the Change Date shall not exceed the sum of the
following:
(x) U.S.$15,000,000, plus
(y) the lesser of (1)
U.S.$10,000,000 and (2) the aggregate amount
of prepayments of the Loans made on and
after the Change Date pursuant to Section
2.09(a) hereof, minus
(z) the aggregate amount of
Investments made pursuant to Section
9.08(h)(iii)(A) hereof.
9.09 Restricted Payments.
(a) Except to the extent the same would not result in an Event
of Default under Section 10(e), neither the Company nor any other
Obligor will purchase, redeem, retire or otherwise acquire for value,
or set apart any money for a sinking, defeasance or other analogous
fund for the purchase, redemption, retirement or other acquisition of,
or make any voluntary payment or prepayment of the principal of or
interest on, or any other amount owing in respect of, any Subordinated
Debt.
(b) None of the Company's Subsidiaries will purchase or
otherwise acquire any shares of any class of stock of the Company or
any warrants, options or other rights to acquire the same.
(c) The Company will not consent to (i) any modification,
supplement or waiver of any of the provisions of the Effective
Subordination Documents without the prior approval of the
Administrative Agent, or (ii) any modification, supplement or waiver of
any other agreement, instrument or other document evidencing or
relating to the Subordinated Debt without the prior approval of the
Majority Lenders, provided that the Company may replace the holder of
the Closing Date Debt with another Eligible Assignee, and enter into
appropriate documentation in connection with such replacement.
(d) The Company will not, without the consent of the Majority
Lenders, consent to any transfer of any of the Closing Date Debt by the
holder thereof.
(e) Neither the Company nor any other Obligor will pay any
management, advisory, consulting or other similar fees to any Affiliate
except
(i) reimbursements for expenses under the Management
Agreements, and
(ii) management fees in an aggregate amount not to
exceed the aggregate amount of prepayments of Loans made
pursuant to Section 2.09(a) hereof, provided, that, with
respect to this clause (ii),
(w) after giving effect to such payment, the
Senior Debt to EBITDA Ratio shall not exceed 4.00 to
1,
-43-
<PAGE>
(x) if such payment is made during any
quarterly fiscal period, such payment shall be made
(A) after the Administrative Agent receives from the
Company a certificate of a senior officer of the
Company, as described in the final paragraph of
Section 9.01, for the immediately preceding quarterly
fiscal period, and (B) in any event, no later than
46 days after the end of such immediately preceding
quarterly fiscal period,
(y) the Post-Closing Financing shall have
been consummated and/or a Post- Closing Contribution
shall have been made in an aggregate amount at least
equal to the Post-Closing Required Amount, and
(z) after giving effect to such payment, no
Default shall occur or be continuing.
9.10 Capital Expenditures. The Company will not permit the aggregate
amount of Capital Expenditures by the Company and its Subsidiaries to exceed:
(a) if a Post-Closing Financing has not been consummated
and/or a Post-Closing Contribution has not been made in an aggregate
amount at least equal to the Post-Closing Required Amount, then for
each fiscal year ending on the respective dates set forth below, the
amount set opposite such date:
Fiscal Year End Amount
December 31, 1999 U.S.$80,000,000
December 31, 2000 U.S.$70,000,000
December 31, 2001 U.S.$50,000,000
(b) if a Post-Closing Financing has been consummated and/or a
Post-Closing Contribution has been made in an aggregate amount at least
equal to the Post-Closing Required Amount, then for each fiscal year
ending on the respective dates set forth below, the amount set opposite
such date:
Fiscal Year End Amount
December 31, 1999 U.S.$80,000,000
December 31, 2000 U.S.$100,000,000
December 31, 2001 U.S.$110,000,000
In addition, in no event will the Company or any of its Subsidiaries enter into
commitments or similar arrangements for the purchase of equipment or services in
any fiscal year in amounts such that the Company would not be in compliance with
its obligations under this Section 9.10 for such fiscal year.
9.11 Total Debt to EBITDA Ratio. The Company will not permit the Total
Debt to EBITDA Ratio to exceed 8.00 to 1 as at the last day of any fiscal
quarter of the Company, beginning with the fiscal quarter ending on June 30,
1999.
9.12 Debt Service Coverage Ratio. The Company will not permit its Debt
Service Coverage Ratio, as at the last day of any fiscal quarter of the Company,
to be less than the ratio set forth below opposite the period in which such day
occurs:
Period Ratio
Closing Date to December 30, 2000 1.00 to 1
December 31, 2000 and at all times thereafter 1.50 to 1
-44-
<PAGE>
9.13 Senior Debt to EBITDA Ratio. The Company will not permit the
Senior Debt to EBITDA Ratio, as at the last day of any fiscal quarter of the
Company, to exceed the ratio set forth below opposite the period in which such
day occurs:
Period Ratio
Closing Date to September 29, 2000 5.50 to 1
September 30, 2000 to December 30, 2000 5.00 to 1
December 31, 2000 to March 30, 2001 4.50 to 1
March 31, 2001 to June 29, 2001 4.00 to 1
June 30, 2001 to December 30, 2001 3.50 to 1
December 31, 2001 and at all times thereafter 3.00 to 1
9.14 Interest Coverage Ratio. The Company will not permit the Interest
Coverage Ratio, as at the last day of any fiscal quarter of the Company, to be
less than the ratio set forth below opposite the period in which such day
occurs:
Period Ratio
Closing Date to December 30, 2000 1.50 to 1
December 31, 2000 to December 30, 2001 2.00 to 1
December 31, 2001 and at all times thereafter 2.50 to 1
9.15 Governmental Approvals. Each Obligor agrees that it will promptly
obtain from time to time at its own expense all such governmental licenses,
authorizations, consents, permits and approvals as may be required for such
Obligor to (a) comply with its obligations, and preserve its rights under, each
Basic Document and (b) maintain the existence, priority and perfection of the
Liens purported to be created under the Security Documents, in each case, except
to the extent the same would not have a Material Adverse Effect. Without in any
way limiting the foregoing, the Obligors will cause each Pledge Without
Conveyance delivered pursuant to the Agreement to Grant a Pledge Without
Conveyance to be duly published in the Diario Oficial de la Republica de Chile
within 30 days after the execution and delivery thereof.
9.16 Hedge Agreements.
(a) If, at any time, (x) the Eurodollar Rate for any Loans hereunder
is in excess of 6-1/2% for more than 90 consecutive days and (y) the Senior Debt
to EBITDA Ratio at such time is equal to or greater than 4.0 to 1, the Company
will, promptly thereafter, enter into and thereafter maintain in full force and
effect one or more Hedge Agreements with one or more of the Lenders that
effectively enables the Company (in a manner satisfactory to the Majority
Lenders), as at any date, to protect itself against three-month London interbank
offered rates as to a notional principal amount at least equal to an amount
equal to 50% of the aggregate notional principal amount of the aggregate
Indebtedness of the Company and its Subsidiaries for a period of at least two
years.
(b) In addition, the Company may (but shall not be required to), at
any time and from time to time, enter into one or more Hedge Agreements,
provided, however, that at no time shall the aggregate notional principal amount
of all Indebtedness of the Company and its Subsidiaries covered by Hedge
Agreements in respect of interest rate risks exceed 60% of the aggregate
notional principal amount of the aggregate Indebtedness of the Company and its
Subsidiaries.
9.17 Lines of Business. Neither the Company nor any other Obligor will
engage in any line or lines of business activity other than the business of
providing video, voice and data services.
-45-
<PAGE>
9.18 Transactions with Affiliates. Except as expressly permitted by
this Agreement, neither the Company nor any other Obligor will directly or
indirectly: (a) make any Investment in an Affiliate; (b) transfer, sell, lease,
assign or otherwise dispose of any Property to an Affiliate; (c) merge into or
consolidate with or purchase or acquire Property from an Affiliate; or (d) enter
into any other transaction directly or indirectly with or for the benefit of an
Affiliate (including, without limitation, Guarantees and assumptions of
obligations of an Affiliate); provided that (x) any Affiliate who is an
individual may serve as a director, officer or employee of the Company or any of
its Subsidiaries and receive reasonable compensation for his or her services in
such capacity and (y) the Company and its Subsidiaries may enter into
transactions providing for the leasing of Property, the rendering or receipt of
services or the purchase or sale of inventory and other Property in the ordinary
course of business if the monetary or business consideration arising therefrom
and the other terms thereof would be substantially as advantageous to the
Company and its Subsidiaries as the monetary or business consideration and other
terms that it would obtain in a comparable transaction with a Person not an
Affiliate.
9.19 Use of Proceeds.
(a) The Company will use the proceeds of the Loans hereunder solely:
(i) in the case of the Tranche A Loans, to (x) finance the
Acquisition and to pay costs and expenses incurred in connection
therewith, and (y) repay principal of and interest on the promissory
note of UIH Chile, Inc., dated June 26, 1997, to VTR S.A. in a
principal amount equal to U.S.$7,770,251.00, and
(ii) in the case of Tranche B Loans, for working capital
purposes and to finance Capital Expenditures in accordance with
Section 9.10;
provided that neither the Administrative Agent nor any Lender shall have any
responsibility as to the use of any of such proceeds.
(b) The Company will use the proceeds of any Closing Date Debt, any
Post-Closing Debt and the Post-Closing Financing solely to finance Capital
Expenditures, for working capital purposes and, to the extent that the same
would not result in an Event of Default under Section 10(e), to prepay Closing
Date Debt.
9.20 Minimum Telephony Revenue. The Company will not permit the
aggregate amount of Telephony Revenue, as at any date set forth below, to be
less than amounts set forth below opposite such date:
Date Amount
June 30, 1999 U.S.$ 5,500,000
September 30, 1999 U.S.$ 9,600,000
December 31, 1999 U.S.$11,600,000
March 31, 2000 U.S.$12,900,000
June 30, 2000 U.S.$15,900,000
September 30, 2000 U.S.$18,700,000
December 31, 2000 U.S.$21,100,000
March 31, 2001 U.S.$23,800,000
June 30, 2001 U.S.$26,100,000
September 30, 2001 U.S.$28,000,000
December 31, 2001 U.S.$29,700,000
March 31, 2002 U.S.$32,100,000
-46-
<PAGE>
9.21 Certain Obligations in Respect of Subsidiaries.
(a) Each of the Company and any other Obligor will take such action
from time to time as shall be necessary to ensure that each of its Subsidiaries
is a Wholly Owned Subsidiary (provided that (x) nothing in this Section 9.21(a)
shall restrict the ability of the Company to consummate the Galaxy Disposition,
(y) 50% of the capital stock of Newcom is owned beneficially and of record by
the Company and 50% of the capital stock of Newcom is owned beneficially and of
record by UIH Chile, Inc. or the Company, and (z) up to 0.01% of the capital
stock of any Subsidiary Guarantor may be held by UIH Chile, Inc.).
(b) Each Obligor (other than the Company) will not, after the date of
this Agreement, enter into any indenture, agreement, instrument or other
arrangement that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence or payment of Indebtedness, the granting of Liens, the
declaration or payment of dividends, the making of loans, advances or
Investments or the sale, assignment, transfer or other disposition of Property.
(c) Each of the Company and the other Obligors will take such action
from time to time as shall be necessary to ensure that all Subsidiaries of the
Company are Subsidiary Guarantors and, thereby, "Obligors" hereunder. Without
limiting the generality of the foregoing, in the event that the Company or any
other Obligor shall form or acquire any new Subsidiary, the Company or the
respective Obligor will cause such new Subsidiary to become a "Subsidiary
Guarantor" (and, thereby, an "Obligor") hereunder pursuant to a written
instrument in form and substance satisfactory to each Lender and the
Administrative Agent, to become a party to each Security Document (and to do
such things as may be necessary so that its Properties are subject to the Lien
of the Security Documents and its capital stock is subject to the Lien of the
Stock Pledge Agreement) and to deliver such proof of corporate action,
incumbency of officers, opinions of counsel and other documents as is consistent
with those delivered by each Obligor pursuant to Section 7.01 hereof upon the
Closing Date or as any Lender or the Administrative Agent shall have requested.
(d) Each of the Obligors will take such action from time to time as
shall be necessary to ensure that all of the capital stock of each Obligor shall
be subject to the Lien of the Stock Pledge Agreement. Without limiting the
generality of the foregoing, in the event that any Person shall acquire any
capital stock of the Company, the Company will cause such Person to become a
party to the Stock Pledge Agreement (and it will thereupon become a "Stock
Pledgor" hereunder) pursuant to a written instrument in form and substance
satisfactory to the Administrative Agent and its Chilean counsel, and to deliver
such proof of corporate action, incumbency of officers, opinions of counsel and
other documents as is consistent with those delivered by each Stock Pledgor
pursuant to Section 7.01 hereof upon the Closing Date or as the Administrative
Agent and its Chilean counsel shall have requested.
9.22 Insurance. The Company and the other Obligors agree that, subject
to the Lenders' rights with respect to insurance proceeds during the continuance
of any Default, they will use the proceeds of any policy of insurance covering
tangible Property of the Obligors to repair or replace the property in respect
of which such proceeds were received reasonably promptly (but in no event later
than six months) after receipt of such proceeds.
9.23 Post-Closing Collateral Matters.
(a) Pole Lease Agreements -- The Company agrees that, on and at all
times after the date four months after the Closing Date, it will:
(i) have caused there to be duly executed and delivered, duly
notarized by a notary public in Chile, and duly consented to by the
applicable lessors, Conditional Assignments covering leaseholds that
represent pole rental agreements covering the services provided to at
least 80% of the total number of Cable Subscribers; and
-47-
<PAGE>
(ii) use commercially reasonable efforts to duly execute and
deliver, have duly notarized by a notary public in Chile, and have
consented to by the applicable lessors, Conditional Assignments
covering the remaining 20% of the total number of Cable Subscribers.
Concurrently therewith, the Company shall furnish to the Lenders opinions of
Chilean counsel, in form and substance satisfactory to the Administrative Agent,
as to the perfection and priority of the Liens purported to be created thereby.
(b) VTR Larga Distancia Lease Agreements -- The Company agrees that,
on and at all times after the date four months after the Closing Date, it will
have caused there to be duly executed and delivered, duly notarized by a notary
public in Chile, and duly consented to by the applicable lessors, Conditional
Assignments covering the VTR Larga Distancia Lease Agreements. Concurrently
therewith, the Company shall furnish to the Lenders opinions of Chilean counsel,
in form and substance satisfactory to the Administrative Agent, as to the
perfection and priority of the Liens purported to be created thereby.
(c) License and Concession Pledge Agreement -- The Company agrees
that, on and at all times after the date three months after the Closing Date, it
will have caused there to be duly executed and delivered, duly notarized by a
notary public in Chile, and duly consented to by the applicable Persons, the
License and Concession Pledge Agreements.
(d) Official Publication of the Pledge Without Conveyance -- The
Company shall furnish to the Administrative Agent, by no later than May 15,
1999, a copy of the publication in the Diario Oficial de la Republica de Chile
of each Pledge Without Conveyance delivered to the Administrative Agent on or
prior to May 15, 1999.
(e) Real Property Mortgages -- With respect to each Real Property
Mortgage, the Company shall (i) deliver the same to the applicable conservador
de bienes raices in Chile by no later than 15 days after the Closing Date, and
(ii) furnish to the Administrative Agent, by no later than 30 days after the
Closing Date, a certificate of each applicable conservador de bienes raices in
Chile to the effect that the Liens created by such Real Property Mortgage have
been duly registered in each public registry in Chile in which such registration
is necessary to perfect the security interest purported to be granted by such
mortgage. Concurrently therewith, the Company shall furnish to the Lenders
opinions of Chilean counsel, in form and substance satisfactory to the
Administrative Agent, as to the perfection and priority of the Liens purported
to be created thereby.
(f) Commercial Pledge Agreement -- The Company shall furnish to the
Administrative Agent, by no later than 15 days after the Closing Date, a
certificate of the departamento de propiedad industrial in Chile to the effect
that the Liens created by the Commercial Pledge Agreement have been duly
registered in each public registry in Chile in which such registration is
necessary to perfect the security interest purported to be granted by such deed.
Concurrently therewith, the Company shall furnish to the Lenders opinions of
Chilean counsel, in form and substance satisfactory to the Administrative Agent,
as to the perfection and priority of the Liens purported to be created thereby.
(g) Insurance -- The Company shall furnish to the Administrative
Agent, with respect to each policy of insurance covering tangible Property of
the Obligors, (i) by no later than five Business Days after the Closing Date,
the endorsement of such policies to the Administrative Agent for the benefit of
the Lenders, and (ii) by no later than three Business Days after the Closing
Date, the acknowledgment of each such insurer to such assignment (it being
understood that, so long as no Default is continuing, the Obligors shall be
entitled to use any proceeds of any such insurance to repair or replace the
property in respect of which such proceeds were received, to the extent that
such repair or replacement is effected reasonably promptly (but in no event
later than six months) after receipt of such proceeds).
(g) Further Assurances -- The Company agrees that from time to time, at
the expense of the Company, the Company will, and will cause each of the other
Obligors to, promptly execute and deliver all further instruments and documents,
-48-
<PAGE>
and take all further action, that may be reasonably necessary or desirable, or
that the Administrative Agent may reasonably request, in order to perfect and
protect the assignments, security interests and Liens granted or purported to be
granted under the Basic Documents or to enable the Administrative Agent or any
Lender to exercise and enforce its rights and remedies under this Agreement or
any other Basic Document with respect to any Collateral. Without limiting the
generality of the foregoing, the Company will, and will cause each of the other
Obligors to
(i) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may
be reasonably necessary or desirable, or as the Administrative Agent
may reasonably request, in order to perfect and preserve the
assignments, security interests and Liens granted or purported to be
granted under the Basic Documents;
(ii) furnish to the Administrative Agent, from time to time at
the Administrative Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail; and
(iii) no later than ten days after the Closing Date, file any
amendment to the authorization of the Central Bank of Chile referred
to in Section 7.01(n) hereof that the Administrative Agent may
request.
With respect to the foregoing and the grant of the security interest under the
Basic Documents, the Company and each of the other Obligors hereby authorize the
Administrative Agent to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral without
the signature of the Company or any such Obligor where permitted by law.
9.24 Post-Closing Acquisition/Merger Matters. The Company agrees that:
(a) it shall, immediately after the making of the initial Loans
hereunder, furnish to the Administrative Agent copies of all opinions,
certificates and other writings delivered pursuant to the Purchase Agreement, in
each case certified by a senior officer of the Company to be true and complete,
together with, in the case of each such legal opinion delivered by counsel to
UIH or Acquisition Co., a letter from the firm or individual delivering such
opinion stating that the Administrative Agent and the Lenders may rely on such
opinion as though such opinion was originally addressed;
(b) with respect to the public deed prepared by the Company
transcribing the minutes of the shareholders' meeting for each of Acquisition
Co. and Hipercable approving the Merger, and the abstracts thereof, it shall:
(i) immediately after the making of the initial Loans
hereunder, and in any event no later than the Business Day after the
Closing Date, deliver the same to the Registro de Comercio del
Conservador de Bienes Raices de Santiago for filing,
(ii) furnish to the Administrative Agent, by no later than 15
days after the Closing Date, a certificate of the Registro de Comercio
del Conservador de Bienes Raices de Santiago to the effect that the
Merger has been duly registered;
(iii) furnish to the Administrative Agent, by no later than
seven days after the Closing Date, a copy of the publication in the
Diario Oficial de la Republica de Chile of the same.
9.25 Assumption Agreement. Each of Acquisition Co. and Hipercable
agrees that, immediately after the consummation of the Merger, Acquisition Co.
and Hipercable shall enter into an agreement in which Hipercable expressly
assumes the obligations of Acquisition Co. hereunder.
-49-
<PAGE>
Section 10. Events of Default. If one or more of the following events
(herein called "Events of Default") shall occur and be continuing:
(a) The Company shall default in the payment when due (whether
at stated maturity or at mandatory or optional prepayment) of any
principal of, or interest on, any Loan or any other amount payable by
it hereunder or under any other Basic Document; or
(b) Any Relevant Party shall default in the payment when due
(beyond any applicable grace or cure period) of any principal of or
interest on any of its other Indebtedness aggregating U.S.$5,000,000
(or the equivalent in other currencies) or more, or in the payment
when due of any amount under any Hedge Agreement; or any event
specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness aggregating
U.S.$5,000,000 (or the equivalent in other currencies) or more, or any
event specified in any Hedge Agreement shall occur if the effect of
such event is to cause, or (after the expiration of any applicable
cure period) to permit the holder or holders of such Indebtedness (or
a trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its
stated maturity (except to the extent that, in the case of any
Indebtedness representing the purchase price of equipment where there
is a dispute between an Obligor and the vendor of such equipment, the
holder of such Indebtedness has been indefinitely stayed from
exercising any right or remedy with respect to such Indebtedness) or,
in the case of an Hedge Agreement, to permit the payments owing under
such Hedge Agreement to be liquidated; or
(c) Any representation, warranty or certification made or
deemed made herein or in any other Basic Document (or in any
modification or supplement hereto or thereto) by any Relevant Party,
or any certificate furnished to any Lender or the Administrative Agent
pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading as of the time made or furnished in any material
respect; or
(d) The Company or any other Obligor shall default in the
performance of any of its obligations under any of Sections 9.01(e),
9.05, 9.06, 9.07, 9.08, 9.09, 9.10, 9.11, 9.12, 9.13, 9.14, 9.16,
9.19, 9.20, 9.22, 9.23, 9.24 or 9.25 hereof; or any Relevant Party
shall default in the performance of any of its other obligations in
this Agreement or any other Basic Document and such default shall
continue unremedied for a period of fourteen or more days after notice
thereof to the Company by the Administrative Agent or any Lender
(through the Administrative Agent); or
(e) The Company shall declare or make any Dividend Payment or
any payments in respect of any Subordinated Debt at any time, other
than a prepayment of Closing Date Debt so long as (i) the aggregate
amount of all such prepayments does not exceed the sum of (x) the
aggregate amount of the Post-Closing Financing and the Post-Closing
Contribution, minus (y) the Post-Closing Required Amount, (ii)
additional Tranche B Loan Commitments in an aggregate amount at least
equal to U.S.$50,000,000 have been provided pursuant to Section
2.03(b) hereof, and (iii) the Company shall have demonstrated to the
satisfaction of the Required Lenders that, on a pro forma basis, after
giving effect to the incurrence of such additional Post-Closing
Financing and Post-Closing Contribution, the Company and each Obligor
will be in compliance with all of its obligations under Section 9 and
no Default will have occurred or be continuing; or
(f) Any Relevant Party shall admit in writing its inability to,
or be generally unable to, pay its debts as such debts become due; or
(g) Any Relevant Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial
part of its Property, (ii) make a general assignment for the benefit of
its creditors, (iii) commence a voluntary case under any applicable law
relating to bankruptcy or insolvency, (iv) file a petition seeking to
-50-
<PAGE>
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts (except as expressly contemplated
by and pursuant to Section 9.05 hereof), (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under any applicable law
relating to bankruptcy or insolvency or (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without the
application or consent of the affected Relevant Party, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of such Relevant
Party or of all or any substantial part of its Property, or (iii)
similar relief in respect of such Relevant Party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or a court order, judgment or decree approving
or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days (each Lender
agreeing to respond within ten Business Days to any request by the
Company for an extension of this grace period (without any obligation
on the part of any Lender to so consent)); or a court order for relief
against any Relevant Party shall be entered in an involuntary case
under any applicable law relating to bankruptcy or insolvency; or
(i) (i) A final judgment or judgments for the payment of money
for which the amount is in excess of U.S.$5,000,000 (or the equivalent
in other currencies), exclusive of judgment amounts fully covered by
insurance, or the amount is in excess of U.S.$20,000,000 (or the
equivalent in other currencies), regardless of insurance coverage, in
the aggregate shall be rendered by one or more courts, administrative
tribunals or other bodies having jurisdiction against any Relevant
Party and the same shall not be discharged (or provision shall not be
made for such discharge), vacated, bonded or a stay of execution
thereof shall not be procured, within 30 days from the date of entry
thereof and such Relevant Party shall not, within said period of 30
days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal; or (ii) any non-monetary judgment or
order shall be rendered against the Company or any of the other
Obligors that could reasonably be expected to have a Material Adverse
Effect, and there shall be any period of 15 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(j) any of the following:
(x) either (A) UIH shall cease to own beneficially and
control (either directly or indirectly) at least 51% of the
issued and outstanding capital stock or other equity interests
(or securities convertible into equity interests) in the
Company having the right to vote, or at least 51% of all of the
issued and outstanding capital stock or other equity interests
(or securities convertible into equity interests) in the
Company, or (B) UIH shall cease to have the power (whether by
ownership of capital stock, contract or otherwise) to control
the management or policies of the Company,
(y) any Person or two or more Persons acting in
concert shall have entered into a contract or arrangement that,
upon consummation, will result in one or more of the events
described in clause (x) above, or
(z) any of the shares of capital stock or other equity
interests (or securities convertible into equity interests) of
the Company held by UIH shall be subject to any Lien (other
than Liens created in favor of the Lenders under the Basic
Documents); or
-51-
<PAGE>
(k) The Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the Property
intended to be covered thereby (other than any immaterial items of
Property) in favor of the Administrative Agent, free and clear of all
other Liens (other than Liens permitted under Section 9.06 hereof),
or, the Administrative Agent shall cease to have a valid and perfected
first priority Lien on 100% of the issued and outstanding capital
stock of, or other equity interests in, any Obligor, or, except for
expiration in accordance with its terms, any of the Basic Documents
shall for whatever reason be terminated or cease to be in full force
and effect, or the enforceability thereof shall be contested by any
Relevant Party; or
(l) Any license, consent, authorization, registration or
approval at any time necessary to enable any Relevant Party to comply
with any of its obligations under this Agreement or any other Basic
Document shall be revoked, withdrawn or withheld or shall be modified
or amended, which revocation, withdrawal, withholding, modification or
amendment could reasonably be expected to have a Material Adverse
Effect; or
(m) Any governmental authority shall take any action to
condemn, seize, nationalize or appropriate any substantial portion of
the Property of the Obligors (either with or without payment of
compensation) or shall take any action which materially adversely
affects any Relevant Party's ability to perform its obligations under
this Agreement or any of the other Basic Documents; or the Company or
any Subsidiary Guarantor shall be prevented from exercising normal
control over all or a substantial part of its Property; or
(n) Chile or any competent authority thereof shall declare a
moratorium on the payment of Indebtedness by Chile or any governmental
agency or authority thereof or corporations therein, or Chile shall
cease to be a member in good standing of the International Monetary
Fund or shall cease to be eligible to utilize the resources of the
International Monetary Fund under the Articles of Agreement thereof,
or the international monetary reserves of Chile shall become subject
to any Lien; or
(o) Any event, circumstance or condition shall have occurred
that has had a Material Adverse Effect; or
(p) An additional U.S.$50,000,000 in Tranche B Loan Commitments
shall not have been provided pursuant to Section 2.03(b) hereof on or
prior to August 29, 1999;
THEREUPON: (1) in the case of any Event of Default other than one referred to in
clause (g) or (h) of this Section 10, the Administrative Agent may, and, if so
requested by the Majority Lenders, shall, by notice to the Company, terminate
the Commitments and/or declare the principal amount then outstanding of, and the
accrued interest on, the Loans and all other amounts payable by the Obligors
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 hereof) to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by each Obligor; and (2) in the case of the occurrence of an Event of
Default referred to in clause (g) or (h) of this Section 10, the Commitments
shall be automatically be terminated and the principal amount then outstanding
of, and the accrued interest on, the Loans and all other amounts payable by the
Obligors hereunder and under the Notes (including, without limitation, any
amounts payable under Section 5.05 hereof) shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Obligor.
Section 11. The Administrative Agent.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Basic Documents with such powers as are
-52-
<PAGE>
specifically delegated to the Administrative Agent by the terms of this
Agreement and of the other Basic Documents, together with such other powers as
are reasonably incidental thereto. The Administrative Agent (which term as used
in this sentence and in Section 11.05 and the first sentence of Section 11.06
hereof shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Basic Documents, and shall not by reason of this Agreement or any other
Basic Document be a trustee for any Lender; (b) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or in any other Basic Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Basic Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
Note or any other Basic Document or any other document referred to or provided
for herein or therein or for any failure by the Company or any other Person to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Basic Document; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
Basic Document or under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct. The Administrative Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
The Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Administrative Agent.
11.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, facsimile, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Basic Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Majority
Lenders or, if provided herein, in accordance with the instructions given by all
of the Lenders and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received notice from a Lender or the Company specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the Lenders except to
the extent that this Agreement expressly requires that such action be taken, or
not be taken, only with the consent or upon the authorization of the Majority
Lenders or all of the Lenders.
11.04 Rights as a Lender. With respect to any Commitment of or Loan
made by The Toronto-Dominion Bank or any of its affiliates, The Toronto-Dominion
Bank or such affiliate (as the case may be) shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though TD were
not acting as the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include The Toronto-Dominion
Bank. The Toronto-Dominion Bank or such affiliates, as the case may be, may
(without having to account therefor to any Lender) accept deposits from, lend
money to, make investments in and generally engage in any kind of banking or
other business with the Obligors (and any of their Subsidiaries or Affiliates)
as if TD were not acting as the Administrative Agent, and The Toronto-Dominion
Bank and its affiliates may accept fees and other consideration from the
Obligors for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
-53-
<PAGE>
11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Company under said Section 12.03)
ratably in accordance with the aggregate principal amount of the Loans held by
the Lenders (or, if no Loans are at the time outstanding, ratably in accordance
with their respective Commitments), for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against the Administrative Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Basic Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses that the Company is obligated to pay under Section 12.03 hereof but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
11.06 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and its Subsidiaries and decision to enter into this Agreement and that
it will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or under any other Basic
Document. The Administrative Agent shall not be required to keep itself informed
as to the performance or observance by any Obligor of this Agreement or any of
the other Basic Documents or any other document referred to or provided for
herein or therein or to inspect the Properties or books of the Company or any of
its Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or under the Security Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Company or any of its Subsidiaries (or any of their
affiliates) that may come into the possession of the Administrative Agent or any
of its affiliates.
11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, that shall be a financial
institution that has an office in New York, New York. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
-54-
<PAGE>
of this Section 11 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Administrative Agent.
11.09 Consents under Other Basic Documents. Except as otherwise
provided in Section 12.05 hereof with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of
the Basic Documents, provided that, without the prior consent of each Lender,
the Administrative Agent shall not (except as provided herein or in the Security
Documents) release any collateral or otherwise terminate any Lien under any
Basic Document providing for collateral security, or agree to additional
obligations being secured by such collateral security.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
12.02 Notices. All notices, requests and other communications provided
for herein and under the Security Documents (including, without limitation, any
modifications of, or waivers, requests or consents under, this Agreement) shall
be given or made in writing (including, without limitation, by facsimile)
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof (below the name of the Company, in the
case of any Subsidiary Guarantor); or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by facsimile or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
12.03 Expenses. The Company agrees to pay or reimburse each of the
Lenders and the Administrative Agent for:
(a) all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable
fees and expenses of Mayer, Brown & Platt, special New York counsel to
the Administrative Agent, and Philippi, Yrarrazaval, Pulido y Brunner,
special Chilean counsel to the Administrative Agent) in connection
with (i) the negotiation, preparation, execution and delivery of this
Agreement and the other Basic Documents and the making of the Loans
hereunder and (ii) the negotiation or preparation of any modification,
supplement or waiver of any of the terms of this Agreement or any of
the other Basic Documents (whether or not consummated).
(b) all reasonable out-of-pocket costs and expenses of each of
the Lenders and the Administrative Agent (including, without
limitation, the reasonable fees and expenses of legal counsel) in
connection with (i) any Default and any enforcement or collection
proceedings resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (x) bankruptcy,
insolvency, receivership, foreclosure, winding up or liquidation
proceedings, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is
consummated) and (ii) the enforcement of this Section 12.03; and
(c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority
in respect of this Agreement or any of the other Basic Documents or
any other document referred to herein or therein and all costs,
expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security
interest contemplated by any Basic Document or any other document
referred to therein.
-55-
<PAGE>
12.04 Indemnification. The Company hereby agrees to indemnify the
Administrative Agent and each Lender and their respective affiliates, directors,
officers, employees, attorneys and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses incurred
by any of them (including, without limitation, any and all losses, liabilities,
claims, damages or expenses incurred by the Administrative Agent to any Lender,
whether or not the Administrative Agent or any Lender is a party thereto)
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to the Loans hereunder, any actual or proposed use by the
Company or any of its Subsidiaries of the proceeds of any of the Loans hereunder
or any Environmental Laws or any Environmental Claim, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
12.05 Amendments, Etc. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be modified or supplemented only
by an instrument in writing signed by the Company and the Majority Lenders, or
by the Company and the Administrative Agent acting with the consent of the
Majority Lenders, and any provision of this Agreement may be waived by the
Majority Lenders or by the Administrative Agent acting with the consent of the
Majority Lenders; provided that:
(a) no modification, supplement or waiver shall, unless by an
instrument signed by all of the Lenders or by the Administrative Agent
acting with the consent of all of the Lenders: (i) increase (except as
provided in Section 2.03(b) hereof), or extend the term of any of the
Commitments, or extend the time or waive any requirement for the
reduction or termination of any of the Commitments, (ii) extend the
date fixed for the payment of principal of or interest on any Loan or
any fee hereunder, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable thereon
or any fee is payable hereunder, (v) alter the rights or obligations
of the Company to prepay Loans, (vi) alter the terms of Section 4.02
or this Section 12.05, (vii) modify the definition of the term
"Majority Lenders" or the term "Required Lenders", or modify in any
other manner the number or percentage of the Lenders required to make
any determinations or waive any rights hereunder or to modify any
provision hereof (including the requirement set forth in Section 11.09
hereof), (viii) waive any of the conditions precedent set forth in
Section 7.01 hereof or set forth in Section 7.02 hereof (insofar as
such conditions in Section 7.02 are required to be met in connection
with the initial borrowing hereunder), or (ix) release any Subsidiary
Guarantor from its obligations under Section 6 hereof;
(b) any modification or supplement of Section 11 hereof shall
require the consent of the Administrative Agent; and
(c) any modification or supplement of Section 6 hereof shall
require the consent of each Subsidiary Guarantor.
