<PAGE> 1
The following items were the subject of a Form 12b-25 and
are included herein: Item 14 exhibits.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-1
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [NO FEE REQUIRED] for the fiscal year ended
December 31, 1996 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [NO FEE REQUIRED] for the transition period from
________ to ________
COMMISSION FILE NUMBER 0-20444
PLD TELEKOM INC.
(FORMERLY PETERSBURG LONG DISTANCE INC.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware Applied for
-------- -----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o PLD Management Services Limited
43 Dover Street
London, ENGLAND W1X 3RE
--------------- -------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
COUNTRY CODE 44 (171) 629-3217
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON STOCK, PAR VALUE $.01 PER SHARE Nasdaq National Market
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this report on Form 10-K or any amendment to this
annual report on Form 10-K. /x/
As of March 5, 1997, the aggregate market value of the Common Stock held by
non-affiliates of the registrant was $108,006,272. Such aggregate market value
was computed by reference to the closing sale price of the Common Stock as
reported on the National Market segment of The Nasdaq Stock Market on such date.
For purposes of making this calculation only, the registrant has defined
affiliates as including all directors and beneficial owners of more than five
percent of the Common Stock of the Company.
As of March 5, 1997, there were 31,708,534 shares of the registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
As stated in Part III of this annual report on Form 10-K, portions of the
definitive proxy statement to be filed within 120 days after the end of the
fiscal year covered by this annual report on Form 10-K is incorporated herein by
reference.
<PAGE> 3
ITEM 14 EXHIBITS
This amendment to the Company's Form 10-K for the fiscal year ended
December 31, 1996 (the "1996 Form 10-K") amends and modifies the 1996 Form 10-K
only to amend and restate the exhibit index in its entirety and to reflect the
filing of exhibits not previously filed:
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
2+ Certificate of Domestication.
3.1+ Certificate of Incorporation.
3.2+ By-Laws.
4.1 Indenture dated as of May 31, 1996 among Petersburg Long
Distance Inc., as Issuer, NWE Capital (Cyprus) Limited,
PLD Asset Leasing Limited, PLD Capital Limited, Baltic
Communications Limited and Wireless Technology
Corporations Limited as Guarantors, and The Bank of New
York, as Trustee, with respect to $123,000,000 aggregate
principal amount at stated maturity of 14% Senior
Discount Notes due 2004 (the "Senior Note Indenture")
(including exhibits B, C, D and K only).
4.2 Indenture dated as of May 31, 1996 among Petersburg Long
Distance Inc. as Issuer, NWE Capital (Cyprus) Limited,
PLD Asset Leasing Limited, PLD Capital Limited, Baltic
Communications Limited and Wireless Technology
Corporations Limited as Guarantors, and The Bank of New
York, as Trustee, with respect to $26,500,000 aggregate
principal amount of 9% Convertible Subordinated Notes due
2006 (the "Convertible Note Indenture") (including
exhibit B only).
4.3 Global Note representing 14% Senior Discounted Notes due
2004.
4.4 Global Note representing 9% Convertible Subordinated
Notes due 2006.
4.5 Warrant Certificate of Petersburg Long Distance Inc. for
123,000 Warrants exercisable on or after December 10,
1996 and on or before June 12, 2006.
4.6 Smith Barney Warrant Certificate of Petersburg Long
Distance Inc. for 100,000 Warrants exercisable as to
50,000 Common Shares on or after June 12, 1996 and as to
50,000 Common Shares on or after October 30, 1996 and on
or before April 30, 2001.
4.7 Registration Rights Agreement dated as of May 31, 1996
between Petersburg Long Distance Inc. and Smith Barney
Inc.
4.8 Purchase Agreement dated May 24, 1996 between Petersburg
Long Distance Inc. and Smith Barney Inc. (without
exhibits).
4.9 Warrant Agreement dated as of May 31, 1996 between
Petersburg Long Distance Inc. and The Bank of New York
as Warrant Agent.
4.10 Smith Barney Warrant Agreement dated as of May 31, 1996
between Petersburg Long Distance Inc. and The Bank of
New York as Warrant Agent.
4.11 Company Senior Note Escrow Account Agreement dated as of
May 31, 1996 among The Bank of New York as Escrow Agent,
as Trustee under the Senior Note Indenture, as Trustee
under the Convertible Note Indenture and Petersburg Long
Distance Inc.
4.12 Company Convertible Note Escrow Account Agreement dated
as of May 31, 1996 among The Bank of New York as Escrow
Agent, as Trustee under the Senior Note Indenture, as
Trustee under the Convertible Note Indenture and
Petersburg Long Distance Inc.
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
4.13 Leasing Company Escrow Account Agreement (PLD Asset
Leasing Limited) dated as of May 31, 1996 among The
Bank of New York as Escrow Agent, as Trustee under the
Senior Note Indenture, as Trustee under the Convertible
Note Indenture and PLD Asset Leasing Limited.
4.14 Leasing Company Escrow Account Agreement (PLD Capital
Limited) dated as of May 31, 1996 among The Bank of New
York as Escrow Agent, as Trustee under the Senior Note
Indenture, as Trustee under the Convertible Note
Indenture and PLD Capital Limited.
4.15 Company Senior Note Security and Pledge Agreement dated
as of May 31, 1996 by Petersburg Long Distance Inc. in
favor of The Bank of New York, as Trustee under the
Senior Note Indenture, as Trustee under the Convertible
Note Indenture, and as Collateral Agent.
4.16 Company Convertible Note Security and Pledge Agreement
dated as of May 31, 1996 by Petersburg Long Distance
Inc. in favor of The Bank of New York, as Trustee under
the Convertible Note Indenture, as Trustee under the
Convertible Note Indenture, and as Collateral Agent.
4.17 Leasing Company Security and Pledge Agreement (PLD Asset
Leasing Limited) dated as of May 31, 1996 by PLD Asset
Leasing Limited in favor of The Bank of New York, as
Trustee under the Senior Note Indenture, as Trustee
under the Convertible Note Indenture, and as Collateral
Agent.
4.18 Leasing Company Security and Pledge Agreement (PLD
Capital Limited) dated as of May 31, 1996 by PLD Capital
Limited in favor of The Bank of New York, as Trustee
under the Senior Note Indenture, as Trustee under the
Convertible Note Indenture, and as Collateral Agent.
4.19 NWE Cyprus Senior Note Security and Pledge Agreement
dated as of May 31, 1996 by NWE Capital (Cyprus) Ltd.
in favor of The Bank of New York, as Trustee under the
Senior Note Indenture, as Trustee under the Convertible
Note Indenture, and as Collateral Agent.
10.1 PLD Telekom Inc. Stock Option Plan, as amended.
10.2 Service Agreement between Petersburg Long Distance Inc.
and Newmark Capital Limited dated as of January 1, 1995
(exhibit 2(o) to the Company's Annual Report on Form 20-F
for the year ended December 31, 1995).
10.3 License No. 4904 issued by the RSCC to PeterStar Company
Limited for the provision of local, national and
international telecommunications services via a dedicated
network.
10.4 License No. 4274 issued by the RSCC to PeterStar Company
Limited for the provision of local and intercity
telephone communications services.
10.5 License No. N4199 issued by the RSCC to Teleport-TP for
the provision of local and international telephone
communications.
10.6 License No. N4207 issued by the RSCC to Teleport-TP for
the provision of international telecommunication services
via dedicated network.
10.7 License No. N4437 issued by the RSCC to Teleport-TP for
the provision of international leased lines and circuits
for the transmission of television signals.
21 List of Subsidiaries.
</TABLE>
- -----------------
+ Incorporated by reference to the Company's interim report on Form 8-K, filed
with the Securities and Exchange Commission on March 7, 1997.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in
London, England on April 14, 1997.
PLD TELEKOM INC.
By: /s/ James R. S. Hatt
-----------------------------------------
James R. S. Hatt
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director
- -------------------------------
Ronald R. Cripps
/s/ Simon Edwards Chief Financial Officer April 14, 1997
- ------------------------------- (Principal Financial Officer)
Simon Edwards
/s/ James R. S. Hatt Director, President and April 14, 1997
- ------------------------------- Chief Executive Officer
James R. S. Hatt (Principal Executive Officer)
/s/ David L. Heavenridge Director April 14, 1997
- -------------------------------
David L. Heavenridge
/s/ Timothy P. Lowry Director April 14, 1997
- -------------------------------
Timothy P. Lowry
/s/ Robert Smith Director April 14, 1997
- -------------------------------
Robert Smith
/s/ David M. Stovel Director and Vice Chairman April 14, 1997
- -------------------------------
David M. Stovel
/s/ Richard Wainright-Lee Director April 14, 1997
- -------------------------------
Richard Wainright-Lee
/s/ Clayton A. Waite Director April 14, 1997
- -------------------------------
Clayton A. Waite
/s/ Douglas T. Waite Director April 14, 1997
- -------------------------------
Douglas T. Waite
</TABLE>
<PAGE> 1
EXHIBIT 4.1
- --------------------------------------------------------------------------------
PETERSBURG LONG DISTANCE INC.
as Issuer
and
NWE CAPITAL (CYPRUS) LIMITED
PLD ASSET LEASING LIMITED
PLD CAPITAL LIMITED
BALTIC COMMUNICATIONS LIMITED
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
as Guarantors
$123,000,000
14% SENIOR DISCOUNT NOTES DUE 2004
INDENTURE
Dated as of May 31, 1996
THE BANK OF NEW YORK,
Trustee
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS REFERENCE TABLE
Reconciliation and tie between the Trust Indenture Act of 1939,
as amended, and the Indenture, dated as of May 31, 1996
TRUST
INDENTURE
ACT INDENTURE
SECTION SECTION
Section 310 (a)(1) ....................................... 7.10
(a)(2) ....................................... 7.10
(a)(3) ....................................... N.A.
(a)(4) ....................................... N.A.
(a)(5) ....................................... 7.10
(b) ....................................... 7.8; 7.10
(c) ....................................... N.A.
Section 311 (a) ....................................... 7.11
(b) ....................................... 7.11
(c) ....................................... N.A.
Section 312 (a) ....................................... 7.6(a); 7.6(b)
(b) ....................................... 7.6(c)
(c) ....................................... 7.6(d)
Section 313 (a) ....................................... 7.6(e)
(b) ....................................... N.A.
(c) ....................................... 7.6(e); 7.6(f)
(d) ....................................... 7.6
Section 314 (a) ....................................... 4.20; 4.21
(b) ....................................... 11.2
(c)(1) ....................................... 11.4
(c)(2) ....................................... 11.4
(c)(3) ....................................... N.A.
(d) ....................................... 11.4
(e) ....................................... 11.5
(f) ....................................... N.A
Section 315 (a) ....................................... 7.1(b)
(b) ....................................... 7.5(a)
(c) ....................................... 7.1(a)
(d) ....................................... 7.1(c)
(e) ....................................... 6.10
Section 316 (a) ....................................... 2.8
(a)(1)(A) ....................................... 6.5
(a)(1)(B) ....................................... 6.4
(a)(2) ....................................... N.A.
i
<PAGE> 3
(b) ....................................... 6.7
(c) ....................................... 9.5
Section 317 (a)(1) ....................................... N.A.
(a)(2) ....................................... 6.8
(b) ....................................... 2.4
Section 318 (a) ....................................... 11.1
(b) ....................................... N.A
(c) ....................................... 11.1
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
ii
<PAGE> 4
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions................................................. 1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act........... 26
SECTION 1.3 Rules of Construction....................................... 26
SECTION 1.4 Form of Documents Delivered to Trustee...................... 27
SECTION 1.5 Acts of Holders; Record Dates............................... 28
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating............................................. 30
SECTION 2.2 Execution and Authentication................................ 33
SECTION 2.3 Registrar and Paying Agent.................................. 34
SECTION 2.4 Paying Agent to Hold Money in Trust......................... 35
SECTION 2.5 Global Notes................................................ 35
SECTION 2.6 Transfer and Exchange....................................... 36
SECTION 2.7 Replacement Notes........................................... 39
SECTION 2.8 Outstanding Notes........................................... 40
SECTION 2.9 Temporary Notes............................................. 41
SECTION 2.10 Cancellation............................................... 41
SECTION 2.11 Payment of Interest; Interest Rights Preserved............. 41
SECTION 2.12 Authorized Denominations................................... 42
SECTION 2.13 Computation of Interest, etc............................... 42
SECTION 2.14 Persons Deemed Owners...................................... 43
SECTION 2.15 CUSIP Numbers.............................................. 44
ARTICLE III
REDEMPTION
SECTION 3.1 Notice to Trustee........................................... 44
SECTION 3.2 Selection of Notes to be Redeemed........................... 44
SECTION 3.3 Notice of Redemption........................................ 45
SECTION 3.4 Effect of Notice of Redemption.............................. 46
SECTION 3.5 Deposit of Redemption Price................................. 46
SECTION 3.6 Notes Redeemed in Part...................................... 46
SECTION 3.7 Optional Redemption......................................... 47
SECTION 3.8 Mandatory Redemption........................................ 48
i
<PAGE> 5
PAGE
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes............................................ 48
SECTION 4.2 Maintenance of Office or Agency............................. 48
SECTION 4.3 Money for the Note Payments to be Held in Trust............. 49
SECTION 4.4 Corporate Existence......................................... 49
SECTION 4.5 Maintenance of Property..................................... 50
SECTION 4.6 Payment of Taxes and Other Claims........................... 50
SECTION 4.7 Repurchase at the Option of Holders
upon a Change of Control................................. 50
SECTION 4.8 Limitation on Asset Sales................................... 52
SECTION 4.9 Limitation on Indebtedness.................................. 59
SECTION 4.10 Limitation on Issuances of Guarantees by
Restricted Subsidiaries.................................. 61
SECTION 4.11 Limitation on Liens........................................ 61
SECTION 4.12 Limitation on Sale and Leaseback Transactions.............. 61
SECTION 4.13 Restricted Payments........................................ 62
SECTION 4.14 Limitation on Dividends and
Other Payment Restrictions Affecting
Restricted Subsidiaries.................................. 64
SECTION 4.15 Limitation on Issuance and Sale of
Preferred Stock of Restricted
Subsidiaries............................................. 65
SECTION 4.16 Transactions with Affiliates............................... 65
SECTION 4.17 Restricted and Unrestricted Subsidiaries................... 67
SECTION 4.18 Limitations on Line of Business............................ 67
SECTION 4.19 Limitation on Sales of
Telecommunications Asset Leases or
Qualified Investments.................................... 67
SECTION 4.20 Reports.................................................... 68
SECTION 4.21 Compliance Certificate; Notice of Default
or Event of Default...................................... 68
SECTION 4.22 Payment of Additional Amounts.............................. 69
SECTION 4.23 Leasing Companies and NWE Cyprus........................... 71
SECTION 4.24 Technocom.................................................. 71
SECTION 4.25 Collateral Agents.......................................... 71
SECTION 4.26 WTC........................................................ 71
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.1 Merger, Consolidation, Sale of Assets, Etc.................. 71
SECTION 5.2 Successor Corporation Substituted........................... 73
ii
<PAGE> 6
PAGE
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default........................................... 74
SECTION 6.2 Acceleration................................................ 76
SECTION 6.3 Other Remedies.............................................. 78
SECTION 6.4 Waiver of Past Defaults..................................... 78
SECTION 6.5 Control by Majority......................................... 79
SECTION 6.6 Limitation on Suits......................................... 79
SECTION 6.7 Rights of Holders to Receive Payment........................ 80
SECTION 6.8 Trustee May File Proofs of Claim............................ 80
SECTION 6.9 Priorities.................................................. 81
SECTION 6.10 Undertaking for Costs...................................... 82
SECTION 6.11 Waiver of Stay or Extension Laws........................... 82
SECTION 6.12 Trustee May Enforce Claims
Without Possession of the Notes.......................... 82
SECTION 6.13 Restoration of Rights and Remedies......................... 82
SECTION 6.14 Rights and Remedies Cumulative............................. 82
SECTION 6.15 Delay or Omission Not Waiver............................... 83
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee........................................... 83
SECTION 7.2 Rights of Trustee........................................... 84
SECTION 7.3 Concerning the Trustee, Collateral
Agents, and Collateral Held by
Collateral Agents......................................... 85
SECTION 7.4 Trustee's Disclaimer........................................ 87
SECTION 7.5 Notice of Defaults.......................................... 87
SECTION 7.6 Preservation of Information;
Reports by Trustee to Holders............................. 87
SECTION 7.7 Compensation and Indemnity.................................. 88
SECTION 7.8 Replacement of Trustee...................................... 91
SECTION 7.9 Successor Trustee by Merger................................. 93
SECTION 7.10 Eligibility; Disqualification.............................. 94
SECTION 7.11 Preferential Collection of Claims Against Company.......... 94
ARTICLE VIII
DEFEASANCE
SECTION 8.1 Company's Option to Effect
Legal Defeasance or Covenant Defeasance................... 96
SECTION 8.2 Legal Defeasance and Discharge.............................. 96
SECTION 8.3 Covenant Defeasance......................................... 97
iii
<PAGE> 7
PAGE
SECTION 8.4 Conditions to Defeasance or Covenant Defeasance............. 97
SECTION 8.5 Deposited Money and U.S. Government Obligations
to be Held in Trust: Miscellaneous Provisions............. 99
SECTION 8.6 Repayment to Company........................................ 99
SECTION 8.7 Reinstatement...............................................100
ARTICLE IX
AMENDMENTS
SECTION 9.1 Without Consent of Holders..................................100
SECTION 9.2 With Consent of Holders.....................................101
SECTION 9.3 Effect of Supplemental Indentures...........................102
SECTION 9.4 Compliance with Trust Indenture Act.........................102
SECTION 9.5 Revocation and Effect of Consents and Waivers...............102
SECTION 9.6 Changed Terms of Notes......................................103
SECTION 9.7 Trustee to Execute Supplemental Indentures..................103
SECTION 9.8 Solicitation of Consents....................................104
ARTICLE X
GUARANTEES
SECTION 10.1 Guarantees.................................................104
SECTION 10.2 Limitation of Guarantor's Liability........................106
SECTION 10.3 Execution and Delivery of Guarantees.......................107
SECTION 10.4 When a Guarantor May Merge, etc............................107
SECTION 10.5 Additional Guarantors......................................108
SECTION 10.6 Release of a Guarantor.....................................108
ARTICLE XI
COLLATERAL AND SECURITY
SECTION 11.1 Collateral Documents.......................................109
SECTION 11.2 Recording and Opinions.....................................110
SECTION 11.3 Further Assurances and Security............................111
SECTION 11.4 Possession, Use and Release of Collateral..................111
SECTION 11.5 Certificates of the Company................................119
SECTION 11.6 Authorization of Actions to be Taken by
the Trustee Under the Collateral Documents...............119
SECTION 11.7 Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents...........................119
SECTION 11.8 Possession, Use and Release of
Convertible Note Collateral..............................119
iv
<PAGE> 8
PAGE
ARTICLE XII
SATISFACTION AND DISCHARGE
SECTION 12.1 Satisfaction and Discharge.................................123
SECTION 12.2 Application of Trust Money.................................124
SECTION 12.3 Repayment to the Company...................................124
SECTION 12.4 Reinstatement..............................................125
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls...............................125
SECTION 13.2 Notices....................................................125
SECTION 13.3 Communications by Holders with Other Holders...............126
SECTION 13.4 Certificate and Opinion as to Conditions Precedent.........126
SECTION 13.5 Statements Required in Certificate or Opinion..............126
SECTION 13.6 Rules by Trustee, Paying Agent and Registrar...............127
SECTION 13.7 Payments on Business Days..................................127
SECTION 13.8 Governing Law; Submission to Jurisdiction..................127
SECTION 13.9 Judgment Currency; Currency Indemnity......................128
SECTION 13.10 No Recourse Against Others................................129
SECTION 13.11 Successors................................................129
SECTION 13.12 Counterparts..............................................129
SECTION 13.13 Table of Contents; Headings...............................129
SECTION 13.14 Severability..............................................129
SECTION 13.15 Further Instruments and Acts..............................129
SECTION 13.16 Final Expression..........................................130
SECTION 13.17 Independent Covenants.....................................130
ARTICLE XIV
SUBORDINATION OF NOTES
SECTION 14.1 Notes Subordinated to Senior Indebtedness..................130
SECTION 14.2 Payment Over of Proceeds Upon Dissolution, Etc.............130
EXHIBIT A FORM OF INITIAL GLOBAL NOTE
EXHIBIT B FORM OF INITIAL CERTIFICATED NOTE
EXHIBIT C FORM OF EXCHANGE GLOBAL NOTE
EXHIBIT D FORM OF EXCHANGE CERTIFICATED NOTE
EXHIBIT E REGISTRATION AGREEMENT
EXHIBIT F FORM OF COMPANY SENIOR NOTE SECURITY
AGREEMENT
v
<PAGE> 9
EXHIBIT G FORM OF COMPANY SENIOR NOTE ESCROW
ACCOUNT AGREEMENT
EXHIBIT H FORM OF LEASING COMPANY ESCROW AGREEMENT
EXHIBIT I FORM OF LEASING COMPANY SECURITY
AGREEMENT
EXHIBIT J FORM OF NWE CYPRUS SENIOR NOTE SECURITY
AGREEMENT
EXHIBIT K FORM OF AGENCY AGREEMENT
SCHEDULE 1.1(a) EXISTING INDEBTEDNESS
SCHEDULE 1.1(b) SPECIAL PURPOSES PROVISIONS, FOR LEASING
COMPANIES
SCHEDULE 1.1(c) EXISTING AGREEMENTS TO MAKE INVESTMENTS
SCHEDULE 1.1(d) EXISTING LIENS
SCHEDULE 1.1(e) EXISTING QUALIFIED JOINT VENTURES
SCHEDULE 4.14 EXISTING DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
SCHEDULE 4.16 EXISTING CONTRACTS WITH AFFILIATES
SCHEDULE A SPECIAL INTEREST
vi
<PAGE> 10
INDENTURE, dated as of May 31, 1996, between PETERSBURG LONG DISTANCE
INC., an Ontario corporation (the "Company"), as issuer, NWE CAPITAL (CYPRUS)
LIMITED, a Cypriot corporation ("NWE Cyprus"), PLD ASSET LEASING LIMITED, a
Cypriot corporation ("PLD Leasing"), PLD CAPITAL LIMITED, a Cypriot corporation
("PLD Capital"), WIRELESS TECHNOLOGY CORPORATIONS LIMITED, a British Virgin
Islands corporation ("WTC"), and BALTIC COMMUNICATIONS LIMITED, a Russian joint
stock company of the closed type ("BCL"), as Guarantors, and THE BANK OF NEW
YORK, a New York banking corporation, as trustee hereunder (the "Trustee").