12.06 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
12.07 Assignments and Participations.
(a) No Obligor may assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the
Lenders, the Administrative Agent and the Central Bank of Chile.
(b) Each Lender may assign any of its Loans, its Notes, and its
Commitments to any Eligible Assignee; provided that (i) any such
partial assignment shall be in an amount at least equal to
U.S.$3,000,000 (or, with respect to assignments among Lenders,
U.S.$1,000,000); (ii) each such assignee Lender shall be a bank or
registered as a financial institution with the Central Bank of Chile;
-56-
<PAGE>
(iii) each such assignment by a Lender of its Loan shall have the prior
authorization of the Central Bank of Chile; (iv) each such partial
assignment by a Lender of any of its Loans, Notes or Commitments of any
Tranche shall be made in such manner so that the same portion of its
Loans, Notes and Commitment of such Tranche are assigned to the
respective assignee; and (v) each such assignment by a Lender of any of
its Loans, Notes or Commitments of any Tranche shall be made in such
manner so that the same portion of its Loans, Notes and Commitment of
the other Tranche are assigned to the respective assignee. Upon
execution and delivery by the assignee to the Company and the
Administrative Agent of an instrument in writing pursuant to which such
assignee agrees to become a "Lender" hereunder (if not already a
Lender) having the Commitment and Loan specified in such instrument,
and the assignee shall have, to the extent of such assignment (unless
otherwise provided in such assignment with the consent of the Company
and the Administrative Agent, such consents not to be unreasonably
withheld or delayed), the obligations, rights and benefits of a Lender
hereunder holding the Commitment and Loan (or portions thereof)
assigned to it (in addition to the Commitment and Loan, if any,
theretofore held by such assignee) and the assigning Lender shall, to
the extent of such assignment, be released from the Commitment (or
portion thereof) so assigned, but shall be entitled to indemnification
and other rights under this Agreement and the other Basic Documents
with respect to the period prior to the date of such assignment. Upon
each such assignment the assigning Lender shall pay the Administrative
Agent an assignment fee of U.S.$3,500. The Company agrees to use its
best efforts to cause any assignment proposed to be made pursuant to
this Section 12.07(b) to be authorized by the Central Bank of Chile.
(c) A Lender may sell or agree to sell to one or more other
Persons a participation in all or any part of any Loan held by it, or
in any of its Commitments, in which event each purchaser of a
participation (a "Participant") shall be entitled to the rights and
benefits of the provisions of Section 9.03(f) hereof with respect to
its participation in such Loan and Commitment as if (and the Company
shall be directly obligated to such Participant under such provisions
as if) such Participant were a "Lender" for purposes of said Section,
but, except as otherwise provided in Section 4.07(c) hereof with
respect to participations purchased pursuant to Section 4.07 (b)
hereof, shall not have any other rights or benefits under this
Agreement or any Note or any other Basic Document (the Participant's
rights against such Lender in respect of such participation to be those
set forth in the agreements executed by such Lender in favor of the
Participant). All amounts payable by the Company to any Lender under
Section 5 hereof in respect of any Loan held by it, and its
Commitments, shall be determined as if such Lender had not sold or
agreed to sell any participations in such Loan and Commitments, and as
if such Lender were funding each of such Loan and Commitments in the
same way that it is funding the portion of such Loan and Commitments in
which no participations have been sold. In no event shall a Lender that
sells a participation agree with the Participant to take or refrain
from taking any action hereunder or under any other Basic Document
except that such Lender may agree with the Participant that it will
not, without the consent of the Participant, agree to (i) increase or
extend the term, or extend the time or waive any requirement for the
reduction or termination, of such Lender's Commitment, (ii) extend the
date fixed for the payment of principal of or interest on the Loan or
any portion of any fee hereunder payable to the Participant, (iii)
reduce the amount of any such payment of principal, (iv) reduce the
rate at which interest is payable thereon, or any fee hereunder payable
to the Participant, to a level below the rate at which the Participant
is entitled to receive such interest or fee, (v) alter the rights or
obligations of the Company to prepay the Loans or (vi) consent to any
modification, supplement or waiver hereof or of any of the other Basic
Documents to the extent that the same, under Section 11.09 or 12.05
hereof, requires the consent of each Lender.
(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 12.07, any
Lender may (without notice to the Company, the Administrative Agent or
any other Lender and without payment of any fee) (i) assign and pledge
all or any portion of its Loan and its Note to any Federal Reserve Bank
as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank, and (ii) assign all or
any portion of its rights under this Agreement and its Loan and its
Note to an affiliate, so long as such assignee is a bank or registered
as a financial institution with the Central Bank of Chile. No such
assignment shall release the assigning Lender from its obligations
hereunder, provided that each such assignment by a Lender of its loan
shall have the prior authorization of the Central Bank of Chile.
-57-
<PAGE>
(e) A Lender may furnish any information concerning the Company
or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees
and participants), provided that such assignee or participant shall
have agreed, pursuant to its customary confidentiality agreement, to
keep such information confidential.
(f) Anything in this Section 12.07 to the contrary
notwithstanding, no Lender may assign or participate any interest in
any Loan held by it hereunder to the Company or any of its Affiliates
or Subsidiaries without the prior consent of each Lender.
12.08 Survival. The obligations of the Company under Sections 5.01,
5.04, 5.05, 12.03 and 12.04 hereof, the obligations of each Subsidiary Guarantor
under Sections 6.03 and 6.04 hereof, the obligations of the Lenders under
Section 11.05 hereof, and the provisions of Sections 12.11, 12.12, 12.13, 12.14
and 12.15 shall survive the repayment of the Loans and the termination of the
Commitments. In addition, each representation and warranty made, or deemed to be
made by a notice of any Loan, herein or pursuant hereto shall survive the making
of such representation and warranty, and no Lender shall be deemed to have
waived, by reason of making any Loan, any Default that may arise by reason of
such representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or the Administrative Agent may have had notice
or knowledge or reason to believe that such representation or warranty was false
or misleading at the time such Loan was made.
12.09 Captions; Integration. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement. This Agreement, the Notes and the other Basic Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any agreements, written or oral, with
respect thereto, entered into prior to the date of this Agreement.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.11 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York City is of the
essence, and the obligations of the Obligors under this Agreement to make
payment to (or for the account of) a Lender in Dollars shall not be discharged
or satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any other currency or in another place except to the extent that
such tender or recovery results in the effective receipt by such Lender in New
York City of the full amount of Dollars payable to such Lender under this
Agreement. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due hereunder in Dollars into another currency (in this Section
12.11 called the "judgment currency"), the rate of exchange that shall be
applied shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase such Dollars at its New York City office
with the judgment currency on the Business Day next preceding the day on which
such judgment is rendered. The obligation of the Obligors in respect of any such
sum due from it to the Administrative Agent or any Lender hereunder or under any
Basic Document (in this Section 12.11 called an "Entitled Person") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
judgment currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer Dollars to New York City with the amount of the
judgment currency so adjudged to be due; and each of the Obligors hereby, as a
separate obligation and notwithstanding any such judgment, agrees to indemnify
such Entitled Person against, and to pay such Entitled Person on demand, in
Dollars, the amount (if any) by which the sum originally due to such Entitled
Person in Dollars hereunder exceeds the amount of the Dollars so purchased and
transferred.
-58
<PAGE>
12.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York, United States of
America.
12.13 Jurisdiction; Service of Process; Venue.
(a) Each Obligor hereby agrees that any suit, action or proceeding
with respect to this Agreement, any Note, any other Basic Document (other than
the Security Documents) or any judgment entered by any court in respect of any
thereof may be brought in the Supreme Court of the State of New York, County of
New York or in the United States District Court for the Southern District of New
York, as the party commencing such suit, action or proceeding may elect in its
sole discretion; and each Obligor hereby irrevocably and unconditionally submits
to the jurisdiction of such courts for the purpose of any suit, action,
proceeding or judgment. Each Obligor hereby further irrevocably and
unconditionally submits, for the purpose of any such suit, action, proceedings
or judgment brought against it (including any suit, action, proceedings or
judgement relating to any of the Security Documents), to any ordinary court of
justice of the City and Comuna of Santiago, Chile. Each Obligor agrees that
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by law suit on the judgment or in any other
manner permitted by law.
(b) Each Obligor hereby agrees that service of all writs, process and
summonses in any such suit, action or proceeding brought in the State of New
York may be made upon CT Corporation, presently located at 1633 Broadway, New
York, New York 10019, U.S.A. (the "Process Agent"), and each Obligor hereby
confirms and agrees that the Process Agent has been duly and irrevocably
appointed as its agent and true and lawful attorney-in-fact in its name, place
and stead to accept such service of any and all such writs, process and
summonses, and agrees that the failure of the Process Agent to give any notice
of any such service of process to such Obligor shall not impair or affect the
validity of such service or of any judgment based thereon. Each Obligor hereby
further irrevocably consents to the service of process in any suit, action or
proceeding in said courts by the mailing thereof by the Administrative Agent or
any Lender by registered or certified mail, postage prepaid, at its address set
forth beneath its signature hereto.
(c) Nothing herein shall in any way be deemed to limit the ability of
the Administrative Agent or any Lender to serve any such writs, process or
summonses in any other manner permitted by applicable law or to obtain
jurisdiction over any Obligor in such other jurisdictions, and in such manner,
as may be permitted by applicable law.
(d) Each Obligor hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement, the Notes or any other
Basic Document brought in the Supreme Court of the State of New York, County of
New York or in the United States District Court for the Southern District of New
York, and hereby further irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
(e) Each Obligor irrevocably waives, to the fullest extent permitted
by applicable law, any claim that any action or proceeding commenced by the
Administrative Agent or any Lender relating in any way to this Agreement should
be dismissed or stayed by reason, or pending the resolution, of any action or
proceeding commenced by any Obligor relating in any way to this Agreement
whether or not commenced earlier. To the fullest extent permitted by applicable
law, the Obligors shall take all measures necessary for any such action or
proceeding commenced by the Administrative Agent or any Lender to proceed to
judgment prior to the entry of judgment in any such action or proceeding
commenced by any Obligor.
12.14 No Immunity. To the extent that any Obligor may be or become
entitled, in any jurisdiction in which judicial proceedings may at any time be
commenced with respect to this Agreement or any other Basic Document, to claim
for itself or its Property any immunity from set-off, suit, court jurisdiction,
attachment prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or from any other legal process or remedy relating to
its obligations under this Agreement or any other Basic Document, and to the
-59-
<PAGE>
extent that in any such jurisdiction there may be attributed such an immunity
(whether or not claimed), each of the Obligors hereby irrevocably agrees not to
claim and hereby irrevocably waives such immunity to the fullest extent
permitted by the laws of such jurisdiction and agrees that the foregoing waiver
shall have the fullest extent permitted under the Foreign Sovereign Immunities
Act of 1976 of the United States of America and is intended to be irrevocable
for purposes of such Act.
12.15 Waiver of Jury Trial. EACH OF THE OBLIGORS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
12.16 Use of English Language. This Agreement has been negotiated and
executed in the English language. All certificates, reports, notices and other
documents and communications given or delivered pursuant to this Agreement shall
be in the English language, or accompanied by a certified English translation
thereof. Except in the case of laws of, or official communications of, Chile, in
the case of any document originally issued in a language other than English, the
English language version of any such document shall for purposes of this
Agreement, and absent manifest error, control the meaning of the matters set
forth therein.
12.17 Confidentiality. Each Lender and the Administrative Agent agrees
(on behalf of itself and each of its affiliates, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Company pursuant to this Agreement
that is identified by the Company in writing as being confidential at the time
the same is delivered to the Lenders or the Administrative Agent (including,
without limitation, the information included in Schedules I, II, III and IV
hereto), provided that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for any of the Lenders or the Administrative Agent,
(iii) to bank examiners, auditors or accountants, (iv) to the Administrative
Agent or any other Lender, (v) in connection with any litigation to which any
one or more of the Lenders or the Administrative Agent is a party, (vi) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first executes
and delivers to the respective Lender a written confidentiality agreement or
(vii) that has become generally available to the public, other than by a breach
of this Section 12.17 by the Administrative Agent or such Lender, as the case
may be, or that the Administrative Agent or such Lender, as the case may be, has
received from a Person not party to this Agreement where the Administrative
Agent or such Lender, as the case may be, is not aware of such Person being
under an obligation to keep such information confidential.
-60-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
UIH CHILE HOLDING S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
Address for Notices:
Attention:
Facsimile No.:
Telephone No.:
-61-
<PAGE>
SUBSIDIARY GUARANTORS
VTR HIPERCABLE S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
VTR CABLE EXPRESS S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
VTR NET S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
VTR CABLE EXPRESS (CHILE) S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
VTR GALAXY CHILE S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
RED DE TELEVISION Y SERVICIOS POR
CABLE S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
CABLEVISION S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
-62-
<PAGE>
VTR TELEFONICA S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
NEWCOM S.A.
By: /S/ Blas Tomic
------------------------------------------
Title: President
-63-
<PAGE>
LENDERS
Tranche A Loan Commitment: THE TORONTO-DOMINION BANK
U.S.$28,823,529.41
Tranche B Loan Commitment: By: /S/ Jeffrey R. Lents
------------------------------------------
U.S.$6,176,470.59 Title: Manager Cr. Admin.
Total Commitment Lending Office:
U.S.$35,000,000 909 Fannin Street, Suite 1700
Houston, Texas 77010
Address for Notices:
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Jano Mott
Facsimile No.: (713) 951-9921
Telephone No.: (713) 653-8241
-64-
<PAGE>
Tranche A Loan Commitment: CITIBANK, N.A.
U.S.$28,823,529.41
Tranche B Loan Commitment: By: /S/ Russell Jones
------------------------------------------
U.S.$6,176,470.59 Title: Managing Director
Total Commitment Lending Office:
U.S.$35,000,000 399 Park Avenue
New York, New York 10043
Address for Notices:
399 Park Avenue
New York, New York 10043
Attention:
Facsimile No.:
Telephone No.:
-65-
<PAGE>
Tranche A Loan Commitment: BANKBOSTON N.A., NASSAU BRANCH
U.S.$28,823,529.41
Tranche B Loan Commitment: By: /S/ Paulina Valdes
------------------------------------------
U.S.$6,176,470.59 Title: Authorized Officer
Total Commitment Lending Office:
U.S.$35,000,000 BankBoston, N.A., Nassau Branch
Rustcraft Road 100
Denham, Massachusetts 02026
Address for Notices:
BankBoston, N.A., Nassau Branch
Rustcraft Road 100
Denham, Massachusetts 02026
Attention: Andres Sanchez
Facsimile No.: (781) 467-2094
Telephone No.: (781) 467-2087
With a copy to:
BankBoston, N.A.
Moneda 799, Piso 3
Santiago
CHILE
Attention: Derek C. Sassoon
Facsimile No.: (56-2) 686-0758
Telephone No.: (56-2) 686-0327
-66-
<PAGE>
Tranche A Loan Commitment: THE CHASE MANHATTAN BANK
U.S.$28,823,529.41
Tranche B Loan Commitment: By: /S/ Debra Papson
------------------------------------------
U.S.$6,176,470.59 Title: Vice President
Total Commitment Lending Office:
U.S.$35,000,000 270 Park Avenue
New York, New York 10017
Address for Notices:
270 Park Avenue
New York, New York 10017
Attention:
Facsimile No.:
Telephone No.:
-67-
<PAGE>
Tranche A Loan Commitment: CREDIT LYONNAIS, NEW YORK BRANCH
U.S.$16,470,588.24
Tranche B Loan Commitment: By: /S/ Richard Teitelbaume
------------------------------------------
U.S.$3,529,411.76 Title: Vice President
Total Commitment Lending Office:
U.S.$20,000,000 1301 Avenue of the Americas
New York, New York 10019
Address for Notices:
1301 Avenue of the Americas
New York, New York 10019
Attention:
Facsimile No.:
Telephone No.:
-68-
<PAGE>
Tranche A Loan Commitment: BANQUE PARIBAS
U.S.$8,235,294.12
Tranche B Loan Commitment: By: /S/ Lynne S. Randall
------------------------------------------
U.S.$1,764,705.88 Title: Director
Total Commitment
By: /s/ Salo Aizenberg
U.S.$10,000,000 ------------------------------------------
Title: Vice President
Lending Office:
787 Seventh Avenue
New York, New York 10019
Address for Notices:
787 Seventh Avenue
New York, New York 100019
Attention:
Facsimile No.:
Telephone No.:
-69-
<PAGE>
TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent
By: /S/ Jeffrey R. Lents
------------------------------------------
Title: Vice President
Address for Notices to Administrative Agent:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Jano Mott, Vice President
Facsimile No.: (713) 951-9921
Telephone No.: (713) 653-8231
-70-
================================================================================
UNITED INTERNATIONAL HOLDINGS, INC.
INITIAL ISSUANCE OF $355,000,000
SENIOR DISCOUNT NOTES DUE 2009
--------------------
INDENTURE
DATED AS OF APRIL 29, 1999
--------------------
FIRSTAR BANK
OF MINNESOTA N.A.
TRUSTEE
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE INDENTURE SECTION
ACT SECTION
310(a)(1)........................................................ 7.10
(a)(2)........................................................ 7.10
(a)(3)........................................................ N.A
(a)(4)........................................................ N.A
(a)(5)........................................................ 7.10
(a) ........................................................ 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)(2)........................................................ 7.07
(c) ........................................................ 7.06;10.02
(d) ........................................................ 7.06
314(A) ........................................................ 4.03;10.02
(c)(1)........................................................ 10.04
(c)(2)........................................................ 10.04
(c)(3)........................................................ N.A
(d) ........................................................ 10.05
(f) ........................................................ N.A
315(a) ........................................................ 7.01
(b) ........................................................ 7.05,10.02
(c) ........................................................ 7.01
(d) ........................................................ 7.01
(e) ........................................................ 6.11
316(a)(LAST SENTENCE)............................................ 2.09
(a)(1)(A)..................................................... 6.05
<PAGE>
TRUST INDENTURE INDENTURE SECTION
ACT SECTION
(a)(1)(B)..................................................... 6.04
(a)(2)........................................................ N.A
(b) ........................................................ 6.07
(c) ........................................................ 2.12
317(a)(1)........................................................ 6.08
(a)(2)........................................................ 6.09
(b) ........................................................ 2.04
318(a) ........................................................ 10.01
(b) ........................................................ N.A
(c) ........................................................ 10.01
N.A. MEANS NOT APPLICABLE
*THIS CROSS-REFERENCE TABLE IS NOT PART OF THE INDENTURE.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE........................... 1
Section 1.1 DEFINITIONS.................................... 1
Section 1.2 OTHER DEFINITIONS.............................. 24
Section 1.3 INCORPORATION BY REFERENCE OF TRUST............
INDENTURE ACT.................................. 25
Section 1.4 RULES OF CONSTRUCTION.......................... 25
ARTICLE II
THE SECURITIES....................................................... 26
Section 2.1 FORM AND DATING................................ 26
Section 2.2 EXECUTION AND AUTHENTICATION................... 27
Section 2.3 REGISTRAR AND PAYING AGENT..................... 27
Section 2.4 PAYING AGENT TO HOLD MONEY IN TRUST............ 28
Section 2.5 HOLDER LISTS................................... 29
Section 2.6 TRANSFER AND EXCHANGE.......................... 29
Section 2.7 REPLACEMENT SECURITIES......................... 37
Section 2.8 OUTSTANDING SECURITIES......................... 37
Section 2.9 TREASURY SECURITIES............................ 38
Section 2.10 TEMPORARY SECURITIES........................... 38
Section 2.11 CANCELLATION................................... 38
Section 2.12 RECORD DATE.................................... 39
Section 2.13 CUSIP NUMBER................................... 39
ARTICLE III
REDEMPTION AND REPURCHASE............................................ 40
Section 3.1 OFFER TO REPURCHASE............................ 40
Section 3.2 DEPOSIT OF REPURCHASE PRICE.................... 41
i
<PAGE>
PAGE
----
Section 3.3 DELIVERY OF SECURITIES AND PAYMENT OF
PURCHASE PRICE................................. 42
Section 3.4 SECURITIES REPURCHASED IN PART................. 42
Section 3.5 RIGHT OF REDEMPTION............................ 42
ARTICLE IV
COVENANTS........................................................... 46
Section 4.1 PAYMENT OF SECURITIES.......................... 46
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY................ 46
Section 4.3 REPORTS........................................ 47
Section 4.4 COMPLIANCE CERTIFICATE......................... 47
Section 4.5 TAXES.......................................... 48
Section 4.6 STAY, EXTENSION AND USURY LAWS................. 48
Section 4.7 LIMITATION ON RESTRICTED PAYMENTS.............. 49
Section 4.8 LIMITATION ON DIVIDENDS AND OTHER PAYMENT......
RESTRICTIONS AFFECTING SUBSIDIARIES............ 50
Section 4.9 LIMITATION ON INCURRENCE OF ADDITIONAL IN
DEBTEDNESS AND DISQUALIFIED CAPITAL STOCK ..... 51
Section 4.10 LIMITATION ON SALE OF ASSETS AND SUBSIDIARY....
STOCK. 54
Section 4.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES..... 56
Section 4.12 LIMITATION ON LIENS............................ 57
Section 4.13 LINES OF BUSINESS.............................. 57
Section 4.14 CORPORATE EXISTENCE............................ 58
Section 4.15 LIMITATIONS ON SUBSIDIARY STRUCTURE............ 58
Section 4.16 LIMITATION ON STATUS AS INVESTMENT
COMPANY........................................ 59
Section 4.17 RULE 144A INFORMATION REQUIREMENT.............. 59
Section 4.18 REPURCHASE OF SENIOR NOTES AT THE
OPTION OF THE HOLDER UPON A CHANGE
OF CONTROL..................................... 59
ii
<PAGE>
PAGE
----
ARTICLE V
SUCCESSORS........................................................... 60
Section 5.1 LIMITATION ON MERGER, SALE OR
CONSOLIDATION.................................. 60
Section 5.2 SUCCESSOR CORPORATION SUBSTITUTED.............. 60
ARTICLE VI
DEFAULTS AND REMEDIES............................................... 61
Section 6.1 EVENTS OF DEFAULT.............................. 61
Section 6.2 ACCELERATION................................... 63
Section 6.3 OTHER REMEDIES................................. 64
Section 6.4 WAIVER OF PAST DEFAULTS........................ 65
Section 6.5 CONTROL BY MAJORITY............................ 65
Section 6.6 LIMITATION ON SUITS............................ 65
Section 6.7 RIGHTS OF HOLDERS OF SECURITIES TO
RECEIVE PAYMENT................................ 66
Section 6.8 COLLECTION SUIT BY TRUSTEE..................... 66
Section 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM............... 66
Section 6.10 PRIORITIES..................................... 67
Section 6.11 UNDERTAKING FOR COSTS.......................... 68
ARTICLE VII
TRUSTEE............................................................. 68
Section 7.1 DUTIES OF TRUSTEE.............................. 68
Section 7.2 RIGHTS OF TRUSTEE.............................. 70
Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE................... 70
Section 7.4 TRUSTEE'S DISCLAIMER........................... 71
Section 7.5 NOTICE OF DEFAULTS............................. 71
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS OF
THE SECURITIES................................. 71
Section 7.7 COMPENSATION AND INDEMNITY..................... 72
iii
<PAGE>
PAGE
----
Section 7.8 REPLACEMENT OF TRUSTEE......................... 73
Section 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC............... 74
Section 7.10 ELIGIBILITY; DISQUALIFICATION.................. 74
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY........................................ 75
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE............................. 75
Section 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR
COVENANT DEFEASANCE............................ 75
Section 8.2 LEGAL DEFEASANCE AND DISCHARGE................. 75
Section 8.3 COVENANT DEFEASANCE............................ 76
Section 8.4 CONDITIONS TO LEGAL OR COVENANT
DEFEASANCE..................................... 76
Section 8.5 DEPOSITED MONEY AND GOVERNMENT
SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS................. 78
Section 8.6 REPAYMENT TO COMPANY........................... 79
Section 8.7 REINSTATEMENT.................................. 79
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER.................................... 79
Section 9.1 WITHOUT CONSENT OF HOLDERS
OF SECURITIES.................................. 79
Section 9.2 WITH CONSENT OF HOLDERS OF SECURITIES.......... 80
Section 9.3 COMPLIANCE WITH TRUST INDENTURE ACT............ 82
Section 9.4 REVOCATION AND EFFECT OF CONSENTS.............. 82
Section 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.......... 83
Section 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC................ 83
iv
<PAGE>
ARTICLE X
MICELLANEOUS 88
Section 10.1 TRUST INDENTURE ACT CONTROLS................... 88
Section 10.2 NOTICES........................................ 88
Section 10.3 COMMUNICATION BY HOLDERS OF SECURITIES
WITH OTHER HOLDERS OF SECURITIES.............. 89
Section 10.4 CERTIFICATE AND OPINION AS TO
CONDITIONS PRECEDENT........................... 89
Section 10.5 STATEMENTS REQUIRED IN CERTIFICATE
OR OPINION..................................... 90
Section 10.6 RULES BY TRUSTEE AND AGENTS.................... 90
Section 10.7 NO PERSONAL LIABILITY OF DIRECTORS,
OFFICERS, EMPLOYEES AND STOCKHOLDERS.......... 90
Section 10.8 GOVERNING LAW.................................. 91
Section 10.9 NO ADVERSE INTERPRETATION OF
OTHER AGREEMENTS............................... 91
Section 10.10 SUCCESSORS..................................... 91
Section 10.11 SEVERABILITY................................... 91
Section 10.12 COUNTERPART ORIGINALS.......................... 91
Section 10.13 HEADINGS, ETC.................................. 91
Section 10.14 REGISTRATION RIGHTS............................ 92
EXHIBITS
EXHIBIT A FORM OF SENIOR NOTE............................ A-1
1
<PAGE>
INDENTURE dated as of April 29, 1999 by and between United
International Holdings, Inc., a Delaware corporation (the "Company"), and
Firstar Bank of Minnesota, N.A., as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Series A
Senior Discount Notes due 2009 and the class of Series B Senior Discount Notes
due 2009 to be exchanged for the Series A Senior Discount Notes due 2009 being
issued by the Company.
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 DEFINITIONS.
"Accreted Value" means, as of any date of determination, the sum
(rounded to the nearest whole dollar) of (a) the initial offering price of each
$1,000 in principal amount at maturity of Senior Notes and (b) the portion of
the excess of the principal amount of Senior Notes over such initial offering
price which shall have been accreted thereon through such date, such amount to
be so accreted on a daily basis at the Accretion Rate, compounded semi-annually
on each May 1 and November 1 from the date of issuance of the Senior Notes
through the date of determination.
"Accretion Rate" is as specified in paragraph 1 of the form of note
attached as Exhibit A.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any Person existing at the time such Person becomes a Subsidiary or
Restricted Affiliate of the Company, including by designation, or is merged or
consolidated into or with the Company or one of its Subsidiaries or Restricted
Affiliates.
"Acquisition" means the purchase or other acquisition of any Person of
all or substantially all the assets or any Person by any other Person, whether
by purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or through one or more intermediaries,
2
<PAGE>
whether through the ownership of voting securities, by contract, or otherwise,
provided that, with respect to ownership interest in the Company and its
Subsidiaries, a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Annualized Consolidated EBITDA" means Consolidated EBITDA
multiplied by two.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products (a) of the number of years from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" for purposes of the definition
of Change of Control and Affiliate has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether
or not applicable, except that a "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.
"Board of Directors" or "Board" means, with respect to any Person, the
board of directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the board of directors of such Person.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
3
<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participation or other equivalents of or interests (however designated) in stock
issued by that corporation.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500 million, (iii) commercial paper issued by others rated at
least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least
P-2 or the equivalent thereof by Moody's Investors Service, Inc., and in the
case of each of (i), (ii) and (iii) maturing within one year after the date of
acquisition, and (iv) Eurodollar time deposits with maturities of six months or
less from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500 million and a Keefe
Bank Watch Rating of "B" or better, provided that with respect to any
Non-Domestic Person, Cash Equivalents shall also mean those investments that are
comparable to clauses (ii) and (iv) above in such Person's country of
organization or country where it conducts business operations.
"Change of Control" means (i) any merger or consolidation of the
Company with or into any Person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Company, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction(s), any
"person" or "group" (as such terms are used for purposes of Section 13(d) and
14(d) of the Exchange Act, whether or not applicable) other than the Principals
or their Related Parties or a group that is controlled by one or more of the
Principals, is or becomes the "beneficial owner," directly or indirectly, of
more than 50% of the total voting power in the aggregate normally entitled to
vote in the election of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (ii) other than the Principals or
their Related Parties or a group that is controlled by one or more of the
Principals, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), is or
4
<PAGE>
becomes the "beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate of all classes of Capital Stock of the
Company then outstanding normally entitled to vote in the election of directors,
or (iii) during any period of 12 consecutive months after the Issue Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Directors of the Company (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 a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office. A Person will not be deemed to be a
member of a "group" for purposes of this definition solely by virtue of becoming
party to an agreement with one or more Principals or their Related Parties that
requires such Person to vote the voting stock of the Company in a manner
specified by the Principals or their Related Parties.
"Company" means United International Holdings, Inc., a Delaware
corporation.
"Consolidated Cash Flow Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) Consolidated Debt of such Person on the Transaction Date to (b) the
aggregate amount of Annualized Consolidated EBITDA of such Person attributable
to continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period; provided that for purposes of such calculation, (i)
Acquisitions which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first day of the Reference Period, (ii) transactions giving
rise to the need to calculate the Consolidated Cash Flow Ratio shall be assumed
to have occurred on the first day of the Reference Period and (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period and on or
5
<PAGE>
prior to the Transaction Date (and the application of the proceeds therefrom to
the extent used to refinance or retire other Indebtedness) shall be assumed to
have occurred on the first day of the Reference Period.
"Consolidated Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and business permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such Person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such Person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall be
assumed to have occurred on the first day of such Reference Period, and (iv) the
Consolidated Fixed Charges of such Person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless such
person or any of its Subsidiaries is a paty to an Interest Swap or Hedging
Obligation (which shall remain in effect for the 12-month period immediately
following the Transaction Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate (whether higher or lower)
shall be used.
"Consolidated Debt" means, with respect to any Person as of any date of
determination, the aggregate amount of Indebtedness and Disqualified Capital
Stock of such Person and its Subsidiaries outstanding as of such date of
determination, determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) Consolidated
6
<PAGE>
income tax expense, (ii) Consolidated depreciation and amortization expense, and
(iii) Consolidated Fixed Charges, less the amount of all cash payments made by
such Person or any of its Subsidiaries during such period to the extent such
payments relate to non-cash charges that were added back in determining
Consolidated EBITDA for such period or any prior period.
"Consolidated Fixed Charges" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such Person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period and
(b) the amount of dividends accrued or payable (or guaranteed) by such Person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such Person to such Person or such Person's Wholly Owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined in good faith by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense attributable to any Indebtedness represented by the guaranty by such
Person or a Subsidiary of such Person of an obligation of another Person shall
be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"Consolidated Invested Equity Capital" means, with respect to any
Person as of any date, the sum of the Invested Equity Capital of such Person as
of such date and, without duplication, the Invested Equity Capital of each of
its Subsidiaries and Restricted Affiliates as of such date. For purposes of
calculating the Consolidated Invested Equity Capital of any Person as of any
date, in order to avoid duplication, the Invested Equity Capital of a Subsidiary
or Restricted Affiliate of such Person shall not include any amounts that would
be included in the Consolidated Invested Equity Capital of any equity owner of
such Subsidiary or Restricted Affiliate, to the extent that such amounts were
utilized by such equity owner prior to such date to permit the incurrence of
Indebtedness pursuant to clause (ii)(3) of the first paragraph of Section 4.9
hereof. For example, if a direct Subsidiary of the Company has Consolidated
Invested Equity Capital of $100 and incurs $225 of such Indebtedness, then a
7
<PAGE>
direct or indirect Subsidiary (or a Restricted Affiliate) of such Subsidiary
will not be deemed to have any Invested Equity Capital based on contributions or
loans to it by such first Subsidiary. In addition, the Invested Equity Capital
of a Subsidiary or Restricted Affiliate of a Person will never be considered to
be greater than the Invested Equity Capital of such Person, except as a result
of contributions of Invested Equity Capital to such Subsidiary or Restricted
Affiliate by third parties.
"Consolidated Net Income" means, with respect to any Person for any
period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains (but not losses)
which are either extraordinary (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock), (b) the net income, if positive, of any Person, other than a
Consolidated Subsidiary, in which such Person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such Person or a
Consolidated Subsidiary of such Person during such period, but in any case not
in excess of such Person's pro rata share of such Person's net income for such
period, (c) the net income or loss of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such Person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Consolidated
Subsidiary other than the Indenture.
"Consolidated Subsidiary" means, for any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such Person in accordance with GAAP.
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of the Subsidiaries of such Person with those of such Person, all
in accordance with GAAP; provided that "consolidation" will not include
consolidation of the accounts of any other Person other than a Subsidiary of
such Person with such Person. The terms "Consolidate" or "Consolidated" have a
correlative meaning to the foregoing.
8
<PAGE>
"Corporate Trust Officer of the Trustee" shall be at the address of the
Trustee specified in Section 10.2 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Securities" means Securities that are in the form of
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 3 and 6 thereof.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, Equity Interests of such Person that, by its terms or by
the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time or
both would be, required to be redeemed or repurchased (including at the option
of the holder thereof) by such Person or any of its Subsidiaries, in whole or in
part, on or prior to 91 days following the Stated Maturity of the Senior Notes
and (b) with respect to any Subsidiary or Restricted Affiliate of the Company,
any Equity Interests of such Subsidiary or Restricted Affiliate other than (i)
any common equity with no preference, privileges, or redemption or repayment
provisions or (ii) preferred stock convertible into such common equity of such
Subsidiary or Restricted Affiliate with no payment of dividends or liquidation
preference due or payable thereon on or prior to 91 days following the Stated
Maturity of the Senior Notes and the proceeds of which are used directly or
indirectly in the business of such Subsidiary or Restricted Affiliate.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities
Corporation.
"Equity Interest" of any Person means any shares, interests,
participation or other equivalents (however designated) in such Person's equity,
9
<PAGE>
and shall in any event include any Capital Stock issued by, or partnership or
membership interests in, such Person.
"Event of Loss" means, with respect to any property or asset, any (i)
loss, destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Securities" means the Series B Senior Discount Notes due
2009, as supplemented from time to time in accordance with the terms hereof, to
be issued pursuant to this Indenture in connection with the offer to exchange
Securities for the Initial Securities that may be made by the Company pursuant
to the Registration Rights Agreement that contain the information referred to in
footnotes 1, 2 and 8 to the form of Security attached hereto as Exhibit A.
"Exempted Affiliate Transaction" means (i) Restricted Payments
comprised of pro rata dividends paid in cash on any class of Capital Stock and
made in compli ance with the Indenture, (ii) transactions, at arms-length and as
so set forth in a Board Resolution, between or among holders of any Equity
Interest of any Subsidiary of the Company and such Subsidiary, so long as such
holder is not otherwise an Affiliate of the Company, (iii) transactions between
or among the Company, and its Subsidiaries and Restricted Affiliates, and (iv)
the Company or any of its Subsidiaries entering into or performing any
employment agreement, stock option agreement or other agreement relating to the
terms of employment, or compensation, or termination of employment in the
ordinary course of business and consistent with the past practice of the Company
or such Subsidiary.
"Existing Agreements" means (i) any and all instruments, as in effect
on the Issue Date, between the Company or any of its Subsidiaries or Restricted
Affiliates and a commercial lending institution or institutions, which makes
borrowing of funds available to the Company or any such Subsidiary or Restricted
Affiliate from such institution or institutions and (ii) any replacements of the
instruments in clause (i) entered into by the respective Subsidiary or
Restricted Affiliate that was party to the instrument so replaced or their
respective successors and a commercial lending institution or institutions for
an amount up to the maximum amount of the instrument so replaced.
10
<PAGE>
"Existing Note Indentures" means the indenture dated November 23, 1994
between the Company and the Trustee, the indenture dated November 22, 1995
between the Company and the Trustee and the indenture dated February 5, 1998
between the Company and the Trustee, each as amended through the Issue Date,
pursuant to which the Existing Notes were issued.
"Existing Notes" means the 14% Senior Secured Discount Notes due 1999
and the 10 3/4% Senior Secured Discount Notes due 2008 issued by the Company
pursuant to the Existing Note Indentures.
"Fair Market Value" means, with respect to any asset or property, the
price which would be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession in the United States, which are in effect on the Issue Date.
"Global Security" means a Security that contains the information
referred to in footnotes 3 and 6 to the form of Security attached hereto as
Exhibit A.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to
any such Government Security or a specific payment of principal of or interest
on any such Government Security held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Security or the specific payment of
principal of or interest on the Government Security evidenced by such depository
receipt.
11
<PAGE>
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. The amount of any Guarantee shall be equal to the maximum
potential liability in respect of the Guarantee, even if less than the
Indebtedness supported by such Guarantee.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such Person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for greater than 60 days past their original due
date) those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditor; (b) all liabilities and
obligations, contingent or otherwise, of such Persons (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) relating to
any Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit
(other than obligations with respect to letters of credit securing obligations
(other than obligations described in (i) through (iii) above) entered into in
the ordinary course of business of such Person to the extent such letters of
credit are not drawn upon); (c) all net obligations of such Person under
Interest Swap and Hedging Obligations; (d) all liabilities and obligations of
others of the kind described in the preceding clause (a), (b) or (c) that such
Person has guaranteed or that is otherwise its legal liability or which are
secured by any assets or property of such Person; (e) any and all deferrals,
renewals, extensions, refinancing and refundings (whether direct or indirect)
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a), b), (c) or (d), or this clause
(e), whether or not between or among the same parties; and (f) all Disqualified
Capital Stock of such Person (measured at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends).
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
12
<PAGE>
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value to be determined in good faith by the
Board of Directors of the Company. The accrual of interest and the accretion of
accreted value shall not be deemed to be an incurrence of Indebtedness on debt
issued with original issue discount and in accordance with its original terms
when issued.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Initial Securities" means the Series A Senior Discount Notes due 2009,
as supplemented from time to time in accordance with the terms hereof, issued
under this Indenture that contain the information referred to in footnotes 4, 5
and 7 to the form of Security attached hereto as Exhibit A.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities.
"Initial Purchasers" means the Purchasers as defined in the Note
Purchase Agreement.
"Interest Swap and Hedging Obligation" means any obligation of any
Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Invested Equity Capital" means, with respect to any Person as of any
date, without duplication, the sum of (i) the total dollar amount contributed in
cash plus the value of all property contributed (valued at Fair Market Value at
the time of contribution, determined in good faith by the Board of Directors) to
such Person since the date of its creation in the form of common equity, plus,
(ii) the total dollar amount contributed in cash plus the value of all property
contributed (valued at Fair Market Value at the time of contribution, determined
in good faith by the Board of Directors) to such Person since the date of
creation by the holders of its common equity (and their Affiliates) in
consideration of the issuance of preferred equity or Indebtedness, on a basis
that is substantially proportionate to their common equity interests (with any
disproportionately large equity interests received by the Company, a Restricted
Affiliate, or a Subsidiary relative to their respective contributions being
ignored for this purpose), plus, (iii) the total dollar amount contributed in
cash plus the value of all property contributed (valued at Fair Market Value at
the time of contribution, determined in good faith by the Board of Directors) to
such Person since the date of its creation by the Company or a Wholly Owned
Subsidiary of the Company in consideration of the issuance of preferred equity
or Indebtedness, less (iv) the value of all interest, returns in respect of
Indebtedness, dividends and other distributions (in whatever form and however
designated, valued at Fair Market Value as determined in good faith by the Board
of Directors) made by such Person since the date of its creation to the holders
of its common equity (and their Affiliates); pro vided that in no event shall
13
<PAGE>
the aggregate amount of interest, dividends and other distributions made to any
holder of common equity of a Person (or its Affiliates) operate to reduce the
Invested Equity Capital of such Person by more than the total contributions to
such Person (per clauses (i) through (iii) above) by such equity holder (and its
Affiliates), and less (v) the total amount of Investments (measured as of the
date made but without giving effect to any proration) made by such Person
pursuant to clause (e) of the definition of Permitted Investments since the date
of the Indenture that are outstanding as of such date.
"Investment" by any Person in any other Person means (without
duplication)(a) the acquisition (whether by purchaser, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable, endorsements for
collection or deposits arising in the ordinary course of business); (c) other
than guarantees of Indebtedness of the Company or any Subsidiary to the extent
permitted by Section 4.9 or the definition of Permitted Indebtedness the
entering into by such Person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other liability of such
other Person; (d) the making of any capital contribution by such Person to such
other Person; and (e) the designation by the Board of Directors of the Company
of any Person to be an Unrestricted Subsidiary or no longer to be a Restricted
14
<PAGE>
Affiliate (and not thence to be a Subsidiary). The Company shall be deemed to
make an Investment in an amount equal to the Fair Market Value of its Pro Rata
Share of any Subsidiary or Restricted Affiliate (or, if neither the Company nor
any of its Subsidiaries has therefore made an Investment in such subsidiary of
affiliate, in an amount equal to its Pro Rata Share of the Investments being
made), at the time that such Subsidiary or Restricted Affiliate is designated an
Unrestricted Subsidiary or no longer to be a Restricted Affiliate (and not
thence to be a Subsidiary) andany property transferred to an Unrestricted
Subsidiary or such other Person from the Company and the Company's Pro Rata
Share of the property transferred by a Subsidiary or Restricted Affiliate of the
Company to such Person shall be deemed an Investment valued at its Fair Market
Value at the time of such transfer.
"Issue Date" means the date of first issuance of the Senior Notes under
the Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Market Spread Date" shall have the meaning set forth in Exhibit A.
"Net Cash Proceeds" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus,
in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and (in the case of Asset Sales, reasonable and customary)
expenses (including, without limitation, the fees and expenses of legal counsel
15
<PAGE>
and investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset
Sale.
"Non-Domestic Person" means any direct or indirect Subsidiary or
Restricted Affiliate of the Company that is organized under the laws of any
jurisdiction, or has its principal business operations outside of the United
States of America and Puerto Rico.
"Note Purchase Agreement" means the note purchase agreement dated the
date hereof between the Company, DLJSC and the Purchasers.
"Obligations" means any principal, Accreted Value, Liquidated Damages,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the initial offering memorandum of the
Company, dated April 29, 1999, relating to the offer and sale of the Initial
Securities in a transaction exempt from the requirements of Section 5 of the
Securities Act.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice- President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 10.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.5 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Indebtedness" means any of the following:
16
<PAGE>
(a) that the Company may incur Indebtedness whose terms are governed by
the Indenture up to the amounts issued thereunder as of the Issue Date;
(b) that the Company and the Subsidiaries and Restricted Affiliates, as
applicable, may incur Refinancing Indebtedness with respect to any indebtedness
or Disqualified Capital Stock, as applicable, described in clause (a) of this
definition, incurred pursuant to the second sentence or clauses (b) or (c) of
Section 4.9 or which is outstanding on the Issue Date;
(c) the Company and the Subsidiaries and Restricted Affiliates may
incur Indebtedness solely in respect of bankers acceptances, letters of credit
and performance bonds (to the extent that such incurrence does not result in the
incurrence of any obligation to repay any obligation relating to borrowed money
of others), all in the ordinary course of business in accordance with customary
industry practices, in amounts and for the purposes customary in the Company's
industry;
(d) the Company may incur Indebtedness to any Subsidiary or Restricted
Affiliate and any Subsidiary or Restricted Affiliate of the Company may incur
Indebtedness to any other Subsidiary or Restricted Affiliate of the Company, or
to the Company; provided that, in the case of Indebtedness of the Company, such
obligations shall be unsecured and subordinated in all respects to the Company's
obligations pursuant to the Senior Notes and the date of any event that causes
such Subsidiary or Restricted Affiliate no longer to be a Subsidiary or
Restricted Affiliate shall be an Incurrence Date;
(e) issuances of preferred stock or Indebtedness by a Subsidiary or a
Restricted Affiliate of the Company to the holders (or their Affiliates) of the
common equity of such Subsidiary or Restricted Affiliate on a basis that is
substantially proportionate to their common equity interests (with any
disproportionately large equity interests received by the Company, a Subsidiary
of the Company or a Restricted Affiliate of the Company relative to their
respective contributions being ignored for this purpose); and
(f) Guarantees by the Company or a Subsidiary of the Company of up to
$15 million in principal amount of Indebtedness of the Company's Subsidiaries or
Restricted Affiliates at any one time outstanding and related accrued interest.
"Permitted Investments" means Investments in (a) any of the Senior
Notes; (b) Cash Equivalents; (c) intercompany notes to the extent permitted
under clause (d) of the definition of "Permitted Indebtedness," (d) Investments
17
<PAGE>
in any Person if as a result of such Investment such Person becomes a Subsidiary
or Restricted Affiliate of the Company or is merged with or into Company or a
Subsidiary or Restricted Affiliate of the Company, so long as the surviving
entity if the Company or a Subsidiary or Restricted Affiliate of the Company and
(e) other Investments, provided that, after giving pro forma effect to teach
such Investment, the aggregate amount of all such Investments made on and after
the Issue Date that are outstanding (after giving effect to any such Investments
that are returned to the Company or the Subsidiary or Restricted Affiliate that
made such prior Investment, without restriction, in cash on or prior to the date
of any such calculation) at any time does not exceed the sum of (i) $100
million, plus (i) the Net Cash Proceeds received by the Company from the sale
(other than (A) to any Subsidiary or Restricted Affiliate of the Company, (B) to
the extent used to effect a Qualified Exchange, or (C) to make Restricted
Payments) of its Qualified Stock after the Issue Date, minus (iii) the amount of
any payments made (other than pursuant to a Qualified Exchange) in connection
with the retirement of the Series A Convertible Preferred Stock, plus (iv) net
proceeds received from The Wharf (Holdings) Limited ("Wharf Holdings"), or any
of its affiliates due to the wrongful acts, as determined in a final judgment of
a court of competent jurisdiction, or pursuant to a contractual settlement of
claims, in either case no longer subject to appeal or review, of Wharf Holdings
or any of its affiliates, and plus (v) to the extent that any Unrestricted
Subsidiary or Affiliate is properly designated as a Subsidiary or Restricted
Affiliate in accordance with the terms of the Indenture, an amount equal to the
Fair Market Value of the Company's Pro Rata Share of such properly designated
Subsidiary or Restricted Affiliate. For purposes of clause (e), the amount of an
Investment made by a Subsidiary, other than a Wholly Owned Subsidiary, or a
Restricted Affiliate, shall be deemed to equal the total amount of such
Investment multiplied by the Company's Pro Rata Share in such Person making the
Investment.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, material men, landlords, repairmen
or other like Liens arising by operation of law in the ordinary course of
business, provided that (i) the underlying obligations are not overdue for a
period of more than 30 days, or (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
18
<PAGE>
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security legislation; (h) leases or subleases granted to other Persons
in the ordinary course of business not materially interfering with the conduct
of the business of the Company or any of its Subsidiaries or materially
detracting from the value of the relative assets of the Company or any
Subsidiary; and (i) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by the
Company or any of its Subsidiaries in the ordinary course of business.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principals" means Apollo Cable Partners, L.P., Apollo Advisors. L.P.,
Albert M. Carollo, Lawrence F. De George, Lawrence J. DeGeorge, Curtis Rochelle,
Marian Rochelle, Rochelle Investments, Ltd (so long as it is controlled by
Curtis or Marian Rochelle), Gene W. Schneider, G. Schneider Holdings, Co. and
the Gene W. Schneider Family Trust (so long as each is controlled by Gene W.
Schneider or trustees appointed by him), Janet S. Schneider and Mark L.
Schneider.
"Pro Rata Share" means that portion of an Investment that corresponds
to the Company's direct or indirect percentage interest in the profits of the
Person in whom such Investment was made or, in the case of a transfer of
property, the direct or indirect percentage interest in the profits of the
Person making such Investment (which would be 100% in the case of any
Investments made by the Company directly). The Pro Rata Share of an Investment
as of any date shall be determined in good faith by the Company's Board of
Directors.
19
<PAGE>
"Public Equity Offering" means a primary underwritten public offering
and sale, after the Issue Date, of Qualified Capital Stock of the Company
registered pursuant to the Securities Act for Net Cash Proceeds (after
commissions, discounts, fees and expenses) to the Company of at least $20
million.
"Purchase Money Indebtedness" means any Indebtedness of such Person to
any seller or other Person incurred solely to finance the acquisition (including
in the case of a Capitalized Lease Obligation, the lease) of any after-acquired
real or personal tangible property which, in the reasonable good faith judgment
of the Board of Directors of the Company, is directly related to a Related
Business of such Person and which is incurred concurrently with such acquisition
and is secured only by the assets so financed.
"Purchaser Resale Notice" shall have the meaning set forth in the Note
Purchase Agreement.
"Purchasers" means UIH Funding Inc., Salomon Smith Barney, Inc., TD
Securities (USA), Inc. and Chase Securities Inc.
"Qualified Capital Stock" means any Equity Interest of the Company that
is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness (in
the case of such Indebtedness, that was issued on or after the Issue Date) of
the Company with the Net Cash Proceeds received by the Company from the
substantially concurrent sale of Qualified Capital Stock or any exchange of
Qualified Capital Stock for any Capital Stock or Indebtedness of the Company
issued on or after the Issue Date.
"Record Date" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Senior Note to be
redeemed pursuant to Section 3.5 hereof and paragraph 4 of the Securities, means
the date fixed for such redemption pursuant to such Section 3.5 and paragraph 4.
"Redemption Price," when used with respect to any Senior Note to be
redeemed pursuant to Section 3.5 hereof and paragraph 4 of the Securities, means
the redemption price for such redemption specified pursuant thereto as Exhibit
20
<PAGE>
A, which shall include, without duplication, in each case, accrued and unpaid
interest and Liquidated Damages, if any to the Redemption Date.
"Reference Period" with regard to any Person means the two full fiscal
quarters (or such lesser period during which such Person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Senior Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount (or, if issued
with an original issue discount, an original accreted value, determined in
accordance with GAAP) or, in the case of Disqualified Capital Stock, liquidation
preference, not to exceed (after deduction of reasonable and customary fees and
expenses incurred in connection with the Refinancing and the payment of any
premium in accordance with the terms of the Indebtedness or Disqualified Capital
Stock being refinanced, without regard to any modification thereof made in
connection with or in contemplation of such refinancing) the lesser of (i) the
principal amount or, in the case of Disqualified Capital Stock, liquidation
preference, of the Indebtedness or Disqualified Capital Stock so Refinanced and
(ii) if such Indebtedness being Refinanced was issued with an original issue
discount, the accreted value thereof (as determined in accordance with GAAP) at
the time of such Refinancing; provided that (A) such Refinancing Indebtedness of
any Subsidiary or Restricted Affiliate of the Company shall only be used to
Refinance outstanding Indebtedness or Disqualified Capital Stock, as the case
may be, of such Subsidiary or Restricted Affiliate, (B) such Refinancing
Indebtedness shall (x) not have an Average Life shorter than the Indebtedness or
Disqualified Capital Stock to be so refinanced at the time of such Refinancing
and (y) in all respects, be no less subordinated or junior, if applicable, to
the rights of Holders of the Senior Notes than was the Indebtedness or
Disqualified Capital Stock to be refinanced and (C) such Refinancing
Indebtedness shall have a final installment of principal (or redemption payment)
scheduled to come due no earlier than the final scheduled maturity of the
Indebtedness or Disqualified Capital Stock to be so refinanced.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof by and between the Initial Purchasers and the
21
<PAGE>
Company, as such agreement may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Related Business" means any business in which the Company, its
Subsidiaries or affiliated companies are engaged, as of the date of the
Indenture, or, directly or indirectly, (i) that consists primarily of, or is
related to, operating, acquiring, developing and constructing multi-channel
television systems, programming services, wire-based or "wireless" telephony
services and related services, (ii) that uses existing or future technology for
the transmission and delivery of programming, voice or other data or (iii) that
supports or is incidental to any business listed in clause (i) or (ii).
"Related Party" with respect to any Principal means (A) any controlling
stockholder or, 80% (or more) owned Subsidiary of such Principal, or with
respect to each individual Principal, (i) family partnerships, corporations or
other entities holding Equity Interests in the Company solely for the benefit of
such Principal or any of the Persons listed in (ii), (iii), (iv) or (v) below,
(ii) such Principal's spouse, (iii) such Principal's children, grandchildren,
stepchildren, stepgrandchildren and their spouses, (iv) heirs, legatees and
devisees, and (v) trusts solely for the benefit of any of the foregoing; or (B)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Affiliate" means any Person that has been designated in a
Board Resolution as a Restricted Affiliate based on a determination by the Board
of Directors that the Company has, directly or indirectly, the requisite control
over such Person to prevent it from incurring any Indebtedness, issuing any
preferred stock, making any dividend, distribution, repurchase, retirement, or
payment with respect to its Capital Stock (except on a pro rata basis with
respect to all holders of its Capital Stock), or otherwise taking any action at
any time in contravention of Sections 4.7, 4.9 and 4.15 that are applicable to
Restricted Affiliates. The Company will be required to deliver an Officers'
Certificate to the Trustee, including a copy of the Board Resolution, upon
22
<PAGE>
designating any Person as a Restricted Affiliate. The Board of Directors may
designate a Restricted Affiliate no longer to be a Restricted Affiliate,
provided that no Default or Event of Default will occur as a consequence thereof
and that such redesignation shall be an Investment treated as having been made
as set forth in the last sentence of the definition of "Investment." The
companies listed as Restricted Affiliates in Annex A to the Offering Memorandum
shall be deemed to be Restricted Affiliates as of the Issue Date for purposes of
this Indenture, until redesignated in compliance therewith.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than Permitted Investments.
"Restricted Payment" means, with respect to any Person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such Person or any parent or Subsidiary or Restricted
Affiliate of such Person, (b) any payment on account of the purchase, redemption
or other acquisition or retirement for value of Equity Interests of such Person
or any Subsidiary or Restricted Affiliate or parent of such Person, (c) other
than with the proceeds from the substantially concurrent sale of, or in exchange
for, Refinancing Indebtedness any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by
such Person or a parent or Subsidiary or Restricted Affiliate of such Person
prior to the scheduled maturity, any scheduled repayment of principal, or
scheduled sinking fund payment, as the case may be, of such Indebtedness and (d)
any Restricted Investment by such Person; provided, however, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Equity Interests of an issuer to the extent
payable solely in shares of Qualified Capital Stock of such issuer, or (ii) any
dividend, distribution or other payment to, or Investment in, the Company or any
of its Subsidiaries or Restricted Affiliates by the Company or any of its
Subsidiaries or Restricted Affiliates; provided that with respect to this clause
(iii), any Investment in the Company shall have resulted in the receipt by the
Company or its Subsidiaries of the considerations constituting such Investment.
"Retained Assets" means the Company's ownership and other interests in
the Persons that comprise the Teleport St. Petersburg operating Company.
"SEC" or "Commission" means the Securities and Exchange Commission.
23
<PAGE>
"Securities" or "Senior Notes" means, collectively, the Initial
Securities and, when and if issued as provided in the Registration Rights
Agreement, the Exchange Securities and, to the extent not included in the
definition of Initial Securities, the Additional Notes issued in compliance with
clause (b) of Section 4.9 and whose terms are governed by this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Senior Notes" See the definition of Securities.
"Series A Convertible Preferred Stock" means the 32,000 shares of the
Company's Series A Convertible Preferred Stock outstanding on the Issue Date.
"Series B Convertible Preferred Stock" means the 139,031 shares of the
Company's Series B Convertible Preferred Stock outstanding on the Issue Date.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Stated Maturity," when used with respect to any Senior Note, means May
1, 2009.
"Subordinated Indebtedness" means Indebtedness of the Company that is
subordinated in right of payment by its terms or the terms of any document or
instrument or instruments, relating thereto to the Senior Notes, in any respect
or has a stated maturity on (except for the Senior Notes and any other
Indebtedness incurred pursuant to clause (b) of Section 4.9) or after the Stated
Maturity.
"Subsidiary" with respect to any Person, means (i) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such Person or a Subsidiary of such Person is,
24
<PAGE>
at the time, the managing general partner. Notwithstanding the foregoing, an
Unrestricted Subsidiary shall not be a Subsidiary of the Company or of any
Subsidiary of the Company. Unless the context requires otherwise, Subsidiary
means each direct and indirect Subsidiary of the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"UIHE" means UIH Europe, Inc., a Delaware corporation, and wholly owned
Subsidiary of the Company and formerly know as Joint Venture, Inc.
"UIPI" means United International Properties, Inc., a Delaware
corporation and a direct Wholly Owned Restricted Subsidiary of the Company.
"Unrestricted Subsidiary" means (a) those subsidiaries of the Company
listed in Annex B attached to the Offering Memorandum, and (b) any subsidiary of
the Company that does not own any Equity Interests of, or own or hold any Lien
on any property of, the Company or any other Subsidiary of the Company and that
is designated as an Unrestricted Subsidiary by the Board of Directors of the
Company; provided that (i) such subsidiary shall not engage, to any substantial
extent, in any line or lines of business activity other than a Related Business,
and (ii) after giving pro forma effect to such designation would there exist a
Default or Event of Default. The Board of Directors of the Company may designate
any Unrestricted Subsidiary to be a Subsidiary, provided that no Default or
Event of Default will occur as a consequence thereof. Each such designation
shall be evidenced by filing with the Trustee a certified copy of the resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions.
"UPC" shall have the meaning set forth in the Offering Memorandum.
"U.S. Government Obligations" or "U.S. Government Securities" means
direct non-callable obligations of, or noncallable obligations guaranteed by,
25
<PAGE>
the United States of America for the payment of which obligation or guarantee
the full faith and credit of the United States of America is pledged.
"Wholly Owned Subsidiary" means a Subsidiary at least 99% of the Equity
Interests of which are owned by the Company or one or more Wholly Owned
Subsidiaries of the Company.
Section 1.2 OTHER DEFINITIONS.
Term Defined in Section
"Affiliate Transaction" 4.11
"Asset Sale" 4.10
"Asset Sale Offer" 4.10
"Asset Sale Offer Amount" 4.10
"Asset Sale Offer Price" 4.10
"Change of Control Offer" 4.18
"Change of Control Purchase Date" 4.18
"Change of Control Offer Period" 4.18
"Change of Control Purchase Price" 4.18
"Covenant Defeasance" 8.3
"Event of Default" 6.1
"Excess Proceeds" 4.10
"incur" 4.9
"Legal Defeasance" 8.2
"Paying Agent" 2.3
"Registrar" 2.3
"Repurchase Offer" 3.1
"Restricted Payments" 4.7
"Unrestricted Investment" 4.16
Section 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
26
<PAGE>
"indenture security holder" means a Holder of a Security;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company and any
successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.4 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) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
27
<PAGE>
ARTICLE II
THE SECURITIES
Section 2.2 FORM AND DATING.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Securities may have
notations, legends or endorsements approved as to form by the Company and
required by law, stock exchange rule, agreements to which the Company is subject
or usage. Each Security shall be dated the date of its authentication. The
Securities shall be issuable only in denominations of $1,000 (or such greater
amount as a result of any increase in the Accretion Rate) and integral multiples
thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture, and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Each Global Security shall represent such of the outstanding Securities
as shall be specified therein and each shall represent the aggregate amount of
outstanding Securities that may from time to time be reduced or increased, as
appropriate, to reflect exchanges, repurchases and redemptions. Any endorsement
of a Global Security to reflect the amount of any increase or decrease in the
amount of outstanding Securities represented thereby shall be made by the
Trustee or the Securities Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6
Section 2.2 EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Securities for the Company
by manual or facsimile signature. The Company's seal shall be reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time a Security is authenticated, the Security shall nevertheless
be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
28
<PAGE>
Security has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Securities shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall authenticate Initial Securities for original issue in
the aggregate principal amount of up to $[355,000,000] and shall authenticate
Exchange Securities for original issue in the aggregate principal amount of up
to $[355,000,000], in each case upon a written order of the Company in the form
of an Officers' Certificate; provided that such Exchange Securities shall be
issuable only upon the valid surrender for cancellation of Initial Securities of
a like aggregate principal amount at maturity in accordance with the
Registration Rights Agreement. The Officers' Certificate shall specify the
amount of Securities to be authenticated and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $[355,000,000] (or such greater amount as
would be necessary to reflect any increase in the Accretion Rate) and except as
provided in Section 2.7. Upon the written order of the Company in the form of an
Officers' Certificate, the Trustee shall authenticate Securities in substitution
of Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.3 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent or Registrar without prior notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
may act as Paying Agent or Registrar.
29
<PAGE>
The Company initially appoints The Depositary Trust Company ("DTC"), to
act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, or premium, if any, or interest (or Liquidated Damages, if any) on
the Securities, and will notify the Trustee of any default by the Company in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the Trustee.
If the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as paying Agent for the Securities.
Section 2.5 HOLDER 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
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest 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 the Holders of
Securities, including the aggregate principal amount at maturity of the Senior
Notes held by each thereof.
Section 2.6 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When Definitive
Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
30
<PAGE>
(y) to exchange such Definitive Securities for an equal
principal amount at maturity of Definitive Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided,
however, that the Definitive Securities surrendered for registration of transfer
or exchange:
(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities
that are Definitive Securities, shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to the
Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such Transfer Restricted Security is being transferred to a
"qualified institutional buyer" (within the meaning of Rule 144A promulgated
under the Securities Act) that is aware that any sale of Securities to it will
be made in reliance on Rule 144A under the Securities Act and that is acquiring
such Transfer Restricted Security for its own account or for the account of
another such "qualified institutional buyer," a certification from such Holder
to that effect (in substantially the form set forth on the reverse of the
Security); or
(C) if such Transfer Restricted Security is being transferred pursuant
to an exemption from registration in accordance with Rule 144, or outside the
United States in an offshore transaction in compliance with Rule 904 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act and with all applicable securities laws of the States of the
United States, a certification from such Holder to that effect (in substantially
the form set forth on the reverse of the Security) and an Opinion of Counsel
reasonably acceptable to the Company and to the Registrar to the effect that
such transfer is in compliance with the Securities Act.
31
<PAGE>
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A BENEFICIAL
INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer
Restricted Security, certification, substantially in the form set forth
on the reverse of the Security, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the
Trustee to make, or to direct the Securities Custodian to make, an
endorsement on the Global Security to reflect an increase in the
aggregate principal amount of the Securities
represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount at maturity of Securities represented by the Global
Security to be increased accordingly. If no Global Securities are then
outstanding, the Company shall issue and the Trustee shall authenticate a new
Global Security in the appropriate principal amount at maturity.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
DEFINITIVE SECURITY.
32
<PAGE>
(i) Any Person having a beneficial interest in a
Global Security may upon request exchange such beneficial interest for
a Definitive Security. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any Person
having a beneficial interest in a Global Security, and upon receipt by
the Trustee of a written instruction or such other form of instructions
as is customary for the Depositary or the Person designated by the
Depositary as having such a beneficial interest in a Transfer
Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from the transferor to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (within the meaning of Rule 144A
promulgated under the Securities Act), that is aware that any sale of
Securities to it will be made in reliance on Rule 144A under the
Securities Act and that is acquiring such beneficial interest in the
Transfer Restricted Security for its own account or the account of
another such "qualified institutional buyer", a certification to that
effect from the transferor (in substantially the form set forth on the
reverse of the Security); or
(C) if such beneficial interest is being transferred pursuant
to an exemption from registration in accordance with Rule 144, or
outside the United States in an offshore transaction in compliance with
Rule 904 under the Securities Act, or pursuant to an effective
registration statement under the Securities Act, a certification from
the transferor to that effect (in substantially the form set forth on
the reverse of the Security); or
(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act and in accordance with all applicable securities laws of
the States of the United States, a certification to that effect from
the transferor (in substantially the form set forth on the reverse of
the Security) and an Opinion of Counsel from the transferee or
33
<PAGE>
transferor reasonably acceptable to the Issuers and to the Registrar to
the effect that such transfer is in compliance with the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Issuers will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee's authenticating agent will authenticate
and deliver to the transferee a Definitive Security in the appropriate principal
amount.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section
2.6(d) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive Securities to the
persons in whose names such Securities are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF DEPOSI TARY.
If at any time:
(i) the Depositary for the Securities noti fies the
Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Securities and a successor Depositary for the
Global Securities is not appointed by the Company within ninety days
after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of
Definitive Securities under this Indenture, then the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate
requesting the authentication and delivery of Definitive Securities,
34
<PAGE>
will, or its authenticating agent will, authenticate and deliver
Definitive Securities, in an aggregate principal amount at maturity
equal to the principal amount at maturity of the Global Securities, in
exchange for such Global Securities.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs
(ii) and (iii) each Security certificate evidencing the Global
Securities and the Definitive Securities (and all Securities issued in
exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THIS SENIOR NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE SECOND SENTENCE
HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS ACQUIRING THIS SENIOR NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR, (C) AFTER THE
COMPANY HAS RECEIVED A "PURCHASER RESALE NOTICE" (AS DEFINED IN THE
INDENTURE) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF THE
SECURITIES ACT, (D) AFTER THE COMPANY HAS RECEIVED A "PURCHASER RESALE
NOTICE", IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) AFTER THE COMPANY HAS RECEIVED A "PURCHASER
35
<PAGE>
RESALE NOTICE", TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE WITH A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS SENIOR NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE ACCRETED VALUE OF SENIOR NOTES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) AFTER THE
COMPANY HAS RECEIVED A "PURCHASER RESALE NOTICE" IN ACCORDANCE WITH
ANOTHE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND IF REQUESTED BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SENIOR
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS SENIOR NOTE IN VIOLATION OF THE FOREGOING."
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted Security
represented by a Global Security) pursuant to Rule 144 under the Act or
an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
36
<PAGE>
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in (i)
above (such sales or transfers being subject only to the provisions of
Section 2.6(c) hereof); provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security that does
not bear a legend, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such certification to be
substantially in the form set forth on the reverse of the Security).
(iii) Any Exchange Securities issued in connection
with the Exchange Offer shall not bear the legend set forth in (i)
above and the Trustee shall rescind any restriction on the transfer of
such Exchange Securities.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or cancelled, such Global Security
shall be returned to or retained and cancelled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount at maturity of Securities represented by such Global Security
shall be reduced and an endorsement shall be made on such Global Security, by
the Trustee or the Securities Custodian, at the direction of the Trustee, to
reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
SECURITIES.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee or any
authenticating agent of the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's
request.
(ii) No service charge shall be made to a Holder 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 governmental charge
37
<PAGE>
payable upon exchanges or transfers pursuant to Section 2.2 (fourth
paragraph), 2.10, 4.10, 4.18 paragraph, 8.5, or 9.1 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Section 3.5, except the
unredeemed portion of any Definitive Security being redeemed in part,
or (b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase pursuant to Section 4.10
or Section 4.18 hereof or redemption of Securities pursuant to Section
3.5 hereof and ending at the close of business on the day of such
mailing.
(iv) 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 Depositary participants or beneficial owners
of interests 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, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements thereof.
(j) Prior to due presentment for the registration of a transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Security is registered as the absolute owner of such Security
for all purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.
Section 2.7 REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and the Trustee, upon the
written order of the Company signed by two Officers of the Company, shall
authenticate a replacement Security if the Trustee's requirements for
replacements of Securities are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the
38
<PAGE>
judgment of the Trustee and the Company to protect the Company, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Security is replaced. The Company may charge for its expenses in replacing a
Security.
Every replacement Security is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
Section 2.8 OUTSTANDING SECURITIES.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee (including any Security represented by a Global
Security), except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding. Except
as set forth in Section 2.9 hereof, 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 2.7 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.1 hereof, it ceases to be outstanding and it ceases to accrete.
Section 2.9 TREASURY SECURITIES.
In determining whether the Holders of the required principal amount at
maturity of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, any Subsidiary of the Company or any Affiliate
of the Company shall be considered as though not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities that a Trustee knows are
so owned shall be so disregarded. Notwithstanding the foregoing, Securities that
are to be acquired by the Company, any Subsidiary of the Company or any
Affiliate of the Company pursuant to an exchange offer, tender offer or other
agreement shall not be deemed to be owned by the Company, a Subsidiary of the
Company or an Affiliate of the Company until legal title to such Securities pass
to the Company, such Subsidiary or such Affiliate, as the case may be.