RECITALS
The Company has duly authorized the creation and issue of its 14%
Senior Discount Notes due 2004 (the "Initial Notes") of substantially the tenor
and amount hereinafter set forth; and to provide therefor and for, if and when
issued as further evidence of the Company's indebtedness and in substitution for
the Initial Notes pursuant to this Indenture and the Registration Agreement (as
defined herein), the Company's 14% Senior Discount Notes due 2004 (the "Exchange
Notes," and together with the Initial Notes, the "Notes"), the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid instrument of the Company and the Guarantors, in accordance with their
respective terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and the purchase of the Initial Notes by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
"Accreted Value" of any outstanding Note as of or to any date of
determination prior to December 1, 1998 shall mean an amount equal to the sum of
(i) the issue price of such Note as determined in accordance with Section 1273
of the Code, plus (ii) the aggregate of the portions of the original issue
discount (the excess of the amounts considered as part of the "stated redemption
price at maturity" of such Note within the meaning of Section 1273(a)(2) of the
Code or any successor provisions, whether denominated as principal or interest,
over the issue price of such Note) that shall theretofore have accrued pursuant
to
<PAGE> 11
Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code) from
the date of this Indenture (a) for each six-month or shorter period ending June
1 or December 1 prior to the date of determination and (b) for the shorter
period, if any, from the end of such immediately preceding six-month or shorter
period, as the case may be, to the date of determination plus (iii) accrued and
unpaid interest to the date such Accreted Value is paid (without duplication of
any amount set forth in (ii) above), minus all amounts theretofore paid in
respect of such Note, which amounts are considered as part of the "stated
redemption price at maturity" of such Note within the meaning of Section
1273(a)(2) of the Code or any successor provisions (whether such amounts paid
were denominated principal or interest). On or after December 1, 1998, the
Accreted Value of any outstanding Note will equal the principal amount of such
Note.
"Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
but excluding Indebtedness which is extinguished, retired or repaid in
connection with such other Person merging with or into or becoming a Subsidiary
of such specified Person.
"Act" when used with respect to any Holder, has the meaning set forth
in Section 1.5 hereof.
"Additional Amounts" has the meaning set forth in Section 4.22 hereof.
"Adjusted Net Assets" of a Guarantor at any date means the amount by
which the fair value of the assets and Property of such Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under its
Guarantee, of such Guarantor at such date.
"Affiliate" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person; provided that each Unrestricted Subsidiary shall be deemed to be an
Affiliate of the Company and of each other Subsidiary of the Company; provided
that, except for purposes of Sections 2.8, 4.1 and 10.6 hereof, neither the
Company nor any of its Wholly-Owned Restricted Subsidiaries shall be deemed to
be Affiliates of each other. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "under common
control with," and "controlled by"), and as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise; provided,
further, that beneficial ownership of 10% or more of the Voting Stock of a
Person (on a fully diluted basis) shall be deemed to be control.
2
<PAGE> 12
"Affiliate Transaction" has the meaning set forth in Section 4.16
hereof.
"Agent Member" has the meaning set forth in Section 2.5(a) hereof.
"Aggregate Unused Proceeds" has the meaning set forth in Section 4.8(d)
hereof.
"Asset Sale" means, with respect to any Person, any transfer,
conveyance, sale, lease or other disposition (including, without limitation,
dispositions pursuant to any consolidation, amalgamation or merger) by such
Person or any of its Restricted Subsidiaries to any Person other than to such
Person or a Restricted Subsidiary of such Person, in one transaction, or a
series of related transactions (each hereinafter referred to as a
"Disposition"), of (a) Capital Stock of or other equity interests in any
Restricted Subsidiary (other than directors' qualifying shares), (b) all or
substantially all of the assets of any division or line of business of such
Person or of any of the Restricted Subsidiaries or (c) Property or assets of
such Person or any of its Restricted Subsidiaries, the Fair Market Value of
which exceeds $1,000,000, other than (i) a Disposition of Property in the
ordinary course of business consistent with industry practice, (ii) a
Disposition of Eligible Cash Equivalents, (iii) a Disposition that constitutes a
Restricted Payment permitted under Section 4.13 hereof, (iv) a Disposition by
Technocom of all of its assets and liabilities to a newly-formed corporation
organized in a jurisdiction other than Ireland formed to acquire such assets and
owned in a substantially identical proportion and manner (and the preferential
$20,000,000 dividend and liquidation, dissolution or winding-up rights of the
Technocom Preferred Stock are not changed) as Technocom is owned immediately
prior to such Disposition and such Disposition does not adversely affect the
perfection or priority of the Liens in the Technocom Preferred Stock, (v) a
Disposition by WTC of its interest in BECET to NWE Cyprus, in connection with a
winding-up or liquidation of WTC, and (vi) a Disposition by the Company in
connection with a transaction permitted pursuant to Article V hereof.
"Asset Sale Offer" has the meaning set forth in Section 4.8(c) hereof.
"Asset Sale Payment Date" has the meaning set forth in Section
4.8(e)(ii) hereof.
"Attributable Indebtedness" means, with respect to any Sale and
Leaseback Transaction of any Person, as at the time of determination, the
greater of (i) the capitalized amount in respect of such transaction that would
appear on the balance sheet of such Person in accordance with GAAP and (ii) the
present value (discounted at a rate consistent with accounting guidelines, as
determined in good faith by such Person) of the payments during the remaining
term of the lease (including any period for which such lease has been extended
or may, at the option of the lessor, be extended) or until the earliest date on
which the lessee may terminate such lease without penalty or upon payment of a
penalty (in which case the rental payments shall include such penalty) .
"Average Life" means, as of any date, with respect to any debt security
or Disqualified Stock, the quotient obtained by dividing (i) the sum of the
products of (x) the number of
3
<PAGE> 13
years from such date to the dates of each scheduled principal payment or
redemption payment (including any sinking fund or mandatory redemption payment
requirements) of such debt security or Disqualified Stock multiplied in each
case by (y) the amount of such principal or redemption payment, by (ii) the sum
of all such principal or redemption payments.
"BECET" means BECET International, a Kazak joint stock company of the
closed type.
"Board of Directors" means the Board of Directors of the Company or any
Guarantor or any committee thereof duly authorized to act on behalf of such
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law, executive order or regulation to close.
"Cable & Wireless" means Cable and Wireless plc, an English
corporation.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Indebtedness
arrangement conveying the right to use) real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with GAAP
and the stated maturity thereof shall be the date of the last payment of rent or
any amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Capital Stock" in any Person means any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than Indebtedness convertible into an
equity interest), warrants or options to acquire an equity interest in such
Person.
"Cash Proceeds" means, with respect to any Asset Sale or issuance or
sale of Capital Stock by any Person, the aggregate consideration received in
respect of such sale or issuance by such Person in the form of cash or Eligible
Cash Equivalents; provided that with regard to an Asset Sale, any liabilities
(as shown on the Company's or such Restricted Subsidiary's most recent balance
sheet or in the notes thereto) of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the Notes, the
Guarantees, the Convertible Notes and the guarantees under the Convertible Note
Indenture) which are assumed by the transferee of any such assets and from which
the Company and such Restricted Subsidiary are completely released shall be
deemed Cash Proceeds.
4
<PAGE> 14
"Certificated Notes" means Initial Certificated Notes and Exchange
Certificated Notes.
"Change of Control" shall be deemed to occur if (i) the sale,
conveyance, transfer or lease, whether direct or indirect, of all or
substantially all of the assets of the Company or the Company and the Restricted
Subsidiaries taken as a whole to any "Person" or "group" (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to
either of the foregoing, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of Rule
13d-5(b)(i) under the Exchange Act) (other than any Wholly-Owned Restricted
Subsidiary of the Company) shall have occurred; (ii) any "Person" or "group"
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any
successor provision to either of the foregoing, including any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(i) under the Exchange Act), other than any Permitted Holder,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of more than 50% of the total voting power of all classes of the Voting Stock of
the Company and/or warrants or options to acquire such Voting Stock, calculated
on a fully diluted basis, and such voting power percentage is greater than or
equal to the total voting power percentage then beneficially owned by the
Permitted Holders in the aggregate; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election or appointment by such board 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.
"Change of Control Offer" has the meaning set forth in Section 4.7(a)
hereof.
"Change of Control Payment Date" has the meaning set forth in Section
4.7(b)(ii) hereof.
"Change of Control Purchase Price" has the meaning set forth in Section
4.7(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all "collateral" referred to in the Collateral
Documents and all other Property or assets that become subject to a Lien in
favor of the Trustee or a collateral agent for the benefit of the Trustee and
the Holders of the Notes and, if the Convertible Notes are outstanding and the
Convertible Note Indenture so requires, for the benefit of the Convertible Note
Trustee and the Holders of the Convertible Notes, but Collateral shall not
include Convertible Note Collateral.
"Collateral Documents" means the Company Senior Note Security
Agreement, the Company Senior Note Escrow Account Agreement, the Leasing Company
Security
5
<PAGE> 15
Agreements, the Leasing Company Escrow Account Agreements, the NWE Cyprus Senior
Note Security Agreement and/or any other document creating a Lien that secures
the Notes or the Guarantees other than the Convertible Note Collateral
Documents.
"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this Indenture such commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, the body performing such duties at such time.
"Common Stock" means, with respect to any Person, Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding-up of such Person, to shares of Capital Stock of any
other class of such Person.
"Company" means the party named as such in the preamble to this
Indenture unless and until a successor replaces it pursuant to the applicable
provisions hereof and, thereafter, means such successor.
"Company Order" means a written order signed in the name of the Company
by (i) its Chairman of the Board, its President, its Chief Executive Officer,
its Chief Operating Officer, a Vice Chairman or a Vice President and (ii) its
Chief Financial Officer, its Treasurer, Assistant Treasurer, its Secretary and
an Assistant Secretary.
"Company Senior Note Escrow Account Agreement" means the Company Senior
Note Escrow Account Agreement among the Company, the Trustee, the Convertible
Note Trustee, the Convertible Note Trustee and the escrow agent named therein in
the form attached hereto as Exhibit G.
"Company Senior Note Escrow Account" means the escrow account
established under the Company Senior Note Escrow Account Agreement.
"Company Senior Note Security Agreement" means the Company Senior Note
Security and Pledge Agreement among the Company, the Trustee and the collateral
agent named therein, in the form attached hereto as Exhibit F.
"Consolidated Interest Expense" means, with respect to any Person for
any period, without duplication (A) the sum of (i) the aggregate amount of cash
and non-cash interest expense (including capitalized interest) of such Person
and its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP in respect of Indebtedness (including, without
limitation, (v) any amortization of debt discount, (w) net costs associated with
Interest Hedging Obligations (including any amortization of discounts), (x) the
interest portion of any deferred payment obligation calculated in accordance
with the effective interest method, (y) all accrued interest and (z) all
commissions, discounts and other fees and charges owed with respect to letters
of credit, bankers' acceptances or similar
6
<PAGE> 16
facilities) paid or accrued, or scheduled to be paid or accrued, during such
period; (ii) dividends or distributions with respect to preferred stock or
Disqualified Stock of such Person (and of its Restricted Subsidiaries if paid to
a Person other than such Person or its Restricted Subsidiaries) declared and
payable in cash; (iii) the portion of any rental obligation of such Person or
its Restricted Subsidiaries in respect of any Capital Lease Obligation allocable
to interest expense in accordance with GAAP; (iv) the portion of any rental
obligation of such Person or its Restricted Subsidiaries in respect of any Sale
and Leaseback Transaction allocable to interest expense (determined as if such
were treated as a Capital Lease Obligation); and (v) to the extent any
Indebtedness of any other Person is guaranteed by such Person or any of its
Restricted Subsidiaries, the aggregate amount of interest paid, accrued or
scheduled to be paid or accrued by such other Person during such period
attributable to any such Indebtedness, less (B) to the extent included in (A)
above, amortization or write-off of deferred financing costs of such Person and
its Restricted Subsidiaries during such period and any charge related to any
premium or penalty paid in connection with redeeming or retiring any
Indebtedness of such Person and its Restricted Subsidiaries prior to its stated
maturity; in the case of both (A) and (B) above, after elimination of
intercompany accounts among such Person and its Restricted Subsidiaries and as
determined in accordance with GAAP. For purposes of clause (ii) above, dividend
requirements attributable to any Preferred Stock or Disqualified Stock shall be
deemed to be an amount equal to the amount of dividend requirements on such
Preferred Stock or Disqualified Stock times a fraction, the numerator of which
is the amount of such dividend requirements, and the denominator of which is one
minus the applicable combined federal, state, local and foreign income tax rate
of the Company and its Restricted Subsidiaries (expressed as a decimal), on a
consolidated basis, for the fiscal year immediately preceding the date of the
transaction giving rise to the need to calculate Consolidated Interest Expense.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or net loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis determined in accordance
with GAAP; provided that there shall be excluded therefrom, without duplication,
(i) all items classified as extraordinary, unusual or nonrecurring, (ii) for any
Person (the "Other Person") in which the Person in question or any of its
Restricted Subsidiaries has less than a 100% interest which interest does not
cause the net income of such other Person to be consolidated into the net income
of the Person in question in accordance with GAAP) any net income of such other
Person, except to the extent of the amount of dividends or other distributions
actually paid to such Person or its Restricted Subsidiaries by such other Person
during such period, (iii) the net income of any Person acquired by such Person
or any of its Restricted Subsidiaries in a pooling-of-interests transaction for
any period prior to the date of the related acquisition, (iv) any gain or loss,
net of taxes, realized on the termination of any employee pension benefit plan,
(v) net gains (but not net losses) in respect of Asset Sales by such Person or
its Restricted Subsidiaries, (vi) the net income (but not net loss) of any
Restricted Subsidiary of such Person to the extent that the payment of dividends
or other distributions to such Person is restricted by the terms of its charter
or any agreement, instrument, contract, judgment, order, decree,
7
<PAGE> 17
statute, rule, governmental regulation or otherwise, except for any dividends or
distributions actually paid by such Restricted Subsidiary to such Person, and
(vii) with regard to a non-Wholly-Owned Restricted Subsidiary, any aggregate net
income (or loss) in excess of such Person's or such Restricted Subsidiary's pro
rata share of such non-Wholly-Owned Restricted Subsidiary's net income
(or loss).
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person and its Restricted Subsidiaries, as
determined on a consolidated basis in accordance with GAAP, less amounts
attributable to Disqualified Stock of such Person.
"Convertible Note Collateral" means all "collateral" referred to in the
Convertible Note Collateral Documents and all other Property or assets that
become subject to a Lien in favor of the Convertible Note Trustee or a
collateral agent for the benefit of the Convertible Note Trustee and the holders
of the Convertible Notes and, if the Senior Notes are outstanding and the Senior
Note Indenture so requires, for the benefit of the Senior Note Trustee and the
Holders of the Senior Notes, but Convertible Note Collateral shall not include
the Collateral.
"Convertible Note Collateral Documents" means the Company Convertible
Note Security and Pledge Agreement among the Company, the Convertible Note
Trustee, the Trustee and the collateral agent named therein, the Company
Convertible Note Escrow Account Agreement among the Company, the Convertible
Note Trustee, the Trustee and the escrow agent named therein, and/or any other
document creating a Lien that secures the Convertible Notes other than the
Collateral Documents, all as such documents are defined in or otherwise
described in the Convertible Note Indenture.
"Convertible Note Indenture" means the Indenture, dated the date
hereof, among the Company, the Guarantors and The Bank of New York, as trustee
thereunder, relating to the Convertible Notes, as amended and supplemented from
time to time.
"Convertible Note Trustee" means The Bank of New York, as trustee under
the Convertible Note Indenture and any successor appointed in accordance with
the terms thereof.
"Convertible Notes" means the 9% Convertible Subordinated Notes due
2006 of the Company to be issued pursuant to the Convertible Note Indenture.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date of execution of this Indenture,
located at 101 Barclay Street, Floor 21W, New York, New York 10286, Attention:
Corporate Trust Department.
"Covenant Defeasance" has the meaning set forth in Section 8.3 hereof.
8
<PAGE> 18
"Default" means any event, act or condition, the occurrence of which
is, or after notice or the passage of time or both would be, an Event of
Default.
"Default Amount" has the meaning set forth in Section 6.2 hereof.
"Defaulted Interest" has the meaning set forth in Section 2.11 hereof.
"Defeasance" has the meaning set forth in Section 8.2 hereof.
"Depositary" means The Depository Trust Company, its nominees, and
their respective successors.
"Disposition" has the meaning set forth in the definition of "Asset
Sale" in this Section 1.1.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the date on which
the Notes mature.
"Dominion Resources" means Dominion Resources Inc.
"EBITDA" means, with respect to any Person for any period, the sum for
such Person for such period of Consolidated Net Income plus, to the extent
reflected in the income statement of such Person for such period from which
Consolidated Net Income is determined, without duplication, (i) Consolidated
Interest Expense, (ii) income tax expense of such Person and its consolidated
Subsidiaries, (iii) depreciation expense, (iv) amortization expense, (v) any
non-cash expense related to the issuance to employees of such Person of options
to purchase Capital Stock of such Person and (vi) any charge related to any
premium or penalty paid in connection with redeeming or retiring any
Indebtedness prior to its Stated Maturity and minus, to the extent reflected in
such income statement, any non-cash credits that had the effect of increasing
Consolidated Net Income of such Person for such period.
"Eligible Cash Equivalents" 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,
certificates of deposit, or Eurodollar deposits of any commercial bank organized
in the United States having capital and surplus in excess of $500,000,000 or a
commercial bank organized under the laws of any other country that is a member
of the Organization for Economic Cooperation and Development ("OECD") and has
total assets in excess of $500,000,000 with a maturity date not more than one
year from the date of
9
<PAGE> 19
acquisition, (iii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (ii)
above, (iv) direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing, or subject to tender at the option of the
holder thereof, within ninety days after the date of acquisition thereof and, at
the time of acquisition having a rating of A or better from Standard & Poor's or
A-2 or better from Moody's, (v) commercial paper issued by the parent
corporation of any commercial bank organized in the United States having capital
and surplus in excess of $500,000,000 or a commercial bank organized under the
laws of any other country that is a member of the OECD and has total assets in
excess of $500,000,000 and commercial paper issued by non-bank issuers rated A-1
by Standard & Poor's or P-1 by Moody's and in each case maturing within 270 days
after the date of acquisition, (vi) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States having capital
and surplus in excess of $500,000,000 or a commercial bank organized under the
laws of any other country that is a member of the OECD and has total assets in
excess of $500,000,000, (vii) deposits available for withdrawal on demand with a
commercial bank organized in the United States having capital and surplus in
excess of $500,000,000 or a commercial bank organized under the laws of any
other country that is a member of the OECD and has total assets in excess of
$500,000,000, (viii) investments in money market funds substantially all of
whose assets comprise securities of the types described in clauses (i) through
(vi), and (ix) with respect to a Restricted Subsidiary conducting operations in
the Russian Federation or Kazakstan, demand deposits, certificates of deposit
and bank promissory notes denominated in Russian Roubles or Kazak Tenge, as the
case may be, and used for ordinary course of business operations by such
Restricted Subsidiary solely in the jurisdiction where such Restricted
Subsidiary does business.
"Event of Default" has the meaning set forth in Section 6.1 hereof.
"Excess Proceeds" has the meaning set forth in Section 4.8(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Certificated Notes" means Notes issued in definitive, fully
registered form to beneficial owners of interests in the Exchange Global Note
pursuant to Section 2.6(c) hereof.
"Exchange Global Note" has the meaning set forth in Section 2.1(d)
hereof.
"Exchange Notes" has the meaning set forth in the Recitals to this
Indenture and more particularly means any of the Notes, substantially in the
forms of Exhibits C and D hereto, as applicable, authenticated and delivered
under this Indenture pursuant to the Registered Exchange Offer.
10
<PAGE> 20
"Exchange Rate Obligation" means, with respect to any Person, any
currency swap agreements, forward exchange rate agreements, foreign currency
futures or options, exchange rate collar agreements, exchange rate insurance and
other agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates.
"Excluded Holder" has the meaning set forth in Section 4.22 hereof.
"Existing Indebtedness" means Indebtedness outstanding on the Issue
Date and disclosed in Schedule 1.1(a) attached hereto.
"Fair Market Value" means, with respect to any asset or Property, the
net sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy, as determined in good faith by the
Board of Directors of the Company or a Restricted Subsidiary, as applicable.
"Final Memorandum" means the final Offering Memorandum, dated May 24,
1996, used in connection with the Initial Placement, as supplemented on June 6,
1996.
"Five Year Date" means the fifth anniversary of the Issue Date.
"GAAP" means United States generally accepted accounting principles,
consistently applied, as 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 may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination; provided that, except as otherwise specifically provided, all
calculations made for purposes of determining compliance with the terms of the
provisions of the Indenture shall utilize GAAP as in effect on the Issue Date.
"Global Notes" means the Initial Global Note and the Exchange Global
Note.
"guarantee" means any direct or indirect obligation, contingent or
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner (and
"guaranteed", "guaranteeing" and "guarantor" shall have meanings correlative to
the foregoing).
"Guarantee" means a guarantee of a Guarantor pursuant to Article X.
"Guaranteed Indebtedness" has the meaning set forth in Section 4.10
hereof.
11
<PAGE> 21
"Guarantor" means NWE Cyprus, PLD Leasing, PLD Capital, WTC and BCL,
any other Leasing Company, any Person that becomes a Wholly-Owned Subsidiary of
the Company after the Issue Date and any other Subsidiaries that guarantee any
Indebtedness of an Obligor.
"Holder" means (i) in the case of any Certificated Note, the Person in
whose name such Certificated Note is registered in the Note Register, (ii) in
the case of any Global Note, the Depositary and (iii) in the case of the
Convertible Notes, any Person constituting a Holder (as such term is defined in
the Convertible Note Indenture).
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or obligation on the balance sheet of such Person (and
"incurrence", "incurred", "incurrable" and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness. Indebtedness otherwise
incurred by a Person before it becomes a Restricted Subsidiary of the Company
shall be deemed to have been incurred at the time at which it becomes a
Restricted Subsidiary.
"Indebtedness" means at any time (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with acquisition of
Property, assets or businesses, excluding trade accounts payable made in the
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business, which in either case are not more than 60 days overdue or which are
being contested in good faith), (v) any Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person and, to the extent held by other Persons, the maximum fixed
redemption or repurchase price of Disqualified Stock of such Person's Restricted
Subsidiaries, at the time of determination, (vii) the notional amount of any
Interest Hedging Obligations or Exchange Rate Obligations of such Person at the
time of determination, (viii) any Attributable Indebtedness with respect to any
Sale and Leaseback Transaction to which such Person is a party and (ix) any
obligation of the type referred to in clauses (i) through (viii) of this
definition of another Person and all dividends and distributions of another
Person the payment of which, in either case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise. For purposes of the preceding sentence, the maximum fixed repurchase
price of any Disqualified Stock that does not have a fixed repurchase price
shall
12
<PAGE> 22
be calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were repurchased on any date on which Indebtedness shall be
required to be determined pursuant hereto; provided that if such Disqualified
Stock is not then permitted to be repurchased, the repurchase price shall be the
book value of such Disqualified Stock. The amount of Indebtedness of any Person
at any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any guarantees at
such date; provided that for purposes of calculating the amount of the Notes
outstanding at any date, such amount shall be the Accreted Value thereof as of
such date unless cash interest has commenced to accrue pursuant to the terms of
the Notes, in which case the amount of the Notes outstanding will be determined
pursuant to the terms of the Notes and will not include any accrued and unpaid
cash interest which would otherwise be included in Accreted Value because of
clause (iii) of the definition thereof.
"Indebtedness to Operating Cash Flow Ratio" means, as at any date of
determination, the ratio of (i) the aggregate amount of Indebtedness of the
Company and its Restricted Subsidiaries on a consolidated basis as of the date
of determination to (ii) the aggregate amount of EBITDA of the Company and its
Restricted Subsidiaries for the four preceding fiscal quarters for which
financial information is available immediately prior to the date of
determination; provided that any Indebtedness incurred or retired by the Company
or any of its Restricted Subsidiaries during the fiscal quarter in which the
date of determination occurs shall be calculated as if such Indebtedness was so
incurred or retired on the first day of the fiscal quarter in which the date of
determination occurs; and provided, further, that (x) if the transaction giving
rise to the need to calculate the Indebtedness to Operating Cash Flow Ratio
would have the effect of increasing or decreasing Indebtedness or EBITDA in the
future, Indebtedness or EBITDA shall be calculated on a pro forma basis as if
such transaction had occurred on the first day of such four fiscal quarter
period preceding the date of determination, and (y) if during such four fiscal
quarter period, the Company or any of its Restricted Subsidiaries shall have
engaged in any Asset Sale, EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive), or increased by an amount equal to the EBITDA
(if negative), directly attributable to the assets which are the subject of such
Asset Sale and any related retirement of Indebtedness as if such Asset Sale and
related retirement of Indebtedness had occurred on the first day of such four
fiscal quarter period or (z) if during such four fiscal quarter period the
Company or any of its Restricted Subsidiaries shall have acquired any material
assets outside the ordinary course of business, EBITDA shall be calculated on a
pro forma basis as if such asset acquisition and related financing had occurred
on the first day of such four fiscal quarter period.
"Indenture" means this Indenture as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this Indenture and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Indenture, and any such supplemental indenture,
respectively.
13
<PAGE> 23
"Initial Certificated Notes" means Notes issued in definitive, fully
registered form to beneficial owners of interests in the Initial Global Note
pursuant to Section 2.6(c) hereof.
"Initial Global Note" has the meaning set forth in Section 2.1(c)
hereof.
"Initial Notes" has the meaning set forth in the Recitals to this
Indenture and, more particularly, means any of the Notes, substantially in the
forms of Exhibits A and B hereto, authenticated and delivered under this
Indenture other than pursuant to the Registered Exchange Offer.
"Initial Placement" means the initial sales of the Units by the Initial
Purchaser.
"Initial Purchaser" means the Initial Purchaser, as such term is
defined in the Purchase Agreement.
"Intercompany Notes" means a promissory note representing Indebtedness
of a Restricted Subsidiary owing to the Company or a Restricted Subsidiary,
which, if representing a loan of net proceeds of the Notes to a Leasing Company,
shall have substantially the same Maturity as the Notes and substantially the
same interest payment dates, the same interest rate and substantially the same
covenants as are contained in this Indenture and the Collateral Documents and
shall be secured by the applicable Telecommunications Asset Leases and by the
applicable Qualified Investments.
"Interest Hedging Obligation" means, with respect to any Person, an
obligation of such Person pursuant to any interest rate swap agreement, interest
rate cap, collar or floor agreement or other similar agreement or arrangement
designed to protect against or manage such Person's or any of its Restricted
Subsidiaries' exposure to fluctuations in interest rates.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"International Vendor Indebtedness" means Indebtedness of the Company
or any Restricted Subsidiary other than the Leasing Companies or NWE Cyprus
incurred or assumed in connection with the purchase within 180 days of such
incurrence or assumption of Property or assets to be used in the business of
such Person or any of its Restricted Subsidiaries in the Russian Federation or
Kazakstan; provided that the net cash proceeds from the issuance of such
Indebtedness do not exceed 100% of the lesser of the cost or Fair Market Value
of the Property or assets constructed or acquired.
"Inventory" means, with respect to any Person, all present or future
inventory in which a Person has any interest, including goods, wares and
merchandise held for sale or lease or leased or furnished or to be leased or
furnished under a contract of service and all of a Person's present and future
raw materials, work in process, finished goods, parts,
14
<PAGE> 24
components, assemblies, and packing and shipping materials, wherever located,
and documents of title representing any of the above.
"Investment" in any Person means any direct, indirect or contingent (i)
advance or loan to, guarantee of any Indebtedness of, or extension of credit or
capital contribution to, such Person, (ii) the acquisition of any shares of
Capital Stock, bonds, notes, debentures or other securities of such Person, or
(iii) the acquisition, by purchase or otherwise, of all or substantially all of
the business, assets or stock or other evidence of beneficial ownership of such
Person; provided that Investments shall exclude accounts receivable and other
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices. The amount of an Investment shall be the original cost
of such Investment, plus the cost of all additions thereto and minus the amount
of any portion of such Investment repaid to such Person in cash as a repayment
of principal or a return of capital, as the case may be, but without any other
adjustments for increases or decrease in value, or write-ups, write-downs or
write-offs with respect to such Investment. In determining the amount of any
Investment involving a transfer of any Property other than cash, such Property
shall be valued at its Fair Market Value at the time of such transfer.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under this Indenture, being June 12, 1996.
"Joint Venture" means a Telecommunications Company of which less than
50 percent of the Voting Stock is held by the Company, provided that the
Telecommunications Business of such Person is principally conducted in the
Russian Federation and/or Kazakstan.
"Leasing Company" means a special purpose Cypriot corporation which is
a Guarantor and a Wholly-Owned Restricted Subsidiary organized for the limited
purpose of acquiring Telecommunications Assets and leasing such
Telecommunications Assets to Restricted Subsidiaries pursuant to
Telecommunications Asset Leases and/or making Qualified Investments permitted by
this Indenture. Each Leasing Company will have corporate organizational
documents containing the provisions set forth on Schedule 1.1(b) attached
hereto. Each Leasing Company must execute a Leasing Company Security Agreement
and a Leasing Company Escrow Account Agreement.
"Leasing Company Escrow Account" means an escrow account established
pursuant to a Leasing Company Escrow Account Agreement.
"Leasing Company Escrow Account Agreement" means a Leasing Company
Escrow Account Agreement among the Leasing Company party thereto, the Trustee
and the escrow agent named therein in the form attached hereto as Exhibit H.
"Leasing Company Security Agreement" means a Leasing Company Security
and Pledge Agreement among the Leasing Company party thereto, the Trustee, the
Convertible Note Trustee and the collateral agent named therein, in the form
attached hereto as Exhibit I.
15
<PAGE> 25
"Lien" means, with respect to any Property or other asset, any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien (statutory or other), charge, easement, encumbrance,
preference, priority or other security or similar agreement or preferential
arrangement of any nature whatsoever on or with respect to such Property or
other asset (including, without limitation, any conditional sale or title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Maturity" means, when used with respect to a Note, the date on which
the principal of such Note becomes due and payable as provided therein or in
this Indenture, whether at Stated Maturity, on the Change of Control Payment
Date or purchase date established pursuant to the terms of the Indenture with
regard to a Change of Control Offer or an Asset Sale Offer, as applicable, or by
declaration of acceleration, call for redemption or otherwise.
"Minimum Amount" has the meaning set forth in Section 11.4 hereof.
"Moody's" means Moody's Investors Service, Inc., or, if Moody's
Investors Service, Inc. shall cease rating the specified debt securities and
such ratings business with respect thereto shall have been transferred to a
successor Person, such successor Person; provided that if Moody's Investors
Service, Inc. ceases rating the specified debt securities and its ratings
business with respect thereto shall not have been transferred to any successor
Person or such successor Person is Standard & Poor's, then "Moody's" shall mean
any other nationally recognized rating agency (other than Standard & Poor's)
that rates the specified debt securities selected by the Trustee.
"NASD" means the National Association of Securities Dealers, Inc.
"Navona" means Navona Communications Corporation, Ltd., a wholly-owned
indirect Subsidiary of Cable & Wireless.
"Net Cash Proceeds" means, with respect to the sale of any Property or
assets by any Person or any of its Restricted Subsidiaries, Cash Proceeds (other
than any liabilities assumed by the transferee constituting Cash Proceeds
referred to in the proviso contained in the definition of "Cash Proceeds" set
forth in this Section 1.1) received, net of (i) all reasonable out-of-pocket
expenses of such Person or such Restricted Subsidiary incurred in connection
with such sale, including, without limitation, all legal, title and recording
tax expenses, commissions and other fees and expenses incurred (but excluding
any finder's fee or broker's fee payable to any Affiliate of such Person) and
all federal, state, foreign and local taxes arising in connection with such sale
that are paid or required to be accrued as a liability under GAAP by such Person
or its Restricted Subsidiaries, (ii) all payments made or required to be made by
such Person or its Restricted Subsidiaries on any Indebtedness which is secured
by such Properties or other assets in accordance with the terms of any Lien upon
or with respect to such Properties or other assets or which must, by the terms
of such Lien, or in order to obtain a necessary consent to such transaction or
by applicable law, be
16
<PAGE> 26
repaid in connection with such sale and (iii) all contractually required
distributions and other payments made to minority interest holders (but
excluding distributions and payments to Affiliates of such Person) in Restricted
Subsidiaries of such Person as a result of such transaction; provided that, in
the event that any consideration for a transaction (which would otherwise
constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow; provided, further, that any non-cash consideration received in
connection with any transaction, which is subsequently converted to cash, shall
be deemed to be Net Cash Proceeds at such time, and shall thereafter be applied
in accordance with this Indenture.
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.3 hereto.
"Notes" has the meaning set forth in the Recitals to this Indenture and
more particularly means any of the Notes authenticated and delivered under this
Indenture.
"NWE Cyprus Senior Note Security Agreement" means the NWE Cyprus Senior
Note Security and Pledge Agreement among NWE Cyprus, the Trustee, the
Convertible Note Trustee and the collateral agent named therein, relating to the
pledge of the Capital Stock of WTC, in the form attached hereto as Exhibit J.
"NWE Cyprus" means NWE Capital (Cyprus) Limited, a Cypriot corporation
and Wholly- Owned Subsidiary of the Company.
"Obligors" means the Company and the Guarantors, collectively;
"Obligor" means any of the Obligors, singly.
"Offer Purchase Price" has the meaning set forth in Section 4.8(c)
hereof.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the Chief
Operating Officer, the President or a Vice President, and by the Chief Financial
Officer, the Chief Accounting Officer, the Secretary or an Assistant Secretary
of the Company, a Guarantor or a Restricted Subsidiary, as applicable, and
delivered to the Trustee, which shall comply with this Indenture.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or a Guarantor (including inside counsel of the Company
or a Guarantor), and who shall be acceptable to the Trustee.
17
<PAGE> 27
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any), interest (including Additional Amounts, if
any, and Special Interest, if any) on, or other amounts in respect of, any Notes
on behalf of the Company.
"Permitted Holders" means Cable & Wireless, Navona and Dominion
Resources and their respective Affiliates (other than the Company and the
Restricted Subsidiaries).
"Permitted Investments" means (i) Eligible Cash Equivalents; (ii)
Investments in Property used in the ordinary course of business; (iii)
Investments in any Wholly-Owned Restricted Subsidiary or any Person as a result
of which such Person becomes a Wholly-Owned Restricted Subsidiary, provided that
the aggregate amount of Investments in non-Guarantor Wholly-Owned Subsidiaries
shall be $1,000,000, reduced by any repayments of loans or advances, return of
capital or other distributions of Property but only to the extent that such
repayments, returns or distributions are not included in the calculation of
Consolidated Net Income of the Company); (iv) Investments pursuant to certain
agreements or obligations of the Company or a Restricted Subsidiary, in effect
on the Issue Date, to make such Investments, and disclosed on Schedule 1.1(c)
attached hereto; (v) Investments in the Leasing Companies of funds constituting
the net proceeds of the Notes; (vi) Investments in Restricted Subsidiaries and
Qualified Joint Ventures by the Leasing Companies; provided that such
Investments shall be made as Telecommunications Asset Leases; (vii) Qualified
Investments, if (a) such Qualified Investments are made with no more than
$9,000,000 of net proceeds of the Notes contained in the Company Senior Note
Escrow Account or in Leasing Company Escrow Accounts, and are otherwise made in
compliance with the applicable conditions contained in Section 11.4 hereof, (b)
such Qualified Investments are made with funds in the Leasing Company Escrow
Accounts or, if applicable, the Company Senior Note Escrow Account not
representing net proceeds of the Notes in compliance with the applicable
conditions contained in Section 11.4 hereof, provided that the aggregate amount
of Qualified Investments constituting Capital Stock or other equity pursuant to
this clause (b) shall be $9,000,000 reduced by any return of capital or other
distributions of Property but only to the extent that such returns or
distributions are not included in the calculation of Consolidated Net Income of
the Company, (c) such Qualified Investments are made directly by the Company
with the proceeds of distributions, dividends or payments by Technocom to the
Company or loans by Technocom to the Company, or are utilized by the Company to
make an intercompany loan to a Leasing Company evidenced by an Intercompany Note
(which Leasing Company thereupon shall make such Qualified Investments with the
proceeds of such Investment by the Company so long as such Qualified Investments
are made in compliance with the terms of the Convertible Note Indenture,
provided, that the aggregate amount of Qualified Investments constituting
Capital Stock or other equity that pursuant to this clause (c) shall be
$5,000,000 reduced by any return of capital or other distribution of Property
but only to the extent that such returns or distributions are not included in
the calculation of Consolidated Net Income of the Company, (d) such Qualified
Investment is Capital Stock of a Restricted Subsidiary, which Investment has the
effect of increasing the percentage of ownership interest of the Company or a
Restricted Subsidiary in Capital Stock of such Restricted Subsidiary, or (e)
such
18
<PAGE> 28
Qualified Investment is in a Person that as a result of such Qualified
Investment becomes a Restricted Subsidiary of the Company; (viii) Investments by
Restricted Subsidiaries which are lessees under Telecommunications Asset Leases,
provided that such Investments shall be made as a sublease of the
Telecommunications Assets subject to the Telecommunications Asset Leases to
which such Restricted Subsidiary is a party as lessee; (ix) Investments in
Restricted Subsidiaries, provided that such Investments in excess of an
aggregate principal amount of $5,000,000 shall be made as loans evidenced by
Intercompany Notes or such Investments are Technocom Preferred Stock and are
made with funds constituting proceeds of the Notes; (x) Investments in prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits; (xi) Interest
Hedging Obligations with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding, (xii) Exchange Rate
Obligations, provided that such Exchange Rate Obligations were entered into in
connection with transactions in the ordinary course of business or the
incurrence of Indebtedness that is permitted by the terms of this Indenture to
be outstanding; (xiii) bonds, notes, debentures or other debt securities
received as a result of Asset Sales permitted under Section 4.8 hereof, and
(xiv) Investments in existence on the Issue Date.
"Permitted Liens" means (i) Liens created by this Indenture and the
Collateral Documents or that otherwise secure the payment of the Notes, the
Guarantees and other obligations under this Indenture and the Collateral
Documents, and liens created by the Convertible Note Indenture or the
Convertible Note Collateral Documents or which otherwise secure the payment of
the Convertible Notes and other obligations under the Convertible Note
Indenture, the guarantees contained therein and the Convertible Note Collateral
Documents; (ii) Liens on Property or assets of a Person existing at the time
such Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company or becomes a Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not secure any Property or assets of the Company
or any of its Restricted Subsidiaries other than the Property or assets subject
to the Liens prior to such merger or consolidation; (iii) Liens on Property or
assets existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary, provided that such Liens were not given in contemplation
of such acquisition; (iv) Liens to secure the payment of all or a part of the
purchase price or construction cost of Property or assets acquired or
constructed in the ordinary course of business after the Issue Date, provided
that the Indebtedness secured by such Liens shall not exceed the lesser of 80%
of the cost or Fair Market Value of the Property or assets acquired or
constructed and such Liens shall not extend to any other Property or assets; (v)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases not constituting Capitalized Lease Obligations, statutory or regulatory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business consistent with industry
practice; (vi) Liens existing as of the Issue Date and disclosed in Schedule
1.1(d) attached hereto; (vii) Liens on Receivables and Inventory of the Company
and its Restricted Subsidiaries to secure Indebtedness permitted to be incurred
under clause (i) of Section 4.9(b) hereof; (viii) any Lien on Property of the
19
<PAGE> 29
Company in favor of the United States of America or any state thereof, or any
instrumentality of either, to secure certain payments pursuant to any contract
or statute; (ix) any Lien for taxes or assessments or other governmental charges
or levies not then due and payable (or which, if due and payable, are being
contested in good faith and for which adequate reserves are being maintained, to
the extent required by GAAP); (x) easements, rights-of-way, licenses and other
similar restrictions on the use of Properties or minor imperfections of title
that, in the aggregate, are not material in amount and do not in any case
materially detract from the Properties subject thereto or interfere with the
ordinary conduct of the business of the Company or its Restricted Subsidiaries;
(xi) any Lien to secure obligations under workmen's compensation laws or similar
legislation, including any Lien with respect to judgments which are not
currently dischargeable; (xii) any statutory warehousemen's, materialmen's or
other similar Liens for sums not then due and payable (or which, if due and
payable, are being contested in good faith and with respect to which adequate
reserves are being maintained, to the extent required by GAAP); (xiii) Liens to
secure any International Vendor Indebtedness, provided that such Liens do not
extend to any Property or assets other than the Property or assets the
acquisition of which was financed by such Indebtedness; (xiv) Liens in favor of
the Company or any Wholly-Owned Restricted Subsidiary, including Liens securing
the Intercompany Notes and the Telecommunications Asset Leases; (xv) Liens in
favor of Technocom securing any leases by Technocom of Telecommunications Assets
to its Restricted Subsidiaries; (xvi) Liens in favor of a Restricted Subsidiary
which is a lessee under a Telecommunications Asset Lease securing a sublease of
such Telecommunications Assets to its Restricted Subsidiary, (xvii) Liens
securing reimbursement obligations with respect to letters of credit that
encumber documents and other Property relating to such letters of credit and the
products and proceeds thereof; and (xviii) Liens to secure any permitted
extension, renewal, refinancing or refunding (or successive extensions,
renewals, refinancings or refundings), in whole or in part, of any Indebtedness
secured by Liens referred to in the foregoing clauses (ii) and (iii), provided
that such Liens do not extend to any other Property or assets and the principal
amount of the Indebtedness secured by such Liens is not increased.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"PeterStar" means PeterStar Company Limited, a Russian joint stock
company of the closed typed organized under the laws of the Russian Federation
and a Restricted Subsidiary.
"Pledged Stock" means all of the Capital Stock of each of the Leasing
Companies, BCL, NWE Cyprus, WTC and any other future Wholly-Owned Subsidiary of
the Company or future Guarantor, and any and all dividends, distributions,
payments and proceeds thereof.