39
<PAGE>
Section 2.10 TEMPORARY SECURITIES.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon a written
order of the Company signed by two Officers of the Company. Temporary Securities
shall be substantially in the form of Definitive Securities but may have
variations that the Company considers appropriate for temporary Securities and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate Definitive
Securities in exchange for temporary Securities.
Holders of temporary Securities shall be entitled to all of the
benefits of this Indenture.
Section 2.11 CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and 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 all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Securities (subject to the record retention requirement
of the Exchange Act). Certification of the destruction of all canceled
Securities shall be delivered to the Company. The Company may not issue new
Securities to replace Securities that it has paid or that have been delivered to
the Trustee for cancellation.
Section 2.12 RECORD DATE.
The record date for purposes of determining the identity of Holders of
the Securities entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA ss. 316(c).
Section 2.13 CUSIP NUMBER.
The Company in issuing the Securities may use a "CUSIP" number and, if
it does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company will promptly notify the Trustee of any change in the CUSIP number.
40
<PAGE>
ARTICLE III
REDEMPTION AND REPURCHASE
Section 3.1 OFFER TO REPURCHASE.
In the event that, pursuant to Sections 4.10 or 4.18 hereof, the
Company shall be required to commence an Asset Sale Offer or a Change of Control
Offer (either, a "Repurchase Offer"), it shall follow the procedures specified
below.
The Company shall send, by first class mail, a notice of such
Repurchase Offer to the Trustee and each of the Holders at the following times:
(i) upon the commencement of an Asset Sale Offer or (ii) within 15 days
following any Change of Control, as applicable. The notice of Repurchase Offer,
which shall be sent to all Holders shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to such
Repurchase Offer. The notice of Repurchase Offer, which shall govern the terms
of the Repurchase Offer, shall state:
(a) that the Repurchase Offer is being made pursuant to this Section
3.1 and Section 4.10 or 4.18 hereof, as applicable, and the length of time that
such Repurchase Offer shall remain open;
(b) in the case of an Asset Sale Offer, the Asset Sale Offer Price and
the Asset Sale Offer Period and the relevant repurchase date;
(c) in the case of a Change of Control Offer, the Change of Control
Purchase Price and the Change of Control Purchase Date;
(d) that any Security not tendered or accepted for payment shall
continue to accrete and accrue interest, as applicable;
(e) that, unless the Company defaults in making such payment, any
Security accepted for payment pursuant to a Repurchase Offer shall cease to
accrete after the repurchase date;
41
<PAGE>
(f) that Holders electing to have a Security purchased pursuant to any
Repurchase Offer shall be required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Security
completed, to the Company, the depositary or a Paying Agent at the address
specified in the notice at least three days before the repurchase date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Asset Sale Offer Period (with respect to an
Asset Sale Offer) or not later than the close of business on the second Business
Day preceding the applicable Change of Control Offer repurchase date (with
respect to a Change of Control Offer), a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount at maturity
of Securities the Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such Securities purchased;
(g) that Holders whose Securities were purchased only in part shall be
issued new Securities equal in principal amount at maturity to the unpurchased
portion of the Securities surrendered, which unpurchased portion must be equal
to $1,000 in principal amount at maturity (or such greater amount as a result
solely of an increase in the Accretion Rate) or an integral multiple thereof;
and
(h) that no representation is made as to the correctness or accu racy
of the CUSIP number, if any, listed in such notice or printed on the Securities.
At the Company's request, the Trustee shall give the notice of a
Repurchase Offer in the Company's name and at its expense; provided, however,
that the Com pany shall have delivered to the Trustee, at least 45 days prior to
the repurchase date, an Officer's Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
The Company shall comply with the requirements of Rule l4e-l under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities in connection with a Repurchase Offer.
Section 3.2 DEPOSIT OF REPURCHASE PRICE.
One Business Day prior to or on any repurchase date set in connection
with a Repurchase Offer, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the repurchase price required by this
42
<PAGE>
Indenture for all Securities to be repurchased on that date. The Trustee or the
Paying Agent shall promptly return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary to
pay the repurchase price of all Securities repurchased.
If the Company complies with the provisions of the preceding paragraph,
on and after such repurchase date, the Securities or the portions of Securities
to be repurchased in accordance with the provisions of this Indenture shall
cease to accrete and interest will cease to accrue, as applicable.
Section 3.3 DELIVERY OF SECURITIES AND PAYMENT OF PURCHASE
PRICE.
One Business Day prior to or on any repurchase date set in connection
with a Repurchase Offer, the Company shall deliver or cause to be delivered to
the Trustee the Securities so accepted together with an Officers' Certificate
stating the aggregate principal amount at maturity of Securities or portions
thereof being purchased by the Company and that such securities were accepted
for repurchase by the Company in accordance with the terms of Section 3.1
hereof. The Company or the Paying Agent, as the case may be, shall promptly (but
in any case not later than five days after the repurchase date) mail or deliver
to each tendering Holder an amount equal to the purchase price of the Securities
tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Security, and the Trustee, upon written
request from the Company shall authenticate and mail or deliver such new
Security to such Holder, in a principal amount at maturity equal to any
unpurchased portion of the Security surrendered, if any, provided, that each
such new Security shall be in a principal amount at maturity of $1,000 (or such
greater amount as a result solely of an increase in the Accretion Rate) or an
integral multiple thereof. Any Security not so accepted shall be promptly mailed
or delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Repurchase Offer on or as soon as practicable after
the repurchase date.
Section 3.4 SECURITIES REPURCHASED IN PART.
Upon surrender of a Security that is repurchased in part in connection
with a Repurchase Offer, the Company shall issue and, upon the Company's written
request, the Trustee shall authenticate for the Holder at the expense of the
Company a new Security equal in principal amount at maturity to the unpurchased
portion of the Security surrendered.
43
<PAGE>
Section 3.5 RIGHT OF REDEMPTION.
The Company shall have the right to redeem Securities as set forth in
paragraph 4 of the Securities and as set forth herein. Redemption of Securities
at the Company's option shall be made only in accordance with this Section 3.5
and such paragraph 4. At its election, the Company may redeem the Securities in
whole or in part, at the times and at the Redemption Prices specified in the
form of Security attached as EXHIBIT A hereto, plus accrued and unpaid interest
and Liquidated Damages, if any, to the applicable Redemption Date. Except as
provided in this paragraph and paragraph 4 of the Securities, the Securities may
not otherwise be redeemed at the option of the Company.
If the Company elects to redeem Securities pursuant to this Section 3.5
and paragraph 4 of the Securities, the Company shall notify the Trustee in
writing of the date on which the applicable Securities are to be redeemed (a
"Redemption Date") and the principal amount at maturity thereof to be redeemed
and whether it wants the Trustee to give notice of redemption to the Holders.
The Company shall give each notice to the Trustee provided for in this
Section 3.5 at least 30 days before the Redemption Date (unless a shorter notice
shall be required by applicable law). Any such notice may be cancelled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
If fewer than all of the Securities are to be redeemed pursuant to
Paragraph 4 thereof, the Trustee shall, if applicable, select from among such
Securities to be redeemed pro rata or by lot or by such other method as the
Trustee shall determine to be fair and appropriate and in such manner as
complies with any applicable Depositary, legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount at maturity
thereof to be redeemed. Securities in denominations of $1,000 (or such greater
amount that results solely from an increase in the Accretion Rate) may be
redeemed only in whole. The Trustee may select for redemption portions (equal to
$1,000 (or such greater amount that results solely from an increase in the
Accretion Rate) denominations or any integral multiple thereof) of the principal
amount at maturity of Securities that have denominations larger than $1,000 (or
44
<PAGE>
such greater amount that results solely from an increase in the Accretion Rate).
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
At least 30 days but not more than 60 days before each Redemption Date
(unless another notice period shall be required by applicable law), the Company
shall mail a notice of redemption by first class mail, postage prepaid, to each
Holder whose Securities are to be redeemed (unless a shorter notice period shall
be required by applicable law) to such Holder's last address as then shown upon
the register of the Registrar. At the Company's request, the Trustee shall give
the notice of redemption in the Company's name and at the Company's expense.
Each notice for redemption shall identify the Securities to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price, plus the amount of accrued and
unpaid interest and Liquidated Damages, if any, to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Company defaults in its obligation to
deposit cash with the Paying Agent in accordance with this Section 3.5 or (b)
such redemption payment is prevented for any reason, interest and accretion of
Accreted Value on Securities called for redemption ceases accrual of on and
after the Redemption Date and the only remaining right of the Holders of such
Securities is to receive payment of the Redemption Price, plus accrued and
unpaid interest and Liquidated Damages, if any, to the Redemption Date, upon
surrender to the Paying Agent of the Securities called for redemption and to be
redeemed;
(6) if any Security is being redeemed in part, the portion of
the principal amount at maturity, equal to $1,000 (or such greater amount that
results solely from an increase in the Accretion Rate) or any integral multiple
thereof, of such Security to be redeemed and that, after the Redemption Date,
and upon surrender of such Security, a new Security or Securities in aggregate
principal amount at maturity equal to the unredeemed portion thereof will be
issued;
45
<PAGE>
(7) if less than all the Securities are to be redeemed, the
identifica tion of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount at maturity of such
Securities to be redeemed;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.5
and pursuant to the redemption provisions of Paragraph 4 of the Securities.
Once notice of redemption is mailed in accordance with this Section
3.5, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, plus accrued and unpaid interest (and
Liquidated Damages, if any) to the Redemption Date. Upon surrender to the
Trustee or Paying Agent, such Securities called for redemption shall be paid at
the Redemption Price, plus accrued and unpaid interest (and Liquidated Damages,
if any) to the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the corresponding Interest Payment Date,
the accrued interest constituting part of the Redemption Price shall be payable
to the Holder of the redeemed Securities registered on the relevant Record Date;
and provided, further, that if a Redemp tion Date is a Legal Holiday, payment
shall be made on the next succeeding Business Day and no interest shall accrue
for the period from such Redemption Date to such succeeding Business Day.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company), cash
sufficient to pay the Redemption Price, plus accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date, of all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Company any cash so deposited which is not required for that purpose upon the
written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Section 3.5 and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything in this
Section 3.5 to the contrary, if any Security surrendered for redemption in the
manner provided in the Securities shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
46
<PAGE>
paragraph and the other provisions of this Section 3.5, interest shall continue
to accrue and Accreted Value to increase and be paid from and including the
Redemption Date until such payment is made on the unpaid principal, and, to the
extent lawful, on any interest not paid on such unpaid principal, in each case
at the rate and in the manner provided in this Indenture and the Securities.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount at maturity to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
Section 4.1 PAYMENT OF SECURITIES.
The Company shall pay or cause to be paid the principal of and premium,
if any, on the Securities on the dates and in the manner provided in the
Securities. Principal, and premium, if any, shall be considered paid on the date
due if the Paying Agent, if other than the Company, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal, and
premium, if any, then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal, Accreted Value,
interest and premium, if any, at the rate equal to l% per annum in excess of the
then applicable interest rate (or rate of accretion, as applicable) on the
Securities to the extent lawful.
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Securities may be surrendered
for registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company shall give prompt written notice to the Trustee of the location and
47
<PAGE>
any change in the location of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.3.
Section 4.3 REPORTS.
(a) Whether or not the Company is subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, so long as any of the Senior Notes
remain outstanding, the Company shall deliver to the Trustee and to each Holder,
and to prospective purchasers of Senior Notes identified to the Company by
Holders (i) within 15 days after it is or would have been (if it were subject to
such reporting obligations) required to file such with the Commission, annual
and quarterly financial statements substantially equivalent to financial
statements that would have been included in reports filed with the Commission,
if the Company were subject to the requirements of Section 13 or 15(d) of the
Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports to the Commission, and, in each case, together with
a management's discussion and analysis of financial condition and results of
operations which would be so required and, unless the Commission will not accept
such copies, file with the Commission the annual, quarterly and other reports
which it is or would have been required to file with the Commission and (ii) any
other information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. The Company shall also comply with the provisions of TIA ss.
314(a).
48
<PAGE>
(b) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Trustee may
be required to deliver to the Holders of the Senior Notes under this Section
4.3.
Section 4.4 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days alter the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the Securities is prohibited or if such event has
occurred, a description of the event and what action the Company is taking or
proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants the year-end financial
statements delivered pursuant to Section 4.3(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
49
<PAGE>
Section 4.5 TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith, and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Securities.
Section 4.6 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, 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 has
been enacted.
Section 4.7 LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Subsidiaries or
Restricted Affiliates to, directly or indirectly, make any Restricted Payment
if, after giving effect to such Restricted Payment on a pro forma basis, (1) a
Default or an Event of Default shall have occurred and be continuing, (2) the
Company is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio in clause (i) of Section 4.9 or (3) the
aggregate amount of all Restricted Payments made by the Company and its
Subsidiaries and Restricted Affiliates, including after giving effect to such
proposed Restricted Payment, from and after the Issue Date, would exceed the sum
of (a) 50% of the aggregate Consolidated Net Income of the Company for the
period (taken as one accounting period), commencing on the Issue Date, to and
including the last day of the fiscal quarter ended immediately prior to the date
of each such calculation for which internal financial statements are available
(or, in the event Consolidated Net Income for such period is a deficit, then
minus 100% of such deficit), plus (b) the aggregate Net Cash Proceeds received
by the Company from the sale of its Qualified Capital Stock (other than (i) to a
Subsidiary or Restricted Affiliate of the Company and (ii) to the extent applied
in connection with a Qualified Exchange), after the Issue Date, less (c) any
50
<PAGE>
amounts applied to the uses set forth in clause (e) of the definition of
"Permitted Investment."
The foregoing clauses (2) and (3) of the immediately preceding
paragraph, however, will not prohibit (u) any dividend, distribution or payment
of interest on Disqualified Capital Stock permitted by Section 4.9 (v) open
market repurchases of publicly traded shares of the Company's common stock from
Persons other than officers, employees, directors or Affiliates of the Company,
and repurchases (whether or not in the open market) of such stock from the
estate of any Principal or from a Related Party of such Principal, in either
case upon the death of such Principal, in an aggregate amount not to exceed $15
million on and after the Issue Date, (w) the retirement of the shares of the
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
outstanding on the Issue Date on its final redemption date and in accordance
with its terms as of the Issue Date, (x) any dividend, distribution, or other
payment (other than a repurchase) by any Subsidiary or Restricted Affiliate of
the Company on its Equity Interests that is paid pro rata to all holders of such
Equity Interests, and any repurchase for Fair Market Value as determined by the
Board of Directors by any Subsidiary or Restricted Affiliate of the Company of
any of such Subsidiary's or Restricted Affiliate's Equity Interests, (y) a
Qualified Exchange, or (z) the payment of any dividend on Qualified Capital
Stock within 60 days after the date of its declaration if such dividend could
have been made on the date of such declaration in compliance with the foregoing
provisions. The full amount of any Restricted Payment made pursuant to the
foregoing clauses (v), (w) and (z) (but not pursuant to clauses (u), (x) or (y))
of the immediately preceding sentence, however, will be deducted in the
calculation of the aggregate amount of Restricted Payments available to be made
referred to in clause (3) of the immediately preceding paragraph.
For purposes of this covenant, the amount of any Restricted Payment, if
other than in cash, shall be the Fair Market Value thereof, as determined in
good faith by the Board of Directors of the Company. Additionally, on the date
of each Restricted Payment, the Company shall deliver an Officers' Certificate
to the Trustee describing in reasonable detail the nature of such Restricted
Payment, stating the amount of such Restricted Payment, stating in reasonable
detail the provisions of the Indenture pursuant to which such Restricted Payment
was made and certifying that such Restricted Payment was made in compliance with
the terms of the Indenture.
51
<PAGE>
Section 4.8 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RE
STRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Subsidiary of the Company to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or any Subsidiary
of the Company, except (a) restrictions imposed by the Senior Notes or the
Indenture or by other Indebtedness of the Company ranking pari passu with the
Senior Notes, provided such restrictions are no more restrictive than those
imposed by the Indenture, (b) restrictions imposed by applicable law, (c)
existing restrictions under Indebtedness outstanding on the Issue Date, (d)
restrictions under any Acquired Indebtedness not incurred in violation of the
Indenture or any agreement relating to any property, asset, or business acquired
by the Company or any of its Subsidiaries, which restrictions in each case
existed at the time of acquisition, were not put in place in connection with or
in anticipation of such acquisition and are not applicable to the Company or any
of its Subsidiaries, or Restricted Affiliates, other than the Person or Persons
acquired, or to any property, asset or business, other than the property, asset
or business so acquired, (e) any such restriction or requirement imposed by
Indebtedness or Disqualified Capital Stock incurred under Section 4.9, provided
such restriction or requirement is no more restrictive than that imposed by the
Indenture or any other instrument (including with respect to such Indebtedness)
entered into by the Company or a Subsidiary governing the terms of a bona fide
borrowing by the Company or a Subsidiary from a third party commercial lender
for valid business purposes, (f) restrictions with respect solely to a
Subsidiary of the Company imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially all of the
Equity Interests or assets of such Subsidiary, provided such restric tions apply
solely to the Equity Interests or assets of such Subsidiary which are being
sold, and (g) in connection with and pursuant to permitted Refinancings,
replacements of restrictions imposed pursuant to clauses (a), (c) or (d) of this
Section 4.8 that are not more restrictive than those being replaced and do not
apply to the Company or any of its Subsidiaries, or Restricted Affiliates or
assets other than those that would have been covered by the restrictions in the
Indebtedness so refinanced. Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease entered into in the
ordinary course of business, consistent with industry practice, nor (b) Liens
permitted under the terms of the Indenture shall in and of themselves be
considered a restriction on the ability of the applicable Subsidiary to transfer
such agreement or assets, as the case may be.
52
<PAGE>
Section 4.9 LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTED
NESS AND DISQUALIFIED CAPITAL STOCK.
The Company will not, and will not permit any of its Subsidiaries or
Restricted Affiliates to, directly or indirectly, issue, assume, guaranty,
incur, become directly or indirectly liable with respect to (including as a
result of an Acquisition), or otherwise become responsible for, contingently or
otherwise (individually and collectively, to "incur" or, as appropriate, an
"incurrence"), any Indebtedness or any Disqualified Capital Stock (including
Acquired Indebtedness), other than Permitted Indebtedness. Notwithstanding the
foregoing, if no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro forma
basis to, such incurrence of Indebtedness or Disqualified Capital Stock, then
(i) if on the date of such incurrence (the "Incurrence date"), the Consolidated
Cash Flow Ratio of the Company for the Reference Period immediately preceding
the Incurrence Date, after giving effect on a pro forma basis to such incurrence
of such Indebtedness or Disqualified Capital Stock and, to the extent set forth
in the definition of Consolidated Cash Flow Ratio, the use of proceeds thereof,
would be no more than 6.5 to 1.0 (the "Debt Incurrence Ratio"), then the Company
may incur Indebtedness or Disqualified Capital Stock, provided such Indebtedness
or Disquali fied Capital Stock matures after, and has no payment of cash or
property (other than payments in Qualified Capital Stock or in such Indebtedness
or Disqualified Capital Stock) scheduled on or prior to, May 1, 2004, and (ii)
if on the Incurrence Date either (1) the Consolidated Cash Flow Ratio of a
Subsidiary or Restricted Affiliate of the Company for the Reference Period
immediately preceding the Incurrence Date, after giving effect on a pro forma
basis to such incurrence of such Indebtedness or Disqualified Capital Stock and
to the extent set forth in the definition of Consolidated Cash Flow Ratio, the
use of proceeds thereof, would be no more than 7.0 to 1.0, or (2) the
Consolidated Coverage Ratio of such Subsidiary or Restricted Affiliate for the
Reference Period immediately preceding the Incurrence Date, after giving effect
on a pro forma basis to such incurrence of such Indebtedness or Disqualified
Capital Stock and, to the extent set forth in the definition of Consolidated
Coverage Ratio, the use of proceeds thereof, would be no less than 1.75 to 1.00,
or (3) after giving effect on a pro forma basis to such incurrence of such
Indebtedness or Disqualified Capital Stock, and, to the extent used to retire
other Indebtedness or Disqualified Capital Stock, the use of proceeds therefrom,
the amount of Indebtedness or Disqualified Capital Stock outstanding of such
Subsidiary or Restricted Affiliate would not exceed 225% of the Consolidated
Invested Equity Capital of such Subsidiary or Restricted Affiliate, then, other
than UIPI or UIHE, such Subsidiary or Restricted Affiliate may incur such
Indebtedness or Disqualified Capital Stock, provided in the case of each of
clauses (ii)(1), (2) and (3), (A) the net proceeds therefrom are used in a
53
<PAGE>
Related Business of the Company or any affiliated company of the Company and (B)
the amount of any Indebtedness or Disqualified Capital Stock of such Subsidiary
or Restricted Affiliate that has been repaid, redeemed, defeased, refunded,
refinanced, discharged or retired by or with the proceeds of any Refinancing
Indebtedness incurred by the Company shall be deemed to have remained
outstanding for the purposes of calculating the pro forma amounts to be
determined pursuant to such clauses, and, for the purposes of this clause (ii),
other than UIPI or UIHE, a Subsidiary or Restricted Affiliate may be a
co-obligor or guarantor on such Indebtedness or Disqualified Capital Stock of
another Subsidiary or Restricted Affiliate of the Company (A) if such Subsidiary
or Restricted Affiliate owns, either directly or indirectly through one or more
Subsidiaries or Restricted Affiliates of the Company, all or a portion of the
Equity Interests of the Subsidiary or Restricted Affiliate of the Company, other
than UIPI or UIHE, that incurred such Indebtedness or Disqualified Capital
Stock, (B) if all or a portion of the Equity Interests of such Subsidiary or
Restricted Affiliate is owned either directly or indirectly through one or more
Subsidiaries or Restricted Affiliates of the Company by the Subsidiary or
Restricted Affiliate, other than UIPI and UIHE, that incurred such Indebtedness
or Disqualified Capital Stock or (C) if such Subsidiary or Restricted Affiliate
owns, either directly or indirectly through one or more Subsidiaries or
Restricted Affiliates of the Company, all or a portion of the business that will
use the proceeds of such Indebtedness.
In addition, the foregoing limitations will not apply to:
(a) the incurrence by the Company or, except for UIPI and UIHE, its
Subsidiaries and Restricted Affiliates of Indebtedness, provided that the
aggregate amount of such Indebtedness outstanding at any time pursuant to this
paragraph (a) (including any Indebtedness issued to refinance, replace or refund
such Indebtedness) shall not exceed $25 million;
(b) [INTENTIONALLY OMITTED]; and
(c) if no Event of Default shall have occurred and be continuing, the
incurrence by Subsidiaries or Restricted Affiliates of the Company of
Indebtedness pursuant to the Existing Agreements up to, but not in excess of the
maximum applicable amounts of Indebtedness available for borrowing pursuant to
the terms of each such Existing Agreement as in effect on the date of the
Indenture; provided that, in determining the maximum applicable amounts
available it shall be assumed that the Company satisfies any applicable
conditions to borrowing.
54
<PAGE>
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary or Restricted Affiliate
of the Company (including upon designation of any subsidiary or other Person as
a Subsidiary or Restricted Affiliate) or is merged with or into or consolidated
with the Company or a Subsidiary or Restricted Affiliate of the Company shall be
deemed to have been incurred at the time such Person becomes such a Subsidiary
or Restricted Affiliate of the Company or is merged with or into or consolidated
with the Company or a Subsidiary or Restricted Affiliate of the Company, as
applicable.
Notwithstanding anything in the Indenture to the contrary, the Company
shall not be permitted to incur Indebtedness that is subordinated in right of
payment to any other Indebtedness of the Company, unless such Indebtedness to be
incurred is also subordinated in right of payment to the Senior Notes at least
as to the same extent and neither UIPI nor UIHE shall incur any Indebtedness
other than permitted intercompany Indebtedness to the Company.
Section 4.10 LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK.
The Company will not, and will not permit any of its Subsidiaries to,
in one or a series of related transactions, convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of its property, business or
assets (other than cash or Cash Equivalents), including by merger or
consolidation (in the case of a Subsidiary of the Company), and including any
sale or other transfer or issuance of any Equity Interests of any Subsidiary of
the Company, whether by the Company or a Subsidiary of either or through the
issuance, sale or transfer of Equity Interests by a Subsidiary of the Company,
and including any sale and leaseback transaction (any of the foregoing, an
"Asset Sale"), unless (1)(a) within 360 days after the date of such Asset Sale,
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied (i)
to the optional redemption of the Senior Notes in accordance with the terms of
the Indenture and other Indebtedness of the Company ranking on a parity with the
Senior Notes with similar provisions requiring the Company to make an offer to
purchase or to redeem such Indebtedness with the proceeds of such Asset Sale,
pro rata in proportion to the respective Accreted Value (or principal amount and
accrued interest in the case of Indebtedness without an original issue discount)
of the Senior Notes and such other Indebtedness then outstanding, (ii) to the
repurchase of the Senior Notes and such other Indebtedness ranking on a parity
with the Senior Notes and having similar provisions requiring the Company to
make an offer to purchase or to redeem such Indebtedness with the proceeds of
such asset sale pursuant to an irrevocable, unconditional cash offer (pro rata
in proportion to the respective Accreted Value (or principal amount and accrued
interest in the case of Indebtedness without an original issue discount) of the
Senior Notes and such other Indebtedness then outstanding) to repurchase the
55
<PAGE>
Senior Notes and such other Indebtedness (the "Asset Sale Offer") at a purchase
price of 100% of Accreted Value (the "Asset Sale Offer Price"), together with
accrued interest and Liquidated Damages, if any, to the date of payment, made
within 360 days of such Asset Sale, or (iii) to the repayment of Indebtedness
issued by a Subsidiary of the Company (in respect of which Indebtedness the
Company is not a direct or contingent obligor) if required by the terms of such
Indebtedness, or (b) within 360 days following such Asset Sale, the Asset Sale
Offer Amount is invested in fixed assets and property which in the good faith
reasonable judgment of the Board of Directors of the Company will be an asset
of, and constitute or be a part of a Related Business of, the Company or such
Subsidiary (if it continues to be a Subsidiary) immediately following such
transaction or is used to make Permitted Investments (other than Cash
Equivalents, Senior Notes or the Existing Notes), (2) at least 85% of the
consideration for such Asset Sale or series of related Asset Sales consists of
Cash or Cash Equivalents, and (3) the Board of Directors of the Company
determines, in good faith, that the Company or such Subsidiary, as applicable,
receives fair market value for such Asset Sale.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in any of clauses
(1)(a)(i), 1(a)(iii) and 1(b) above (the "Excess Proceeds") exceeds $20 million,
provided that, in the case of an Asset Sale by a Subsidiary that is not a Wholly
Owned Subsidiary, only the Company's pro rata portion of such Net Cash Proceeds
shall constitute Net Cash Proceeds subject to the provisions of this Section
4.10. Each Asset Sale Offer shall remain open for 20 Business Days following its
commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset Sale
Offer Period, the Company shall apply the Asset Sale Offer Amount, plus an
amount equal to accrued interest and Liquidated Damages, if any, to the purchase
of all Senior Notes and, if applicable, such other Indebtedness ranking on a
parity with the Senior Notes and with provisions requiring the Company to make
an offer to purchase or redeem such Indebtedness with the proceeds of such Asset
Sale properly tendered (on a pro rata basis if the Asset Sale Offer Amount is
insufficient to purchase all Senior Notes so tendered) at the Asset Sale Offer
Price (together with accrued interest and Liquidated Damages, if any). To the
extent that the aggregate amount of Senior Notes tendered pursuant to an Asset
Sale Offer is less than the Asset Sale Offer Amount, the Company may use any
remaining Net Cash Proceeds for general corporate purposes as otherwise
permitted by the Indenture and following each Asset Sale Offer the Excess
Proceeds amount shall be reset to zero. For purposes of clause (2) above, total
consideration received means the total consideration received for such Asset
Sales, minus the amount of (a) Indebtedness (other than Subordinated
56
<PAGE>
Indebtedness) assumed by a transferee of such Asset Sale, (b) Purchase Money
Indebtedness secured solely by the assets sold and repaid upon such Asset Sale
or assumed by a transferee of such Asset Sale and (c) property that within 30
days of such Asset Sale is converted into Cash or Cash Equivalents (to the
extent of such cash or Cash Equivalents received), provided that, with respect
to this clause (c), such cash or Cash Equivalents so received shall be deemed to
have been received on the date of such Asset Sale and shall be applied in the
manner and within the time specified by Section 4.10 pertaining to the proceeds
from such Asset Sale.
Notwithstanding, and without complying with, the foregoing provisions
of the other paragraphs of Section 4.10:
(i) the Company and its Subsidiaries may, in the ordinary course of
business, (A) convey, sell, transfer, assign or otherwise dispose of inventory
acquired and held for resale in the ordinary course of business and (B)
liquidate Cash Equivalents;
(ii) the Company and its Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of assets pursuant to and in accordance with Section
5.1;
(iii) the Company and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete personal property in the ordinary course of business
so long as such property is no longer necessary for the proper conduct of the
business of the Company or such Subsidiary, as applicable;
(iv) the Company and its Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of assets to the Company or any of its Subsidiaries
or Restricted Affiliates;
(v) the Company and its Subsidiaries may surrender or waive contract
rights or settle, release or surrender of contract, tort or other claims of any
kind or grant Liens not prohibited by the Indenture;
(vi) the Company and its Subsidiaries may exchange all or a portion of
its property, businesses or assets for Permitted Investments (other than Senior
Notes and Existing Notes) or for property, businesses or assets of a type used
in a Related Business, or a combination of any such Permitted Investments,
property, businesses or assets; provided that any Cash or Cash Equivalents
received pursuant to any such exchange shall be applied in the manner applicable
to Net Cash Proceeds from an Asset Sale as set forth pursuant to the provisions
of the immediately preceding provisions of this Section 4.10; and provided,
further, that in the case of a transaction exceeding $15 million of
consideration to any party thereto, the Company shall have obtained a favorable
written opinion by an independent financial advisor of national reputation as to
57
<PAGE>
the fairness from a financial point of view to the Company or such Subsidiary of
the proposed transaction.
All Net Cash Proceeds from an Event of Loss shall be invested or used
to repurchase Senior Notes, all within the period and as otherwise provided
above in clause (1) of the first paragraph of this Section 4.10.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.10, compliance by the Company or any of its Subsidiaries with such laws and
regulations shall not in and of itself cause a breach of its obligations under
this Section 4.10.
Section 4.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Subsidiaries on or
after the Issue Date to enter into any contract, agreement, arrangement or
transaction with any Affiliate of the Company (an "Affiliate Transaction"), or
any series of related Affiliate Transactions, other than Exempted Affiliate
Transactions, (i) unless it is determined by the Board of Directors as evidenced
by a Board Resolution, that the terms of such Affiliate Transaction are fair and
reasonable to the Company, and no less favorable to the Company, than could have
been obtained in an arm's length transaction with a non-Affiliate, (ii) if
involving consideration to either party in excess of $1 million, unless such
Affiliate Transaction(s) is evidenced by an Officers' Certificate addressed and
delivered to the Trustee certifying that such Affiliate Transaction(s) has been
approved by a majority of the members of the Board of Directors that are
disinterested in such transaction and (iii) if involving consideration to either
party in excess of $10 million, unless, in addition, the Company, prior to the
consummation thereof, obtains a written favorable opinion as to the fairness of
such transaction to the Company from a financial point of view from an
independent investment banking firm of national reputation in the United States
or, if pertaining to a matter for which such investment banking firms do not
customarily render such opinions, an appraisal or valuation firm of national
reputation in the United States.
58
<PAGE>
Section 4.12 LIMITATION ON LIENS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, grant, incur or suffer to exist, other than Permitted
Liens, any Lien upon any of the property or assets of UIPI or UIHE, whether now
owned or hereafter acquired upon any income profits therefrom.
Section 4.13 LINES OF BUSINESS.
The Company will not, and will not permit any of its Subsidiaries or
Restricted Affiliates to, directly or indirectly engage to any substantial
extent in any line or lines of business activity other than that which, in the
reasonable good faith judgment of the Board of Directors of the Company, is a
Related Business.
Section 4.14 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Securities.
Section 4.15 LIMITATIONS ON SUBSIDIARY STRUCTURE.
Notwithstanding anything in this Indenture to the contrary, the Company
shall not make any Investment in any Person, directly or indirectly, other than
through UIPI or UIHE, which together shall be required to hold, directly or
indirectly, all Investments made by the Company or any of its Restricted
Subsidiaries after the date of this Indenture. In addition, (i) except as
permitted by clause (v) of this Section 4.15, each of UIPI and UIHE shall at all
times continue to be a direct Wholly Owned Subsidiary of the Company and the
Company will not have any other direct subsidiaries other than the Retained
Assets, (ii) neither UIPI nor UIHE shall (although their Subsidiaries and
Restricted Affiliates may, to the extent permitted by Section 4.09 hereof) incur
any Indebtedness, except intercompany Indebtedness from UIPI or UIHE to the
Company or issue any preferred stock, (iii) that UIHE (or, if UIHE is merged
into UIPI as permitted by clause (v) of this Section 4.15, UIPI) will be the
direct beneficial and record owner or all of the Company's direct and indirect
interests in UPC other than those interests held or reserved to be held (as of
the Issue Date) through the foundation administering UPC's employee equity
59
<PAGE>
incentive plan, (iv) that neither UIPI nor UIHE will incur or suffer to exist
any Lien, other than Permitted Liens, on any of its assets or property, and (v)
neither UIHE nor UIPI shall consolidate or merger with or into any other Person
(other than each other) prior to the date that none of the Company's Senior
Secured Discount Notes due 1999 are outstanding.
Section 4.16 LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Company shall not, and shall not permit any of its Subsidiaries and
Restricted Affiliates to conduct its business in a fashion that would cause it
to be required to register as an "investment company" (as this term is defined
in the Investment Company Act of 1940, as amended), or from otherwise becoming
subject to regulation under the Investment Company Act of 1940.
Section 4.17 RULE 144A INFORMATION REQUIREMENT.
The Company shall furnish to the Holders of the Securities and
prospective purchasers of Securities designated by the Holders of Transfer
Restricted Securities, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act until such time
as either the Company has concluded an offer to exchange the Exchange Securities
for the Initial Securities or a registration statement relating to resales of
the Securities has become effective under the Securities Act. The Company shall
also furnish such information during the pendency of any suspension of
effectiveness of such resale registration statement.
Section 4.18 REPURCHASE OF SENIOR NOTES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL
In the event that a Change of Control has occurred, each holder of
Senior Notes will have the right, at such holder's option, pursuant to an
irrevocable and unconditional offer by the Company (the "Change of Control
Offer"), to require the Company to repurchase all or any part of such holder's
Senior Notes (provided that the principal amount at maturity of such Senior
Notes must be $1,000 (or such greater amount that results solely from an
increase in the Accretion Rate) or an integral multiple thereof) on a date (the
"Change of Control Purchase Date") that is no later than 40 Business Days after
60
<PAGE>
the occurrence of such Change of Control, at a cash price equal to 101% of the
Accreted Value thereof at the Change of Control Purchase Date (the "Change of
Control Purchase Price"), together with accrued interest and Liquidated Damages,
if any, to the Change of Control Purchase Date. The Change of Control Offer
shall be made within 15 Business Days following a Change of Control and shall
remain open for 20 Business Days following its commencement (the "Change of
Control Offer Period").
ARTICLE V
SUCCESSORS
Section 5.1 LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Company shall not consolidate with or merge with or into another
Person or, directly or indirectly, sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons or adopt a Plan of Liquidation, unless (i) either
(a) the Company is the continuing entity or (b) the resulting, surviving or
transferee entity or, in the case of a Plan of Liquidation, the entity which
receives the greatest value from such Plan of Liquidation is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Senior Notes and the
Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such transaction, and
(iii) immediately after giving effect to such transaction on a pro forma basis,
the consolidated resulting, surviving or transferee entity or, in the case of a
Plan of Liquidation, the entity which receives the greatest value from such Plan
of Liquidation would immediately thereafter have a Debt Incurrence Ratio (as
though such entity were the Company) no greater than the Company's Debt
Incurrence Ratio immediately prior to such transaction.
Section 5.2 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a Plan of
Liquidation in accordance with the foregoing, the successor corporation formed
by such consolidation or into which the Company is merged or to which such
transfer is made or, in the case of a Plan of Liquidation, the entity which
61
<PAGE>
receives the greatest value from such Plan of Liquidation shall succeed to, and
be (except in the case of a lease) substituted for, and may exercise every right
and power of, the Company under the Indenture with the same effect as if such
successor corporation had been named therein as the Company, and (except in the
case of a lease) the Company shall be released from the obligations under the
Senior Notes and the Indenture except with respect to any obligations that arise
from, or are related to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries or Restricted Affiliates, the Company's interest in which
constitutes all or substantially all of the properties and assets of the Company
shall be deemed to be the transfer of all or substantially all of the properties
and assets of the Company.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of any installment of
interest when due and the continuance of such default for 30 days;
(b) the Company defaults in the payment when due of the principal, or
Accreted Value (as applicable), or premium of the Securities, at maturity, upon
acceleration, repurchase or otherwise;
(c) the Company fails to comply with any of the provisions of Section
4.7, 4.9, 4.10, 4.15, 4.18. or 5.1 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Securities
for 60 days after notice to the Company by the Trustee or notice to the Company
and the Trustee by the Holders of at least 25% in principal amount at maturity
of the Securities then outstanding;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
62
<PAGE>
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (i) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated aggregates $10 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments are not paid, discharged
or stayed for a period of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $10 million;
(g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a Custo dian of
it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of
its creditors, or
(v) generally is not paying its debts as they
become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
63
<PAGE>
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) appoints a Custodian of the Company or any of
its Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of
its Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
Section 6.2 ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.1 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing,
unless the principal of all of the Senior Notes shall have already become due
and payable, the Trustee or the Holders of at least 25% in principal amount at
maturity of the then outstanding Securities by notice in writing to the Company
(and to the Trustee if given by Holders) (an "Acceleration Notice") may declare
all Accreted Value, accrued interest and Liquidated Damages, if any, thereon the
Securities to be due and payable immediately. Upon any such declaration, the
Accreted Value of the Securities shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.1 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary all Accreted Value, accrued interest
and Liquidated Damages, if any, thereon shall be due and payable immediately
without further action or notice. The Holders of a majority in aggregate
principal amount at maturity of the then outstanding Securities by written
notice to the Trustee may on behalf of all of the Holders rescind an
64
<PAGE>
acceleration and its consequences if the rescission would conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest, or premium or Liquidated Damages, if any, that has become
due solely because of the acceleration and except on default with respect to any
provision requiring a super-majority approval to amend, which default may only
be waived by such a super-majority) have been cured or waived. Except as
provided below in the following paragraph, in the event of any such acceleration
of Securities, the Company will become obligated to pay the Accreted Value, plus
all applicable premiums, accrued interest and Liquidated Damages, of the Senior
Notes immediately.
The Holders of a majority in aggregate principal amount at maturity of
the Senior Notes at any time outstanding may waive on behalf of all the Holders
any default, except a default with respect to any provision requiring a
super-majority approval to amend, which default may only be waived by such a
super-majority, and except a default in the payment of principal of, Accreted
Value, or interest or Liquidated Damages on any Senior Note not yet cured or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Senior Note
affected. Subject to Article 7, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Senior Notes at the time outstanding will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee.
Section 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, Accreted Value, and
premium, and accrued interest and Liquidated Damages, if any, 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 Holder of a Security 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. All remedies are
cumulative to the extent permitted by law.
65
<PAGE>
Section 6.4 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount at
maturity of the then outstanding Securities by notice to the Trustee may on
behalf of the Holders of all of the Securities waive an existing Default or
Event of Default and its consequences hereunder, except a continuing Default or
Event of Default in the payment of the principal of, Accreted Value, or premium,
and accrued interest and Liquidated Damages, if any, on the Securities (which is
required to be unanimous), and except in connection with a Repurchase Offer
(which requires at least 66.67% in principal amount at maturity of the then
outstanding Securities). Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
Section 6.5 CONTROL BY MAJORITY.
Holders of a majority in principal amount at maturity of the then
outstanding Securities may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Securities or that
may involve the Trustee in personal liability.
Section 6.6 LIMITATION ON SUITS.
A Holder of a Security may pursue a remedy with respect to this
Indenture or the Securities only if:
(a) the Holder of a Security gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount at maturity of the
then outstanding Securities make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Security or Holders of Securities offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
66
<PAGE>
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount at maturity of the then outstanding Securities do not give the Trustee a
direction inconsistent with the request.
Section 6.7 RIGHTS OF HOLDERS OF SECURITIES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal, Accreted Value, and
premium, and interest and Liquidated Damages, if any, on the Security, on or
after the respective due dates expressed in the Security (including in
connection with a Repurchase Offer or in respect of the redemption thereof), 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 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1 occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, and premium, if any, remaining unpaid on the Securities and
interest on overdue principal and such other amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Securities allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
67
<PAGE>
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7 hereof. To the extent that the payment
of any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties that
the Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder,
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for
amounts due under Section 7.7 hereof, including payment of all
compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of
collection;
Second: to Holders of Securities for amounts due and unpaid on
the Securities for principal, Accreted Value, and premium, and interest
and Liquidated Damages, if any, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities
for principal, Accreted Value, and premium, and interest and Liquidated
Damages, if any, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
68
<PAGE>
The Trustee may fix a record date and payment date for any payment to
Holders of Securities pursuant to this Section 6.10.
Section 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a 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 of a
Security pursuant to Section 6.7 hereof, or a suit by Holders of more than 10%
in principal amount at maturity of the then outstanding Securities.
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be deter mined
solely by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) 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.
69
<PAGE>
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) 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 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b),and (c) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) 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. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Except with respect to Sections 4.1 and 4.4 hereof, the Trustee
shall have no duty to inquire as to the performance of the Company's covenants
in Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 4.1, 4.4 and 6.1 hereof or (ii) any Default or
Event of Default of which the Trustee shall have received written notification
or obtained actual knowledge.
70
<PAGE>
Section 7.2 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon 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 or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and 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 that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
Section 7.3 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 any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
71
<PAGE>
Section 7.4 TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representations
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 or any
money paid to the Company or upon the Company's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
Section 7.5 NOTICE OF DEFAULTS.
The Trustee shall mail to Holders of Securities a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of, or premium, if any, on
any Security, the Trustee may withhold the notice if and so long as a committee
of its Responsible Officers in good faith determines that withholding the notice
is in the interests of the Holders of the Securities.
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE SECURITIES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Securities remain outstanding,
the Trustee shall mail to the Holders of the Securities a brief report dated as
of such reporting date that complies with TIA ss. 313(a) (but if no event
described in TIA ss. 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Securities shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Securities are listed in accordance with TIA ss. 313(d).
The Company shall promptly notify the Trustee when the Securities are listed on
any stock exchange.
72
<PAGE>
Section 7.7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.7) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee so to notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and, the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
73
<PAGE>
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
Section 7.8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so noticing the Company. The Holders of Securities
of a majority in principal amount at maturity of the then outstanding Securities
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount at maturity of the then outstanding Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Securities of at least 10% in principal amount at maturity of the
then outstanding Securities may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Senior Note
who has been a Holder of a Senior Note for at least six months, fails to comply
with Section 7.10, such Holder of a Senior Note may petition any court of
74
<PAGE>
competent jurisdiction for the removal of the Trustee and the appointment of 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 mail a notice of its
succession to Holders of the Securities. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7 hereof
shall continue for the benefit of the retiring Trustee.
Section 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor, corporation if otherwise eligible hereunder without any further
act shall be the successor Trustee.
Section 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)( l), (2) and (5). The Trustee is subject to TIA
ss.310(b).
Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COM PANY.
The Trustee is subject to 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 therein.
75
<PAGE>
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time prior to the
Stated Maturity, elect to have either Section 8.2 or 8.3 hereof be applied to
all outstanding Securities upon compliance with the conditions set forth below
in this Article Eight.
Section 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
Section 8.4 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, and premium, and interest and Liquidated Damages,
if any, on such Securities when such payments are due from the funds held by the
Trustee in the trust, (b) the Company's obligations with respect to such
Securities under Article 2 and Section 4.2 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.2 notwithstanding the prior exercise of its option under Section
8.3 hereof.
76
<PAGE>
Section 8.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, Covenant Defeasance means
that, with respect to the outstanding Securities, the Company may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.1 hereof, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.1 hereof of the option applicable to this
Section 8.3 hereof, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, Sections 6.1(c) through 6.1(f) hereof shall not constitute
Events of Default.
Section 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance the
Company shall have received a Purchaser Resale Notice and:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. legal tender, U.S. Government Securities,
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Senior Notes on the stated
date for payment thereof or on the redemption date of such principal or
installment of principal of, premium, if any, or interest on such Senior Notes,
and the holders of Senior Notes must have a valid, perfected, exclusive security
interest in such trust;
77
<PAGE>
(b) in the case of an election under Section 8.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming 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 Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Legal Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same time
as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Securities pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.1(g) or 6.1(h)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in, in the case of the Officers' Certificate, (a) through
78
<PAGE>
(d) and, in the case of an Opinion of Counsel, clauses (a) (with respect to the
validity and perfection of the security interest), (b), (c) and (e) of this
paragraph have been complied with.
Section 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Securities of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest and Liquidated Damages, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.4 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.4(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.6 REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, or premium, if
any, on any Security and remaining unclaimed for two years after such principal,
and premium, if any, has become due and payable shall be paid to the Company on
its request or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as a secured creditor,
79
<PAGE>
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 8.2 or 8.3
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Security following
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
held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 WITHOUT CONSENT OF HOLDERS OF SECURITIES.
Notwithstanding Section 9.2 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Securities without the
consent of any Holder of a Security:
(a) to cure any ambiguity, defect or inconsistency;
80
<PAGE>
(b) to provide for uncertificated Securities in addition to or in place
of certificated Securities;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Securities in the case of a merger, consolidation or sale of all
or substantially all of the Company's assets pursuant to Article Five hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Securities or that does not adversely affect the
legal rights hereunder of any Holder of the Securities;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(f) to change the name of the Securities.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate Agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2 WITH CONSENT OF HOLDERS OF SECURITIES.
Except as provided below in this Section 9.2, the Company and the
Trustee may amend or supplement this Indenture and the Securities may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount at maturity of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Securities), and, subject to Sections 6.4 and 6.7 hereof, any existing Default
or Event of Default (other than a Default or Event of Default in the payment of
the principal of, Accreted Value, or premium, interest or Liquidated Damages, if
any, on the Securities, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture or
the Securities may be waived with the consent of the Holders of a majority in
principal amount at maturity of the then outstanding Securities (including
consents obtained in connection with a tender offer or exchange offer for the
81
<PAGE>
Securities). Notwithstanding the foregoing, without the consent of at least
66-2/3% in principal amount at maturity of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for such Securities), no waiver or amendment to this Indenture may make any
change in the provisions of Section 4.18 hereof (including by way of an
amendment to any of the definitions used in any such provisions) that adversely
affects the rights of any Holder of Securities.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Securities as aforesaid, and upon
receipt by the Trustee of the documents described in Section 7.2 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Securities
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Securities affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount at maturity of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Securities held by a non-consenting Holder):
(a) reduce the principal amount at maturity of Securities whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of, or premium, or change the fixed maturity
of any Security or alter or waive any of the provisions with respect to the
82
<PAGE>
repurchase of the Securities, except as provided above with respect to Sections
4.18 hereof;
(c) reduce the rate of accretion of Accreted Value or interest on any
Security, or the Asset Sale Offer Price or the Change of Control Purchase Price,
or extend the time for payment of any interest;
(d) waive a Default or Event of Default in the payment of principal of,
Accreted value, interest, Liquidated Damages or premium, if any, on the
Securities;
(e) make any Security payable in money other than that stated in the
Securities, or change the place of payment where any Senior Note or any premium
or the interest, if any, thereon is payable;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Securities to receive
payments of principal of, Accreted Value, interest, Liquidated Damages or
premium, if any, on the Securities;
(g) make any change in Section 6.4 or 6.7 hereof or in the foregoing
amendment and waiver provisions;
(h) cause the Senior Notes to become subordinated in right of payment
to any other Indebtedness.
Section 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Securities shall
be set forth in an amended or supplemental Indenture that complies with the TIA
as then in effect.
Section 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Security is a continuing consent by the Holder of a
Security and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, any such Holder of a Security
or subsequent Holder of a Security may revoke the consent as to its Security if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
83
<PAGE>
becomes effective in accordance with its terms and thereafter binds every
Holder.
Section 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.
The Trustee may plan an appropriate notation about amendment,
supplement or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Security shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that all conditions precedent have
been complied with.
ARTICLE X
MISCELLANEOUS
Section 10.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 10.2 NOTICES.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
84
<PAGE>
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
United International Holdings, Inc.
4643 South Ulster Street
Denver, Colorado 80237
Telecopier No.: (303) 770-4207
Attention: Chief Financial Officer
With a copy to:
Holme Roberts & Owen LLP
1700 Lincoln, Suite 4100
Denver, Colorado 80203
Telecopier No.: (303) 866-0200
Attention: Garth B. Jensen, Esq.
If to the Trustee:
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101
Telecopier No.: (651) 229-6415
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guarantee ing next day delivery to its address shown on the register
85
<PAGE>
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 10.3 COMMUNICATION BY HOLDERS OF SECURITIES WITH OTHER HOLDERS OF
SECURITIES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
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 10.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 10.5
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
86
<PAGE>
Section 10.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss.314(a)(4)) shall comply with the provisions of TIA ss. 314(e)
and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 10.6 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee or direct or
indirect stockholder of the Company, as such, shall 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. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
securities.
Section 10.8 GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION
SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK
CIVIL PRACTICE LAWS AND RULES 327(b), AS APPLIED TO CONTRACTS MADE AND PERFORMED
87
<PAGE>
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 10.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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.
88
<PAGE>
Section 10.11 SEVERABILITY.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.12 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 10.13 HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
Section 10.14 REGISTRATION RIGHTS
Certain Holders of the Securities may be entitled to certain
registration rights with respect to the Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.
89
<PAGE>
Dated as of April 29, 1999 UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Michael T. Fries
------------------------------------
Name: Michael T. Fries
Title: President
Attest: /s/ Michelle L. Keist
- ------------------------------- (SEAL)
Dated as of April 29, 1999 FIRSTAR BANK OF MINNESOTA N.A.
By: /s/ Frank Leslie III
------------------------------------
Name: Frank Leslie III
Title: Vice President
Attest:
- -------------------------------- (SEAL)
90
<PAGE>
EXHIBIT A
(Form of Senior Note)
Series A Senior Discount Note due 2009
No.____________________ $__________________________
CUSIP No. _____________
ISIN No. ______________
UNITED INTERNATIONAL HOLDINGS, INC. promises to pay to or its
registered assigns, the principal sum of ____________ Dollars ($ ), which
amount, except as described below, includes amortization of original issue
discount, on May 1, 2009.
Interest Payment Dates: May 1 and November 1
Record Dates: May 1 and November 1
Dated: ______________________________
UNITED INTERNATIONAL
HOLDINGS, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
(SEAL)
[Insert legend required by Section 1.1275-3 of the Treasury Regulations]
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the
Securities described
in the within-mentioned
Indenture.
FIRSTAR BANK OF MINNESOTA N.A.
as Trustee
By:___________________________________
Authorized Signatory
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
<PAGE>
UNITED INTERNATIONAL HOLDINGS, INC.
Series A Senior Discount Note due 2009
"THIS SENIOR NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE SECOND SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (C) AFTER THE COMPANY
HAS RECEIVED A "PURCHASE RESALE NOTICE" (AS DEFINED IN THE INDENTURE) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT
WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE, EXCEPT (A) TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF THE SECURITIES
ACT, (D) AFTER THE COMPANY HAS RECEIVED A "PURCHASE RESALE NOTICE," IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E)
AFTER THE COMPANY HAS RECEIVED A "PURCHASE RESALE NOTICE," TO AN IAI THAT, PRIOR
TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SENIOR NOTE (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE ACCRETED VALUE OF SENIOR NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) AFTER THE COMPANY HAS RECEIVED A "PURCHASE RESALE
NOTICE," IN ACCORDANCE WITH ANOTHER EXEMPTIN FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
<PAGE>
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SENIOR NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SENIOR NOTE IN VIOLATION OF THE FOREGOING."(1)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below, unless otherwise indicated.
1. METHOD OF PAYMENT. The initial Accreted Value will increase at the
rate of 10.875% per annum, compounded semi-annually, on the Senior Notes. From
and after the Market Spread Date, if any, the Accreted Value of the Notes will
increase at the Accretion Rate, compounded semi-annually, until the final
maturity thereof. PAYMENT OF THE PRINCIPAL OF, OR PREMIUM, IF ANY, ON THE SENIOR
NOTES OR SUCH OTHER AMOUNT PAYABLE UPON THE ACCELERATION OF THE MATURITY OF THE
SENIOR NOTES WILL INCLUDE ACCRUED AMORTIZATION OF ORIGINAL ISSUE DISCOUNT, AND,
THEREFORE, THE PRINCIPAL AMOUNT (INCLUDING AMORTIZATION OF ORIGINAL ISSUE
DISCOUNT) DUE ON THIS NOTE COULD EXCEED THE AMOUNT STATED IN THE FIRST PARAGRAPH
HEREOF. Interest payable in cash will commence to accrue on May 1, 2004, and
will be payable on each May 1 and November 1 thereafter until maturity
commencing November 1, 2004, to Holders of record on each immediately preceding
April 15 and October 15 (each, a "Record Date"). Interest will be paid upon
overdue principal and premium, and interest, if any, compounded semi-annually
from the due date at a rate equal to the then current Accretion Rate applicable
to the Notes to the extent such payment is lawful. All such interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Accretion Rate may vary as specified below, but shall be fixed at
the time the Senior Notes are first resold by the Initial Purchasers pursuant to
the terms of the Note Purchase Agreement. DLJSC on behalf of the Initial
Purchasers shall fix the Accretion Rate by written notice prior to or on the
Market Spread Date to the Company and the Trustee (the "Market Spread Notice").
- -------------
(1) This paragraph should only be added for the Transfer Restricted
Securities.
<PAGE>
In no event shall the Accretion Rate on the Notes be greater than the Accretion
Rate as so fixed. Until the Accretion Rate is so fixed by the giving of such
notice, the initial Accretion Rate of the Senior Notes from the Issue Date until
the Market Spread Date shall be 10.875% per annum. The Accretion Rate from and
after the Market Spread Date shall be equal to the sum of (a) the Treasury Rates
(as defined below), plus (b) the spread over such treasury bond rate then
applicable to the Company's 10.75% Senior Secured Discount Notes due 2008 (the
"Reference Notes"), plus (c) 125 basis points, plus (d) the Additional Rate. The
Additional Rate shall initially be equal to zero (0) basis points and shall
increase by an additional 100 basis points on the last day of each six month
anniversary of the Issue Date (each such anniversary, or "Accretion Date"). The
Accretion Date on or next following the date that a Market Spread Notice shall
have been delivered shall be, the "Market Spread Date"). In the event that the
Reference Notes are not outstanding on the trading date immediately preceding
the Market Spread Date, or if for any other reason it shall be impossible to
calculate the Accretion Rate, the Accretion Rate shall be 18%. In no event shall
the Accretion Rate be greater than 18%.
"TREASURY RATE" means on any Market Spread Date the yield on a
hypothetical United States Treasury security with a Treasury constant maturity
matching the then remaining average life to maturity of the Senior Notes. The
hypothetical Treasury security is to be derived by referring to the Federal
Reserve Board's Statistical Release H.15 (519) (or its successor publication)
most recently available next preceding (by not more than 10 nor less than 5
Business Days) such Market Spread Date. If there is a Treasury constant maturity
listed in said Federal Reserve Release H.15 (519) with a maturity equal to the
then remaining average life to maturity of the Senior Notes then the yield on
such Treasury security shall be the Treasury Rate. If no such Treasury constant
maturity exists, then the yield on such Treasury security shall be linearly
interpolated from the yields on (a) the Treasury security with a constant
maturity closest to and greater than the then remaining average life to maturity
of the Senior Notes and (b) the Treasury security with a constant maturity
closest to and less than the then remaining average life to maturity of the
Senior Notes. If there shall be no Treasury security with a constant maturity
less than the then remaining average life to maturity of the Senior Notes, then
Treasury Rate shall mean the yield on the Treasury security with the shortest
Treasury constant maturity. If said Federal Reserve Release H.15 (519) or a
successor publication refers to no applicable yield on Treasury securities, then
the Treasury Rate shall be the Prime Rate in effect on the applicable Market
Spread Date.
The Holder must surrender this Senior Note to a Paying Agent to collect
payments other than cash interest. The principal of, Accreted Value, interest
and premium, if any, on the Senior Notes will be payable at the office or agency
<PAGE>
of the Company maintained for such purpose within the City and State of New York
or, at the option of the Company, payment may be made by check mailed to the
Holders of the Senior Notes at their respective addresses set forth in the
register of Holders of Senior Notes. Until otherwise designated by the Company,
the Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. All payments shall be in coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
2. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent or Registrar
or co-registrar without prior notice to any Holder. The Company may act in any
such capacity, except as set forth in the Indenture.
3. INDENTURE. The Company issued the Senior Notes under an Indenture
dated as of April 29, 1999 (the "Indenture") between the Company and the
Trustee. The terms of the Indenture include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Senior Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Senior Notes. The Senior Notes are
unsecured obligations of the Company, except to the extent provided in the
Indenture, limited to $355,000,000 in aggregate principal amount at maturity.
4. OPTIONAL REDEMPTION. Optional Redemption after the resale of all of
the Senior Notes by the Initial Purchasers. The Company will not have the right
to redeem any Senior Notes following the first resale of the Senior Notes by the
Initial Purchasers and prior to May 1, 2004, other than out of the Net Cash
Proceeds from (a) a Public Equity Offering or (b) an Asset Sale, as described in
the two immediately following paragraphs. The Senior Notes will be redeemable
for cash at the option of the Company, in whole or in part, at any time on or
after May 1, 2004, upon not less than 30 days nor more than 60 days notice to
each Holder of Senior Notes, at the redemption prices set forth below (expressed
as percentages of the then Accreted Value thereof) if redeemed during the
12-month period commencing May 1, of the years indicated below, together with,
if applicable, accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Redemption Date. If applicable, the redemption prices set forth
below shall be adjusted proportionately to reflect the difference between
10.875% and the Accretion Rate at the time of redemption by multiplying the
<PAGE>
redemption premium set forth below (I.E., the values by which the percentages
set forth below exceed 100%) by a fraction the numerator of which is the
Accretion Rate then in effect and the denominator of which is 10.875%.
YEAR PERCENTAGE
---- ----------
2004.......................... 105.438%
2005.......................... 103.625%
2006.......................... 101.813%
2007 and thereafter........... 100.000%
Until May 1, 2002, upon a Public Equity Offering, up to 35% of the
maximum aggregate principal amount at maturity of the Senior Notes issued at any
time on or after the Issue Date pursuant to the Indenture may be redeemed at the
option of the Company within 90 days of such Public Equity Offering, on not less
than 30 days, but not more than 60 days, notice to each Holder of the Senior
Notes to be redeemed, with cash from the Net Cash Proceeds of such Public Equity
Offering, at a Redemption Price equal to the Accretion Rate plus 100% (initially
110.875%) of the then Accreted Value thereof, together with accrued and unpaid
Liquidated Damages, if any, to the Redemption Date; provided, however, that
immediately following such redemption not less than 65% of the maximum aggregate
principal amount at maturity of the Senior Notes issued at any time on or after
the Issue Date pursuant to the Indenture remains outstanding.
In addition, until May 1, 2002, upon an Asset Sale, up to 35% of the
maximum aggregate principal amount at maturity of the Senior Notes issued at any
time on or after the Issue Date pursuant to the Indenture may be redeemed at the
option of the Company within 90 days of such Asset Sale, on not less than 30
days, but not nor more than 60 days, notice to each Holder of the Senior Notes
to be redeemed, with the Net Cash Proceeds from such Asset Sale, at a Redemption
Price equal to the Accretion Rate plus 100% (initially 110.875%) of the then
Accreted Value thereof, together with accrued and unpaid Liquidated Damages, if
provided, however, that immediately following such redemption not less than 65%
of the maximum aggregate principal amount at maturity of the Senior Notes issued
at any time on or after the Issue Date pursuant to the Indenture remains
outstanding.
In the case of a partial redemption, the Trustee shall select the
Senior Notes or portions thereof for redemption on a pro rata basis, by lot or
in such other manner it deems appropriate and fair. The Senior Notes may be
redeemed in part in multiples of $1,000 principal amount at maturity only (or
such higher principal amount at maturity resulting from any increase in the
Accretion Rate.
The Senior Notes will not have the benefit of any sinking fund.
<PAGE>
Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption to the
Holder of each Senior Note to be redeemed to such Holder's last address as then
shown upon the registry books of the Registrar. Any notice which relates to a
Senior Note to be redeemed in part only must state the portion of the principal
amount at maturity equal to the unredeemed portion thereof and must state that
on and after the date of redemption, upon surrender of such Senior Note, a new
Senior Note or Senior Notes in a principal amount at maturity equal to the
unredeemed portion thereof will be issued. On and after the Redemption Date, the
Accreted Value will cease to increase and, if applicable, interest will cease to
accrue, with respect to the Senior Notes, or portions thereof, called for
redemption, unless the Company defaults in the payment thereof.
5. MANDATORY REDEMPTION.
The Company is not required to make mandatory redemption payments with
respect to the Senior Notes.
6. REPURCHASES AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company will be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 in principal amount at maturity or an integral multiple thereof) of
each Holder's Senior Notes at a purchase price in cash equal to 101% of the
Accreted Value thereof on the date of purchase plus, if applicable, accrued and
unpaid interest and Liquidated Damages. Within 10 days following any Change of
Control, the Company will mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
Holders may elect to have all or a portion of their Senior Notes purchase by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
(b) If the Company or a Subsidiary consummates any Asset Sale, when the
aggregate amount of Excess Proceeds exceeds $20 million, the Company will be
required to make an offer to all Holders of Senior Notes (an "Asset Sale Offer")
to purchase the maximum amount of Senior Notes and other pari passu Indebtedness
that may be purchased out of the Excess Proceeds, at an offer price in cash
equal to the Accreted Value thereof as of the date of purchase, plus, if
applicable, accrued and unpaid interest and Liquidated Damages in accordance
with the procedures set forth in the Indenture. Holders of Senior Notes that are
the subject of such an offer to purchase will receive an Asset Sale Offer from
<PAGE>
the Company prior to any related purchase date and may elect to have all or a
portion of their Senior Notes purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 (or such higher amount required by any increase in the
Accretion Rate). The transfer of Senior Notes may be registered and Senior Notes
may be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture.
8. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be
treated as its owner for all purposes.
9. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount at maturity of the then
outstanding Senior Notes, and any existing default or compliance with any
provision of the Indenture or the Senior Notes may be waived with the consent of
the Holders of a majority in principal amount at maturity of the then
outstanding Senior Notes. Without the consent of any Holder of a Senior Note,
the Indenture or the Senior Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes
in addition to or in place of certificated Senior Notes, to provide for the
assumption of the Company's obligations to Holders of the Senior Notes in case
of a merger, consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or benefits
to the Holders of the Senior Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
10. DEFAULTS AND REMEDIES. Events of Default include: (i) default in
payment when due of principal or Accreted Value (as applicable) of the Senior
Notes when the same becomes due and payable at maturity upon acceleration,
repurchase or otherwise, (ii) failure by the Company to comply with any of the
provisions of Sections 4.7, 4.9, 4.10, 4.15, 4.18 or 5.1 of the Indenture; (iii)
failure by the Company for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in principal amount at maturity of the Senior Notes
then outstanding to comply with certain other Agreements in the Indenture or the
<PAGE>
Senior Notes; (iv) default under certain other Agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (v) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; and (vi)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries. If any Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount at maturity of
the then outstanding Senior Notes may declare all the Senior Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Senior
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Senior Notes, except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount at maturity of the then outstanding Senior Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
the Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal, Accreted
Value, interest, or premium) if it determines that withholding notice is in
their interest. The Holder of a majority in aggregate principal amount at
maturity of the Senior Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Senior Notes waive any existing Default or
Event of Default and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of principal of, Accreted Value,
interest or premium, if any, on the Senior Notes and except in connection with a
Repurchase Offer or other redemption. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
11. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
12. NO RECOURSE AGAINST OTHERS. A director, officer, employee or direct
or indirect stockholder of the Company, as such, shall not have any liability
for any obligations of the Company under the Senior Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Senior Note waives and releases such
persons from all such liability.
13. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
<PAGE>
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=tenants
by the entireties), JT TEN (= joint tenants with right of survivorship and not
as tenants in common), CUST (= Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
15. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company will cause
CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Senior Notes
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
16. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.(2)
In addition to the rights provided to holders of Securities under the Indenture,
Holders of Securities shall have all the rights set forth in the Registration
Rights Agreement.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
United International Holdings, Inc.
4643 South Ulster Street
Denver, Colorado 80237
Attention: Chief Financial Officer
- -----------------
(2) This paragraph should be included only for the initial securities.
<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or (we) assign and
transfer this Senior Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ___________________________________ to transfer this
Senior Note on the books of the Company. The agent may substitute another to act
for him.
Date: __________________
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this
Declaration)
Signature Guarantee:
NOTICE: The Signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP); or
(iv) in such other guarantee program acceptable to the Trustee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note purchased by the Company
pursuant to Section 4.10 or 4.18 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.18
If you want to elect to have only part of the Senior Note purchased by
the Company pursuant to Section 4.10 or Section 4.18 of the Indenture, state the
amount you elect to have purchased: $____________
Date: ____________
Your Signature: ______________________________________
(Sign exactly as your name appears on the
Declaration)
Tax Identification No.: ____________
Signature Guarantee:
NOTICE: The Signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP); or
(iv) in such other guarantee program acceptable to the Trustee.
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
TRANSFER RESTRICTED SECURITIES(3)
Re: SERIES A SENIOR DISCOUNT NOTES
DUE 2009 OF UNITED INTERNATIONAL HOLDINGS, INC.
This Certificate relates to $______ principal amount at maturity
(except as provided in paragraph 1 of the Note) of Securities held in (check
applicable space) _____ book-entry or ______ definitive form by
_________________ (the "Transferor").
The Transferor (check applicable box):
[ ] has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount at maturity equal to its
beneficial interest in such Global Security (or the portion thereof indicated
above); or
[ ] has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Securities and as provided in Section
2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (within the meaning of Rule 144A promulgated under the Securities Act),
that is aware that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer Restricted
Security for its own account, or for the account of another such "qualified
- ------------------
(3) This Certificate shall be included only for Initial Securities.
<PAGE>
institutional buyer" (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
[ ] Such Security is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
[ ] Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act and
in accordance with applicable securities laws of the states of the United
States, other than as provided in the immediately preceding paragraph. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of the Indenture).
[INSERT NAME OF TRANSFEROR]
By:
Date:
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES(4)
Re: SERIES B Senior Discount Notes
DUE 2009 OF UNITED INTERNATIONAL HOLDINGS, INC.
This Certificate relates to $______ principal amount at
maturity of Securities held in (check applicable box) _____ book-entry or ______
definitive form by _____ (the "Transferor").
The Transferor (check applicable box):
[ ] has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount at maturity equal to its
beneficial interest in such Global Security (or the portion thereof indicated
above); or
[ ] has requested the Registrar by written order to exchange or
register the transfer of a Security or Securities.
- ----------------
(4) This certificate shall be included only for the Exchange Securities.
UNITED INTERNATIONAL HOLDINGS, INC.
$208,938,800 10.875% Senior Discount Notes due 2009
NOTE PURCHASE AGREEMENT
-----------------------
April 29, 1999
Donaldson, Lufkin & Jenrette
Securities Corporation
UIH Funding Corp.
Salomon Smith Barney Inc.
Chase Securities Inc.