"Predecessor Security" means, with respect to any particular Security,
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular
20
<PAGE> 30
Security; and, for the purposes of this definition, any Security authenticated
and delivered under Section 2.7 in exchange for a mutilated Security or in lieu
of a lost, destroyed or stolen Security shall be deemed to evidence the same
debt as the mutilated, lost destroyed or stolen Security.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Private Placement Legend" means the legend in the form set forth in
Section 2.1(e)(i) hereof.
"Process Agent" has the meaning set forth in Section 13.8 hereof.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, excluding Capital Stock in any other Person.
"Purchase Agreement" means the Purchase Agreement relating to the Units
and the Convertible Notes, dated May 24, 1996, between the Company and the
Initial Purchaser.
"Qualified Investment" means an Investment in a Telecommunications
Company primarily engaged or proposing to engage in the Telecommunications
Business in the Russian Federation or Kazakstan.
"Qualified Joint Venture" means a Joint Venture in which the Company
owns directly or indirectly Voting Stock thereof on the Issue Date, which Joint
Ventures are disclosed in Schedule 1.1(e) attached hereto, and any future Joint
Venture in which the Company owns 20% or more of the Voting Stock thereof.
"Qualified Stock" of any Person means a class of Capital Stock other
than Disqualified Stock.
"Receivables" means, with respect to any Person, all of the following
Property and interests in Property of such Person, whether now existing or
existing in the future or hereafter acquired or arising: (i) accounts, (ii)
accounts receivable, including, without limitation, all rights to payment
created by or arising from sales of goods, leases of goods or the rendition of
services no matter how evidenced, whether or not earned by performance, (iii)
all unpaid seller's or lessor's rights including, without limitation,
rescission, replevin, reclamation and stoppage in transit, relating to any of
the foregoing or arising therefrom, (iv) all rights to any goods or merchandise
represented by any of the foregoing after creation of the foregoing, including,
without limitation, returned or repossessed goods, (v) all reserves and credit
balances with respect to any such accounts receivable or account
21
<PAGE> 31
debtors, (vi) all letters of credit, security or guarantees for any of the
foregoing, (vii) all insurance policies or reports relating to any of the
foregoing, (viii) all collection or deposit accounts relating to any of the
foregoing, (ix) all proceeds of any of the foregoing, and (x) all books and
records relating to any of the foregoing.
"Record Date" means, for the interest payable on any Interest Payment
Date, the date specified in Section 2.11 hereof.
"Record Expiration Date" has the meaning set forth in Section 1.5
hereof.
"Redemption Date" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the date fixed for redemption of such Notes
pursuant to the terms of the Notes and this Indenture.
"Redemption Price" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the price fixed for redemption of such Note
pursuant to the terms of the Notes and this Indenture, plus accrued and unpaid
interest thereon, if any (including Additional Amounts, if any, and Special
Interest, if any), to the Redemption Date.
"Refinance" has the meaning set forth in Section 4.9(b)(xii) hereof.
The terms "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means any Indebtedness incurred in
connection with the Refinancing of other Indebtedness.
"Registered Exchange Offer" means an "Exchange Offer" as defined in the
Registration Agreement.
"Registrar" has the meaning set forth in Section 2.3 hereof.
"Registration Agreement" means the Registration Rights Agreement
relating to the Notes, dated as of May 31, 1996, between the Company and the
Initial Purchaser, attached hereto as Exhibit E.
"Related Proceeding" has the meaning set forth in Section 13.8 hereof.
"Required Filing Date" has the meaning set forth in Section 4.20
hereof.
"Replacement Assets" has the meaning set forth in Section 4.8(b)
hereof.
"Replacement Telecommunication Assets" has the meaning set forth in
Section 4.8(b) hereof.
22
<PAGE> 32
"Restricted Payment" means (i) a dividend or other distribution
declared or paid on the Capital Stock of the Company or to the Company's
stockholders (in their capacity as such), or declared or paid to any Person
other than to the Company or any Restricted Subsidiary of the Company on the
Capital Stock of any Restricted Subsidiary of the Company, in each case, other
than dividends, distributions or payments made solely in Qualified Stock of the
Company or such Restricted Subsidiary, (ii) a payment made by the Company or any
of its Restricted Subsidiaries (other than to the Company or any Restricted
Subsidiary of the Company) to purchase, redeem, acquire or retire any Capital
Stock of the Company or of a Restricted Subsidiary of the Company, (iii) a
payment made by the Company or any of its Restricted Subsidiaries (other than a
payment made solely in Qualified Stock of the Company) to redeem, repurchase,
defease (including an in-substance or legal defeasance) or otherwise acquire or
retire for value (including pursuant to mandatory repurchase covenants), prior
to any scheduled maturity, scheduled sinking fund or mandatory redemption
payment, Indebtedness of the Company or such Restricted Subsidiary which is
subordinate (whether pursuant to its terms or by operation of law) in right of
payment to the Notes, or the Guarantees, as applicable) or which was scheduled
to mature on or after the maturity of the Notes or (iv) an Investment in any
Person, including an Unrestricted Subsidiary or the designation of a Subsidiary
as an Unrestricted Subsidiary, other than a Permitted Investment.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been classified as an "Unrestricted Subsidiary."
"Revolving Credit Facilities" means revolving credit agreements to
which the Company and the Restricted Subsidiaries are or become parties, and all
related amendments, notes, collateral documents, guarantees, instruments and
other agreements executed in connection therewith, as the same may be amended,
modified, supplemented, restated, renewed, extended, refinanced, substituted or
replaced from time to time.
"Rule 144" means Rule 144 under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
23
<PAGE> 33
"Senior Indebtedness" means all obligations of the Company under the
Convertible Notes, the Convertible Note Indenture, the guarantees contained in
the Convertible Note Indenture and the Convertible Note Collateral Documents.
"Separation Date" shall mean the first to occur of (i) the commencement
of the Registered Exchange Offer, (ii) a date 180 days after the Issue Date,
(iii) such date as the Initial Purchaser may determine and (iv) in the event of
a Change of Control, the date the Company mails notice thereof to the holders of
the Senior Notes.
"Shelf Registration Statement" has the meaning set forth in the
Registration Agreement.
"Significant Restricted Subsidiary" means a Restricted Subsidiary that
is a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under
the Securities Act and the Exchange Act.
"Special Interest" means (a) such additional interest as is specified
as such in paragraph 4(a) of each Initial Note and the Registration Agreement;
and/or (b) such additional interest as is specified as such in paragraph 4(b) of
each Initial Note and Schedule A to this Indenture.
"Special Record Date" means a date fixed by the Trustee pursuant to
Section 2.11 for the payment of Defaulted Interest.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc., or if Standard & Poor's Ratings Group shall cease rating
the specified debt securities and such ratings ceases with respect thereto shall
have been transferred to a successor Person, such successor Person, provided
that if Standard & Poor's Ratings Group ceases rating the specified debt
securities and its ratings business with respect thereto shall not have been
transferred to any successor Person or such successor Person is Moody's, then
"Standard & Poor's" shall mean any other materially recognized rating agency
selected by the Trustee.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred), and, when used with respect
to any installment of interest on such security, the fixed date on which such
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation
more than 50% of the outstanding shares of Voting Stock of which is owned,
directly or indirectly, by such Person, or by one or more other Subsidiaries of
such Person, or by such Person and one or
24
<PAGE> 34
more other Subsidiaries of such Person, (ii) any general partnership, joint
venture or similar entity, more than 50% of the outstanding partnership or
similar interests of which are owned, directly or indirectly, by such Person, or
by one or more other Subsidiaries of such Person, or by such Person and one or
more other Subsidiaries of such Person, or (iii) any limited partnership of
which such Person or any Subsidiary of such Person is a general partner, and
BECET, provided that the Company owns directly or indirectly 50% of the then
outstanding shares of Voting Stock of BECET.
"Surviving Entity" has the meaning set forth in Section 5.1 hereof.
"Technocom" means Technocom Limited, an Irish corporation and a
Restricted Subsidiary, including any transferee in a Disposition contemplated in
clause (iv) of the definition of "Asset Sale" set forth in this Section 1.1.
"Technocom Preferred Stock" means all Preferred Stock of Technocom
owned directly or indirectly by the Company.
"Telecommunications Asset Lease" means a lease by a Leasing Company of
Telecommunications Assets to Restricted Subsidiaries and Qualified Joint
Ventures in the Russian Federation and Kazakstan, which leases will be
Collateral.
"Telecommunications Assets" means, with respect to any Person, assets
(including, without limitation, rights of way, trademarks and licenses to use
copyrighted material), that are utilized by such Person, directly or indirectly,
in a Telecommunications Business. For purposes of determining a
Telecommunications Company but not for purposes of determining whether Property
or assets may be subject to a Telecommunications Asset Lease, Telecommunications
Assets shall also include stock, joint venture or partnership interests in
another Person, provided that substantially all of the assets of such other
Person consist of Telecommunications Assets, and provided, further, that if such
stock, joint venture or partnership interests are held by the Company or a
Restricted Subsidiary, such other Person either is, or immediately following the
relevant transaction shall become, a Restricted Subsidiary of the Company
pursuant to this Indenture. The determination of what constitutes
Telecommunication Assets shall be made by the Board of Directors of the Company
and evidenced by a Board Resolution delivered to the Trustee.
"Telecommunications Business" means the business of (i) transmitting,
or providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing or
marketing communications related network equipment, software and other devices
for use in (i) above or (iii) evaluating, participating or pursuing any other
activity or opportunity that is related to those specified in (i) or (ii) above
and includes, without limitation, any business which the Company and its
Restricted Subsidiaries are currently engaged on the Issue Date.
25
<PAGE> 35
"Telecommunications Company" means any Person substantially all of the
assets of which consist of Telecommunications Assets.
"Temporary Notes" has the meaning set forth in Section 2.9 hereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture except
as required by Section 9.4 hereof, provided that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939,
as so amended.
"Trust Officer" means any Vice President, Assistant Vice President,
Secretary, Assistant Secretary, Treasurer or Assistant Treasurer of the Trustee
assigned by the Trustee to administer this Indenture or any other officer
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means such successor.
"U.S. Government Obligations" means (x) securities that are (i) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which in either case are not callable or redeemable at the
option of the issuer thereon, and (y) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (x) above and held
by such bank for the account of the holder of such depository receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depository receipt.
"Unit" means a Unit consisting of one Note, in principal amount at
Stated Maturity of $1,000, and one Warrant to purchase 34 Common Shares of the
Company as described in the Purchase Agreement.
"Unit Legend" means the legend in the form set forth in Section
2.1(e)(iii) hereof.
26
<PAGE> 36
"Unrestricted Subsidiary" means any Subsidiary of the Company that the
Company has classified as an "Unrestricted Subsidiary," and that has not been
reclassified as a Restricted Subsidiary, pursuant to the terms of this
Indenture.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.
"Warrant" means a Warrant issued by the Company pursuant to a Warrant
Agreement dated as of May 31, 1996 between the Company and the Bank of New York
as Warrant Agent.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary,
all of the outstanding Capital Stock (other than directors' qualifying shares)
of which are owned, directly or indirectly, by the Company.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms incorporated by reference in
this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or other
obligor on the Notes, if any.
All other Trust Indenture Act terms used or incorporated by reference
in this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act reference to another statute or defined by Commission rule have
the meanings assigned to them therein.
SECTION 1.3 Rules of Construction. Unless context otherwise requires:
27
<PAGE> 37
(a) the words "herein," "hereof" and "hereunder," and other
words of similar import, refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(b) "or" is not exclusive;
(c) a term has the meaning assigned to it;
(d) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(e) words in the singular include the plural, and words in the
plural includes the singular;
(f) provisions apply to successive events and transactions;
(g) the principal amount of any non-interest bearing or other
discount security (other than the Notes), at any date shall be the
principal amount thereof that would be shown on a balance sheet of the
issuer dated such date prepared in accordance with GAAP;
(h) except for the purposes of Section 4.8(d) hereof, when
used with respect to the Notes, the term "principal amount" shall mean
the principal amount thereof at the Stated Maturity of such principal
amount; and
(i) unless otherwise expressly provided herein, the principal
amount of any Preferred Stock shall be the greater of (i) the maximum
liquidation value of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred
Stock.
SECTION 1.4 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or a Guarantor
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion of
counsel or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate
28
<PAGE> 38
or opinion of counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Company or a Guarantor stating that the information with respect to such
factual matters is in the possession of the Company or such Guarantor, as
applicable, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.5 Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company and
the Guarantors. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 7.1) conclusive in favor of
the Trustee, the Company and the Guarantors, if made in the manner provided in
this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
an acknowledgment of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than such signer's individual capacity, such
certificate or affidavit shall also constitute sufficient proof of the signer's
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Notes shall be proved by the Note Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company or the Guarantors
in reliance thereon, whether or not notation of such action is made upon such
Security.
29
<PAGE> 39
The Company may set any day as a record date for the purpose of
determining the Holders of outstanding Notes entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Notes, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
outstanding Notes on such record date, and no other Holders, shall be entitled
to take the relevant actions whether or not such Holders remain Holders after
such record date; provided that no such action shall be effective hereunder
unless taken on or prior to the applicable Record Expiration Date by Holders of
the requisite principal amount of outstanding Notes on such record date; and
provided, further, that for the purpose of determining whether Holders of the
requisite principal amount of such Notes have taken such action, no Note shall
be deemed to have been outstanding on such record date unless it is also
outstanding on the date such action is to become effective. Nothing in this
paragraph shall prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), nor shall anything in
this paragraph be construed to render ineffective any action taken by Holders of
the requisite principal amount of outstanding Notes on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Company at its own expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Record Expiration Date to be given to the
Trustee in writing and to each Holder of Notes in the manner set forth in
Section 13.2 hereof.
The Trustee may set any day as a record date for the purpose of
determining the Holders of outstanding Notes entitled to join in the giving or
making of (i) any notice of Default under Section 6.1(d) or (i) hereof, (ii) any
declaration of acceleration referred to in Section 6.2 hereof, (iii) any request
to institute proceedings referred to in Section 6.6 hereof or (iv) any direction
referred to in Section 6.5 hereof. If any record date is set pursuant to this
paragraph, the Holders of outstanding Notes on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Record Expiration Date by Holders of the requisite
principal amount of outstanding Notes on such record date; and provided,
further, that for the purpose of determining whether Holders of the requisite
principal amount of such Notes have taken such action, no Security shall be
deemed to have been outstanding on such record date unless it is also
outstanding on the date such action is to become effective. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be cancelled and of no
effect), nor shall anything in this paragraph be construed to render ineffective
any action taken by Holders of the requisite principal amount of outstanding
Notes on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the
30
<PAGE> 40
Trustee, at the Company's expense, shall cause notice of such record date, the
matter(s) to be submitted for potential action by Holders and the applicable
Record Expiration Date to be given to the Company in writing and to each Holder
of Notes in the manner set forth in Section 13.2 hereof.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Record
Expiration Date" and from time to time may change the Record Expiration Date to
any earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Record Expiration Date is given to the other party
hereto in writing, and to each Holder of Notes in the manner set forth in
Section 13.2 hereof, on or before the existing Record Expiration Date. If a
Record Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto that set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Record Expiration Date with respect thereto, subject to its right to change the
Record Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Record Expiration Date shall be later than the 180th day after the
applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Note may do so with regard to all
or any part of the principal amount of such Note or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating.
(a) The Initial Notes, with the notation of the Guarantees endorsed
thereon and the certificate of authentication of the Trustee thereon, shall be
substantially in the form of Exhibit A or Exhibit B hereto, as applicable, which
are hereby incorporated in and expressly made a part of this Indenture. The
Exchange Notes, with the notation of the Guarantees endorsed thereon and the
certificate of authentication of the Trustee thereon, shall be substantially in
the form of Exhibit C or Exhibit D hereto, as applicable, which are hereby
incorporated in and expressly made a part of this Indenture.
(b) The Notes may have such letters, numbers or other marks of
identification and such legends and endorsements, stamped, printed, lithographed
or engraved thereon, (i) as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, (ii) as may be required to
comply with this Indenture, any law or any rule of any securities exchange on
which the Notes may be listed and (iii) as may be necessary to
31
<PAGE> 41
conform to customary usage. Each Note shall be dated the date of its
authentication by the Trustee.
(c) Initial Notes, with the notation of the Guarantees endorsed
thereon, shall be issued initially in the form of a permanent, global note in
definitive, fully registered form, without coupons, substantially in the form of
Exhibit A hereto (the "Initial Global Note"). Upon issuance, such Initial Global
Note shall be duly executed by the Company, with the endorsement of Guarantees
thereon executed by the Guarantors, and authenticated by the Trustee as
hereinafter provided and deposited with the Trustee as custodian for the
Depositary. Any Initial Certificated Note that may be issued pursuant to Section
2.6(c) hereof, shall be issued in the form of a note in definitive, fully
registered form, without coupons, substantially in the form set forth in Exhibit
B hereof. Upon issuance, any such Initial Certificated Note shall be duly
executed by the Company, with the endorsement of Guarantees therein executed by
the Guarantors, and authenticated by the Trustee as hereinafter provided.
(d) In the event Exchange Notes are issued pursuant to a Registered
Exchange Offer in substitution for Initial Notes held in the form of the Initial
Global Note, such Exchange Notes shall be issued initially in the form of a
permanent global note in definitive, fully registered form, without coupons,
substantially in the form set forth in Exhibit C hereto (the "Exchange Global
Note"). Upon issuance, such Exchange Global Note shall be duly executed by the
Company, with the endorsement of Guarantees therein executed by the Guarantors,
and authenticated by the Trustee as hereinafter provided and deposited with the
Trustee as custodian for the Depositary. Any Exchange Certificated Note that may
be issued pursuant to Section 2.6(c) hereof or in substitution for Initial
Certificated Notes pursuant to a Registered Exchange Offer shall be issued in
the form of a note in definitive, fully registered form, without coupons,
substantially in the form set forth in Exhibit D hereto. Upon issuance, any such
Exchange Certificated Notes shall be duly executed by the Company, with the
endorsement of Guarantees therein executed by the Guarantors, and authenticated
by the Trustee as hereinafter provided.
(e) The following legends shall appear on each Global Note and each
Certificated Note as indicated below:
(i) Except as provided in Section 2.6(a)(iii) hereof, each
Initial Global Note and Initial Certificated Note shall bear the
following legend on the face thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
32
<PAGE> 42
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE
144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE)
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES AND THE PROVINCES OF CANADA.
(ii) Each Global Note shall bear the following legend on the
face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO
PETERSBURG LONG DISTANCE INC. OR THE REGISTRAR FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS HAS BEEN
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.6 OF THE INDENTURE, DATED AS OF MAY 31,
1996, AMONG PETERSBURG LONG DISTANCE INC., CERTAIN
CORPORATIONS ACTING AS GUARANTORS AND NAMED THEREIN AND THE
TRUSTEE NAMED THEREIN, PURSUANT TO WHICH THIS NOTE WAS ISSUED.
(iii) Except as provided in Section 2.6(j) hereof, each
Initial Global Note and Initial Certificated Note shall bear the
following legend on the face thereof:
33
<PAGE> 43
THE NOTES EVIDENCED HEREBY WERE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL
AMOUNT AT STATED MATURITY OF 14% SENIOR DISCOUNT NOTES DUE
2004 OF PETERSBURG LONG DISTANCE INC. (THE "NOTES") AND ONE
WARRANT (THE "WARRANTS") EACH ENTITLING THE HOLDER THEREOF TO
PURCHASE 34 COMMON SHARES WITHOUT NOMINAL OR PAR VALUE OF
PETERSBURG LONG DISTANCE INC. PRIOR TO THE EARLIEST TO OCCUR
OF (A) 180 DAYS AFTER THE DATE OF ORIGINAL ISSUANCE OF THE
UNITS, (B) THE COMMENCEMENT OF A REGISTERED EXCHANGE OFFER FOR
THE NOTES, (C) SUCH DATE AS THE INITIAL PURCHASER MAY
DETERMINE AND (D) IN THE EVENT OF A CHANGE OF CONTROL, THE
DATE ON WHICH THE COMPANY MAILS NOTICE THEREOF TO THE HOLDERS
OF THE NOTES, THE NOTES EVIDENCED HEREBY MAY NOT BE
TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE WARRANTS.
(f) Definitive Notes shall be typed, printed, lithographed or engraved
or produced by any combination of such methods or produced in any other manner
permitted by the rules of any securities exchange on which such Notes may be
listed, all as determined by the officers of the Company executing such Notes,
as evidenced by their execution of such Notes.
SECTION 2.2 Execution and Authentication. The Notes may be issued in
two series, a series of Initial Notes and a series of Exchange Notes. The
aggregate principal amount at Stated Maturity of Notes outstanding at any time
shall not exceed $123,000,000 except as provided in Section 2.7 hereof. The
Notes shall be executed by manual or facsimile signature on behalf of the
Company by two of the following officers of the Company: Chief Executive
Officer, its Chief Operating Officer, its President, its Chief Financial Officer
or any Vice President or either its Secretary or any Assistant Secretary (but
not both). The Company's corporate seal shall be reproduced or imprinted on the
Notes by facsimile or otherwise. The Notes shall have the notation relating to
the Guarantees executed by each Guarantor in the manner provided for in Section
10.3 hereof and endorsed thereon.
In case any officer of the Company whose signature shall have been
placed upon any of the Notes shall cease to be such officer of the Company
before authentication of such Notes by the Trustee and the issuance and delivery
thereof, such Notes may, nevertheless, be authenticated by the Trustee and
issued and delivered with the same force and effect as though such Person had
not ceased to be such officer of the Company.