TD Securities (USA) Inc.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
United International Holdings, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to UIH Funding Corp. ("UIH Funding"), an
affiliate of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
Salomon Smith Barney, Inc. ("Salomon"), Chase Securities Inc. ("Chase") and TD
Securities (USA) Inc. ("TD Securities") (together (not including DLJ), the
"Purchasers") an aggregate of $208,938,800 in accreted value of its 10.875%
Senior Discount Notes due 2009 (the "Senior Notes"), subject to the terms and
conditions set forth in this agreement (the "Agreement"). The Senior Notes are
to be issued pursuant to the provisions of an indenture (the "Indenture") to be
dated as of April 29, 1999 between the Company and Firstar Bank of Minnesota,
N.A., as trustee (the "Trustee").
Capitalized terms used herein and not otherwise defined are used herein
as defined in the Initial Offering Memorandum (as defined below).
1. OFFERING MEMORANDUM. The Senior Notes will be offered and sold to
the Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
Company has prepared an initial offering memorandum, attached hereto as Exhibit
A, relating to the Senior Notes (including the documents incorporated by
reference therein, the "Initial Offering Memorandum"). The Company understands
that the Senior Notes purchased hereunder by the Purchasers will be resold (the
"Exempt Resales") pursuant to one or more exemptions from the registration
requirements under the Act. DLJ will act as lead manager in connection with the
Exempt Resales. Each Purchaser will either act as a co-manager or designate one
of its affiliates so to act with respect to the Senior Notes owned by it. The
Company agrees to prepare a preliminary offering memorandum (including the
documents incorporated by reference therein, a "Preliminary Offering
<PAGE>
Memorandum") and a final offering memorandum (including the documents
incorporated by reference therein, an "Offering Memorandum") relating to the
Senior Notes i n connection with each Exempt Resale, if requested by DLJ. DLJ
agrees to notify the Company at such time as all of the Senior Notes have been
resold by such Purchasers and the Company will thereupon so notify the Trustee
(the "Purchaser Resale Notice").
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Senior Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear the following legend:
"THIS SENIOR NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE SECOND SENTENCE
HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)(A "QIB"), (B)
IT IS ACQUIRING THIS SENIOR NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (C) AFTER THE
COMPANY HAS RECEIVED A "PURCHASER RESALE NOTICE" (AS DEFINED IN THE
INDENTURE), IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2),(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
(AN "IAI")), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS SENIOR NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES,
(B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D)
AFTER THE COMPANY HAS RECEIVED A "PURCHASER RESALE NOTICE" IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) AFTER THE COMPANY HAS RECEIVED A "PURCHASER RESALE NOTICE" TO
AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE TRANSFER OF THIS SENIOR NOTE (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
ACCRETED VALUE OF SENIOR NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) AFTER THE COMPANY HAS RECEIVED A
"PURCHASER RESALE NOTICE" IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND IF REQUESTED BASED
2
<PAGE>
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SENIOR NOTE OR AN INTEREST HEREIN
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SENIOR NOTE IN
VIOLATION OF THE FOREGOING."
The Company understands that the Exempt Resales will be made solely to
persons who are reasonably believed to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBs") and to persons permitted to purchase
the Senior Notes in offshore transactions in reliance upon Regulation S under
the Act (each a "Regulation S Purchaser"). The QIBs and Regulation S Purchasers
who purchase the Senior Notes in the initial placement thereof are referred to
herein as the "Eligible Purchasers."
Holders (including subsequent transferees) of the Senior Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated as of April 29, 1999, in
substantially the form of Exhibit B hereto, for so long as any such Senior Notes
constitute "Transfer Restricted Notes" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "Commission"),
under the circumstances and on the terms set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's Senior Discount Notes due 2009 (the "Exchange Notes" and
together with the Senior Notes, the "Notes"), to be offered in exchange for the
Senior Notes (the "Exchange Offer") and (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Senior Notes, and
to use its best efforts to cause such Registration Statements to be declared
effective.
This Agreement, the fee agreement dated April 29, 1999 among the
Company, DLJ and the Purchasers (the "Fee Agreement"), the Indenture, the Senior
Notes and the Registration Rights Agreement are hereinafter referred to
collectively as the "Transaction Documents."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell to the Purchasers, and the
Purchasers agree severally and not jointly to purchase from the Company the
principal amount at maturity of Senior Notes set forth opposite their names on
3
<PAGE>
Exhibit C hereto at a purchase price equal to 58.856% of the principal amount at
maturity thereof (the "Purchase Price").
3. DELIVERY AND PAYMENT. Delivery to the Purchasers, and payment for,
the Senior Notes shall be made at 9:00 a.m. New York City time, on April 29,
1999 (the "Closing Date"), at the offices of DLJ, or such other time or place as
you and the Company shall designate.
The Senior Notes in global or definitive form shall be registered in
such names and issued in such denominations as you shall request. Each of
Salomon, Chase and TD Securities hereby appoints as attorney-in-fact to act on
their behalf UIH Funding and authorizes UIH Funding to purchase the Senior Notes
from the Company on their behalf in accordance with this paragraph pro rata in
accordance with Schedule C attached hereto. Upon receipt of the Purchase Price
plus an amount equal to the accrual of original issue discount on the Notes from
the Issue Date to and including the date of reimbursement, if any, from each of
Salomon, Chase and TD Securities, UIH Funding will deliver the Senior Notes that
it purchased on behalf of each of Salomon, Chase and TD Securities respectively
to separate respective accounts at DLJ in their respective names. If UIH Funding
has not received the Purchase Price from any such Purchaser by 2:00 p.m. New
York Time on April 30, 1999, the Senior Notes to which such Purchaser would
otherwise be entitled pursuant to this Agreement shall revert to UIH Funding
without, notwithstanding any other provision contained herein or in the Fee
Letter, any liability or continuing obligation pursuant to this Agreement or the
Fee Letter on the part of such Purchaser to any other party to this Agreement or
the Fee Letter. The Senior Notes shall be delivered to UIH Funding, who shall
hold such Senior Notes on behalf of the Purchasers as custodian, on the Closing
Date with any transfer taxes payable upon initial issuance thereof duly paid by
the Company, against payment of the Purchase Price by wire-transfer.
Each of the Purchasers agrees that all Exempt Resales undertaken by
each Purchaser will be conducted by their respective or their respective
affiliate's sales departments, but that all Exempt Resales shall only take place
on the terms as set forth in the Fee Letter.
4. AGREEMENTS OF THE COMPANY. In connection with the sale of the Notes
to the Purchasers and each Exempt Resale of the Notes, the Company agrees with
DLJ and the Purchasers as follows:
a. To advise DLJ and the Purchasers promptly and, if requested by
the Purchas ers, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Senior Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority and (ii) of any change in
the Company's condition (financial or otherwise), business, proposals,
properties, net worth or results of operations or the happening of any event
that makes any statement of a material fact made in the Initial Offering
Memorandum, any Preliminary Offering Memorandum or any Offering Memorandum
untrue or that requires the making of any additions to or changes in the Initial
Offering Memorandum, any Preliminary Offering Memorandum or any Offering
Memorandum in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company shall use
its best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of any Senior Notes under any state securities or
4
<PAGE>
Blue Sky laws and, if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption of any Senior Notes under any state securities or Blue Sky laws, the
Company shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
b. To prepare each Preliminary Offering Memorandum and each
Offering Memorandum on a timely basis in connection with the Exempt Resales, if
requested to do so by DLJ.
c. To furnish DLJ and the Purchasers, without charge, with as many
copies of the Initial Offering Memorandum, each Preliminary Offering Memorandum
and each Offering Memorandum, and any amendments or supplements thereto, as DLJ
and the Purchasers may reasonably request. The Company consents to the use of
the Initial Offering Memorandum, each Preliminary Offering Memorandum and each
Offering Memorandum, and any amendments and supplements thereto, by DLJ and the
Purchasers in connection with offers or sales of the Senior Notes and agrees to
cooperate with DLJ and the Purchasers in good faith in the marketing and sale of
such Senior Notes, including, without limitation, participation on a customary
basis in road show presentations, not to exceed ten business days, reasonably
advisable in the opinion of DLJ in connection with such marketing and sale.
d. Not to amend or supplement the Initial Offering Memorandum, any
applicable Preliminary Offering Memorandum or any applicable Offering Memorandum
prior to the final closing date of the applicable Exempt Resales as specified by
DLJ (each date an Exempt Resale takes place, an "Exempt Resales Closing Date"),
unless DLJ shall previously have been advised thereof and shall not have
objected thereto after being furnished a copy thereof. The Company shall
promptly prepare, upon your request, any amendment or supplement to the Initial
Offering Memorandum, any Preliminary Offering Memorandum or any Offering
Memorandum that may be necessary or advisable in connection with Exempt Resales.
e. If, after the date hereof, any event shall occur as a result of
which, in the reasonable judgment of the Company or in the reasonable judgment
of DLJ or its counsel, it becomes necessary to amend or supplement, any
Preliminary Offering Memorandum or any Offering Memorandum, as applicable, in
order to make the statements therein, in the light of the circumstances when,
any Preliminary Offering Memorandum or any Offering Memorandum, as applicable,
is delivered to an Eligible Purchaser, not misleading, or if it is necessary to
amend or supplement, any Preliminary Offering Memorandum or any Offering
Memorandum, as applicable, to comply with applicable law, forthwith to prepare
an appropriate amendment or supplement to, any Preliminary Offering Memorandum
or any Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that, any Preliminary Offering Memorandum and
any Offering Memorandum, as applicable, will comply with applicable law.
f. To cooperate with you and your counsel in connection with the
qualification of the Senior Notes under the securities or Blue Sky laws of such
jurisdictions as you may request and to continue such qualification in effect
for as long as may be necessary to complete the Exempt Resales; provided,
however, that the Company shall not be required in connection therewith to
5
<PAGE>
register or qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to the service of process in suits or
taxation, other than as to matters and transactions relating to the Exempt
Resales, in any jurisdiction where it is not now so subject.
g. Whether or not the transactions contemplated by this Agreement
are consum mated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to and in connection with: (i) the
printing, processing, filing, distribution and delivery of the Initial Offering
Memorandum, each Preliminary Offering Memorandum and each Offering Memorandum
(including, without limitation, financial statements and exhibits) and all
amendments and supplements thereto, (ii) the printing, processing, execution,
distribution and delivery of this Agreement, the other Transaction Documents,
any memoranda describing state securities or Blue Sky laws and all other
agreements, memoranda, correspondence and other documents printed, distributed
and delivered in connection herewith and with the offer or sale of the Senior
Notes, (iii) the issuance and delivery by the Company of the Senior Notes, (iv)
the qualification of the Senior Notes for offer and sale under the securities or
Blue Sky laws of the several states (including, without limitation, the fees and
disbursements of your counsel relating to such registration or qualification and
memoranda relating thereto and any filing fees in connection therewith), (v)
furnishing such copies of each Preliminary Offering Memorandum and each Offering
Memorandum, and all amendments and supplements thereto, as may be reasonably
requested for use in connection with Exempt Resales, (vi) the preparation of
certificates for the Senior Notes (including, without limitation, printing and
engraving thereof), (vii) the fees, disbursements and expenses of the Company's
counsel and accountants, all expenses and listing fees in connection with the
application for quotation of the Senior Notes in the National Association of
Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL
("PORTAL"), (ix) all fees and expenses (including fees and expenses of counsel)
of the Company in connection with approval of the Senior Notes by The Depository
Trust Company ("DTC") for "book-entry" transfer, (x) the performance by the
Company of its other obligations under this Agreement and the other Transaction
Documents and (xi) the rating of the Senior Notes by investment rating agencies.
h. To use the proceeds from the sale of the Senior Notes in the
manner described in the Initial Offering Memorandum under the caption "Use of
Proceeds."
i. Not to claim voluntarily, and to resist actively any attempts
to claim, the benefit of any usury laws against the holders of any Senior Notes.
j. To do and perform all things required to be done and performed
under this Agreement by it on, prior to, and after the Closing Date and to use
its best efforts to satisfy all conditions precedent on its part to the delivery
of the Senior Notes.
k. Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act), other
than the Senior Notes, in a manner that would require the registration under the
Act of the sale to the Purchasers or of any of the Exempt Resales of the Senior
Notes.
6
<PAGE>
l. For so long as any of the Senior Notes remain outstanding and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder and any prospective purchaser of such Senior Notes from
such holder, the information required by Rule l 44A(d)(4) under the Act.
m. Except as otherwise permitted under the Act, it will not, and
will not authorize or permit any person acting on its behalf to, solicit any
offer to buy or offer to sell the Senior Notes by means of any form of general
solicitation or general advertising (as such terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act.
n. Neither the Company nor any of its affiliates will engage in
any directed selling efforts within the meaning of Regulation S under the Act
with respect to the Senior Notes in violation of the Act.
o. To use its best efforts to cause the Exchange Offer to be made
on the appropri ate form to permit registration of the Exchange Notes to be
offered in exchange for the Senior Notes and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
p. To comply with all of its agreements set forth in the
Transaction Documents, and all agreements set forth in the representation
letter, as applicable, of the Company to DTC relating to the approval of the
Senior Notes by DTC for "book-entry" transfer.
q. To use its best efforts to effect the inclusion of the Senior
Notes in PORTAL, when so requested by the Purchasers.
r. During a period of five years following the date of this
Agreement, to deliver to each of you promptly upon their becoming available,
copies of all current, regular and periodic reports filed by the Company with
the Commission or any securities exchange or with any governmental authority
succeeding to any of the Commission's functions.
s. If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to Section
9 hereof) or if this Agreement shall be terminated by DLJ or the Purchasers
because of any failure or refusal on the part of the Company to comply with the
terms or fulfill any of the conditions of this Agreement, the Company agrees to
reimburse DLJ and the Purchasers for all out-of-pocket expenses (including fees
and expenses of counsel) for those reasonably incurred by the Purchasers in
connection with the matters covered by this Agreement.
t. To reaffirm, as of each of the Exempt Resales Closing Dates, in
the form of an Officers' Certificate, the representations and warranties made to
DLJ and the Purchasers pursuant to Section 5 of this Agreement.
7
<PAGE>
u. To satisfy for purposes of the Exempt Resales, on or prior to
each of the Exempt Resales Closing Dates, the conditions set forth in Section 7
of this Agreement.
v. Until such time as all the Notes have been resold by the
Purchasers, the Company shall not list any securities of the Company of the same
class (within the meaning of Rule 144A under the Act) as the Senior Notes on a
national securities exchange.
w. To deliver to the Purchasers on or prior to each of the Exempt
Resales Closing Dates a current list of "significant subsidiaries" (as such term
is defined in Rule 1-D2 (w) of Regulation S-X).
5. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to DLJ and the Purchasers, as
of the date hereof as follows. The references below to the Preliminary Offering
Memorandum and the Offering Memorandum shall only apply to the representations
and warranties made as of each Exempt Resales Closing Date.
a. The Initial Offering Memorandum, each Preliminary Offering
Memorandum and each Offering Memorandum have been prepared in connection with
and in contemplation of the sale to the Purchasers of the Senior Notes and, at
the option of DLJ, Exempt Resales. The Initial Offering Memorandum does not and
each Preliminary Offering Memorandum and each Offering Memorandum do not, and
any supplement or amendment thereto prepared by the Company will not, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that the representations and
warranties contained in this paragraph (i) shall not apply to statements in or
omissions from the Initial Offering Memorandum, each Preliminary Offering
Memorandum and each Offering Memorandum (or any supplement or amendment thereto)
made in reliance upon and in conformity with information relating to you
furnished to the Company in writing by you expressly for use therein. The
Company acknowledges for all purposes under this Agreement that the statements
set forth in the first paragraph appearing on page i, the third full paragraph,
the eighth paragraph, the eleventh paragraph, the twelfth paragraph, the
thirteenth paragraph and the fourteenth paragraph appearing under the caption
"Plan of Distribution" in the Initial Offering Memorandum constitutes the only
written information furnished to the Company by you expressly for use in the
Initial Offering Memorandum, each Preliminary Offering Memorandum and each
Offering Memorandum (or any amendment or supplement thereto). No stop order
preventing the use of the Initial Offering Memorandum, the applicable
Preliminary Offering Memorandum and the applicable Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act or the applicable laws of any other jurisdiction, has
been issued.
b. When the Senior Notes are issued and delivered pursuant to this
Agreement, none of the Senior Notes will be of the same class (within the
meaning of Rule 144A under the Act) as securities of the Company that are listed
8
<PAGE>
on a national securities exchange registered pursuant to the Exchange Act or
that are quoted in a United States automated inter dealer quotation system.
c. All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the capital stock of the Company
conforms in all material respects to the description thereof in the Initial
Offering Memorandum, and will so confirm with respect to each Preliminary
Offering Memorandum and each Offering Memorandum; and the Company's ownership
interest with respect to each of the corporations and partnerships (including
its Restricted Affiliates) in which the Company has a direct or indirect
investment (each a "Subsidiary" and, collectively, the "Subsidiaries") is in all
material respects as described in the Initial Offering Memorandum, and will so
conform with respect to each Preliminary Offering Memorandum and each Offering
Memorandum and the descriptions of contracts and agreements set forth therein
are and will be, as applicable accurate and complete in all material respects.
d. The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents and to
perform its obligations under this Agreement and the other Transaction Documents
and to authorize, issue, sell and deliver the Senior Notes as contemplated by
this Agreement and to perform its obligations thereunder, as applicable.
e. The Indenture has been duly authorized by the Company and, when
executed and delivered at the Closing, will be a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with its
terms. The Indenture, when executed and delivered, will conform to the
description thereof in the Initial Offering Memorandum, each Preliminary
Offering Memorandum and each Offering Memorandum.
f. The Senior Notes have been duly authorized by the Company and,
on the Closing Date, will have been duly executed by the Company and will
conform in all materials respects to the descriptions thereof in the Initial
Offering Memorandum, each Preliminary Offering Memorandum and each Offering
Memorandum. When the Senior Notes are issued, authenticated and delivered in
accordance with the Indenture and paid for in accordance with the terms of this
Agreement, the Senior Notes will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms and entitled to the benefits of the Indenture.
g. The Exchange Notes have been duly and validly authorized for
issuance by the Company, and when issued and authenticated in accordance with
the terms of the Indenture and the Registration Rights Agreement will be valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms and entitled to the benefits of the Indenture.
h. The Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the Company,
will be the valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Registration Rights
Agreement, when executed and delivered, will conform to the description thereof
9
<PAGE>
in the Initial Offering Memorandum, each Preliminary Offering Memorandum and
each Offering Memorandum.
i. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Initial Offering Memorandum, and, if
applicable, as will be described in each Preliminary Offering Memorandum and
each Offering Memorandum, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify does not have
a material adverse effect on the condition (financial or other), business,
properties, prospects, net worth or results of operations of the Company and the
Subsidiaries taken as a whole. Such an effect, either singly or in the
aggregate, is referred to in this Agreement as a "Material Adverse Effect" and
the word "material" shall have a corresponding meaning.
j. The Subsidiaries that were "significant subsidiaries" (as such
term is defined in Rule 1-02(w) of Regulation S-X) as of December 31, 1998 are
listed in the list of subsidiaries and affiliates included as Annexes A and B to
the Initial Offering Memorandum. Each Subsidiary is a corporation or other legal
entity duly organized, validly existing and in good standing in the jurisdiction
of its formation, with full power and authority to own, lease and operate its
properties and to conduct its business as described in the Initial Offering
Memorandum, and, if applicable, as will be described in the applicable
Preliminary Offering Memorandum and Offering Memorandum, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a Material Adverse Effect; except as set
forth in the Initial Offering Memorandum, or the applicable Preliminary Offering
Memorandum or Offering Memorandum, all the outstanding shares of capital stock
or other equity interests of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable, and are owned by the
Company directly or indirectly through one of the other Subsidiaries, free and
clear of any material lien, adverse claim, security interest, equity or other
encumbrance.
k. There is (A) no legal, regulatory or governmental action, suit
or proceeding before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending or, to the knowledge of the Company,
threatened or contemplated to which the Company or any of the Subsidiaries is a
party or to which the business or property of the Company or any of the
Subsidiaries is subject, (B) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been proposed
by any governmental body, (C) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent jurisdiction to
which the Company or any of the Subsidiaries is subject issued that, in the case
of clauses (A), (B) and (C) above, (x) might, singly or in the aggregate, result
in a Material Adverse Effect, (y) would interfere with or adversely affect the
issuance or Exempt Resale of the Notes (materially, solely in the case of an
Exempt Resale) or (z) in any manner draw (materially, solely in the case of an
Exempt Resale) into question the validity of this Agreement or the other
Transaction Documents.
10
<PAGE>
l. Neither the Company nor any of the Subsidiaries is in violation
of its certificate or articles of incorporation or by-laws or other
organizational documents, or in material violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries or of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries, or in
default in any material respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound.
m. Neither the issuance and sale of the Senior Notes, the
execution and delivery by the Company of the Transaction Documents, the
performance of this Agreement, the Fee Agreement, Indenture and the Registration
Rights Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby and thereby (i) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official except such as have been obtained and made (or, in the case of the
Registration Rights Agreement, will be obtained and made under the Act, the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and United
States state securities or Blue Sky laws and regulations or such as may be
required by the NASD), (ii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries, (iii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any agreement, indenture, lease
or other instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or any of their respective properties may be bound or
(iv) violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company (other than in favor of the holders of the Senior Notes)
or any of the Subsidiaries pursuant to the terms of any agreement or instrument
to which any of them is a party or by which any of them may be bound or to which
any of the property or assets of any of them is subject, except in each case
where failure to obtain such consents, approvals, authorizations or orders or
make such registrations or filings or where such conflicts or violations will
not individually or in the aggregate have a Material Adverse Effect.
n. The accountants, Arthur Andersen LLP, KPMG Accountants N.V.,
and Price Waterhouse each of which has audited certain of the financial
statements that are or will be (as applicable) included, incorporated by
reference or summarized in the Initial Offering Memorandum, each Preliminary
Offering Memorandum and each Offering Memorandum, are independent certified
public accountants with respect to the Company and its Subsidiaries under Rule
101 of the AICPA's Code of Professional Conduct and its interpretations and
rulings. The financial statements, together with related schedules and notes,
included or incorporated by reference in the Initial Offering Memorandum, and
that will be so included or incorporated in each Preliminary Offering Memorandum
11
<PAGE>
and each Offering Memorandum (and any amendment or supplement thereto) present
fairly the respective financial positions, results of operations and changes in
financial positions of the Company and each Subsidiary, in each case, for which
such financial statements are or will be so included or incorporated by
reference, on the basis stated in the Initial Offering Memorandum, the
applicable Preliminary Offering Memorandum and the applicable Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such financial statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
and to be included, as applicable, in the Initial Offering Memorandum, each
Preliminary Offering Memorandum and each Offering Memorandum (and any amendment
or supplement thereto) are accurately presented in all material respects and
prepared on a basis consistent with such financial statements and the books and
records of the Company and the Subsidiaries.
o. The financial statements, included or incorporated by reference
in the Initial Offering Memorandum, each Preliminary Offering Memorandum and
each Offering Memorandum (and any amendment or supplement thereto), present and,
as applicable, will present fairly the respective financial positions, results
of operations and changes in financial positions of (i) the Company and (ii)
each Subsidiary, in each case, for which such financial statements are so
included or incorporated by reference, on the basis stated in the Initial
Offering Memorandum, each Preliminary Offering Memorandum and each Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such financial statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; the other financial and statistical information and data included in
the Initial Offering Memorandum, each Preliminary Offering Memorandum and each
Offering Memorandum (and any amendment or supplement thereto) are accurately
presented and, as applicable, will be accurately presented in all material
respects and prepared on a basis consistent with such financial statements and
the books and records of the Company and the Subsidiaries; and the pro forma
financial statements and "as adjusted" financial information and the related
notes thereto included or incorporated by reference in the Initial Offering
Memorandum, each Preliminary Offering Memorandum and each Offering Memorandum
have been or, as applicable, will be prepared in accordance with the applicable
requirements of the Act (as though each Preliminary Offering Memorandum and each
Offering Memorandum were a prospectus included in a registration statement filed
pursuant to the Act) and on the bases described therein and, in the opinion of
the Company, the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
p. The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement and the Fee Agreement have been
duly and validly authorized by the Company, and this Agreement and the Fee
Agreement have been duly executed and delivered by the Company and constitutes
the valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnity and
contribution hereunder or thereunder may be limited by federal or state
securities laws.
12
<PAGE>
q. Except as disclosed in the Initial Offering Memorandum, each
Preliminary Offering Memorandum and each Offering Memorandum (or any amendment
or supplement thereto), as applicable, subsequent to the respective dates as of
which such information is given in the applicable Initial Offering Memorandum,
Preliminary Offering Memorandum or Offering Memorandum (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries has
incurred any liability or obligation, direct or contingent or entered into any
transaction, not in the ordinary course of business, that is material to the
Company on a consolidated basis, and there has not been any change in the
capital stock or material increase in the short-term debt or long-term debt of
the Company, any of the Subsidiaries, or any change or any development that has,
or that may reasonably be expected to have, a Material Adverse Effect, or any
discovery of any change or development that may be reasonably expected to have
any such Material Adverse Effect.
r. Except as is not material, each of the Company and each
Subsidiary has good and marketable title to all property (real and personal)
described and, as applicable, to be described, in the Initial Offering
Memorandum, each Preliminary Offering Memorandum and each Offering Memorandum as
being owned by it, free and clear of all liens, claims, security interests or
other encumbrances (except such as are described, as applicable, in the Initial
Offering Memorandum, Preliminary Offering Memorandum or Offering Memorandum and
all the property described therein as being held under lease by each of the
Company and the Subsidiaries is held by it under valid, subsisting and
enforceable leases).
s. Each of the Company and each Subsidiary has such material
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are and, as applicable, will be necessary to own its
respective properties and to conduct its respective business in the manner
described in the Initial Offering Memorandum, each Preliminary Offering
Memorandum and each Offering Memorandum, subject to such qualifications as may
be set forth, as applicable, in the Initial Offering Memorandum, each
Preliminary Offering Memorandum and each Offering Memorandum; each of the
Company and each Subsidiary has fulfilled and performed all its material
obligations with respect to such permits and no event has occurred that allows,
or after notice or lapse of time would allow, revocation or termination thereof
or result in any other material impairment of the rights of the holder of any
such permit, subject in each case to such qualification as may be set forth in
the Initial Offering Memorandum, each Preliminary Offering Memorandum and each
Offering Memorandum as applicable; and, except as described in the Initial
Offering Memorandum, each Preliminary Offering Memorandum and each Offering
Memorandum, as applicable, none of such permits contains any restriction that is
materially burdensome to the Company or any of the Subsidiaries. The
descriptions contained and, as applicable, to be contained in the Initial
Offering Memorandum, each Preliminary Offering Memorandum and each Offering
Memorandum of statutes, rules, regulations and other laws applicable to the
Company and the Subsidiaries are and will be as of their respective dates
accurate and complete in all material respects.
t. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
13
<PAGE>
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
u. No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Senior Notes or the Exempt Resales; no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the issuance of the Senior
Notes or suspends the sale of the Senior Notes or the Exempt Resales in any
jurisdiction referred to in Section 4(f) hereof, and no action, suit or
proceeding is pending affecting or, to the knowledge of the Company, threatened
against the Company or any of the Subsidiaries before any court or arbitrator or
any governmental body, agency or official which, if adversely determined, would
prohibit, interfere (materially, solely in the case of Exempt Resales) with or
(materially, solely in the case of Exempt Resales) adversely affect the issuance
or marketability of the Senior Notes, including any Exempt Resale, or in any
(material, solely in the case of Exempt Resales) manner draw into question the
validity of any of the Transaction Documents; and every request of the Company
by any securities authority or agency of any jurisdiction for additional
information has been and will be complied with in all material respects.
v. To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee, agent, co-investor or partner of the Company or
any Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Initial Offering Memorandum, each Preliminary Offering
Memorandum or each Offering Memorandum, as applicable.
w. No registration under the Act of the Senior Notes is required
for the sale of the Senior Notes to the Purchasers as contemplated hereby or for
Exempt Resales to Eligible Purchasers, assuming (A) that the persons who buy the
Senior Notes in the Exempt Resales are Eligible Purchasers and (B) the accuracy
of representations of DLJ and the Purchasers regarding the absence of general
solicitation in connection with Exempt Resales described herein. No form of
general solicitation or general advertising was used by the Company or any of
its representatives in connection with the offer and sale of any of the Senior
Notes or in connection with Exempt Resales, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Senior Notes have been
issued and sold by the Company or any of the subsidiaries within the six-month
period immediately prior to the date hereof or will be sold prior to the Exempt
Resale Closing Date.
x. The Initial Offering Memorandum, each Preliminary Offering
Memorandum and each Offering Memorandum, as of its respective date, and each
amendment or supplement thereto, as applicable, as of its date, contains or will
contain, as applicable, including the information incorporated by reference
therein, all the information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
14
<PAGE>
y. Each of the Company and each Subsidiary has filed all material
tax returns required to be filed, which returns are complete and correct in all
material respects, and neither the Company nor any Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
z. The Company and the Subsidiaries own or possess all material
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described, and, as applicable, to be described in the Initial Offering
Memorandum, each Preliminary Offering Memorandum and each Offering Memorandum,
as applicable, as being owned by them or any of them or necessary for the
conduct of their respective businesses, and the Company is not aware of any
claim to the contrary or any challenge by any other person to the rights of the
Company and the Subsidiaries with respect to the foregoing.
aa. The Company is not, and after the sale of the Senior Notes to
be sold by it hereunder and the application of the proceeds from such sale as
described in the Initial Offering Memorandum, each Preliminary Offering
Memorandum and each Offering Memorandum, as applicable under the caption "Use of
Proceeds" will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
bb. The Company has complied with all provisions of Florida H.B.
1771 codified as Section 517.075 of the Florida statutes, and all regulations
promulgated thereunder, relating to issuers doing business with the Government
of Cuba or with any person or any affiliate located in Cuba.
cc. Except as described in the Initial Offering Memorandum, or the
applicable Offering Memorandum, there are no outstanding options, warrants or
other rights calling for the issuance of, or any commitment, plan or arrangement
to issue, any shares of capital stock of the Company or any security convertible
into or exchangeable or exercisable for capital stock of the Company.
dd. Except as described in the Initial Offering Memorandum or the
applicable Offering Memorandum, there is no holder of any security of the
Company or any other person who has the right, contractual or otherwise, to
cause the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, the Notes or the right to have any other securities of
the Company included in the registration statement or the right to require
registration under the Act of any securities of the Company because of the
execution by the Company of this Agreement or consummation of the transactions
contemplated by this Agreement or otherwise.
ee. Except as set forth in the Initial Offering Memorandum or the
applicable Offering Memorandum, the Company has no commitments to fund entities
that do not constitute Subsidiaries.
15
<PAGE>
ff. None of the Company, any Subsidiary or any agent thereof
acting on the behalf of either of them has taken, and none of them will take,
any action that might cause this Agreement or the issuance or sale of the Notes
pursuant to the terms of this Agreement to violate Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System, in each case as in effect
now or as the same may hereafter be in effect on the Closing Date.
gg. No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on retaining any rating assigned to the
Company or any securities of the Company, or (ii) has indicated to the Company
that it is considering (1) the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (2) any change in the outlook for
any rating of the Company or any securities of the Company;
hh. Each certificate signed by any officer of the Company and
delivered to DLJ and the Purchasers or the counsel of DLJ and the Purchasers
pursuant hereto shall be deemed to be a representation and warranty by the
Company to the Purchasers as to the matters covered thereby;
The Company acknowledges that DLJ and the Purchasers and, for purposes
of the opinions to be delivered to DLJ and the Purchasers pursuant to Section 7
hereof, counsel to the Company and counsel to DLJ and the Purchasers, will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
(b) The Purchasers, and in the case of clause 5(b)c. And 5(b)d., DLJ
each represent and warrant to the Company and agree, as of the Date hereof and
as of the Exempt Resales Closing Date, that:
a. Such Purchaser is a QIB, with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of an investment in the Senior Notes.
b. Such Purchaser is not acquiring the Senior Notes with a view to
any distribu tion thereof that would violate the Act or the securities laws of
any state of the United States or any other applicable jurisdiction.
c. No form of general solicitation or general advertising has been
or will be used by DLJ or the Purchasers or any of its representatives in
connection with the offer and sale of any of the Senior Notes, which would
render unavailable to the Company reliance upon the exemption from the
registration requirements of the Act afforded by Section 4(2) thereof,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
16
<PAGE>
d. DLJ and the Purchasers also understand that the Company and,
for purposes of the opinions to be delivered to DLJ and the Purchasers pursuant
to Section 7 hereof, counsel to the Company and counsel to the DLJ and the
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. INDEMNIFICATION AND CONTRIBUTION.
a. The Company agrees to indemnify and hold harmless (i) DLJ and
the Purchasers, (ii) each person, if any, who controls DLJ or any of the
Purchasers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (iii) the respective officers, directors, partners, employees,
representatives and agents of DLJ and the Purchasers or any controlling person
of any of them (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Person") from and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Initial Offering
Memorandum, any Preliminary Offering Memorandum or any Offering Memorandum or in
any amendment or supplement thereto, as applicable, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information relating to DLJ and the
Purchasers furnished to the Company in writing by or on behalf of DLJ and the
Purchasers expressly for use in connection therewith. The foregoing indemnity
agreement shall apply to all actions taken by DLJ and the Purchasers pursuant
hereto and pursuant to the Fee Letter and shall be in addition to any liability
which the Company may otherwise have.
b. If any action, suit or proceeding shall be brought against any
Indemnified Person with respect to which indemnity may be sought against the
Company, such Indemnified Person shall promptly notify the Company, and the
Company shall assume the defense thereof, including the employment of counsel
and payment of all fees and expenses. Any Indemnified Person shall have the
right to employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person, unless (i) the Company has
agreed in writing to pay such fees and expenses, (ii) the Company has failed to
assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Indemnified Person and the Company and such Indemnified Person shall have been
advised by its counsel that representation of such Indemnified Person and the
Company by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Indemnified Person). It is
understood, however, that the Company shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
17
<PAGE>
counsel) at any time for such Indemnified Person not having actual or potential
differing interests with such Indemnified Person or among themselves, which firm
shall be designated in writing by such Indemnified Person, and that all such
fees and expenses shall be reimbursed as they are incurred. The Company shall
not be liable for any settlement of any such action, suit or proceeding effected
without its written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Indemnified
Person, to the extent provided in the preceding paragraph, from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse such indemnified
party for fees and expenses of counsel as incurred, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
business days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement. The
indemnifying party shall not, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of judgment in
or otherwise seek to terminate any pending or threatened action, claim,
litigation or proceeding in respect of which indemnification or contribution may
be sought hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent or termination includes an
unconditional release of each indemnified party from all liability arising out
of such action, claim, litigation or proceeding.
c. DLJ and the Purchasers agree to indemnify and hold harmless the
Company, its directors, its officers and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to each
Indemnified Person, but only with respect to information relating to such
Indemnified Person furnished in writing by or on behalf of such Indemnified
Person through you expressly for use in the Initial Offering Memorandum, the
applicable Preliminary Offering Memorandum and the applicable Offering
Memorandum, or any amendment or supplement thereto, as applicable. If any
action, suit or proceeding shall be brought against the Company, any of its
directors, any such officer, or any such controlling person based on the Initial
Offering Memorandum, any Preliminary Offering Memorandum or any Offering
Memorandum, or any amendment or supplement thereto, as applicable, and in
respect of which indemnity may be sought against DLJ and the Purchasers pursuant
to this paragraph c., DLJ and the Purchasers shall have the rights and duties
given to the Company by paragraph b. above (except that if the Company shall
have assumed the defense thereof DLJ and the Purchasers shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
DLJ and the Purchasers), and the Company, its directors, any such officer, and
any such controlling person shall have the rights and duties given to DLJ and
the Purchasers by paragraph b. above. The foregoing indemnity agreement shall be
in addition to any liability which DLJ and the Purchasers may otherwise have.
d. If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs a. or c. hereof in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then an indemnifying party, in lieu of indemnifying such indemnified party,
18
<PAGE>
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and DLJ and the Purchasers on the other hand from the
offering of the Senior Notes, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and DLJ and the
Purchasers on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and DLJ and the Purchasers on the other hand shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
fees received and retained by DLJ and the Purchasers pursuant to the Fee
Agreement. The relative fault of the Company on the one hand and DLJ and the
Purchasers on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by DLJ and the Purchasers on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
e. The Company, DLJ and the Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph d. above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph d. above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, DLJ and the
Purchasers shall not be required to contribute any amount in excess of the
amount by which the total fees received by DLJ and the Purchasers pursuant to
the Fee Agreement exceeds the amount of any damages which DLJ and the Purchasers
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
f. Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company and of DLJ and the Purchasers set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of DLJ and the
Purchasers or any person controlling DLJ and the Purchasers, the Company, its
directors or officers, or any person controlling the Company, (ii) acceptance of
any Senior Notes and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to DLJ or the Purchasers or any person controlling
DLJ or the Purchasers, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to benefits of the indemnity,
contribution, and reimbursement agreements contained in this Section 6.