34
<PAGE> 44
Notwithstanding any other provision hereof, the Trustee shall
authenticate and deliver Notes only upon receipt by the Trustee of an Officers'
Certificate and Opinion of Counsel complying with Sections 13.4 and 13.5 hereof
with respect to satisfaction of all conditions precedent contained in this
Indenture to authentication and delivery of such Notes.
Upon compliance by the Company with the provisions of the previous
paragraph, the Trustee shall, upon receipt of a Company Order requesting such
action, authenticate (a) Initial Notes for original issuance in an aggregate
principal amount at Stated Maturity not to exceed $123,000,000 in the form of
the Initial Global Note or (b) Exchange Notes for issuance pursuant to a
Registered Exchange Offer for Initial Notes in a principal amount equal to the
principal amount of Initial Notes replaced in such Registered Exchange Offer.
Such Company Order shall specify the amount of Notes to be authenticated and the
date on which, in the case of clause (a) above, the Initial Notes or, in the
case of clause (b) above, the Exchange Notes, are to be authenticated and shall
further provide instructions concerning registration, amounts for each Holder
and delivery.
Upon the occurrence of any event specified in Section 2.6(c) hereof and
compliance by the Company with the provisions of the paragraph preceding the
immediately preceding paragraph, the Company shall execute and the Trustee shall
authenticate and deliver to each beneficial owner identified by the Depositary,
in exchange for such beneficial owner's interest in the Initial Global Note or
Exchange Global Note, as the case may be, Initial Certificated Notes or Exchange
Certificated Notes, as the case may be, representing Notes theretofore
represented by the Initial Global Note or Exchange Global Note, as the case may
be.
A Note shall not be valid or entitled to any benefit under this
Indenture or obligatory for any purpose unless appropriately executed by the
Company and the Guarantors and authenticated by the manual signature of the
Trustee as provided herein. The signature of an authorized officer of the
Trustee shall be conclusive evidence, and the only evidence, that such Note has
been authenticated and delivered under this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference to this Indenture to authentication by the Trustee
includes authentication by such agent. Any authenticating agent of the Trustee
shall have the same rights hereunder as any Registrar or Paying Agent.
SECTION 2.3 Registrar and Paying Agent. The Company shall maintain,
pursuant to Section 4.2 hereof, an office or agency where the Notes may be
presented or surrendered for payment, or surrendered for registration of
transfer or for exchange. The Company shall cause to be kept at such office a
register (the register maintained in such office being herein sometimes referred
to as the "Note Register") in which, subject to such reasonable
35
<PAGE> 45
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes entitled to be registered or transferred as
provided herein. The Trustee, at its Corporate Trust Office, is initially
appointed "Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided, and as "Paying Agent" for the payment of principal of
(and premium, if any), interest (including Additional Amounts if any, and
Special Interest, if any) on, or other amounts in respect of the Notes as
provided herein. The Company may, upon written notice to the Trustee, change the
designation of the Trustee as Registrar or Paying Agent and appoint another
Person to act as Registrar for purposes of this Indenture except that, for the
purposes of Article III, Article XII and Sections 4.7 and 4.8, none of the
Company, any Guarantor, any Restricted Subsidiary or any Affiliate of the
Company or of any Guarantor shall act as Paying Agent. If any Person other than
the Trustee acts as Registrar, the Trustee shall have the right at any time,
upon reasonable notice, to inspect or examine the Note Register and to make such
inquiries of the Registrar as the Trustee shall in its discretion deem necessary
or desirable in performing its duties hereunder.
The Company shall enter into an appropriate agreement with any Person
designated by the Company as Registrar or Paying Agent that is not a party to
this Indenture, which agreement shall incorporate the provisions of the Trust
Indenture Act and shall implement the provisions of this Indenture that relate
to such Registrar or Paying Agent. Prior to the designation of any such Person,
the Company shall, by written notice (which notice shall include the name and
address of such Person), inform the Trustee of such designation. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such.
Upon surrender for registration of transfer of any Note at an office or
agency of the Company designated for such purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Initial Notes or Exchange Notes, as
the case may be, of any authorized denomination or denominations, of like tenor
and aggregate principal amount, all as requested by the transferor.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee or the Registrar) be
duly endorsed, or be accompanied by a duly executed instrument of transfer in
form satisfactory to the Company, the Trustee and the Registrar, by the Holder
thereof or such Holder's attorney duly authorized in writing.
SECTION 2.4 Paying Agent to Hold Money in Trust. On or prior to each
due date of the principal, premium, any payment of interest or any other amount
due with respect to any Note, the Company shall deposit with the Paying Agent a
sum sufficient to pay such principal, premium, interest or other amount when so
becoming due.
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent (i) shall hold in trust for the benefit
of Holders or the
36
<PAGE> 46
Trustee all money held by such Paying Agent for the payment of principal,
premium, interest (including Additional Amounts, if any, and Special Interest,
if any) or other amount due with respect to the Notes (whether such money has
been distributed to it by the Company, a Guarantor or any other Obligor), (ii)
shall notify the Trustee of any default by the Company in making any such
payment and (iii) at any time during the continuance of any such default, upon
the written request of the Trustee, shall forthwith pay to the Trustee all sums
held in trust by such Paying Agent.
The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section 2.4, the Paying Agent shall have no
further liability for the money delivered to the Trustee.
SECTION 2.5 Global Notes.
(a) So long as a Global Note is registered in the name of the
Depositary or its nominee, beneficial owners, members of, or participants in,
the Depositary ("Agent Members") shall have no rights under this Indenture with
respect to the Global Note held on their behalf by the Depositary or the Trustee
as its custodian, and the Depositary may be treated by the Company, the
Guarantors, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Note for all purposes. Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (ii) impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of
Notes.
(b) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in such Global Note through Agent Members, to take any action which a
Holder of Notes is entitled to take under this Indenture or the Notes.
(c) Whenever, as a result of an optional redemption of Notes by the
Company, a Change of Control Offer, an Asset Sale Offer, a Registered Exchange
Offer or an exchange pursuant to the second sentence of Section 2.6(c) hereof, a
Global Note is redeemed, repurchased or exchanged in part, such Global Note
shall be surrendered by the Holder thereof to the Trustee who shall cause an
adjustment to be made to Schedule A thereof so that the principal amount at
Stated Maturity of such Global Note will be equal to the portion of such Global
Note not redeemed, repurchased or exchanged and shall thereafter return such
Global Note to such Holder, provided that each such Global Note shall be in a
principal amount at Stated Maturity of $1,000 or an integral multiple thereof.
SECTION 2.6 Transfer and Exchange.
37
<PAGE> 47
(a) The provisions of this paragraph (a) are applicable only to Initial
Notes:
(i) By its acceptance of any Initial Note represented by a
certificate bearing the Private Placement Legend, each Holder of, and
beneficial owner of an interest in, such Initial Note acknowledges the
restrictions on transfer of such Initial Note set forth in the Private
Placement Legend and under the heading "Transfer Restrictions" in the
Final Memorandum and agrees that it will transfer such Initial Note
only in accordance with the Private Placement Legend and the
restrictions set forth under the heading "Transfer Restrictions" in the
Final Memorandum.
(ii) In connection with any transfer of an Initial Note
bearing the Private Placement Legend, each Holder agrees to deliver to
the Company such satisfactory evidence, which may include an opinion of
independent counsel licensed to practice law in the State of New York,
as reasonably may be requested by the Company or by the Trustee to
confirm that such transfer is being made in accordance with the
limitations set forth in the Private Placement Legend. In the event the
Company determines that any such transfer is not in accordance with the
Private Placement Legend, the Company shall so inform the Registrar
which shall not register such transfer; provided that the Registrar
shall not be required to determine (but may rely on a determination
made by the Company with respect to) the sufficiency of any such
evidence.
(iii) Upon the registration of transfer, exchange or
replacement of an Initial Note not bearing the Private Placement
Legend, the Trustee shall deliver an Initial Note or Initial Notes that
do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of an Initial Note bearing the Private Placement Legend,
the Trustee shall deliver an Initial Note or Initial Notes bearing the
Private Placement Legend, unless such legend may be removed from such
Note as provided in the next sentence. The Private Placement Legend may
be removed from an Initial Note if there is delivered to the Company
and the Trustee such satisfactory evidence, which may include an
opinion of independent counsel licensed to practice law in the State of
New York, as reasonably may be requested by the Company to confirm that
neither such legend nor the restrictions on transfer set forth therein
are required to ensure that transfers of such Initial Note will not
violate the registration and prospectus delivery requirements of the
Securities Act and, if the transferee is a resident of Canada, of the
securities laws of the applicable province of Canada; provided that the
Trustee shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of
any such evidence. Upon provision of such evidence, the Trustee shall
authenticate and deliver in exchange for such Initial Note, an Initial
Note or Initial Notes (representing the same aggregate principal amount
of the Initial Note being exchanged) without such legend. If the
Private Placement Legend has been removed from an Initial Note, as
provided above, no other Initial Note issued in exchange for all or any
part of such Initial Note shall bear such legend, unless the Company
has
38
<PAGE> 48
reasonable cause to believe that such other Initial Note represents a
"restricted security" within the meaning of Rule 144 and instructs the
Trustee in writing to cause a legend to appear thereon.
(iv) The Company shall deliver to the Trustee, and the Trustee
shall retain for two years, copies of all documents received pursuant
to this Section 2.6(a). The Company shall have the right to inspect and
make copies of all such documents at any reasonable time upon the
giving of reasonable written notice to the Trustee.
(b) Any Initial Notes which are presented to the Registrar for
replacement pursuant to a Registered Exchange Offer shall be replaced by
Exchange Notes of equal principal amount at Stated Maturity upon surrender to
the Registrar of the Initial Notes to be replaced in accordance with the terms
of the Registered Exchange Offer; provided that the Initial Notes so surrendered
for replacement are duly endorsed and accompanied by a letter of transmittal or
written instrument of transfer in form satisfactory to the Company, the Trustee
and the Registrar and duly executed by the Holder thereof or such Holder's
attorney who shall be duly authorized in writing to execute such document on the
behalf of such Holder. Whenever any Initial Notes are so surrendered for
replacement, the Company shall execute, and the Trustee shall authenticate and
deliver to the surrendering Holder thereof, Exchange Notes in the same aggregate
principal amount at Stated Maturity as the Initial Notes so surrendered.
(c) The Initial Global Note or Exchange Global Note, as the case may
be, shall be exchanged by the Company for one or more Initial Certificated Notes
or Exchange Certificated Notes, as the case may be, if (x) the Depositary (i)
has notified the Company that it is unwilling or unable to continue as, or
ceases to be, a "Clearing Agency" registered under Section 17A of the Exchange
Act and (ii) a successor to the Depositary registered as a "Clearing Agency"
under Section 17A of the Exchange Act is not able to be appointed by the Company
within 90 calendar days or (y) the Depositary is at any time unwilling or unable
to continue as Depositary and a successor to the Depositary is not able to be
appointed by the Company within 90 calendar days. If an Event of Default occurs
and is continuing, the Company shall, at the request of the Holder thereof,
exchange all or part of the Initial Global Note or Exchange Global Note, as the
case may be, for one or more Initial Certificated Notes or Exchange Certificated
Notes, as the case may be; provided that the principal amount at Stated Maturity
of each of such Initial Certificated Notes or Exchange Certificated Notes, as
the case may be, and such Global Note, after such exchange, shall be $1,000 or
an integral multiple thereof. Whenever a Global Note is exchanged as a whole for
one or more Initial Certificated Notes or Exchange Certificated Notes, as the
case may be, it shall be surrendered by the Holder thereof to the Trustee for
cancellation. Whenever a Global Note is exchanged in part for one or more
Initial Certificated Notes or Exchange Certificated Notes, as the case may be,
it shall be surrendered by the Holder thereof to the Trustee and the Trustee
shall make the appropriate notations to Schedule A thereof pursuant to Section
2.5(c) hereof. All Initial Certificated Notes or Exchange Certificated Notes, as
the case may be, issued in exchange
39
<PAGE> 49
for a Global Note or any portion thereof shall be registered in such names, and
delivered, as the Depositary shall instruct the Trustee. Any Initial
Certificated Notes issued pursuant to this Section 2.6(c) shall include (i) the
Private Placement Legend, except as set forth in Section 2.6(a)(iii) hereof, and
(ii) the Unit Legend except as set forth in Section 2.6(j) hereof. Interests in
a Global Note may not be exchanged for Certificated Notes other than as provided
in this Section 2.6(c).
(d) A Holder may transfer a Note only upon the surrender of such Note
for registration of transfer. No such transfer shall be effected until, and the
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer in the Note Register by the Registrar. When
Notes are presented to the Registrar with a request to register the transfer of,
or to exchange, such Notes, the Registrar shall register the transfer or make
such exchange as requested if its requirements for such transactions and any
applicable requirements hereunder are satisfied. To permit registrations of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Certificated Notes at the Registrar's request.
(e) The Company shall not be required to make and the Registrar need
not register transfers or exchanges of (a) Certificated Notes selected for
redemption (except, in the case of Certificated Notes to be redeemed in part,
the portion thereof not to be redeemed), or (b) any Certificated Note for a
period of 15 calendar days before a selection of Certificated Notes to be
redeemed or the mailing of a notice of a Change of Control Offer pursuant to
Section 4.7 hereof or an Asset Sale Offer pursuant to Section 4.8 hereof and
ending on the close of business on the day of such mailing.
(f) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer of Notes (other than in respect of a
Registered Exchange Offer, except as provided in the Registration Agreement and
in respect of exchanges or transfers pursuant to Sections 2.9, 3.6, 4.7, 4.8 and
9.6).
(g) All Notes issued upon any registration of transfer, exchange or
substitution pursuant to the terms of this Indenture will evidence the same debt
and will be entitled to the same benefits under this Indenture as the Notes
surrendered for such registration of transfer, exchange or substitution.
(h) Prior to the effectiveness under the Securities Act of a Shelf
Registration Statement, or at any time during the suspension or following the
termination thereof, Holders of Initial Notes (or holders of interests therein)
and prospective purchasers designated by such Holders of Initial Notes (or such
holders of interests therein) shall have the right to obtain from the Company
upon request by such Holders (or such holders of interests) or prospective
purchasers, during any period in which the Company is not subject to Section 13
or Section 15(d) of the Exchange Act, or is exempt from reporting pursuant
40
<PAGE> 50
to 12g3-2(b) under the Exchange Act, the information required by paragraph
(d)(4)(i) of Rule 144A in connection with any transfer or proposed transfer of
such Notes or interests.
(i) Any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Notes represented hereby shall be required to be reflected in book entry form.
Transfers of a Global Note shall be limited to transfers in whole and not in
part, to the Depositary, its successors, and their respective nominees.
Interests of beneficial owners in a Global Note may be transferred in accordance
with the rules and procedures of the Depositary (or its successors).
(j) By its acceptance of any Initial Note represented by a certificate
bearing the Unit Legend specified in Section 2.1(e)(iii) hereof, each Holder of,
and each beneficial owner of an interest in, such Initial Note acknowledges that
Notes were initially issued as part of an issuance of Units, each of which
consisted of $1,000 principal amount at Stated Maturity of Notes and one Warrant
to purchase 34 Common Shares of the Company, agrees to the restrictions on
transfer of Units set forth in the Final Memorandum and the Unit Legend and
agrees that it will not transfer such Initial Notes separately, but only with
the Warrants as part of a Unit, until the Separation Date.
SECTION 2.7 Replacement Notes. If any mutilated Note is surrendered to
the Trustee, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in exchange for any such mutilated Note, a new
Note containing identical provisions and of like principal amount, bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Note and (ii)
such security or indemnity as may be required by them to save either of them and
any agent of each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note containing identical provisions and of like principal amount, bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note, provided such payment is either
not made prior to the day following the Five Year Date or is made only following
the occurrence of an Event of Default.
Upon the issuance of any new Note under this Section 2.7, the Company
may require the payment by the Holder of a sum sufficient to cover any tax or
other governmental
41
<PAGE> 51
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 2.7 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost of stolen Notes.
SECTION 2.8 Outstanding Notes. Notes outstanding at any time are all
Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation and those described in this Section 2.8 as not
outstanding. A Note does not cease to be outstanding because the Company, a
Guarantor or an Affiliate of the Company or a Guarantor holds such Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that such replaced Note is held by a bona fide purchaser. A mutilated Note
ceases to be outstanding upon surrender of such Note and replacement thereof
pursuant to Section 2.7.
If the Paying Agent (other than the Company, a Guarantor or an
Affiliate of the Company or a Guarantor) segregates and holds in trust, in
accordance with this Indenture, on a Redemption Date or Maturity date money
sufficient to pay all principal, premium, if any, interest (including Additional
Amounts, if any, and Special Interest, if any) and any other amounts payable on
that date with respect to the Notes (or portions thereof) to be redeemed or
maturing, as the case may be, then on and after that date such Notes (or such
portions thereof) shall cease to be outstanding and interest on them shall cease
to accrue.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent or any amendment,
modification or other change to this Indenture, Notes held or beneficially owned
by the Company or Guarantor or an Affiliate of the Company or a Guarantor of the
Company or by agents of any of the foregoing shall be disregarded, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes which a Trust Officer knows are so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee establishes to the satisfaction of
the Trustee such pledgee's right so to act with respect to the Notes and that
the pledgee is not the Company, a Guarantor or an Affiliate of the Company or of
a Guarantor or any of their agents.
42
<PAGE> 52
SECTION 2.9 Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute, the Guarantors shall endorse and the Trustee
shall authenticate, temporary notes ("Temporary Notes") which are printed,
lithographed, or otherwise produced, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations.
If Temporary Notes are issued, the Company shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the Temporary Notes shall be exchangeable for definitive Notes upon
surrender of the Temporary Notes to the Trustee, without charge to the Holder.
Until so exchanged, Temporary Notes will evidence the same debt and will be
entitled to the same benefits under this Indenture as the definitive Notes in
lieu of which they have been issued.
SECTION 2.10 Cancellation. The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar and the Paying Agent shall forward
to the Trustee any Notes surrendered to them for registration of transfer,
exchange, purchase or payment. The Trustee shall cancel all Notes surrendered
for registration of transfer, exchange, purchase, payment or cancellation and
shall dispose of such Notes in accordance with the Trustee's policy of disposal;
provided, however, that the Trustee shall not be required to destroy such
canceled Notes. The Company may not issue new Notes to replace Notes it has
redeemed or paid or that have been delivered to the Trustee for cancellation.
SECTION 2.11 Payment of Interest; Interest Rights Preserved. Interest
(including Additional Amounts, if any, and Special Interest, if any) on any Note
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date, commencing on June 1, 1999, shall be paid to the Person in whose
name such Note is registered at the close of business on the Record Date for
such interest payment, which shall be the May 15 or November 15 (whether or not
a Business Day) immediately preceding such Interest Payment Date.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Record Date, and, except as hereinafter provided, such Defaulted
Interest and any interest payable on such Defaulted Interest may be paid by the
Company, at its election, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest,
and any interest payable on such Defaulted Interest, to the Persons in whose
names the Notes are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on the Notes and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
43
<PAGE> 53
respect of such Defaulted Interest (including Additional Amounts, if any, and
Special Interest, if any) or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as provided in this clause (a). Thereupon the Trustee shall
fix a Special Record Date for the payment of such Default Interest which shall
be not more than 15 calendar days and not less than 10 calendar days prior to
the date of the proposed payment and not less than 10 calendar days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be sent, first class
mail, postage prepaid, to each Holder at such Holder's address as it appears in
the Security Register, not less than 10 calendar days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Persons in whose names the Notes are registered at
the close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest, (including
Additional Amounts, if any, and Special Interest, if any) and any interest
payable on such Defaulted Interest, on the Notes in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section 2.11, each Note
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, or in substitution for, any other Note, shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Note.
SECTION 2.12 Authorized Denominations. The Notes shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.13 Computation of Interest, etc.
(a) The Notes will be issued at a discounted aggregate principal value
of $87,697,300. The Notes will accrete interest from the Issue Date at a rate
computed as if the Notes had been issued bearing interest at the rate of 14% per
annum on May 31, 1996 (being a rate of 14.9445% per annum for the period from
the Issue Date through November 30, 1996), compounded semi-annually, to an
aggregate principal amount of $123,000,000 by December 1, 1998. Thereafter,
interest on the Notes will accrue at the rate of 14% per annum and will be
payable in cash semi-annually on June 1 and December 1 of each year, commencing
June 1, 1999 to the person in whose name the Note (or any predecessor Note)
44
<PAGE> 54
is registered at the close of business on May 15 or November 15 next preceding
such Interest Payment Date. The effect of the foregoing is that the Notes will
bear interest at the rate of 14.9445% per annum from the Issue Date through
November 30, 1996 and 14% per annum thereafter. The payment of interest on the
Notes in respect of the period from the Issue Date to December 1, 1998, however,
will effectively be deferred until Maturity and such deferred interest will be
compounded semi-annually and added to the outstanding principal amount of the
Notes. Interest on the Notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months. If the Company has not received on or before
May 31, 1998, $20,000,000 in Cash Proceeds from a sale or sales of Qualified
Stock of the Company occurring subsequent to the Issue Date (other than
Qualified Stock issued upon the exercise of Warrants or upon conversion of the
Convertible Notes), the Notes will accrete interest to December 1, 1998 and
thereafter accrue interest at the rate of 14.5% per annum, commencing on June 1,
1998 until any Interest Payment Date prior to which the Company shall have
received such $20,000,000 in Cash Proceeds from such a sale of Qualified Stock.
Commencing on any such Interest Payment Date, the Notes will again bear interest
at the rate of 14% per annum. For purposes of this interest rate adjustment
provision, the Company will be deemed to have raised such $20,000,000 in Cash
Proceeds if a Change of Control has occurred.