19
<PAGE>
g. The statements set forth in the first paragraph appearing on
page i, the third full paragraph, the eighth paragraph, the eleventh paragraph,
the twelfth paragraph, the thirteenth paragraph and the fourteenth paragraph
appearing under the caption "Plan of Distribution" in the Initial Offering
Memorandum constitute the only information relating to DLJ and the Purchasers
furnished to the Company in writing by or on behalf of the Purchasers as such
information is referred to herein, including in Sections 5 and 6 hereof.
7. CONDITIONS OF PURCHASERS' OBLIGATIONS. The obligation of the
Purchasers to purchase Senior Notes hereunder is subject to the following
conditions:
a. All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof, the
Closing Date, and on each Exempt Resales Closing Date, as applicable, with the
same force and effect as if made on and as of the date hereof. The Company shall
have performed or complied with all of the agreements herein contained and
required to be performed or complied with by it at or prior to the Closing Date
and each Exempt Resales Closing Date, as applicable.
b. The Initial Offering Memorandum shall have been printed and
copies distributed to DLJ and the Purchasers not later than 10:00 p.m. New York
City time on April 28, 1999.
c. With respect solely to each Resale Closing Date, the Offering
Memorandum shall have been printed and copies distributed to DLJ and the
Purchasers not later than as required to effect Exempt Resales as reasonably
specified by you after the Date of this Agreement or at such later date and time
as to which you may agree, and no stop order suspending the qualification or
exemption from qualification of any of the Senior Notes in any jurisdiction
shall have been issued and no proceeding for that purpose shall have been
commenced or shall be pending or threatened.
d. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, or Exempt Sales Closing
Date, as applicable, prevent the issuance or sale of any of the Senior Notes; no
action, suit or proceeding shall be pending against or affecting or, to the
knowledge of the Company, threatened against, the Company or any of the
Subsidiaries before any court or arbitrator or any governmental body, agency or
official that, if adversely determined, would prohibit, interfere with or
adversely affect the issuance or sale of the Senior Notes or would have a
Material Adverse Effect or in any manner draw into question the validity of any
of the Transaction Documents; and no stop order, injunction, restraining order,
or order of any nature preventing the use of the Initial Offering Memorandum,
any Preliminary Offering Memorandum or any Offering Memorandum, as applicable,
or any amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued.
20
<PAGE>
e. Subsequent to the effective date of this Agreement and prior to
the applicable Exempt Resale, there shall not have occurred (i) any change, or
any development involving a prospective change, in or affecting the condition
(financial or other), business, properties, net worth, or results of operations
of the Company or the Subsidiaries not contemplated by the Initial Offering
Memorandum, or the applicable Offering Memorandum which, would materially
adversely affect the market for the Senior Notes or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company which makes any statement made in the Initial Offering Memorandum or
the applicable Offering Memorandum untrue in any material respect which, in the
opinion of the Company and its counsel or DLJ and the Purchasers and their
counsel, requires the making of any addition to or change in the Initial
Offering Memorandum or the applicable Offering Memorandum in order to make the
statements therein not misleading, if amending or supplementing the Initial
Offering Memorandum to reflect such event or development would in the opinion of
DLJ and the Purchasers, materially adversely affect the market for the Senior
Notes.
f. DLJ and the Purchasers shall have received on the Closing Date
and each Exempt Resales Closing Date, an opinion of Holme Roberts & Owen LLP,
counsel for the Company, dated the Closing Date and each Exempt Resales Closing
Date and addressed to you, to the effect that:
i. The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own lease and operate its properties and to
conduct its business as described in the Initial Offering Memorandum (and any
amendment or supplement thereto) and, as applicable, the Offering Memorandum,
and, based solely on certificates from and correspondence with public officials,
is qualified to do business and is in good standing in the states Colorado and
Delaware;
ii. Each of UIPI and UIHE (collectively, the "Designated
Subsidiaries") and each of the corporate Subsidiaries incorporated in the United
States (the "U.S. Subsidiaries") is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority to own, lease, and operate its
properties and to conduct its business as described in the Initial Offering
Memorandum (and any amendment or supplement thereto) and, as applicable, the
Offering Memorandum; and all the outstanding shares of capital stock of each of
the Designated Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and, except as set forth in the Initial Offering
Memorandum, are owned by the Company directly free and clear, to the best
knowledge of such counsel after reasonable inquiry, of any security interest,
lien, adverse claim, equity or other encumbrance;
iii. All the outstanding shares of capital stock or other
equity interest of each of the U.S. Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights (whether provided pursuant to
Transaction Documents or, to the best knowledge of such counsel, after due
inquiry, contractually), and, except as set forth in the Initial Offering
Memorandum, and, as applicable, the Offering Memorandum, are owned by the
Company directly, or indirectly through one of the U.S. Subsidiaries, free and
clear, to the best knowledge of such counsel after due inquiry, of any security
interest, lien, adverse claim, equity or other encumbrance;
21
<PAGE>
iv. The authorized and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Initial Offering
Memorandum or the applicable Offering Memorandum; and the Company's ownership
interest with respect to each of the Designated Subsidiaries is as described in
the Initial Offering Memorandum or the applicable Offering Memorandum;
v. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, and are fully paid and
nonassessable;
vi. The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under each of the Transaction
Documents and to consummate the transactions contemplated thereby, including,
without limitation, with the corporate power and authority to issue, sell and
deliver the Senior Notes as contemplated by this Agreement and to perform its
obligations hereunder and thereunder;
vii. The Company has the corporate power and authority to enter
into this Agreement and the Fee Agreement, and to issue, sell and deliver the
Senior Notes to the Purchasers as provided herein, and each of this Agreement
and the Fee Agreement, been duly authorized, executed and delivered by the
Company and is a valid, legal and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforcement of
rights to indemnity and contribution hereunder and thereunder may be limited by
federal or state securities laws or principles of public policy and subject to
the qualification that the enforceability of the Company's obligations hereunder
and thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general principles of equity, regardless of whether
enforcement is sought in a proceeding at law or in equity;
viii. The Company has the corporate power and authority to
execute, deliver and perform its respective obligations under the Senior Notes;
ix. The Senior Notes and the Indenture have been duly
authorized, executed and delivered by the Company;
x. The Company has duly and validly authorized, executed and
delivered the Indenture and (assuming the due authorization, execution and
delivery thereof by the Trustee) the Indenture is a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
their terms, except (A) as such enforcement may be limited by (y) bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally, or (z) general principles of
equity, regardless of whether enforcement is sought in a proceeding at law or in
equity, and (B) to the extent that a waiver of rights under any usury laws may
be unenforceable. The Indenture conforms as to legal matters in all material
respects to the summary description thereof in the Initial Offering Memorandum
and, as applicable, the Offering Memorandum;
22
<PAGE>
xi. The Senior Notes have been duly and validly authorized for
issuance and sale to the Purchasers by the Company pursuant to this Agreement
and, when issued and authenticated in accordance with the terms of the Indenture
and delivered against payment therefor in accordance with the terms hereof, will
be the valid and legally binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to the benefits of the
Indenture, except (A) as such enforcement may be limited by (y) bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally, or (z) general principles of
equity, regardless of whether enforcement is sought in a proceeding at law or in
equity, and (B) to the extent that a waiver of rights under any usury laws may
be unenforceable. The Senior Notes, when issued, authenticated and delivered,
will conform as to legal matters in all material respects to the summary
description thereof in the Initial Offering Memorandum and, as applicable, the
Offering Memorandum;
xii. The Exchange Notes have been duly and validly authorized
for issuance by the Company and, when issued and authenticated in accordance
with the terms of the Indenture and the Registration Rights Agreement, will be
valid and legally binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of the
Indenture, except (A) as such enforcement may be limited by (y) bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally, or (z) general principles of
equity, regardless of whether enforcement is sought in a proceeding at law or in
equity, and (B) to the extent that a waiver of rights under any usury laws may
be unenforceable;
xiii. The Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the Company, and is a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, except (A) as such enforcement may be limited by (y)
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and remedies generally and (z) general
principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity and (B) such counsel need express no opinion as
to the enforceability of the indemnification or contribution provisions
contained in Section 7 of the Registration Rights Agreement. The Registration
Rights Agreement conforms, as to legal matters, in all material respects to the
summary description thereof in the Initial Offering Memorandum and, as
applicable, in the Offering Memorandum;
xiv. When the Senior Notes are issued and delivered pursuant to
this Agreement and at each applicable Exempt Resale Closing Date, none of the
Senior Notes will be of the same class (within the meaning of Rule 144A under
the Act) as securities of the Company that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system;
xv. Neither the Company nor any of the Designated Subsidiaries
nor any U.S. Subsidiary is in violation of its respective certificate or
articles of incorporation or bylaws, or other organization documents, or to the
best knowledge of such counsel after reasonable inquiry, is in material default
in the performance of any obligation, agreement or condition contained in any
permit or any bond, debenture, note or other evidence of indebtedness, except as
23
<PAGE>
may be disclosed in the Initial Offering Memorandum and, as applicable, in the
Offering Memorandum;
xvi. Registration of the Senior Notes under the Act or
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, is not required in connection with the offer, sale and delivery of the
Senior Notes to the Purchasers or the resale of the Senior Notes pursuant to the
terms of this Agreement, including pursuant to the applicable Exempt Resale, it
being understood that in rendering this opinion such counsel may assume the
accuracy of the representations of the Purchasers and the Company contained
herein and that the offer, sale and delivery of the Senior Notes have been made
as contemplated by this Agreement and the Initial Offering Memorandum and the
applicable Offering Memorandum;
xvii. The execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance and sale of the Senior Notes,
and the consummation of the transactions contemplated hereby and thereby,
including the use of proceeds and the Exempt Resales, will not violate, conflict
with or constitute a breach of any of the terms or provisions of, or a default
(or an event that with notice or the lapse of time, or both, would constitute a
default) under, or require consent under, or result in the imposition of a lien
or encumbrance on any assets or properties of the Company or any of its
subsidiaries, or an acceleration of indebtedness pursuant to, (A) the
organizational documents of the Company or any of its subsidiaries, (B) any
bond, debenture, note, indenture, mortgage, deed of trust, license or other
agreement or instrument, known to such counsel after reasonable inquiry, to
which the Company or any of its subsidiaries is a party or by which any of them
or their property is or may be bound, (C) any U.S. law, statute, rule or
regulation applicable to the Company, any of the U.S. Subsidiaries or any of
their assets or properties, or (D) any judgment, order or decree of any U.S.
court or governmental agency or U.S. authority, known to such counsel after
reasonable inquiry, having jurisdiction over the Company, any of the U.S.
Subsidiaries or their assets or properties, except such conflicts or violations
as would not individually or in the aggregate be reasonably expected to have a
Material Adverse Effect. No consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, any court or
governmental agency, body or administrative agency in the United States is
required for the execution, delivery and performance of this Agreement or the
other Transaction Documents, except (subject to clause (xvi) above) such as have
been obtained prior to the Date hereof (or, in the case of the Registration
Rights Agreement, are planned to be obtained or made under the Act, the Trust
Indenture Act and state securities or Blue Sky laws and regulations or such as
may be required by the NASD). In rendering the opinions required in this clause
(xvii), such counsel may rely on the accuracy of the representations of the
Purchasers and the Company contained in this Agreement. No consents or waivers
from any other person are required for the execution, delivery and performance
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby, other than such consents and
waivers as have been obtained, or except where the failure to obtain such
consents or waivers would not individually or in the aggregate be reasonably
expected to have a Material Adverse Effect;
xviii. To the best knowledge of such counsel, after reasonable
inquiry, no action has been taken and no statute, rule or regulation or order
has been enacted, adopted or issued by any governmental agency that prevents the
24
<PAGE>
issuance of the Senior Notes or the Exempt Resales, no injunction, restraining
order or order of any nature by a United States federal or state court of
competent jurisdiction has been issued that prevents the issuance of the Senior
Notes and no action, suit or proceeding is pending against or affecting or
threatened against the Company or the Exempt Resales or any of the U.S.
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which, if adversely determined, would prohibit, interfere with or
adversely affect the issuance or marketability of the Senior Notes or the Exempt
Resales or in any manner draw into question the validity of any Transaction
Document;
xix. To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the U.S. Subsidiaries is in violation of
any law, ordinance, administrative or other governmental rule or regulation
applicable to the Company or any of the U.S. Subsidiaries or any of the U.S.
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the U.S. Subsidiaries or any of the U.S.
Subsidiaries, except for such violations as would not individually or in the
aggregate be reasonably likely to have a Material Adverse Effect;
xx. The statements in the Initial Offering Memorandum and, as
applicable, the Offering Memorandum, insofar as they are descriptions of
contracts, agreements or other legal documents, or refer to statements of law or
legal conclusions, are accurate and complete in all material respects and
present fairly the information required to be shown, to the extent governed by
the laws of jurisdictions on which such counsel expresses an opinion;
xxi. Each of the Company and each Designated Subsidiary and
each U.S. Subsidiary has all necessary governmental authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental regulatory officials and bodies (except where the failure so to
have any such authorizations, approvals, orders, licenses, certificates,
franchises or permits, individually or in the aggregate, would not have a
Material Adverse Effect), to own its properties and to conduct its businesses as
now being conducted, as described in the Initial Offering Memorandum and, as
applicable, the Offering Memorandum;
xxii. Neither the Company nor any of its subsidiaries is, nor,
after the sale of Senior Notes to be sold by it hereunder and the application of
the proceeds from such sales as described in the Initial Offering Memorandum,
under the caption "Use of Proceeds," will they be (i) an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act, or (ii) a "holding company" or a "subsidiary company" or
an "affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended;
xxiii. There is (A) to the knowledge of such counsel, after
reasonable inquiry, no legal, regulatory or governmental action, suit or
proceeding before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending or, to the knowledge of such counsel,
threatened or contemplated to which the Company or any of the U.S. Subsidiaries
25
<PAGE>
is a party or to which the business or property of the Company or any of the
U.S. Subsidiaries is subject, (B) no law, statute, rule, regulation or order
that has been enacted, adopted or issued by any governmental agency or that has
been proposed by any governmental body, to the extent governed by the laws of
jurisdictions on which such counsel expresses an opinion, (C) to the knowledge
of such counsel, after reasonable inquiry, no injunction, restraining order or
order of any nature by a federal or state court of competent jurisdiction to
which the Company or any of the U.S. Subsidiaries is subject issued that, in the
case of clauses (A), (B) and (C) above, (x) might, singly or in the aggregate,
result in a Material Adverse Effect, (y) would interfere with or adversely
affect the issuance of the Senior Notes or the Exempt Resales or (z) in any
manner draw into question the validity of this Agreement, the Fee Agreement or
the other Transaction Documents;
xxiv. To the best knowledge of such counsel, there are no
holders of debt securities of the Company who, by reason of the execution by the
Company of this Agreement or any other Transaction Document or the consummation
of the transactions contemplated hereby or thereby, have the right to request or
demand that the Company register debt securities of the Company under the Act or
analogous foreign laws and regulations securities held by them;
xxv. The Initial Offering Memorandum, as of its date, and each
amendment or supplement thereto, if any, as of its date and, as applicable, the
Offering Memorandum (except for the financial statements, including the notes
thereto, and supporting schedules and other financial, statistical, and
accounting data included therein or omitted therefrom, as to which no opinion
need be expressed), contains all the information specified in, and meeting all
the requirements of, Rule l44A(d)(4) under the Act;
xxvi. To the best knowledge of such counsel after reasonable
inquiry, except as described in the Initial Offering Memorandum or the
applicable Offering Memorandum, there are no outstanding options, warrants or
other rights calling for the issuance of, and such counsel does not know of any
commitment, plan or arrangements to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company;
xxvii. To the best knowledge of such counsel after reasonable
inquiry, except as described in, or incorporated by reference into, the Initial
Offering Memorandum or the applicable Offering Memorandum, there is no holder of
any security of the Company or any other person (other than the Purchasers) who
has the right, contractual or otherwise, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, the Senior
Notes or the right to have any other securities of the Company included in the
Initial Offering Memorandum, or the Offering Memorandum or the right, to require
registration under the Act of any securities of the Company;
xxviii. The issuance and sale of the Senior Notes pursuant to
the terms of this Agreement will not violate Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System; and
xxix. The statements in the Initial Offering Memorandum under
"Risk Factors -We may be limited in claiming foreign tax credits; we do business
in countries that do not have tax treaties with the United States," and "- You
will generally be required to include original issue discount on the senior
26
<PAGE>
notes in gross income before you receive any cash payment on the senior notes"
insofar as they constitute statements of law or legal conclusions are accurate
in all material respects.
In addition, such counsel shall state that it has generally
reviewed and discussed with certain officers and other representatives of the
Company, representatives of the independent public accountants for the Company,
your representatives and your counsel the preparation of the Initial Offering
Memorandum and the applicable Offering Memorandum and the statements contained
therein and, although such counsel has not independently verified the accuracy,
completeness or fairness of such statements (except as indicated above), such
counsel advises you that, on the basis of the foregoing, no facts came to its
attention that caused it to believe that the Initial Offering Memorandum (as
amended or supplemented, if applicable) as of the date of the Initial Offering
Memorandum or at the Closing Date or the Offering Memorandum as of any Exempt
Resales Closing Date, if applicable, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Without limiting the foregoing, such
counsel may further state that they assume no responsibility for, and have not
independently verified, the accuracy, completeness or fairness of, and express
no view as to, the financial statements, notes and schedules and other financial
or statistical data included in the Initial Offering Memorandum or, as
applicable, the Offering Memorandum.
Such opinion may be limited to the federal laws of the United
States and the internal laws of the State of Colorado and the General
Corporation Law of the State of Delaware. In rendering their opinion as
aforesaid, counsel may rely upon an opinion or opinions, each dated the Closing
Date, of other counsel retained by them or the Company as to laws of any
jurisdiction other than the United States or the State of Colorado, provided
that (1) each such local counsel is acceptable to DLJ and the Purchasers, (2)
such reliance is expressly authorized by each opinion so relied upon and a copy
of each such opinion is delivered to DLJ and the Purchasers and is in form and
substance satisfactory to it and its counsel, and (3) counsel shall state in
their opinion that they believe that they, DLJ and the Purchasers are justified
in relying thereon.
g. DLJ and the Purchasers shall have received on the Closing Date
and each Exempt Resales Closing Date, as applicable, the opinions of Houthoff
Advocaten & Notarissen (with respect to UPC, UTH, A2000, and the laws of The
Netherlands), Bruckhaus Westrick Heller Lober (with regard to the Telekabel
Group and the laws of Austria), Stibbe Simont Monahan Davhot (with regard to
Radio Public S.A. and the laws of Belgium,) Advokatfirmaet Steenstrup (with
regard to Janco Multicom AS. and the laws of Norway), Yigal Arnon & Co. (with
regard to Tevel and the laws of Israel), Freehill Hollingdale & Page (with
regard to Austar and the laws of Australia), and Carey Abogados y Cia Ltda.
(with regard to VTR Hipercable, and the laws of Chile), each dated the Closing
Date and each Exempt Resales Closing Date, as applicable, and addressed to DLJ
and the Purchasers, substantially to the effect that:
i. The statements included or incorporated by reference in the
Initial Offering Memorandum, and the Offering Memorandum, as applicable, insofar
as they are descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions, are accurate and complete in
27
<PAGE>
all material respects and present fairly the information purported to be shown,
and the descriptions of the applicable government regulations in each of such
countries are accurate and complete in all material respects;
ii. Each of UPC, UTH, the Telekabel Group companies, Radio
Public S.A., Janco Multicom S.A., A2000, Tevel, Austar, CTV Pty. Ltd. and STV
Pty. Ltd ("CTV/STV"), and VTR Hipercable (collectively, the "Foreign
Subsidiaries") is a corporation or other legal entity duly organized and validly
existing in good standing under the laws of the jurisdiction of its formation,
with full power and authority to own, lease, and operate its properties and to
conduct its business as described in or incorporated by reference into the
Initial Offering Memorandum and, as applicable, the Offering Memorandum (and any
amendment or supplement thereto); and all the outstanding shares of capital
stock or other equity interest of each of the Foreign Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable and, except
as set forth in or incorporated by reference into the Initial Offering
Memorandum, and, as applicable the Offering Memorandum, are owned by the Company
directly, or indirectly through one of the Subsidiaries, free and clear, to the
best knowledge of such counsel after reasonable inquiry, of any security
interest, lien, adverse claim, equity or other encumbrance;
iii. The Company's ownership interest with respect to each of
the Foreign Subsidiaries is as described in or incorporated by reference into
the Initial Offering Memorandum and, as applicable, the Offering Memorandum;
iv. None of the Foreign Subsidiaries is in violation of its
respective certificate or articles of incorporation or bylaws, or other
organizational documents; to the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Foreign Subsidiaries is in material
default in the performance of any obligation, agreement or condition contained
in any permit or any bond, debenture, note or other evidence of indebtedness,
except as may be disclosed in or incorporated by reference into the Initial
Offering Memorandum and, as applicable the Offering Memorandum;
v. Neither the offer, sale or delivery of the Notes, the
execution, delivery or performance of this Agreement, compliance by the Company
with the provisions hereof and consummation by the Company of the transactions
contemplated hereby and by the Transaction Documents, including the use of
proceeds, and the Exempt Resales, conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, the certificate or articles
of incorporation or bylaws, or other organizational documents, of any of the
Foreign Subsidiaries or any agreement indenture, lease or other instrument to
which the Company or any of the Foreign Subsidiaries is a party or by which any
of them or any of their respective properties is bound that is known to such
counsel after reasonable inquiry, or, to the best knowledge of such counsel
after reasonable inquiry, will result in the creation or imposition of any
material lien charge or encumbrance upon any property or assets of the Company
or any of the Foreign Subsidiaries nor will any such action result in any
violation of any existing law, regulation, ruling (assuming compliance with all
applicable state securities and Blue Sky laws), judgment, injunction, order or
decree known to such counsel after reasonable inquiry, applicable to the Company
or the Foreign Subsidiaries or any of their respective properties, except where
such violation would not have a Material Adverse Effect;
28
<PAGE>
vi. No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company or any Foreign Subsidiary (except as may be required under state
securities or Blue Sky law governing the purchase and distribution of the Notes)
in connection with the consummation by the Company of the transactions
contemplated hereby and by the Transaction Documents, including the use of
proceeds, and the Exempt Resales for the valid issuance and sale of the Senior
Notes to the Purchasers or pursuant to the Exempt Resales as contemplated by
this Agreement;
vii. To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Foreign Subsidiaries is in violation
of any law, ordinance administrative or governmental rule or regulation
applicable to the Company or any of the Foreign Subsidiaries of any decree of
any court or governmental agency or body having jurisdiction over the Company or
any of the Foreign Subsidiaries, except where such violation would not have a
Material Adverse Effect;
viii. Each of the Company and each Foreign Subsidiary has all
necessary governmental authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental regulatory
officials and bodies (except where the failure so to have any such
authorizations, approvals, orders, licenses, certificates, franchises or
permits, individually or in the aggregate, would not have a Material Adverse
Effect) to own its properties and to conduct its businesses as now being
conducted, as described in or incorporated by reference into the Initial
Offering Memorandum and, as applicable, the Offering Memorandum; and
ix. Each of the Company and each Foreign Subsidiary owns all
licenses and rights described in the Initial Offering Memorandum and, as
applicable, the Offering Memorandum as being owned by the Company or the Foreign
Subsidiaries and necessary for the conduct of its businesses, and such counsel
is not aware of any claim to the contrary or any challenge by any other person
to the rights of the Company or any Foreign Subsidiary with respect to the
foregoing.
h. The Purchasers and DLJ shall have received on the Closing Date
and each Exempt Resales Closing Date, an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, dated the applicable Exempt Resales Closing Date, and
addressed to you, in form and substance reasonably satisfactory to DLJ.
i. DLJ and the Purchasers shall have received letters on the
Closing Date and on each Exempt Resales Closing Date, addressed to DLJ and the
Purchasers, and dated the date hereof and thereof, as applicable, from Arthur
Andersen LLP and Price Waterhouse, and others (as determined by DLJ) all of
which are independent public accountants, substantially in the forms reasonably
approved and requested by DLJ and the Purchasers.
j. (i) There shall not have been any change in the capital stock
of the Company (other than as a result of the issuance of shares of Class A
Common Stock of the Company upon the exercise of outstanding warrants or stock
29
<PAGE>
options or upon conversion of shares of Class B Common Stock of the Company or
the Company's preferred stock) nor any material increase in the short-term or
long-term debt of the Company (other than in the ordinary course of business)
from that set forth or contemplated in the Initial Offering Memorandum, each
Preliminary Offering Memorandum or each Offering Memorandum (or any amendment or
supplement thereto), as applicable; (ii) there shall not have been, since the
respective dates as of which information is given in the Initial Offering
Memorandum, each Preliminary Offering Memorandum or each Offering Memorandum (or
any amendment or supplement thereto), as applicable, except as may otherwise be
stated in the Initial Offering Memorandum (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole; (iii) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiaries taken as a whole, other than those reflected in the
Initial Offering Memorandum, each Preliminary Offering Memorandum or each
Offering Memorandum (or any amendment or supplement thereto), as applicable; and
(iv) all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date and on and as of each Exempt Resales Closing Date if any as
if made on and as of such dates, and you shall have received a certificate,
dated the Closing Date and each Exempt Resales Closing Date, if any and signed
by the chief executive officer and the chief financial officer of the Company
(or such other officers as are acceptable to you), to the effect set forth in
this Section 7(i).
k. The Company shall not have failed at or prior to the Closing
Date and each Exempt Resales Closing Date, if any, to have performed or complied
with any of its agreements herein contained and required to be performed or
complied with by it hereunder at or prior to the Closing Date and each Exempt
Resales Closing Date, if any.
l. The Company shall have furnished or caused to be furnished to
DLJ and the Purchasers such further certificates and documents as you shall have
requested.
m. On or after the date hereof and prior to the applicable Exempt
Resales Closing Date, (i) there shall not have occurred any downgrading,
suspension or withdrawal of, nor shall any notice have been given of any
potential or intended downgrading, suspension or withdrawal of, or of any review
(or of any potential or intended review) for a possible change that does not
indicate the direction of the possible change in, any rating of the Company or
any securities of the Company (including, without limitation, the placing of any
of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Act , and there shall not have occurred any change,
nor shall any notice have been given of any potential or intended change, in the
outlook for any rating of the Company or any securities of the Company by any
such rating organization;
n. The net proceeds to the Company of the Senior Notes shall be
applied in the manner set forth under the caption "Use of Proceeds" in the
Initial Offering Memorandum on the Closing Date.
30
<PAGE>
o. All transactions and conditions, including any Chilean
governmental and foreign exchange approvals, that are required or contemplated
by the VTR Acquisition, as defined in the Initial Offering Memorandum, to have
been consummated or satisfied at or prior to the Closing Date shall have been
consummated or satisfied prior to or simultaneously with the consummation of the
purchase and sale of the Senior Notes hereunder, including, but not limited to
the approval by all relevant Chilean authorities as required and the
contemplated bank financing.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to DLJ and the Purchasers and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to DLJ, the Purchasers, or counsel for DLJ or the Purchasers, shall be
deemed a representation and warranty by the Company to DLJ and the Purchasers as
to the statements made therein.
8. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective
upon the execution hereof.
9. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the absolute discretion of DLJ and the Purchasers, without
liability on the part of the Purchasers to the Company, by notice to the
Company, if prior the Closing Date, (i) trading in securities generally on the
New York Stock Exchange, American Stock Exchange or Nasdaq National Market shall
have been suspended or materially limited, (ii) general moratorium on commercial
banking activities in New York or Colorado shall have been declared by either
federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostile or other international or domestic calamity, crisis or
change in political, financial or economic condition the effect of which on the
financial markets of the United States is such as to make it, in the judgement
of DLJ or the Purchasers impracticable or inadvisable to commence or continue
the offering of the Senior Notes pursuant to Exempt Resales or to enforce
contracts for the resale of the Senior Notes by DLJ and the Purchasers. Notice
of such termination may be given to the Company by telegram, telecopy telephone
and shall be subsequently confirmed by letter.
10. MISCELLANEOUS. Except as otherwise provided in Sections 4 and 9
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to Company, at the office of the Company
at 4643 South Ulster Street, Denver, Colorado 80237, Attention: Chief Financial
Officer; or (ii) if to the Purchasers, separately and in each case care of
Donaldson, Lufkin & Jenrette Securities Corporation and UIH Funding, 277 Park
Avenue, New York, New York 10172.
This Agreement has been and is made solely for the benefit of DLJ and
the Purchasers, the Company, its directors and officers, and the other
controlling persons referred to in Section 6 hereof and the respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
31
<PAGE>
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Purchasers of any of the Senior Notes in his
status as such purchaser.
11. APPLICABLE LAW: COUNTERPARTS. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b) BUT EXCLUDING (TO THE
GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW
YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR
ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF
THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF
PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
32
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Purchasers.
Very truly yours,
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Michael T. Fries
--------------------------------
Name: Michael T. Fries
Title: President
<PAGE>
The foregoing Note Purchase Agreement is hereby confirmed and accepted as of the
Date first above mentioned.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BY: /s/ Paul Thompson III
----------------------------------
Name: Paul Thompson III
Title:
UIH FUNDING CORP.
BY: /s/ Paul Thompson III
----------------------------------
SALOMON SMITH BARNEY INC.
By: /s/ Robert D. Miller
----------------------------------
Name: Robert D. Miller
Title: Vice President
CHASE SECURITIES INC.
By: /s/ R. Ranocchia
----------------------------------
Name: R. Ranocchia
Title: Managing Director
TD SECURITIES (USA), INC.
By: /s/ Thomas W. Regan
----------------------------------
Name: Thomas W. Regan
Title: Managing Director
<PAGE>
EXHIBIT A
The Initial Offering Memorandum
[EXHIBIT OMITTED]
<PAGE>
EXHIBIT B
Registration Rights Agreement
[FILED SEPERATELY]
<PAGE>
EXHIBIT C
INITIAL PURCHASER PRINCIPAL AMOUNT AT MATURITY
- ----------------- ----------------------------
UIH Funding Corp. $177,500,000
Salomon Smith Barney $ 59,167,000
TD Securities (USA) Inc. $ 59,167,000
Chase Securities Inc. $ 59,166,000
================================================================================
10.875% SENIOR DISCOUNT NOTES DUE 2009
REGISTRATION RIGHTS AGREEMENT
Dated April 29, 1999
by and among
UNITED INTERNATIONAL HOLDINGS, INC.
and
THE INITIAL PURCHASERS NAMED HEREIN
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into this 29th day
of April, 1999, among United International Holdings, Inc., a Delaware
corporation (the "Company"), and UIH Funding Corp., Salomon Smith Barney Inc.,
Chase Securities Inc. and TD Securities (USA) Inc. (the "Initial Purchasers").
This Agreement is made pursuant to the Note Purchase Agreement, dated April
29, 1999, among the Company, Donaldson Lufkin & Jenrette Securities Corporation
and the Initial Purchasers (the "Purchase Agreement"). In connection with the
transactions contemplated by the Purchase Agreement, the Company has agreed to
provide the registration rights provided for in this Agreement to the Initial
Purchasers and its direct and indirect transferees. The execution of this
Agreement is a condition to the closing of the transactions contemplated by the
Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the following
meanings:
ADVICE: As defined in the last paragraph of Section 5 hereof.
Affiliate: With respect to any specified person, "Affiliate" shall mean
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 "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
BUSINESS DAY: Any day except a Saturday, a Sunday or a day on which
banking institutions in the State of New York generally are authorized or
required by law or other government action to be closed.
COMPANY: As defined in the preamble hereof.