(b) For the purposes of the Interest Act (Canada) and disclosure
thereunder, whenever interest, Additional Amounts, Special Interest, or
Defaulted Interest or interest on Defaulted Interest relating to the Notes, is
to be calculated on the basis of a year of 360 days or any other period of time
that is less than a calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by either 360 or such other period of time, as
the case may be. The rate accruing on the Notes for payment purposes shall be
determined in accordance with Subsection 2.13(a) hereof, and for greater
certainty for the purposes of the Interest Act (Canada) for the period from the
Issue Date through November 30, 1996, the interest rate hereunder shall be
14.9445% per annum, subject to the initial sentence of this Section 2.13(b).
(c) Notwithstanding any other term of this Indenture, the Company shall
not be obliged to pay any interest or other amounts under or in connection with
this Indenture in excess of the amount or rate permitted under or consistent
with applicable law. In particular, the Company shall not be obliged to pay any
interest or other amounts which would result in the receipt by the Holders of
interest on credit advanced at a rate in excess of the rate permitted under the
Criminal Code (Canada).
SECTION 2.14 Persons Deemed Owners. Prior to the due presentation for
registration of transfer of any Notes, the Company, the Guarantors, the Trustee,
the Paying Agent, the Registrar and any co-Registrar may deem and treat the
person in whose name a Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of, premium, if any, and interest
(including Special Interest, if any, but
45
<PAGE> 55
excluding Additional Amounts, if any, which shall be determined by the
beneficial ownership of such Note) on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and none of the Company, the
Guarantors, the Trustee, the Paying Agent, the Registrar or any co-Registrar
shall be affected by notice to the contrary.
SECTION 2.15 CUSIP Numbers. The Company, in issuing the Notes, may use
a "CUSIP" number for each series of Notes and, if so, the Trustee shall use the
relevant CUSIP number in any notices to Holders as a convenience to such
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 Notes and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company shall promptly notify the Trustee of
any change in any CUSIP number used.
ARTICLE III
REDEMPTION
SECTION 3.1 Notice to Trustee. If the Company elects to redeem Notes
pursuant to the optional redemption provisions of Section 3.7(a) and the Notes,
it shall furnish an Officers' Certificate to the Trustee setting forth the
Redemption Date, the principal amount of Notes to be redeemed and the Redemption
Price. The Company shall give each such notice to the Trustee at least 60
calendar days prior to the Redemption Date unless the Trustee consents to a
shorter period. Such notice shall be accompanied by an Officers' Certificate and
an Opinion of Counsel from the Company to the effect that such redemption will
comply with any conditions to such redemption set forth herein and in the Notes.
SECTION 3.2 Selection of Notes to be Redeemed. If less than all the
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed on a pro rata basis, or by any other method which the Trustee shall
determine to be fair and appropriate and which complies with any stock exchange
and other applicable requirements, provided that the Trustee may select for
redemption in part only Notes in denominations larger than $1,000. In selecting
Notes to be redeemed pursuant to this Section 3.2, the Trustee shall make such
adjustments, reallocations and eliminations as it shall deem proper so that the
principal amount at Stated Maturity of each Note to be redeemed shall be $1,000
or an integral multiple thereof, by increasing, decreasing or eliminating any
amount less than $1,000 which would be allocable to any Holder. If the Notes to
be redeemed are Certificated Notes, the Certificated Notes to be redeemed shall
be selected by the Trustee by prorating, as nearly as may be, or by any other
method which the Trustee shall determine to be fair and appropriate and which
complies with any stock exchange and other applicable requirements, the
principal amount of Certificated Notes to be redeemed among the Holders of
Certificated Notes registered in their respective names. The Trustee in its
discretion may determine the particular Notes (if there are more than one)
registered in the name of any Holder which are to be redeemed, in whole or in
part. Provisions of this
46
<PAGE> 56
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be redeemed. Each redemption of Notes shall be
pro rata as between Initial Notes and Exchange Notes.
SECTION 3.3 Notice of Redemption. At least 30 calendar days but not
more than 60 calendar days before a Redemption Date, the Company shall send a
notice of redemption, first class mail, postage prepaid, to Holders of Notes to
be redeemed at the addresses of such Holders as they appear in the Note
Register.
The notice shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price (and shall specify the portion of such
Redemption Price that constitutes the amount of accrued and unpaid interest to
be paid, if any);
(c) the name and address of the Paying Agent;
(d) that the Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(e) if any Global Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, the Global Note, with a notation on Schedule A thereof adjusting the
principal amount thereof to be equal to the unredeemed portion, will be returned
to the Holder thereof;
(f) if any Certificated Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the Redemption
Date, a new Certificated Note or Certificated Notes in principal amount equal to
the unredeemed portion will be issued;
(g) if fewer than all the outstanding Notes are to be redeemed, the
identification and principal amounts of the particular Notes to be redeemed;
(h) that, unless the Company defaults in making the redemption payment,
interest on, or the accretion of the value of, and Additional Amounts, if any,
and Special Interest, if any on, the Notes (or portions thereof) called for
redemption shall cease and such Notes (or portions thereof) shall cease to
accrete in value or cease to accrue such interest on and after the Redemption
Date;
(i) the paragraph of the Notes and the Section of the Indenture
pursuant to which the Notes are being called for redemption; and
47
<PAGE> 57
(j) any other information necessary to enable Holders to comply with
the notice of redemption.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.3 in a timely manner, provided that the Company shall give the Trustee
not less than 45 calendar days notice of such election prior to the Redemption
Date unless the Trustee consents to a shorter period.
SECTION 3.4 Effect of Notice of Redemption. Once notice of redemption
is mailed in accordance with Section 3.3 hereof, Notes called for redemption
shall become due and payable on the Redemption Date and at the Redemption Price
stated in such notice, including interest, Additional Amounts and Special
Interest, if any, accrued and unpaid and any other amounts payable on the
Redemption Date; provided that if the Redemption Date is after a regular Record
Date and on or prior to the Interest Payment Date, the accrued interest
(including Additional Amounts, if any, and Special Interest, if any) and any
other amounts payable shall be payable to the Holder of the redeemed Note on the
relevant Record Date; and provided, further, that if a Redemption Date is not a
Business Day, payment shall be made on the next succeeding Business Day and no
interest shall accrue, nor shall the Notes accrete in value, for the period from
such Redemption Date to such succeeding Business Day. Upon surrender to the
Paying Agent, such Notes shall be paid at the Redemption Price stated in such
notice. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.5 Deposit of Redemption Price. On or prior to 10:00 a.m., New
York City time, on each Redemption Date, the Company shall deposit with the
Paying Agent money, in federal or other immediately available funds, sufficient
to pay the Redemption Price on all Notes to be redeemed on that date other than
Notes or portions of Note called for redemption on such date which have been
delivered by the Company to the Trustee for cancellation.
So long as the Company complies with the preceding paragraph and the
other provisions of this Article III, interest (and Additional Amounts and
Special Interest, if any) on the Notes to be redeemed on the applicable
Redemption Date shall cease to accrue, or such Notes shall cease to accrete in
value, as the case may be, from and after such date and such Notes or portions
thereof shall be deemed not to be entitled to any benefit under this Indenture
except to receive payment of the Redemption Price on the Redemption Date. If any
Note called for redemption shall not be so paid upon surrender for redemption,
then, from the Redemption Date until such principal is paid, interest (and
Additional Amounts and Special Interest, if any) shall be paid on the unpaid
principal and, to the extent permitted by law, on any accrued but unpaid
interest thereon, in each case at the rate prescribed therefor by such Notes.
48
<PAGE> 58
SECTION 3.6 Notes Redeemed in Part. Upon surrender and cancellation of
a Certificated Note that is redeemed in part, the Company shall issue and the
Trustee shall authenticate and deliver to the surrendering Holder (at the
Company's expense) a new Certificated Note equal in principal amount to the
unredeemed portion of the Certificated Note surrendered and canceled, provided
that each such Certificated Note shall be in a principal amount at Stated
Maturity of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is redeemed in part, the Paying
Agent shall forward such Global Note to the Trustee who shall make a notation on
Schedule A thereof to reduce the principal amount of such Global Note to an
amount equal to the unredeemed portion of such Global Note, as provided in
Section 2.5(c) hereof.
SECTION 3.7 Optional Redemption. (a) Except as set forth in subsection
(b) of this Section 3.7, the Company shall not have the option to redeem the
Notes pursuant to this Section 3.7 prior to June 13, 2001, being the date
following the Five Year Date. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part upon not less than 30 calendar days' nor
more than 60 calendar days' notice, at the Redemption Prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest, if any, Additional Amounts, if any, and Special Interest, if any, to
the applicable Redemption Date, if redeemed during the period from June 13, 2001
through May 31, 2002 at a percentage of 108.000% and thereafter during the
twelve month period beginning June 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2002 ................................................. 104.000%
2003 and thereafter .................................. 100.000%
</TABLE>
(b) The Notes may be redeemed, at the option of the Company, in whole
but not in part, upon not less than 30 or more than 60 days' notice to the
Holders in accordance with Section 13.2 hereof, at a Redemption Price equal to
the Accreted Value thereof, plus accrued and unpaid interest, if any (including
Additional Amounts, if any, and Special Interest, if any), to the Redemption
Date fixed therefor (subject to the right of Holders of record on the relevant
Record Date to receive interest (including Additional Amounts, if any, and
Special Interest, if any), due on the Interest Payment Date that is on or prior
to the Redemption Date) and any other amounts due if, as a result of any change
in or amendment to the laws or the regulations or rulings promulgated thereunder
of Canada, Cyprus, the Russian Federation or any other jurisdiction with which
the Company or any Guarantor has any connection (other than a connection arising
as a result of a continuance or a merger or consolidation of the Company with or
into a newly formed corporation solely for the purpose of moving the Company's
domicile out of Canada) or any political subdivision thereof or any authority
thereof or having power to tax therein, or any change in the application or
official interpretation of such laws or regulations, or any change in
administrative policy or assessing practice of the applicable taxing authority,
which change or amendment becomes effective on or after May 24, 1996, the
Company or the Guarantors
49
<PAGE> 59
(if the Guarantees are called) are or would be required on the next succeeding
Interest Payment Date to pay Additional Amounts with respect to the Notes or the
Guarantees and the payment of such Additional Amounts cannot be avoided by the
use of any reasonable measures available to the Company or the Guarantors, as
the case may be. The Company will also pay to Holders on the Redemption Date any
Additional Amounts payable in respect of the period ending on the Redemption
Date. Prior to the publication of any notice of redemption pursuant to this
provision, which in no event will be given earlier than 90 days prior to the
earliest date on which the Company or the Guarantors, as the case may be, would
be required to pay such Additional Amounts were a payment in respect of the
Notes then due, the Company shall deliver to the Trustee (i) an Officers'
Certificate stating that the obligation to pay such Additional Amounts cannot be
avoided by the Company or the Guarantors, as the case may be, taking reasonable
measures and (ii) an Opinion of Counsel, independent of the Company and the
Guarantors and approved by the Trustee, to the effect that the Company or the
Guarantors have or will become obligated to pay such Additional Amounts as a
result of such change or amendment. Such notice, once delivered by the Company
to the Trustee, will be irrevocable. The Trustee shall accept such Officers'
Certificate and Opinion of Counsel as sufficient evidence of the satisfaction of
the condition precedent set forth in clauses (i) and (ii) above, in which event
it shall be conclusive and binding on the Holders.
SECTION 3.8 Mandatory Redemption. Subject to the Company's obligations
to make an offer to purchase Notes under certain circumstances pursuant to
Sections 4.7 or 4.8 hereof, the Company shall have no mandatory redemption or
sinking fund obligations with respect to the Notes.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes. The Company shall promptly pay the
principal of, premium, if any, interest (including Additional Amounts, if any,
and Special Interest, if any) on, and any other amounts in respect of, the Notes
on the dates and in the manner provided in the Notes and in this Indenture.
Principal, premium, interest and such other amounts shall be considered paid on
the date due if, on or before 10:00 a.m., New York City time, on such date, the
Trustee or the Paying Agent, other than the Company or a Guarantor or an
Affiliate of the Company or a Guarantor, holds in accordance with this Indenture
money to pay all principal, premium, interest (including Additional Amounts, if
any, and Special Interest, if any) or other amounts then due.
To the extent lawful, the Company shall pay interest on (i) any overdue
principal of (and premium, if any, on) the Notes, at the interest rate borne on
the Notes plus 1% per annum and (ii) Defaulted Interest (without regard to any
applicable grace period), at the same rate. The Company's obligation pursuant to
the previous sentence shall apply whether
50
<PAGE> 60
such overdue amount is due at its Stated Maturity, as a result of the Company's
obligations pursuant to Section 3.7, Section 4.7 or Section 4.8 hereof, or
otherwise.
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 where
Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee its agent to
receive all presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all of such purposes, and may from time
to time rescind such designations; provided that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation and any
change in the location of any such other office or agency.
SECTION 4.3 Money for the Note Payments to be Held in Trust. If the
Company, any Guarantor, any Restricted Subsidiary, or any of their respective
Affiliates shall at any time act as Paying Agent with respect to the Notes, such
Paying Agent shall, on or before each due date of the principal of (and premium,
if any), interest on or other amounts in respect of any of the Notes, segregate
and hold in trust for the benefit of the Persons entitled thereto money
sufficient to pay the principal (and premium, if any), interest (including
Additional Amounts, if any and Special Interest, if any) or other amounts so
becoming due until such money shall be paid to such Persons or otherwise
disposed of as herein provided, and shall promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect
to the Notes, it shall, prior to or on each due date of the principal of (and
premium, if any), interest on or other amounts in respect of any of the Notes,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any), interest (including Additional Amounts, if any and Special Interest, if
any) or other amounts so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium, if any, interest
(including Additional Amounts, if any and Special Interest, if any) or other
amounts, and (unless such Paying Agent is the Trustee) the Paying Agent shall
promptly notify the Trustee of the Company's action or failure so to act.
51
<PAGE> 61
SECTION 4.4 Corporate Existence. Subject to the provisions of Article V
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence, rights
(charter and statutory) and franchises of the Company and each of its Restricted
Subsidiaries; provided that the Company and any such Restricted Subsidiary other
than a Leasing Company or NWE Cyprus shall not be required to preserve the
corporate existence of any such Restricted Subsidiary other than a Leasing
Company or NWE Cyprus or any such right or franchise 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 that the loss thereof is not
disadvantageous in any material respect to the Holders of Notes.
SECTION 4.5 Maintenance of Property. The Company shall cause all
Property used in the conduct of its business or the business of any of its
Restricted Subsidiaries to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as, in the judgment of
the Company, may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section 4.5 shall prevent the Company from discontinuing
the operation or maintenance of any of such Property if such discontinuance is,
in the judgment of the Company, desirable in the conduct of its business or the
business of any of its Restricted Subsidiaries and not disadvantageous in any
material respect to the Holders of the Notes.
SECTION 4.6 Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any of its Restricted Subsidiaries or upon the
income, profits or Property of the Company or any of its Restricted Subsidiaries
and (b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a Lien upon the Property of the Company or any of its
Restricted Subsidiaries; provided that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings upon stay of execution or the enforcement
thereof and for which adequate reserves in accordance with GAAP or other
appropriate provision has been made.
SECTION 4.7 Repurchase at the Option of Holders upon a Change of
Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to purchase such Holder's Notes, in
whole or in part in a principal amount at Stated Maturity that is an integral
multiple of $1,000, pursuant to an irrevocable and unconditional offer described
in Section 4.7(b) hereof (the "Change of Control Offer"), at a purchase price
(the "Change of Control Purchase Price") in cash equal to 101 percent of the
Accreted Value of such Notes (or portions thereof) on any Change of
52
<PAGE> 62
Control Payment Date plus accrued and unpaid interest, if any, and Additional
Amounts, if any, and Special Interest, if any, to the Change of Control Payment
Date.
(b) Within 30 calendar days of the date of any Change of Control, the
Company, or the Trustee at the request and expense of the Company, shall send to
each Holder by first class mail, postage prepaid, a notice prepared by the
Company stating:
(i) that a Change of Control has occurred and a Change of
Control Offer is being made pursuant to this Section 4.7, and that all
Notes properly tendered will be accepted for payment;
(ii) the Change of Control Purchase Price, and the date Notes
are to be purchased pursuant to the Change of Control Offer (the
"Change of Control Payment Date"), which date shall be a date occurring
no earlier than 30 calendar days nor later than 40 calendar days
subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not properly tendered
will continue to accrete in value or accrue interest, as applicable,
and Additional Amounts and Special Interest, if applicable;
(iv) that, unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or
portions thereof accepted for payment pursuant to the Change of Control
Offer shall cease to accrete in value or accrue interest, as
applicable, and Additional Amounts and Special Interest, if applicable,
from and after the Change of Control Payment Date;
(v) that any Holder electing to have any Notes or portions
thereof purchased pursuant to a Change of Control Offer will be
required to surrender such Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of such Notes completed, to
the Paying Agent at the address specified in the notice, prior to the
close of business on the third Business Day preceding the Change of
Control Payment Date;
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter,
setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing
such Holder's election to have such Notes or portions thereof purchased
pursuant to the Change of Control Offer;
(vii) that any Holder electing to have Notes purchased
pursuant to the Change of Control Offer must specify the principal
amount that is being tendered for
53
<PAGE> 63
purchase, which principal amount must be $1,000 at Stated Maturity or
an integral multiple thereof;
(viii) if Certificated Notes have been issued pursuant to
Section 2.6(c), that any Holder of Certificated Notes whose
Certificated Notes are being purchased only in part will be issued new
Certificated Notes equal in principal amount to the unpurchased portion
of the Certificated Note or Notes surrendered, which unpurchased
portion will be equal in principal amount at Stated Maturity to $1,000
or an integral multiple thereof;
(ix) that the Trustee will return to the Holder of a Global
Note that is being purchased in part, such Global Note with a notation
on Schedule A thereof adjusting the principal amount thereof to be
equal to the unpurchased portion of such Global Note; and
(x) the instructions and any other information necessary to
enable any Holder to accept a Change of Control Offer or effect
withdrawal of such acceptance.
(c) On or before the Change of Control Payment Date, the Company shall
(i) accept for payment any Notes or portions thereof properly tendered pursuant
to the Change of Control Offer; (ii) irrevocably deposit with the Paying Agent,
by 10:00 a.m., New York City time, on such date, in immediately available funds,
an amount equal to the Change of Control Purchase Price in respect of all Notes
or portions thereof so accepted, including interest, Additional Amounts and
Special Interest, if applicable; and (iii) deliver, or cause to be delivered, to
the Trustee the Notes so accepted together with an Officers' Certificate listing
the Notes or portions thereof tendered to the Company and accepted for payment.
The Paying Agent shall promptly send by first class mail, postage prepaid, to
each Holder of Notes or portions thereof so accepted for payment, payment in an
amount equal to the Change of Control Purchase Price for such Notes or portions
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date. For purposes of this Section 4.7, the Trustee shall act as the Paying
Agent.
(d) Upon surrender and cancellation of a Certificated Note that is
purchased in part pursuant to the Change of Control Offer, the Company shall
promptly issue and the Trustee shall authenticate and deliver to the
surrendering Holder of such Certificated Note, a new Certificated Note equal in
principal amount to the unpurchased portion of such surrendered Certificated
Note; provided that each such new Certificated Note shall be in a principal
amount of $1,000 at Stated Maturity or an integral multiple thereof.
Upon surrender of a Global Note that is purchased in part pursuant to a
Change of Control Offer, the Paying Agent shall forward such Global Note to the
Trustee who shall make a notation on Schedule A thereof to reduce the principal
amount of such Global Note
54
<PAGE> 64
to an amount equal to the unpurchased portion of such Global Note, as provided
in Section 2.5(c) hereof.
(e) The Company shall comply with the requirements of Section 14(e)
under the Exchange Act and any other securities laws or regulations, to the
extent such laws and regulations are applicable, in connection with the purchase
of Notes pursuant to a Change of Control Offer.
SECTION 4.8 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries, directly or indirectly to, consummate any Asset Sale, unless:
(i) no Event of Default shall have occurred and be continuing
or shall occur as a consequence thereof;
(ii) the Company or such Restricted Subsidiary, as the case
may be, receives net consideration at the time of such Asset Sale at
least equal to the Fair Market Value (as evidenced by a Board
Resolution delivered to the Trustee) of the Property or assets sold or
otherwise disposed of;
(iii) at least 75 percent of the consideration received in
respect of such Asset Sale by the Company or such Restricted
Subsidiary, as the case may be, for such Property or assets consists of
Cash Proceeds; and
(iv) the Company or such Restricted Subsidiary, as the case
may be, uses the Net Cash Proceeds from such Asset Sale in the manner
set forth in Section 4.8(b) hereof.
To the extent that the assets which are the subject of any Asset Sale
constitute Collateral, all proceeds thereof shall, to the extent permitted by
law, be subject to a perfected Lien in favor of the Trustee or a collateral
agent for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Notes and for the benefit of the Convertible Note Trustee and the
equal and ratable benefit of the Holders of the Convertible Notes, which Lien
shall have the same priority as the Lien on the Collateral which was the subject
of such Asset Sale, and all Net Cash Proceeds from such an Asset Sale shall be
deposited in the Company Senior Note Escrow Account or a Leasing Company Escrow
Account, if applicable. To the extent that assets which are the subject of any
Asset Sale constitute Telecommunications Assets subject to a Telecommunications
Assets Lease which is Collateral, all proceeds thereof shall, to the extent
permitted by applicable law, be subject to a perfected Lien in favor of the
Trustee or a collateral agent for the benefit of the Trustee and for the equal
and ratable benefit of the Holders of the Notes and for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the Holders of the
Convertible Notes, which Lien shall have the same priority as the Lien on such
55
<PAGE> 65
Telecommunications Asset Leases governing the Telecommunications Assets which
were the subject of such Asset Sale, and all Net Cash Proceeds from such an
Asset Sale of Telecommunications Assets must be deposited in the applicable
Leasing Company Escrow Account. To the extent that assets which are the subject
of any Asset Sale constitute Convertible Note Collateral, all proceeds thereof
shall, to the extent permitted by applicable law, be subject to a perfected Lien
in favor of the Convertible Note Trustee or a collateral agent for the benefit
of the Convertible Note Trustee and the equal and ratable benefit of the Holders
of Convertible Notes and for the benefit of the Trustee and the equal and
ratable benefit of the Holders of Notes, which Lien shall have the same priority
as the Lien on the Convertible Note Collateral which was the subject of such
Asset Sale, and all Net Cash Proceeds from such an Asset Sale of Convertible
Note Collateral must be deposited in the Company Convertible Note Escrow
Account, unless the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged, in which case such
Net Cash Proceeds shall be deposited in the Company Senior Note Escrow Account.
(b) (i) To the extent that assets subject to an Asset Sale consist of
Collateral other than a Telecommunications Asset Lease or
Telecommunications Assets subject to a Telecommunications Asset Lease,
the Company shall have the option, within 365 days of such Asset Sale,
to reinvest the Net Cash Proceeds (or any portion thereof) from such
Asset Sale in another asset or business in the same or similar lines of
business as the Company and its Restricted Subsidiaries (the
"Replacement Assets") (or enter into a binding agreement to reinvest
such Net Cash Proceeds (or any portion thereof) prior to the end of
such 365-day period, provided that such reinvestment is completed
within 90 days after the end of such 365-day period); provided that
such Replacement Assets are subject to a Lien in favor of the Trustee
or a collateral agent for the benefit of the Trustee and for the equal
and ratable benefit of the Holders and for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of Holders
of Convertible Notes, which Lien has the same priority as had the Lien
on such Collateral, which was the subject of such Asset Sale.
(ii) To the extent that assets subject to an Asset Sale
consist of Convertible Note Collateral, the Company shall have the
option, within 365 days of such Asset Sale, to reinvest the Net Cash
Proceeds (or any portion thereof) from such Asset Sale in Replacement
Assets (or enter into a binding agreement to reinvest such Net Cash
Proceeds (or any portion thereof) prior to the end of such 365-day
period, provided that such reinvestment is completed within 90 days
after the end of such 365-day period); provided that such Replacement
Assets are subject to a Lien in favor of the Convertible Note Trustee
or a collateral agent for the benefit of the Convertible Note Trustee
and for the equal and ratable benefit of the Holders of Convertible
Notes and for the benefit of the Trustee and the equal and ratable
benefit of Holders of the Notes, which Lien has the same priority as
had the Lien on such Convertible Note Collateral, which was the subject
of such Asset Sale.
56
<PAGE> 66
(iii) To the extent that assets subject to an Asset Sale
constitute Telecommunications Assets subject to a Telecommunications
Asset Lease, the Company shall have the option, within 365 days of such
Asset Sale, to cause the applicable Leasing Company to reinvest the Net
Cash Proceeds from such Asset Sale (or any portion thereof) in
Telecommunications Assets to be leased pursuant to a new
Telecommunications Asset Lease ("Replacement Telecommunication Assets")
(or enter into, or cause the applicable Leasing Company to enter into,
a binding agreement to reinvest such Net Cash Proceeds (or any portion
thereof) prior to the end of such 365-day period, provided that such
reinvestment is completed within 90 days after the end of such 365-day
period), and with respect to any proceeds of insurance paid on account
of the loss of or damage to any such Telecommunications Assets, or
compensation or other proceeds for any such Telecommunications Assets
taken by condemnation, eminent domain or similar proceedings, such Net
Cash Proceeds are applied as provided above or applied to reimburse the
applicable Leasing Company for expenditures made, and costs incurred,
to repair, rebuild, replace or restore the Telecommunications Assets
subject to such loss, damage or taking.
(iv) To the extent that assets subject to an Asset Sale do not
constitute Collateral, Telecommunications Assets subject to a
Telecommunications Asset Lease or Convertible Note Collateral, the
Company shall have the option within 365 days of such Asset Sale (i) to
reinvest (or enter into a binding agreement to reinvest prior to the
end of such 365-day period, provided that such reinvestment is
completed within 90 days after the end of such 365-day period) an
amount equal to the Net Cash Proceeds (or any portion thereof) from
such Asset Sale in Replacement Assets, and/or (ii) apply an amount
equal to such Net Cash Proceeds (or remaining Net Cash Proceeds) to the
permanent reduction of Indebtedness of the Company (other than
Indebtedness to a Restricted Subsidiary) that is pari passu in right of
payment with the Notes or to the permanent reduction of Indebtedness of
any Restricted Subsidiary that is pari passu in right of payment with
the Guarantees, if applicable (other than Indebtedness owed to, or
Preferred Stock owned by, the Company or a Restricted Subsidiary of the
Company).
(v) Any Net Cash Proceeds from any Asset Sale that are not
used to reinvest in Replacement Assets or Replacement
Telecommunications Assets and/or to reduce pari passu Indebtedness of
the Company or the Guarantors to the extent permitted by this Section
4.8(b) shall constitute "Excess Proceeds"; provided that, with respect
to any Asset Sale by a Person which is not a Wholly-Owned Restricted
Subsidiary, the amount of Net Cash Proceeds which shall constitute
Excess Proceeds to be used to make an Asset Sale Offer (as defined in
Section 4.8(c) below) shall be limited to the percentage of such unused
Net Cash Proceeds received by such Person equal to a percentage
determined by dividing the direct or indirect interest of the Company
in the Capital Stock of such Person by the total then outstanding
Capital Stock of such Person determined as of the date of such Asset
Sale.
57
<PAGE> 67
(c) Subject to the limitations set out in Section 4.8(d) below, if at
any time the aggregate amount of Excess Proceeds exceeds $5,000,000, the Company
shall, within 30 days thereafter, use such Excess Proceeds to make an offer to
purchase Notes (an "Asset Sale Offer") on a pro rata basis from all Holders of
Notes in an aggregate principal amount equal to the maximum principal amount
that may be purchased out of Excess Proceeds, at a purchase price (the "Offer
Purchase Price") in cash equal to 100% of the Accreted Value thereof on any
purchase date, plus accrued and unpaid interest, if any, Additional Amounts, if
any, and Special Interest, if any, to the Asset Sale Payment Date, in accordance
with the procedures set forth in this Section 4.8; provided that, if any such
assets subject to such Asset Sale constitute Convertible Note Collateral, the
Company shall be required to apply that portion of such Excess Proceeds
attributable to such Asset Sale of Convertible Note Collateral which is
permitted to be so applied pursuant to Section 4.8(d) of the Convertible Note
Indenture (the "Permitted Portion"), first, to an asset sale offer for the
Convertible Notes pursuant to and in the circumstances permitted by the
Convertible Note Indenture (a "Convertible Note Asset Sale Offer") unless the
Convertible Notes are no longer outstanding and the Convertible Note Indenture
has been satisfied and discharged, and, to the extent that the aggregate amount
paid pursuant to the Convertible Note Asset Sale Offer is less than such
Permitted Portion, then to an Asset Sale Offer; and provided further that if
such assets subject to such Asset Sale are subject to a Lien which is and is
permitted to be pari passu with the Lien in favor of the Trustee or a collateral
agent, the Company shall only be required to apply a pro rata portion of such
Excess Proceeds to the Asset Sale Offer. To the extent that assets subject to an
Asset Sale are not and are not required to be subject to a Lien in favor of the
Trustee or do not constitute Telecommunications Assets subject to a
Telecommunications Asset Lease or Convertible Note Collateral, the Company may
apply 100% of the Excess Proceeds thereof to the prepayment of obligations
outstanding in respect of Indebtedness that is pari passu to the Notes or the
Guarantees to the extent required thereunder. If (x) no obligations are
outstanding in respect of or under such pari passu Indebtedness or (y) the
holders of such pari passu Indebtedness entitled to receive payment elect not to
receive the payments provided for in the previous sentence, or (z) the
application of such Net Cash Proceeds results in the complete prepayment of all
such Indebtedness, then such Excess Proceeds or any remaining portion thereof
will be required to be applied by the Company to an Asset Sale Offer subject to
the limitations of Section 4.8(d) below. Subject to the limitations set out in
Section 4.8(d) below, the Company may at any time by delivering an Officers'
Certificate and Board Resolution to the Trustee waive its reinvestment options
and proceed to make an Asset Sale Offer, notwithstanding that any applicable
period for reinvestment shall not have expired.
(d) Notwithstanding Section 4.8(c) above and Section 4.8(e) below, the
Company will not be obligated to repurchase Notes in connection with an Asset
Sale Offer representing in the aggregate more than 25% of the original aggregate
principal amount of the Notes (which original aggregate principal amount shall
for these purposes be the amount originally allocated to the Notes, net of any
amounts allocated to the Warrants and without any adjustment whatsoever) prior
to the date following the Five Year Date, and the original aggregate principal
amount of Notes repurchased in connection with any Asset Sale Offer
58
<PAGE> 68
having a purchase date prior to the date following the Five Year Date shall
represent no more than 25% of the original aggregate principal amount of the
Notes less the original aggregate principal amount of Notes purchased pursuant
to Asset Sale Offers relating to all prior Asset Sales. To the extent that the
amount of Excess Proceeds exceeds the amount of Notes purchased because of the
limitation imposed by the immediately preceding sentence (the amount of such
excess being the "Aggregate Unused Proceeds"), such Aggregate Unused Proceeds
shall constitute Excess Proceeds for purposes of the first Asset Sale Offer that
is made after the Five Year Date and, in the event the amount of the Aggregate
Unused Proceeds exceeds $5,000,000, promptly after the Five Year Date, the
Company shall commence an Asset Sale Offer on a pro rata basis for an aggregate
principal amount of Notes equal to the Aggregate Unused Proceeds (and any other
Excess Proceeds that arise between the Five Year Date and such Asset Sale Offer)
at a purchase price equal to 100% of the Accreted Value of the Notes, plus
accrued interest, if any, Special Interest, if any, and Additional Amounts, if
any, to the date of purchase.
(e) Subject to the provisions of Section 4.8(d) above, within 30
calendar days of the date the amount of Excess Proceeds exceeds $5,000,000, the
Company, or the Trustee at the request and expense of the Company, shall send to
each Holder by first class mail, postage prepaid, a notice prepared by the
Company stating:
(i) that an Asset Sale Offer is being made pursuant to this
Section 4.8, and that all Notes properly tendered will be accepted for
payment, subject to proration in the event the amount of Excess
Proceeds is less than the aggregate Offer Purchase Price of all Notes
properly tendered pursuant to the Asset Sale Offer;
(ii) the Asset Sale Purchase Price, the amount of Excess
Proceeds that are available to be applied to purchase tendered Notes,
and the date Notes are to be purchased pursuant to the Asset Sale Offer
(the "Asset Sale Payment Date"), which date shall be a date no earlier
than 30 calendar days and not later than 40 calendar days subsequent to
the date such notice is mailed;
(iii) that any Notes or portions thereof not properly tendered
or accepted for payment will continue to accrue interest or accrete in
value, as the case may be, and Additional Amounts, if any, and Special
Interest, if any;
(iv) that, unless the Company defaults in the payment of the
Offer Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete in value or accrue interest and Additional Amounts, if
any, and Special Interest, if any, from and after the Asset Sale
Payment Date;
(v) that any Holder electing to have any Notes or portions
thereof purchased pursuant to the Asset Sale Holder will be required to
surrender such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse
59
<PAGE> 69
of such Notes completed, to the Paying Agent at the address specified
in the notice, prior to the close of business on the third Business Day
preceding the Asset Sale Payment Date;
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Asset Sale Payment
Date, a telegram, telex, facsimile transmission or letter, setting
forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing such
Holder's election to have such Notes or portions thereof purchased
pursuant to the Asset Sale Offer;
(vii) that any Holder electing to have Notes purchased
pursuant to the Asset Sale Offer must specify the principal amount at
Stated Maturity that is being tendered for purchase, which principal
amount must be $1,000 or an integral multiple thereof;
(viii) if Certificated Notes have been issued pursuant to
Section 2.6(c), that any Holder of Certificated Notes whose
Certificated Notes are being purchased only in part will be issued new
Certificated Notes equal in principal amount to the unpurchased portion
of the Certificated Note or Notes surrendered, which unpurchased
portion will be equal in principal amount at Stated Maturity to $1,000
or an integral multiple thereof;
(ix) that the Trustee will return to the Holder of a Global
Note that is being purchased in part, such Global Note with a notation
on Schedule A thereof adjusting the principal amount thereof to be
equal to the unpurchased portion of such Global Note; and
(x) the instructions and any other information necessary to
enable any Holder to tender Notes and to have such Notes purchased, or
to withdraw such tender, pursuant to this Section 4.8.
(f) If the aggregate Asset Sale Purchase Price of the Notes surrendered
by Holders exceeds the amount of Excess Proceeds as indicated in the notice
required by Section 4.8(e) hereof, the Trustee shall select the Notes to be
purchased on a pro rata basis based on the principal amount of the Notes
tendered, with such adjustments as may be deemed appropriate by the Trustee and
to comply with any stock exchange and other applicable requirements, so that
only Notes in denominations of $1,000 or integral multiples thereof shall be
purchased.
(g) On or before the Asset Sale Payment Date, the Company shall (i)
accept for payment any Notes or portions thereof properly tendered and selected
for purchase pursuant to the Asset Sale Offer and Section 4.8(f) hereof; (ii)
irrevocably deposit with the Paying
60
<PAGE> 70
Agent, by 10:00 a.m., New York City time, on such date, in immediately available
funds, an amount equal to the Asset Sale Purchase Price in respect of all Notes
or portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee the Notes so accepted together with an Officers' Certificate listing
the Notes or portions thereof tendered to the Company and accepted for payment.
The Paying Agent shall promptly send by first class mail, postage prepaid, to
each Holder of Notes or portions thereof so accepted for payment, payment in an
amount equal to the Asset Sale Purchase Price for such Notes or portions
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on or as soon as practicable after the Asset Sale Payment Date. For purposes of
this Section 4.8, the Trustee shall act as the Paying Agent.
(h) Upon surrender and cancellation of a Certificated Note that is
purchased in part, the Company shall promptly issue and the Trustee shall
authenticate and deliver to the surrendering Holder of such Certificated Note a
new Certificated Note equal in principal amount to the unpurchased portion of
such surrendered Certificated Note; provided that each such new Certificated
Note shall be in a principal amount at Stated Maturity of $1,000 or an integral
multiple thereof.
Upon surrender of a Global Note that is purchased in part pursuant to
an Asset Sale Offer, the Paying Agent shall forward such Global Note to the
Trustee who shall make a notation on Schedule A thereof to reduce the principal
amount of such Global Note to an amount equal to the unpurchased portion of such
Global Note, as provided in Section 2.5(c) hereof.
(i) Upon completion of an Asset Sale Offer (including payment of the
Asset Sale Purchase Price for accepted Notes), any surplus Excess Proceeds that
were subject to such offer shall cease to be Excess Proceeds, and the Company
may then use such amounts for general corporate purposes, including a
Convertible Note Asset Sale Offer pursuant to the asset sale covenant contained
in the Convertible Note Indenture. For greater certainty, such Excess Proceeds
do not include any Aggregate Unused Proceeds until such Aggregate Unused
Proceeds become Excess Proceeds pursuant to Section 4.8(d) hereof.
(j) The Company shall comply with the requirements of Section 14(e)
under the Exchange Act and any other securities laws or regulations, to the
extent such laws and regulations are applicable, in connection with the purchase
of Notes pursuant to an Asset Sale Offer.
SECTION 4.9 Limitation on Indebtedness. (a) The Company will not, and
will not permit its Restricted Subsidiaries to, directly or indirectly, incur
any Indebtedness (including Acquired Indebtedness) and the Company will not
issue any Disqualified Stock or permit any of its Restricted Subsidiaries to
issue any Disqualified Stock; provided that the Company and its Restricted
Subsidiaries other than the Leasing Companies or NWE Cyprus may incur
Indebtedness or issue Disqualified Stock if, after giving effect to such
issuance or incurrence
61
<PAGE> 71
on a pro forma basis, the Indebtedness to Operating Cash Flow Ratio of the
Company does not exceed 5.0 to 1.0.
(b) The provisions of Section 4.9(a) will not apply to:
(i) the incurrence by the Company and its Restricted
Subsidiaries other than the Leasing Companies or NWE Cyprus of
Indebtedness under the Revolving Credit Facilities, provided that the
aggregate principal amount of Indebtedness at any time outstanding
under or in respect of such facilities, together with any Indebtedness
then outstanding which was permitted to be incurred pursuant to clause
(x) below, shall not exceed $25,000,000;
(ii) the incurrence of the Existing Indebtedness;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness owing to any of its
Restricted Subsidiaries, provided that any such Indebtedness is junior
and subordinate to the Notes and the Guarantees, if applicable, and
such Indebtedness is held at all times by the Company or a Restricted
Subsidiary of the Company;
(iv) Indebtedness of any Restricted Subsidiary to the Company
or a Wholly-Owned Restricted Subsidiary of the Company, provided that
such intercompany Indebtedness is evidenced by an Intercompany Note or
by a Telecommunications Asset Lease;
(v) Indebtedness of a Restricted Subsidiary constituting a
sublease by the lessee of Telecommunications Assets subject to a
Telecommunications Asset Lease to a Restricted Subsidiary of such
lessee;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries other than the Leasing Companies or NWE Cyprus of Interest
Hedging Obligations with respect to any floating rate Indebtedness that
is permitted by the covenant described in this Section 4.9(b);
(vii) the incurrence by the Company of any Exchange Rate
Obligations, provided that such Exchange Rate Obligations were entered
into in connection with transactions in the ordinary course of business
or the incurrence of Indebtedness that is permitted by this Section
4.9(b);
(viii) the incurrence of Indebtedness evidenced by the Notes
and the Guarantees pursuant to the Indenture and the Collateral
Documents and by the Convertible Notes and the Convertible Note
Guarantees pursuant to the Convertible Note Indenture and the
Convertible Note Collateral Documents;
62
<PAGE> 72
(ix) Indebtedness in respect of performance, surety or appeal
bonds provided by the Company in the ordinary course of business;
(x) Indebtedness of Restricted Subsidiaries other than the
Leasing Companies or NWE Cyprus in an aggregate principal amount not to
exceed $15,000,000 at any one time outstanding, provided that the
aggregate principal amount of all such Indebtedness at any time
outstanding, together with Indebtedness of Restricted Subsidiaries then
outstanding which was permitted to be incurred pursuant to clause (i)
above, shall not exceed $25,000,000;
(xi) International Vendor Indebtedness not to exceed an
aggregate principal amount of $40,000,000 at any one time outstanding,
provided that the Leasing Companies and NWE Cyprus may not incur any
International Vendor Indebtedness; and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Refinancing Indebtedness issued in exchange for, or the
proceeds of which are used to refinance, repurchase, replace, refund or
defease ("Refinance" and correlatively, "Refinanced" and "Refinancing")
Indebtedness permitted pursuant to clause (ii) or (viii) of this
Section 4.9(b), provided that (A) the amount of such Refinancing
Indebtedness shall not exceed the principal amount of, premium, if any,
and accrued interest (and Additional Amounts and Special Interest on
the Notes) on the Indebtedness so Refinanced (or if such Indebtedness
was issued with original issue discount, the original issue price plus
amortization of the original issue discount at the time of the
repayment of such Indebtedness) plus the fees, expenses and costs of
such Refinancing and reasonable prepayment premiums, if any, in
connection therewith, (B) such Refinancing Indebtedness shall have a
Stated Maturity no earlier than the Indebtedness being Refinanced, (C)
such Refinancing Indebtedness shall have an Average Life equal to or
greater than the Average Life of the Indebtedness being Refinanced, (D)
if the Indebtedness being Refinanced is subordinated in right of
payment to the Notes or the Guarantees, as applicable, such Refinancing
Indebtedness shall be subordinated in right of payment to the Notes or
the Guarantees, as applicable, on terms at least as favorable to the
holders of Notes as those contained in the documentation governing the
Indebtedness being so Refinanced, and (E) no Restricted Subsidiary
shall incur Refinancing Indebtedness to Refinance Indebtedness of the
Company or another Restricted Subsidiary.
SECTION 4.10 Limitation on Issuances of Guarantees by Restricted
Subsidiaries. (a) The Company will not permit any Restricted Subsidiary which is
not a Guarantor on the Issue Date to guarantee, directly or indirectly, any
Indebtedness of the Company ("Guaranteed Indebtedness") unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for a Guarantee by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement,
63
<PAGE> 73
indemnity or subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Guarantee. If the Guaranteed Indebtedness is pari passu with the Notes
or its Guarantee, then the guarantee of such Guaranteed Indebtedness shall be
pari passu with or subordinated to such Guarantee; and if the Guaranteed
Indebtedness is subordinated to the Notes or its Guarantee, then the guarantee
of such Guaranteed Indebtedness shall be subordinated to such Guarantee at least
to the extent that the Guaranteed Indebtedness is subordinated to the Notes or
such Guarantee.
(b) Notwithstanding the provisions of Section 4.10(a) hereof, any
Guarantee by a Restricted Subsidiary other than a Leasing Company, NWE Cyprus,
WTC, BCL or a future WhollyOwned Restricted Subsidiary of the Company shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon the release or discharge of the guarantee which resulted in
the creation of such Restricted Subsidiary's Guarantee, except a discharge or
release by, or as a result of, payment under such guarantee.