CONSUMMATE OR CONSUMMATE: When used to qualify the term "Exchange
Offer" shall mean validly and lawfully to issue and deliver the Exchange Notes
pursuant to the Exchange Offer for all Transfer Restricted Notes validly
tendered and not validly withdrawn pursuant thereto in accordance with the terms
of this Agreement.
CONSUMMATION DATE: The date that is 30 days immediately following the
date that a Registration Statement relative to an Exchange Offer, commenced
pursuant to this Agreement, shall have been declared effective by the SEC.
EFFECTIVENESS PERIOD: As defined in Section 3 hereof.
<PAGE>
EVENT DATE: As defined in Section 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC pursuant thereto.
EXCHANGE DATE: As defined in Section 2(d) hereof.
Exchange Offer: An offer to issue, in exchange for any and all of the
Transfer Restricted Notes, a like aggregate principal amount at maturity of
Exchange Notes, which offer shall be made by the Company pursuant to Section 2
hereof.
EXCHANGE NOTES: The 10.875% Senior Discount Notes due 2009 of the
Company that are identical to the Notes in all material respects, except that
the provisions regarding restrictions on transfer shall be modified, as
appropriate, and the issuance thereof pursuant to the Exchange Offer shall have
been registered pursuant to an effective Registration Statement in compliance
with the Securities Act.
EXCHANGE REGISTRATION STATEMENT: As defined in Section 2(a) hereof.
HOLDER: Each registered holder of any Transfer Restricted Notes.
INDEMNIFIED PERSON: As defined in Section 7(a) hereof.
INDENTURE: The Indenture, dated as of April 29, 1999, between the
Company and Firstar Bank of Minnesota, N.A., as trustee thereunder, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
INITIAL PURCHASERS: As defined in the preamble hereof.
INITIAL RESALE DATE: The date that the Initial Purchasers first resell
any Notes.
LIQUIDATED DAMAGES: As defined in Section 4(a) hereof.
NOTES: The 10.875% Senior Discount Notes due 2009 of the Company issued
pursuant to the Indenture.
PARTICIPATING BROKER-DEALER: As defined in Section 2(e) hereof.
PAYING AGENT: As defined in the Indenture.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Private Exchange: As defined in Section 2(c) hereof.
Private Exchange Notes: As defined in Section 2(c) hereof.
2
<PAGE>
PROCEEDING: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a
deposition),whether commenced or threatened.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Transfer Restricted Notes or the
Exchange Notes covered by such Registration Statement, and all other amendments
and supplements to any such prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
REGISTRATION STATEMENT: Any registration statement of the Company that
covers any of the Notes or the Exchange Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF FILING EVENT: As defined in Section 3 hereof.
3
<PAGE>
SHELF REGISTRATION: As defined in Section 3 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 3 hereof.
SPECIAL COUNSEL: Any special counsel to the Holders, the expenses of
which Holders will be reimbursed for, pursuant to Section 6.
TIA: The Trust Indenture Act of 1939, as amended.
TRANSFER RESTRICTED NOTES: The Notes, upon original issuance thereof,
and at all times subsequent thereto, each Exchange Note as to which Section
3(a)(iii)(B) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) the date on which such Note has been exchanged by a person other
than a broker-dealer for an Exchange Note pursuant to the Exchange Offer, (ii) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 3(a)(iii)(B) hereof is applicable, the Exchange Registration
Statement) covering such Note, Exchange Note or such Private Exchange Note has
been declared effective by the SEC and such Note or such Private Exchange Note,
as the case may be, has been disposed of in accordance with such effective
Registration Statement, (iii) the date on which such Note, Exchange Note or
Private Exchange Note, as the case may be, is distributed to the public pursuant
to Rule 144 (or any similar provisions then in effect) or is saleable pursuant
to Rule 144(k) promulgated by the SEC pursuant to the Securities Act, or (iv)
the date on which such Note, Exchange Note or Private Exchange Note, as the case
may be, ceases to be outstanding for purposes of the Indenture.
TRUSTEE: The trustee under the Indenture and if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
2. EXCHANGE OFFER
--------------
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Company shall (A) prepare and, on or
prior to 60 days after the Initial Resale Date, file with the SEC a Registration
Statement relating to the Exchange Offer under the Securities Act with respect
to an offer by the Company to the Holders to issue and deliver to such Holders,
in exchange for Transfer Restricted Notes (other than Private Exchange Notes, if
any), a like principal amount of corresponding Exchange Notes, (B) use its best
efforts to cause the Registration Statement relating to the Exchange Offer to be
declared effective by the SEC under the Securities Act on or prior to 150 days
after the Initial Resale Date, and (C) unless the Exchange Offer would not then
be permitted by a policy of the SEC, commence the applicable Exchange Offer and
use its best efforts to issue, on or prior to the Consummation Date, the
Exchange Notes. The offer and sale of the Exchange Notes pursuant to the
Exchange Offer shall be registered pursuant to the Securities Act on the
appropriate form (the "Exchange Registration Statement") and duly registered or
qualified under all applicable state securities or Blue Sky laws and will comply
with all applicable tender offer rules and regulations of the Exchange Act and
state securities or Blue Sky laws. The Exchange Offer and the Private Exchange
shall not be subject to any condition, other than that the Exchange Offer and
the Private Exchange, as the case may be, does not violate any applicable law or
4
<PAGE>
interpretation of the staff of the SEC. Upon consummation of the Exchange Offer
in accordance with this Section 2, the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to Transfer Restricted
Notes that are Private Exchange Notes and Exchange Notes held by Participating
Broker-Dealers, and the Company shall have no further obligation to register
Transfer Restricted Notes (other than Private Exchange Notes and other than in
respect of any Exchange Notes as to which clause 3(a)(iii)(B) hereof applies)
pursuant to Section 3 hereof. No securities shall be included in the
Registration Statement covering the Exchange Offer other than the Exchange
Notes.
(b) The Company may require each Holder as a condition to its
participation in the Exchange Offer to represent to the Company and its counsel
in writing (which may be contained in the applicable letter of transmittal) that
at the time of the consummation of the Exchange Offer (i) any Exchange Notes
received by such Holder will be acquired in the ordinary course of its business,
(ii) such Holder will have no arrangement or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the Securities Act and (iii) such Holder is not an Affiliate of the
Company, or if it is an Affiliate of the Company, it will comply with the
registration and prospectus delivery requirements of the Securities Act, to the
extent applicable.
(c) If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having, or which are reasonably
likely to be determined to have, the status of an unsold allotment in the
initial distribution, or any other Holder is not entitled to participate in the
Exchange Offer, the Company upon the request of either the Initial Purchasers or
any such Holder shall, simultaneously with the delivery of the Exchange Notes in
the Exchange Offer, issue and deliver to the Initial Purchasers and any such
Holder, in exchange (the "Private Exchange") for such Notes held by the Initial
Purchasers and any such Holder, a like principal amount at maturity of debt
securities of the Company that are identical in all material respects to the
Exchange Notes (the "Private Exchange Notes") (and which, subject to section
2(h), are issued pursuant to the same indenture as the Exchange Notes). The
Private Exchange Notes, to the extent possible, shall bear the same CUSIP number
as the Exchange Notes.
(d) Unless the Exchange Offer would not be permitted by any applicable
law or interpretation of the staff of the SEC, the Company shall commence the
Exchange Offer (within the time periods set forth herein) by mailing the related
exchange offer prospectus and appropriate accompanying documents, including
appropriate letters of transmittal, to each Holder providing, in addition to
such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Notes validly tendered will be accepted for
exchange;
(ii) the dates of acceptance for exchange (the "Exchange Date"),
which date shall in no event be later than the Consummation Date
(unless otherwise required by applicable law);
(iii) that Holders electing to have a Note exchanged pursuant to
the Exchange Offer will be required to surrender such Note or $1,000
integral multiple portion thereof, together with the enclosed letters
of transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the Exchange Date; and
5
<PAGE>
(iv) that (subject to a notification pursuant to Section 3(a))
Holders that do not tender all such securities pursuant to the
Exchange Offer will no longer have any registration rights hereunder
with respect to securities not tendered (other than with respect to
"Private Exchange Notes").
Promptly after the Exchange Date, the Company shall:
(i) accept for exchange all Notes or portions thereof validly
tendered and not validly withdrawn pursuant to the Exchange Offer or
the Private Exchange; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by
the Company, and issue, or cause the Trustee under the Indenture to
authenticate and mail to each Holder, an Exchange Note or Private
Exchange Note, as the case may be, equal in principal amount at
maturity to the principal amount at maturity of the Notes surrendered
by such Holder.
(e) The Company and the Initial Purchasers acknowledge that the staff
of the SEC has taken the position that any broker-dealer that owns Exchange
Notes that were received by such broker-dealer for its own account in the
Exchange Offer (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
The Company and the Initial Purchasers also acknowledge that
it is the SEC staff's position that if the Prospectus contained in the
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Notes, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligations under the Securities Act in connection with resales of Exchange
Notes for their own accounts, so long as the Prospectus otherwise meets the
requirements of the Securities Act.
In light of the above, notwithstanding the other provisions of this
Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration Statement shall also apply to an Exchange Offer
to the extent, and with such modifications thereto as may be reasonably
requested by the Initial Purchasers or by one or more Participating
Broker-Dealers, in each case as provided in clause (ii) below, as appropriate to
expedite or facilitate the disposition of any Exchange Notes by Participating
Broker-Dealers consistent with the positions of the SEC recited in this Section
2(e); provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Registration Statement, as would otherwise
be contemplated by this Agreement, for a period exceeding one year
after the Consummation Date (as such period may be extended pursuant
to the terms of this Agreement relating to a Shelf Registration) and
Participating Broker-Dealers shall not be authorized by the Company to
deliver and shall not deliver such Prospectus after such period in
connection with the resales contemplated by this Section 2(e); and
6
<PAGE>
(ii) the application of the Shelf Registration procedures set
forth in Section 5 of this Agreement to an Exchange Offer, to the
extent not otherwise required by the positions of the staff of the SEC
or the Securities Act, will be in conformity with the reasonable
request to the Company by any Initial Purchaser or by anyone that
certifies to the Company in writing that such person anticipates that
it will be a Participating Broker-Dealer; and provided, further, that
in connection with such application of the Shelf Registration
procedures set forth in Section 5 of this Agreement to an Exchange
Offer, the Company shall be obliged (x) to deal only with one entity
representing the Participating Broker-Dealers, which shall be DLJ
unless it elects not to act as such representative, (y) to pay the
fees and expenses of only one counsel representing the Participating
Broker-Dealers and (z) to cause to be delivered, if requested,
customary "cold comfort" letters from the Company's independent
accountants with respect to the Prospectus in the form existing on the
Exchange Date and with respect to any subsequent amendment or
supplement, if any, effected during the period specified in clause (i)
above.
(f) The Initial Purchasers shall have no liability to any person with
respect to any request made pursuant to Section 2(e).
(g) Interest on the Exchange Notes and the Private Exchange Notes will
accrue (by which it is meant that the Accreted Value thereof shall continue to
increase) from the date of the original issuance of the Notes.
(h) The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) if necessary, an indenture identical in all
material respects to the Indenture, which in either event shall provide that the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture. The Indenture or such indenture shall provide that the Exchange
Notes, the Private Exchange Notes and the Notes shall vote and consent together
on all matters as one class and that neither the Exchange Notes, the Private
Exchange Notes nor the Notes will have the right to vote or consent as a
separate class on any matter.
3. SHELF REGISTRATION
------------------
(a) If (i) the Company is advised in writing by the staff of the SEC
that it is not permitted to consummate the Exchange Offer because the Exchange
Offer is not permitted by applicable law or SEC policy or (ii) the Company has
not consummated the Exchange Offer within 180 days of the Initial Resale Date or
(iii) any Holder notifies the Company within 135 days after the Initial Resale
Date that (A) due to a change in law or policy it is not entitled to participate
in the Exchange Offer, (B) due to a change in law or policy it may not resell
the Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) it is a broker-dealer that owns Notes (including any Initial
Purchaser who hold Notes as part of an unsold allotment from the original
offering of the Notes) acquired directly from the Company or an Affiliate of the
Company or (iv) any holder of Private Exchange Notes so requests within 135 days
after the consummation of the Private Exchange (each such event referred to in
clauses (i) through (iv), a "Shelf Filing Event"), the Company shall cause to be
filed with the SEC pursuant to Rule 415 a shelf registration statement (the
"Shelf Registration Statement") prior to the later of (a) 180 days after the
Initial Resale Date or (b) 30 days after the occurrence of such Shelf Filing
Event, relating to all such Transfer Restricted Notes (the "Shelf Registration")
7
<PAGE>
the Holders of which have provided the information required pursuant to Section
3(b) hereof; provided that if the Company has not consummated the Exchange Offer
within 180 days of the Initial Resale Date, then the Company will file the Shelf
Registration Statement on or prior to the 181st day after the Initial Resale
Date, and shall use its best efforts to have such Registration Statement
declared effective by the SEC as promptly as practicable, but in no event later
than on or prior to 60 days after such Shelf Registration Statement is required
to be filed. In such circumstances, the Company shall use its best efforts to
keep the Shelf Registration continuously effective under the Securities Act,
until (A) 12 months following the Initial Resale Date (subject to extension
pursuant to the last paragraph of Section 5 hereof) or (B) if sooner, the date
immediately following the date that all Transfer Restricted Notes covered by the
Shelf Registration have been sold pursuant thereto (the "Effectiveness Period");
provided that the Effectiveness Period shall be extended to the extent required
to permit dealers to comply with the applicable prospectus delivery requirements
of Rule 174 and as otherwise provided herein.
(b) No Holder may include any of its Transfer Restricted Notes in any
Shelf Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 20 Business Days after
receipt of a request therefor, such information as the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary prospectus included therein. No Holder shall be
entitled to Liquidated Damages pursuant to Section 4 hereof unless and until
such Holder shall have provided all such reasonably requested information. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
4. LIQUIDATED DAMAGES
------------------
(a) The parties hereto agree that the Holders will suffer damages if
the Company fails to fulfill its obligations pursuant to Section 2 or Section 3,
as applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, in the event that (i) the applicable Registration
Statement is not filed with the SEC on or prior to the 60th day following the
Initial Resale Date, (ii) the applicable Registration Statement has not been
declared effective by the SEC on or prior to the 150th day after the Initial
Resale Date, (iii) the Exchange Offer has become effective but has not been
consummated within 30 days after the date on which the Registration Statement
relating to the Exchange Offer was declared effective or (iv) the applicable
Registration Statement is filed and declared effective but shall thereafter
cease to be effective without being succeeded immediately by any additional
Registration Statement covering either the Notes or the Exchange Notes, as the
case may be, which has been filed and declared effective (each such event
referred to in clauses (i) through (iv), an "Event Date"), the Company agrees to
pay, as liquidated damages, and not as a penalty, to each Holder, an additional
amount (the "Liquidated Damages") equal to (A) during the first 90-day period
beginning on, and including, the Event Date, an amount equal to 0.5% per annum
of the Accreted Value (as defined in the Indenture) of Transfer Restricted Notes
held by such Holder and (B) during each subsequent 90-day period immediately
following the final day of the prior 90-day period, a percentage of the Accreted
Value of Transfer Restricted Notes held by such Holder calculated at the rate
per annum applicable in the immediately preceding 90-day period plus 0.5%,
provided that, the rate at which Liquidated Damages are calculated shall not
exceed 2.5% per annum, and, in all cases, ending on, but excluding (w) in the
case of clause (i) above, the date on which the applicable Registration
Statement is filed, (x) in the case of clause (ii) above, the date on which the
applicable Registration Statement is declared effective, (y) in the case of
8
<PAGE>
clause (iii) above, the date on which the Exchange Offer is consummated or (z)
in the case of clause (iv) above, the date on which the applicable Registration
Statement again becomes effective, as the case may be.
(b) The Company shall notify the Trustee and Paying Agent under the
Indenture immediately upon the happening of each and every Event Date. The
Company shall pay the Liquidated Damages due on the Transfer Restricted Notes by
depositing with the Paying Agent (which shall not be the Company for these
purposes), in trust, for the benefit of the Holders thereof, at least one
Business Day prior to the applicable payment date specified in the following
sentence, sums sufficient to pay the Liquidated Damages then due. The Liquidated
Damages due shall be payable on each [May 15] and [November 15] to Holders of
record of Transfer Restricted Notes on the [May 1] or [November l],
respectively, next preceding such payment date. Each obligation to pay
Liquidated Damages shall be deemed to accrue from and including the applicable
Event Date.
(c) The parties hereto agree that the Liquidated Damages provided for
in this Section 4 constitute a reasonable estimate of the damages that will be
suffered by Holders by reason of the happening of any event described in clauses
(i) through (iv) of Section 4(a).
5. REGISTRATION PROCEDURES
-----------------------
In connection with the Company's registration obligations hereunder,
the Company shall effect such registrations on the appropriate form available
for the sale of the Transfer Restricted Notes or Exchange Notes, as applicable,
to (i) permit the sale of Exchange Notes and (ii) in the case of a Shelf
Registration, permit the sale of Transfer Restricted Notes in accordance with
the method or methods of disposition thereof specified by the Holders of a
majority in aggregate principal amount at maturity of Transfer Restricted Notes
to be included in the Registration Statement, and pursuant thereto the Company
shall as expeditiously as possible:
(a) In the case of a Shelf Registration, no fewer than five Business
Days prior to the initial filing of a Registration Statement or Prospectus and
no fewer than two Business Days prior to the filing of any amendment or
supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), furnish to the Holders, their Special
Counsel and the managing underwriters, if any, copies of all such documents
proposed to be filed, which documents (other than those incorporated or deemed
to be incorporated by reference) will be subject to the review of such Holders,
their Special Counsel and such underwriters, if any, and cause the officers and
directors of the Company, counsel to the Company and independent certified
public accountants to the Company to respond to such inquiries as shall be
necessary, in the opinion of respective counsel to such Holders and such
underwriters, to conduct a reasonable investigation within the meaning of the
Securities Act; provided, however, that the Company shall not be deemed to have
kept a Registration Statement effective during the applicable period if it
voluntarily takes or fails to take any action that results in selling Holders of
the Transfer Restricted Notes covered thereby not being able to sell such
Transfer Restricted Notes pursuant to Federal securities laws during that period
(and the time period during which such Registration Statement is required to
remain effective hereunder shall be extended by the number of days during which
such selling Holders are not able to sell Transfer Restricted Notes). The
Company shall not file any such Shelf Registration Statement or related
Prospectus or any amendments or supplements thereto which the Holders of a
majority of the Transfer Restricted Notes, their Special Counsel, or the
managing underwriters, if any, shall reasonably object on a timely basis;
9
<PAGE>
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all securities covered
by such Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented;
(c) Notify the Holders of Transfer Restricted Notes to be sold or, in
the case of an Exchange Offer, tendered for, their Special Counsel and the
managing underwriters, if any, promptly (and in the case of an event specified
by clause (i)(A) of this paragraph in no event fewer than two Business Days
prior to such filing), and (if requested by any such Person), confirm such
notice in writing, (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment is proposed to be filed, and, (B) with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) in the case of a Shelf Registration, of any request by the SEC
or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information, (iii) of the issuance by the SEC, any state securities commission,
any other governmental agency or any court of any stop order, order or
injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
hereby cease to be true and correct in all material respects, (v) of the receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Transfer Restricted
Notes or Exchange Notes for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (vi) of the happening of any
event or information becoming known that makes any statement made in such Shelf
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in such Shelf Registration Statement,
Prospectus or documents so that, in the case of the Shelf Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, not misleading, and that in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of any order enjoining or suspending the use or
effectiveness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Transfer
Restricted Notes or Exchange Notes for sale in any jurisdiction, at the earliest
practicable moment;
(e) If a Shelf Registration is filed pursuant to Section 3 hereof and
if requested by the managing underwriters, if any, or the Holders of a majority
in aggregate principal amount at maturity of the Transfer Restricted Notes being
sold in connection with such offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such Holders agree should be included therein, and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
10
<PAGE>
required to take any action pursuant to this Section 5(e) that would, in the
opinion of counsel for the Company, violate applicable law;
(f) Furnish to each Holder, their Special Counsel and each managing
underwriter, if any, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
each Holder (including those previously furnished or incorporated by reference)
as soon as practicable after the filing of such documents with the SEC;
(g) Deliver to each Holder, their Special Counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons reasonably request; and the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders and the underwriters, if any, in connection with
the offering and sale of the Transfer Restricted Notes covered by such
Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Transfer Restricted Notes and prior
to the consummation of the Exchange Offer, use its best efforts to register or
qualify or cooperate with the Holders of Transfer Restricted Notes to be sold or
tendered for, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Transfer Restricted Notes or Exchange
Notes for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder or underwriter reasonably
requests in writing; keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Notes or Exchange Notes covered by the applicable Registration
Statement;
(i) In connection with any sale or transfer of Transfer Restricted
Notes that will result in such securities no longer being Transfer Restricted
Notes, cooperate with the Holders and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Notes or Exchange Notes to be sold, which certificates shall
not bear any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company and to enable such Transfer Restricted Notes
or Exchange Notes to be in such denominations and registered in such names as
the managing underwriters, if any, or Holders may request at least two Business
Days prior to any sale of Transfer Restricted Notes or Exchange Notes;
(j) Use its best efforts to cause the offering of the Transfer
Restricted Notes and Exchange Notes covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the underwriters,
if any, to consummate the disposition of such Transfer Restricted Notes and
Exchange Notes, except as may be required solely as a consequence of the nature
of such selling Holder's business, in which case the Company will cooperate in
all reasonable respects with the filing of such Registration Statement and the
granting of such approvals;
(k) Upon the occurrence of any event contemplated by Paragraph
5(c)(vi), as promptly as practicable, prepare a supplement or amendment,
11
<PAGE>
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Notes or Exchange Notes, as applicable, to
provide a CUSIP number for the Transfer Restricted Notes and Exchange Notes, as
applicable;
(m) If a Shelf Registration is filed pursuant to Section 3 hereof,
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all such other
reasonable actions in connection therewith (including those reasonably requested
by the managing underwriters, if any, or the Holders of a majority in aggregate
principal amount at maturity of the Transfer Restricted Notes being sold) in
order to expedite or facilitate the disposition of such Transfer Restricted
Notes, and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Holders of
such Transfer Restricted Notes and the underwriters, if any, with respect to the
business of the Company and its subsidiaries (including with respect to
businesses or assets acquired or to be acquired by any of them), and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are reasonable and customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) obtain
an opinion of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and Special Counsel to the Holders) addressed to
each selling Holder and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) use its best efforts to obtain customary "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed (where reasonably
possible) to each selling Holder and each of the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings;
(iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the selling
Holders and the underwriters, if any, than those set forth in Section 8 hereof
(or such other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of the Transfer Restricted Notes covered by such
Registration Statement and the managing underwriters, if any); and (v) deliver
such documents and certificates as may be reasonably requested by the Holders of
a majority in aggregate principal amount at maturity of the Transfer Restricted
Notes being sold, their Special Counsel and the managing underwriters, if any,
to evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company;
(n) In the case of a Shelf Registration, make available for inspection
by a representative of the Holders of Transfer Restricted Notes being sold, any
underwriter participating in any such disposition of Transfer Restricted Notes,
if any, and any attorney, consultant or accountant retained by such selling
12
<PAGE>
Holders or underwriter, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries (including with respect to
business and assets acquired or to be acquired to the extent that such
information is available to the Company), and cause the officers, directors,
agents and employees of the Company and its subsidiaries (including with respect
to business and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Shelf Registration; provided,
however, that such Persons shall first agree in writing with the Company that
any information that is reasonably and in good faith designated by the Company
in writing as confidential at the time of delivery of such information shall be
kept confidential by such Persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of any Registration Statement or
the use of any prospectus referred to in this Agreement), (iii) such information
becomes generally available to the public other than as a result of a disclosure
or failure to safeguard by such Person or (iv) such information becomes
available to such Person from a source other than the Company and such source is
not bound by a confidentiality agreement;
(o) Provide an indenture trustee for the Transfer Restricted Notes and
the Exchange Notes, as the case may be, and cause the Indenture to be qualified
under the TIA not later than the effective date of the first Registration
Statement relating to the Transfer Restricted Notes or the Exchange Notes, as
applicable; and in connection therewith, cooperate with the trustee under the
Indenture and the Holders, to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all customary documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner;
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to their security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act), no later than 45
days after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Transfer Restricted Notes are sold to underwriters
in a firm commitment or reasonable efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of Rule 158;
(q) In the case of a Shelf Registration, use its best efforts to cause
the Transfer Restricted Notes to be rated with the appropriate rating agencies,
if so requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount at maturity of the Transfer Restricted
Notes;
(r) Cooperate with each seller of Transfer Restricted Notes covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Transfer Restricted Notes and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc.;
13
<PAGE>
(s) Use its best efforts to take all other steps necessary or advisable
to effect the registration of the Exchange Notes and/or Transfer Restricted
Notes covered by a Registration Statement contemplated hereby; and
(t) If an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Notes by such Holders to the Company in exchange for the
Exchange Notes, the Company shall mark, or caused to be marked, on such Transfer
Restricted Notes that such Transfer Restricted Notes are being cancelled in
exchange for the Exchange Notes; in no event shall such Transfer Restricted
Notes be marked as paid or otherwise satisfied.
The Company may require such seller of Transfer Restricted Notes as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Notes as is
required by law to be disclosed in the applicable Registration Statement and the
Company may exclude from such registration the Transfer Restricted Notes of any
seller who fails to furnish such information within a reasonable time after
receiving such request.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar Federal statute then in force, the deletion of the
reference to such Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases to
be required.
In the case of a Shelf Registration pursuant to Section 3 hereof, each
Holder agrees by acquisition of such Transfer Restricted Notes that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iii), 5(c)(v) or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Transfer Restricted Notes
covered by such Registration Statement or Prospectus until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
5(k) hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus. If
the Company shall give any such notice, the Effectiveness Period shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Notes covered by such Registration Statement shall have received (x)
the copies of the supplemented or amended Prospectus contemplated by Section
5(k) hereof or (y) the Advice, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.
6. REGISTRATION EXPENSES
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
any Registration Statement is filed or becomes effective and whether or not any
securities are issued or sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
14
<PAGE>
fees and expenses (A) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (B) in compliance with
securities or Blue Sky laws (including, without limitation and in addition to
that provided for in (b) below, fees and disbursements of counsel for the
underwriters or Holders or holders of Exchange Notes in connection with Blue Sky
qualifications and determination of the eligibility of the Transfer Restricted
Notes or Exchange Notes for investment under the laws of such jurisdictions as
the managing underwriters, if any, or Holders of a majority in aggregate
principal amount at maturity of Transfer Restricted Notes may designate), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing Prospectuses if
the printing of Prospectuses is required by the managing underwriters, if any,
or by the Holders of a majority in principal amount at maturity of the Transfer
Restricted Notes included in or tendered for in connection with any Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders
(plus any local counsel, deemed appropriate by the Holders of a majority in
aggregate principal amount at maturity of the Transfer Restricted Notes), in
accordance with the provisions of Section 6(b) hereof, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(m)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) if required, the fees and expenses of any "qualified
independent underwriter" and its counsel, (vii) Securities Act liability
insurance, if the Company desires such insurance, and (viii) fees and expenses
of all other persons retained by the Company. In addition, the Company shall pay
their internal expenses (including, without limitation, all salaries and
expenses of their officers and employees performing legal or accounting duties),
the expense of any annual audit, and the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange.
(b) In connection with any registration hereunder, the Company shall
reimburse the Holders of the Transfer Restricted Notes being registered or
tendered for in such registration for the reasonable fees and disbursements of
not more than one firm of attorneys representing the selling Holders (in
addition to any local counsel) chosen by the Holders of a majority in aggregate
principal amount at maturity of the Transfer Restricted Notes.
7. INDEMNIFICATION
---------------
(a) The Company agrees to indemnify and hold harmless (i) each Initial
Purchaser, each Holder, each holder of Exchange Notes and each Participating
Broker-Dealer, (ii) each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) any of the foregoing
(any of the persons referred to in this clause (ii) being hereinafter referred
to as a "controlling person"), and (iii) the respective officers, directors,
partners, employees, representatives and agents of the Initial Purchaser, each
Holder, each holder of Exchange Notes, each Participating Broker-Dealer or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Person"), from and against any and
all losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Indemnified Person furnished in writing to the
15
<PAGE>
Company by such Indemnified Person expressly for use therein; provided that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Indemnified Person from whom the person asserting such
losses, claims, damages, liabilities and judgments purchased securities if such
untrue statement or omission or alleged untrue statement or omission made in
such preliminary prospectus is eliminated or remedied in the Prospectus and a
copy of the Prospectus shall not have been furnished to such person in a timely
manner due to the wrongful action or wrongful inaction of such Indemnified
Person.
(b) In case any action shall be brought against any Indemnified Person,
based upon any Registration Statement or any such Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against the
Company, such Indemnified Person shall promptly notify the Company in writing
and the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person and payment of all
fees and expenses. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) the named parties to
any such action (including any impleaded parties) include both such Indemnified
Person and the Company and such Indemnified Person shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Indemnified Person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all such Indemnified Persons, which firm shall be designated
in writing by such Indemnified Persons, and that all such fees and expenses
shall be reimbursed as they are incurred). The Company shall not be liable for
any settlement of any such action effected without its written consent but if
settled with its written consent, the Company agrees to indemnify and hold
harmless any Indemnified Person from and against any loss or liability by reason
of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(c) In connection with any Registration Statement in which a
Holder is participating, such Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and any
person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Indemnified Person but only with
respect to information relating to such Indemnified Person furnished in writing
by or on behalf of such Indemnified Person expressly for use in such
Registration Statement. In any such case in which any action shall be brought
against the Company, any of its directors, any such officer or any person
controlling the Company based on such Registration Statement and in respect of
which indemnity may be sought against any Indemnified Person, the Indemnified
Person shall have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Indemnified Person shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person), and the Company, its
directors, any such officers and any person controlling the Company shall have
the rights and duties given to the Indemnified Person, by Section 7(b) hereof.
16
<PAGE>
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
Indemnified Person on the other hand from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and each such Indemnified Person on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and each such
Indemnified Person on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company or such Indemnified Person and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if the Indemnified Person were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Indemnified Person shall be
required to contribute any amount in excess of the amount by which the net
profit received by it in connection with the sale of the Notes contemplated by
this Agreement exceeds the amount of any damages which such Indemnified Person
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section II (f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Indemnified Persons' obligations to contribute pursuant
to this Section 7(d) are several in proportion to the respective amount of Notes
included in any such Registration Statement by each Indemnified Person and not
joint.
8. RULES 144 AND 144A
------------------
The Company shall use its best efforts to file the reports required to
be filed by it under the Securities Act and the Exchange Act in a timely manner
and, if at any time it is not required to file such reports but in the past had
been required to or did file such reports, it will, upon the request of any
Holder, make available other information as required by, and so long as
necessary to permit, sales of its Transfer Restricted Notes pursuant to Rule
144A. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed
to require the Company to register any of its securities pursuant to the
Exchange Act.
9. UNDERWRITTEN REGISTRATIONS
--------------------------
If any of the Transfer Restricted Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
17
<PAGE>
will be selected by the Holders of a majority in aggregate principal amount at
maturity of such Transfer Restricted Notes included in such offering, subject to
the consent of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such Transfer Restricted Notes on the
basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
10. MISCELLANEOUS
-------------
(a) REMEDIES. In the event of a breach by the Company or by a Holder of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. Subject to Section 4 hereof, the Company and
each Holder agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The Company has not previously entered into any agreement,
which is now effective, granting any registration rights with respect to any of
its debt securities to any person. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
principal amount at maturity of the then outstanding Transfer Restricted Notes,
the Company shall not grant to any person the right to request the Company to
register any of their debt securities under the Securities Act unless the rights
so granted are subject in all respects to the prior rights of the Holders set
forth herein, and are not otherwise in conflict or inconsistent with the
provisions of this Agreement.
(c) NO PIGGYBACK ON REGISTRATIONS. The Company shall not grant to any
of its security holders (other than the Holders in such capacity) the right to
include any securities of the Company in any Shelf Registration or Exchange
Offer other than Transfer Restricted Notes.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, otherwise than with the prior written consent of the Holders of not less
than a majority of the then outstanding aggregate principal amount at maturity
of Transfer Restricted Notes; provided, however, that, for the purposes of this
Agreement, Transfer Restricted Notes that are owned, directly or indirectly, by
the Company or an Affiliate of the Company are deemed not outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other Holders may be
given by Holders of a majority in aggregate principal amount at maturity of the
Transfer Restricted Notes being sold by such Holders pursuant to such
18
<PAGE>
Registration Statement; provided, however, that the provisions of this sentence
may not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(e) NOTICES. All notices and other communications provided for herein
shall be made in writing by hand-delivery, next-day air courier, certified
first-class mail, return receipt requested, telex or facsimile:
(i) if to the Company, as provided in the Purchase Agreement,
(ii) if to the Initial Purchasers, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then a registered Holder, to
the address of such Holder as it appears in the Note register of the
Company.
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: when delivered by hand, if personally
delivered; one business day after being timely delivered to a next-day air
courier; five business days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; and when receipt is acknowledged by
the recipient's telecopier machine, if telecopied.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Notwithstanding the foregoing, no transferee shall have any of the
rights granted under this Agreement until such transferee shall acknowledge its
rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(h) APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT
LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b) AS APPLIED TO CONTRACTS MADE
AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, EXCLUDING (TO THE GREATEST
EXTENT PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
19
<PAGE>
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(i) SEVERABILITY. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provisions of this Agreement, or where any provision hereof or thereof is
validly asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
20
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Michael T. Fries
-----------------------------------
Name: Michael T. Fries
Title: President
<PAGE>
UIH FUNDING CORP.
By: /s/ Paul Thompson III
-----------------------------------
Name: Paul Thompson III
Title: Managing Director
SALOMON SMITH BARNEY INC.
By: /s/ Robert D. Miller
-----------------------------------
Name: Robert D. Miller
Title: Vice President
TD SECURITIES (USA), INC.
By: /s/ Thomas W. Regan
-----------------------------------
Name: Thomas W. Regan
Title: Managing Director
CHASE SECURITIES INC.
By: /s/ R. Ranocchia
-----------------------------------
Name: R. Ranocchia
Title: Managing Director