SECTION 4.11 Limitation on Liens. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any Liens of any kind other than
Permitted Liens on or with respect to any of its Property or assets now owned or
hereafter acquired, or any interest therein or any income or profits therefrom,
without effectively providing that the Notes and/or the Guarantees, as
applicable, shall be secured equally and ratably with (and provided that the
Notes and/or the Guarantees, as applicable, shall be secured prior to any
secured obligation that is subordinated in right of payment to the Notes and/or
the Guarantees, as applicable) the obligations so secured for so long as such
obligations are so secured.
SECTION 4.12 Limitation on Sale and Leaseback Transactions. The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into, assume, guarantee or otherwise become liable with
respect to any Sale and Leaseback Transaction, unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Sale and Leaseback Transaction at least equal to the Fair Market Value (as
evidenced by a Board Resolution delivered to the Trustee) of the Property or
assets subject to such transaction; (ii) the Attributable Indebtedness of the
Company or such Restricted Subsidiary with respect thereto is included as
Indebtedness and would be permitted by Section 4.9 hereof, and any Liens granted
thereby would be permitted by Section 4.11 hereof; and (iii) the Net Cash
Proceeds from such transaction are applied in accordance with Section 4.8 as if
such proceeds resulted from an Asset Sale.
SECTION 4.13 Restricted Payments. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, make
any Restricted Payment unless, at the time of and after giving effect to such
proposed Restricted Payment (i) no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof; (ii) after
giving effect, on a pro forma basis, to such Restricted
64
<PAGE> 74
Payment and the incurrence of any Indebtedness the net proceeds of which are
used to finance such Restricted Payment, the Company could incur at least $1.00
of additional Indebtedness pursuant to Section 4.9(a) hereof; and (iii) after
giving effect to such Restricted Payment on a pro forma basis, the aggregate
amount expended or declared for all Restricted Payments after the Issue Date
does not exceed the sum of (A) 50% of the Consolidated Net Income of the Company
(or, if Consolidated Net Income shall be deficit, minus 100% of such deficit)
for the period (taken as one accounting period) beginning on the last day of the
fiscal quarter immediately preceding the Issue Date and ending on the last day
of the fiscal quarter immediately preceding the date of such Restricted Payment,
plus (B) 100% of the aggregate Net Cash Proceeds received by the Company
subsequent to the Issue Date from the issuance or sale (other than to a
Subsidiary) of shares of its Qualified Stock, including Qualified Stock issued
upon the exercise of options, warrants or rights to purchase Qualified Stock,
plus (C) 100% of the amount of any Indebtedness of the Company or any of its
Restricted Subsidiaries (as expressed on the face of a balance sheet in
accordance with GAAP), or the carrying value of any Disqualified Stock, which
has been converted into, exchanged for or satisfied by the issuance of shares of
Qualified Stock of the Company subsequent to the Issue Date, less the amount of
any cash, or the value of any other Property distributed by the Company or its
Restricted Subsidiaries upon such conversion, exchange or satisfaction, plus (D)
100% of the net reduction in Investments, subsequent to the Issue Date, in any
Person, resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of Property (but only to the
extent such interest, dividends, repayments or other transfers of Property are
not included in the calculation of Consolidated Net Income), in each case to the
Company or any Restricted Subsidiary from any Person (including, without
limitation, from Unrestricted Subsidiaries) or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments" set forth in Section 1.1 hereof),
not to exceed in the case of any Person the amount of Investments previously
made by the Company or any Restricted Subsidiary in such Person and in each such
case which was treated as a Restricted Payment, minus (E) 100% of the amount of
Investments made or dividends paid pursuant to clauses (v), (vi) and (vii) of
Section 4.13(b) below subsequent to the Issue Date.
(b) The provisions of Section 4.13(a) shall not prevent the Company
from
(i) paying a dividend on its Capital Stock at any time within
60 days after the declaration thereof if, on the declaration date, the
Company could have paid such dividend in compliance with the provisions
of Section 4.13(a) hereof;
(ii) retiring (A) any Capital Stock of the Company or any
Restricted Subsidiary of the Company or (B) Indebtedness of the Company
that is subordinate to the Notes or (C) Indebtedness of a Restricted
Subsidiary of the Company, in exchange for, or out of the proceeds of
the substantially concurrent sale of, Qualified Stock of the Company;
65
<PAGE> 75
(iii) so long as no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof,
retiring any Indebtedness of the Company subordinated in right of
payment to the Notes in exchange for, or out of the proceeds of, the
substantially concurrent incurrence of Indebtedness of the Company
(other than Indebtedness to a Subsidiary of the Company), provided that
such new Indebtedness (A) is subordinated in right of payment to the
Notes at least to the same extent as, (B) has an Average Life at least
as long as, and (C) has no scheduled principal payments due in any
amount earlier than, any equivalent amount of principal under the
Indebtedness so retired;
(iv) so long as no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof,
retiring any Indebtedness of a Restricted Subsidiary of the Company in
exchange for, or out of the proceeds of, the substantially concurrent
incurrence of Indebtedness of the Company or any Restricted Subsidiary
that is permitted under Section 4.9 hereof and that (A) is not secured
by any assets of the Company or any Restricted Subsidiary to a greater
extent than the retired Indebtedness was so secured, (B) has an Average
Life at least as long as the retired Indebtedness and (C) is
subordinated in right of payment to the Notes or the Guarantee, as
applicable, at least to the same extent as the retired Indebtedness;
(v) so long as no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof,
making loans to members of management of the Company as required
pursuant to employment agreements with such members, in an aggregate
principal amount not to exceed $500,000, provided that any repayment of
such loans (but only to the extent such payments are not included in
the calculation of Consolidated Net Income of the Company) shall reduce
the amount of such Investments;
(vi) so long as no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof,
making Investments in Qualified Joint Ventures in an aggregate amount
not to exceed $5,000,000, provided that any repayment of loans or
advances, return of capital or other transfer of Property (but only to
the extent such distributions are not included in the calculation of
Consolidated Net Income of the Company) shall reduce the amount of such
Investments;
(vii) paying dividends to minority stockholders or partners of
a Restricted Subsidiary (other than to a Person who is otherwise an
Affiliate), provided that the Company or the Restricted Subsidiary that
is the stockholder or partner of such non-Wholly Owned Restricted
Subsidiary shall receive pro rata dividends at the same time and in the
same form and composition of consideration as the dividends paid to the
minority stockholders or partners; and
66
<PAGE> 76
(viii) so long as no Default or Event of Default has occurred,
the Company may redeem Convertible Notes pursuant to the terms of the
Convertible Note Indenture or repurchase Convertible Notes pursuant to
a "Change of Control Offer" (as defined in the Convertible Note
Indenture), a Convertible Note Asset Sale Offer or a repurchase offer
pursuant to Section 4.14 of the Convertible Note Indenture.
(c) Not later than the date of making any Restricted Payment, any
Investment made pursuant to clause (vi) of Section 4.13(b), any dividend made
pursuant to clause (vii) of Section 4.13(b) and any redemption or repurchase
made pursuant to clause (viii) of Section 4.13(b), the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payment,
dividend, Investment or redemption is permitted and setting forth the basis upon
which any required calculations were computed, which calculations may be based
upon the Company's or applicable Restricted Subsidiary's latest available
financial statements.
SECTION 4.14 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, cause or suffer to exist or
become effective or enter into an encumbrance or restriction (other than
pursuant to law or regulation) on the ability of any Restricted Subsidiary (i)
to pay dividends or make any other distributions in respect of its Capital Stock
or pay any Indebtedness or other obligation owed to the Company or any
Restricted Subsidiary of the Company; (ii) to make loans or advances to the
Company or any Restricted Subsidiary of the Company; or (iii) to transfer any of
its Property or assets to the Company or any other Restricted Subsidiary of the
Company, except:
(a) any encumbrance or restriction existing as of the Issue Date
pursuant to this Indenture, the Collateral Documents, the Convertible Note
Indenture or the Convertible Note Collateral Documents, the Telecommunications
Asset Leases, the Intercompany Notes and the related collateral documents, an
agreement relating to the Revolving Credit Facilities or the Existing
Indebtedness or any existing agreement listed on Schedule 4.14 attached hereto;
(b) any encumbrance or restriction pursuant to an agreement relating to
an acquisition of assets or Property, so long as the encumbrances or
restrictions in any such agreement related solely to the assets or Property so
acquired (and are not or were not created in anticipation of or in connection
with the acquisition thereof);
(c) any encumbrances or restrictions relating to any Indebtedness of
any Restricted Subsidiary existing on the date on which such Restricted
Subsidiary is acquired by the Company or any Restricted Subsidiary (other than
Indebtedness incurred by such Restricted Subsidiary in connection with or in
anticipation of its acquisition), provided that the EBITDA of such Restricted
Subsidiary is not taken into account in determining whether such acquisition is
permitted by the terms of this Indenture;
67
<PAGE> 77
(d) any encumbrance or restriction pursuant to an agreement effecting a
permitted Refinancing of Indebtedness issued pursuant to an agreement referred
to in the foregoing clauses (a) through (c), so long as the encumbrances and
restrictions contained in any such Refinancing agreement are not materially more
restrictive than the encumbrances and restriction contained in such agreements;
(e) customary provisions restricting subletting or assignment of any
lease of the Company or any Restricted Subsidiary or customary provisions in
certain agreements that restrict the assignment of such agreement or any rights
thereunder;
(f) any temporary encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock of, or
Property and assets of, such Restricted Subsidiary; and
(g) any restriction on the sale or other disposition of assets or
Property securing Indebtedness as a result of a Permitted Lien on such assets or
Property permitted pursuant to Section 4.11 hereof.
SECTION 4.15 Limitation on Issuance and Sale of Preferred Stock of
Restricted Subsidiaries. The Company (i) shall not permit any Restricted
Subsidiary to issue any Preferred Stock other than to the Company or a
Restricted Subsidiary (provided that the Leasing Companies and NWE Cyprus may
not issue Preferred Stock to a Restricted Subsidiary) and (ii) shall not permit
any Person other than the Company or a Restricted Subsidiary to own any
Preferred Stock of any Restricted Subsidiary, except for (a) a sale of 100% of
the Capital Stock of a Restricted Subsidiary sold in a transaction not
prohibited by Section 4.8 hereof; (b) Preferred Stock of a Restricted Subsidiary
issued and outstanding on the Issue Date and held by Persons other than the
Company or any Restricted Subsidiary, (c) Capital Stock of a Restricted
Subsidiary issued and outstanding prior to the time that such Person becomes a
Restricted Subsidiary so long as such Capital Stock was not issued in
contemplation of such Person's becoming a Restricted Subsidiary or otherwise
being acquired by the Company; and (d) any Disqualified Stock permitted to be
issued under Section 4.9 hereof.
SECTION 4.16 Transactions with Affiliates . The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
sell, lease, transfer, or otherwise dispose of, any of its Property or assets
to, or purchase any Property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a)
such Affiliate
68
<PAGE> 78
Transaction complies with the other covenants of this Indenture, (b) such
Affiliate Transaction is on terms that are no less favorable to the Company or
such Restricted Subsidiary than those that would have been obtained in a
comparable arm's-length transaction by the Company or such Restricted Subsidiary
with a Person that is not an Affiliate and (c) the Company delivers to the
Trustee (i) with respect to any Affiliate Transaction involving aggregate
payments in excess of $5,000,000, a Board Resolution certifying that such
Affiliate Transaction complies with clause (a) above and that such Affiliate
Transaction has been approved by a majority of the disinterested directors who
have determined that such Affiliate Transaction is in the best interests of the
Company or such Restricted Subsidiary and (ii) with respect to any Affiliate
Transaction involving aggregate payments in excess of $25,000,000, an opinion as
to the fairness from a financial point of view to the Company or such Restricted
Subsidiary issued by an investment banking firm of national standing, or in the
case of a transaction involving a sale or transfer of assets subject to
valuation such as real estate, an appraisal issue by a nationally recognized
appraisal firm, together with an Officers' Certificate to the effect that such
opinion complies with this clause (ii); provided that the following shall not be
deemed Affiliate Transactions:
(i) any employment agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business
and consistent with industry practice;
(ii) any agreement or arrangement with respect to the
compensation of a director of the Company or any Restricted Subsidiary
approved by the Board of Directors and consistent with industry
practice;
(iii) transactions between or among the Company, its
Wholly-Owned Restricted Subsidiaries or its majority-owned Restricted
Subsidiaries (so long as no minority interest is owned by a Person
which is otherwise an Affiliate, provided that the indirect beneficial
ownership interest of Cable & Wireless in PeterStar will not be deemed
to be such a minority interest so long as Cable & Wireless does not
directly or indirectly own beneficially more than 11% of PeterStar);
(iv) transactions constituting Restricted Payments permitted
by Section 4.13(a) hereto; and
(v) transactions pursuant to contracts existing on the Issue
Date and listed on Schedule 4.16 attached hereto; and
(vi) loans and advances to employees and officers of the
Company or a Restricted Subsidiary in the ordinary course of business
and consistent with the past practice of the Company or such Restricted
Subsidiary, provided that the aggregate principal amount of all such
loans and advances shall not exceed $500,000 at any one time
outstanding.
SECTION 4.17 Restricted and Unrestricted Subsidiaries. (a) The Company
may designate a Subsidiary (including a newly formed or newly acquired
Subsidiary) of the Company or any of its Restricted Subsidiaries, other than the
Leasing Companies, NWE Cyprus, WTC and Technocom, as an Unrestricted Subsidiary,
provided that (i) no portion of the Indebtedness or any other obligation
(contingent or otherwise) of such Subsidiary (x)
69
<PAGE> 79
is guaranteed by the Company or any Restricted Subsidiary, (y) is recourse to or
obligates the Company or any Restricted Subsidiary in any way or (z) subjects
any Property or assets of the Company or any Restricted Subsidiary, directly or
indirectly, contingent or otherwise, to the satisfaction thereof, (ii) such
Subsidiary does not have any obligations which, if in default, would result in a
cross default on Indebtedness of the Company or a Restricted Subsidiary (other
than Indebtedness to the Company or a Restricted Subsidiary) and (iii) such
Subsidiary has total assets of $50,000 or less or such designation is effective
immediately upon such Person's becoming a Subsidiary. Notwithstanding the
foregoing, no Subsidiary may be designated an Unrestricted Subsidiary if such
Subsidiary, directly or indirectly, held Capital Stock of a Restricted
Subsidiary. Unless so designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company or any of its Restricted Subsidiaries shall
be classified as a Restricted Subsidiary thereof. Except for Restricted
Subsidiaries having total assets of $50,000 or less, no Restricted Subsidiary
may be redesignated as an Unrestricted Subsidiary.
(b) The Company will not, and will not permit any of its Restricted
Subsidiaries to, take any action or enter into any transaction or series of
transactions that would result in a Person (other than a newly formed Subsidiary
having no outstanding Indebtedness (other than Indebtedness to the Company or a
Restricted Subsidiary) at the date of determination) becoming a Restricted
Subsidiary (whether through an acquisition, the redesignation of an Unrestricted
Subsidiary or otherwise) unless, after giving effect to such action, transaction
or series of transactions on a pro forma basis, (i) the Company could incur at
least $1.00 of additional Indebtedness pursuant to Section 4.9(a) hereof and
(ii) no Default or Event of Default would occur.
(c) Subject to Section 4.17(b) hereof, an Unrestricted Subsidiary may
be redesignated as a Restricted Subsidiary. The designation of a Subsidiary as
an Unrestricted Subsidiary or the designation of an Unrestricted Subsidiary as a
Restricted Subsidiary in compliance with Section 4.17(b) hereof shall be made by
the Board of Directors pursuant to a Board Resolution delivered to the Trustee
and shall be effective as of the date specified in such Board Resolution, which
shall not be prior to the date such Board Resolution is delivered to the
Trustee.
SECTION 4.18 Limitations on Line of Business. Neither the Company nor
any of its Restricted Subsidiaries will directly or indirectly engage to any
substantial extent in any lines or lines of business activity other than the
Telecommunications Business.
SECTION 4.19 Limitation on Sales of Telecommunications Asset Leases or
Qualified Investments. The Leasing Companies will not directly or indirectly
transfer, convey, sell, lease or make any other disposition (including, without
limitation, dispositions pursuant to any consolidation or merger) of a
Telecommunications Asset Lease or any Qualified Investments.
70
<PAGE> 80
SECTION 4.20 Reports. Whether or not the Company is subject to Section
13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the
Company shall file with the Commission the annual and other reports and other
documents which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were subject thereto, such documents to be filed with the Commission
on or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required to file them. The Company shall also (whether
or not it is required to file reports with the Commission), within 30 days of
each Required Filing Date, (i) transmit by mail to all Holders, as their names
and addresses appear in the Note Register and to any Persons that request such
reports in writing, without cost to such Holders or Persons, and (ii) file with
the Trustee, copies of the annual and other reports, and other documents
(without exhibits) which the Company has filed or would have filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act, any successor
provisions thereto or this Section 4.20. The Company shall not be required to
file any report with the Commission if the Commission does not permit such
filing.
SECTION 4.21 Compliance Certificate; Notice of Default or Event of
Default.
(a) The Company shall deliver to the Trustee within 120 calendar days
after the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate (which shall be signed by officers satisfying the
requirements of Section 314 of the Trust Indenture Act) stating whether or not,
to the best knowledge of such officers, the Company has complied with all
conditions and covenants under this Indenture and the Collateral Documents, and,
if the Company shall be in Default, specifying all such Defaults and the nature
thereof of which such officer may have knowledge.
(b) So long as the Canadian Institute of Chartered Accountants does not
provide recommendations regarding the basis on which Canadian accountants can
make the statement in Section 4.21(c) and so long as the Company is incorporated
in Canada, the year-end financial statements delivered pursuant to Section 4.20
above shall be accompanied by (and in substitution for the certificate in
Section 4.21(c)) a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation reasonably
satisfactory to the Trustee) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
which would lead them to believe that the Company is not in compliance, as of
the end of the fiscal year which the financial statements delivered pursuant to
Section 4.20 relate, with Sections 4.9 or 4.13 hereof, 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) Subject to the provisions of Section 4.21(b) hereof, the year-end
financial statements delivered pursuant to Section 4.11 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation reasonably
satisfactory to the Trustee) that in making the
71
<PAGE> 81
examination necessary for certification of such financial statements nothing has
come to their attention which would lead them to believe that the Company or any
of its Restricted Subsidiaries has violated any provisions of Sections 4.1, 4.6,
4.7, 4.8, 4.9 or 4.14 hereof or of Article V of this Indenture 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, and it being further understood that such statement may not be
provided to the extent contrary to the then current recommendations of the
accountants' governing body.
(d) The Company will, so long as any of the Notes are outstanding,
deliver to the Trustee, within 5 calendar days of any Officer becoming aware of
(i) any Default or Event of Default or (ii) any event of default under any other
mortgage, indenture or instrument referred to in Section 6.1(e), an Officers'
Certificate specifying such Default, Event of Default or other event of default
and what action the Company or applicable Restricted Subsidiary is taking or
proposes to take with respect thereto.
(e) For the purposes of this Section 4.21, compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
(f) So long as either (i) The Company has not procured or caused to be
procured a recognized financial institution with capital of not less than
$10,000,000 as collateral agent in the British Virgin Islands which the Trustee
or the Convertible Note Trustee may lawfully appoint in respect of Collateral or
Convertible Note Collateral, or (ii) WTC has not consolidated with or merged
with NWE Cyprus or transferred all or substantially all of its assets to NWE
Cyprus in connection with a winding-up or liquidation of WTC, the Company shall
deliver, on or before the last Business Day of the month following the Issue
Date and each month thereafter, a certificate to the Trustee stating what steps
have been taken to fulfill the Company's best efforts undertaking to the Holders
of the Notes and of the Convertible Notes to give effect to (i) or (ii) above
and what steps will be taken in the month immediately succeeding the month for
which such certificate is delivered.
SECTION 4.22 Payment of Additional Amounts. (a) Except to the extent
required by law, any and all payments of, or in respect of, any Note shall be
made free and clear of and without deduction for or on account of any and all
present or future taxes, levies, imposts, deductions, charges or withholdings
and all liabilities with respect thereto imposed by Canada, the Russian
Federation, Cyprus or any other jurisdiction with which the Company or any
Guarantor has some connection (including any jurisdiction (other than the United
States of America) from or through which payments under the Notes or the
Guarantees are made) or any political subdivision of or any taxing authority in
any such jurisdiction ("Canadian Taxes," "Russian Taxes," "Cypriot Taxes" or
"Other Taxes," respectively). If the Company or any Guarantor shall be required
by law to withhold or deduct any Canadian Taxes, Russian Taxes, Cypriot Taxes or
Other Taxes from or in respect of any sum payable under a Note or pursuant to a
Guarantee, the sum payable by the Company or such Guarantor, as the case may be,
thereunder shall be increased by the
72
<PAGE> 82
amount ("Additional Amounts") necessary so that after making all required
withholdings and deductions, the Holder shall receive an amount equal to the sum
that it would have received had no such withholdings and deductions been made;
provided that any such sum shall not be paid in respect of any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes to a Holder (an "Excluded Holder")
of a Note (i) resulting from the beneficial owner of such Note carrying on
business or being deemed to carry on business in or through a permanent
establishment or fixed base in the relevant taxing jurisdiction or any political
subdivision thereof or having any other connection with the relevant taxing
jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of such Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of such Note
or the Guarantees or the enforcement of such Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)) with such Holder at the time of such
payment or at the time the amount of such payment is deemed to have been paid or
credited or (iii) that would not have been imposed but for the presentation
(where presentation is required) of such Note for payment more than 180 days
after the date such payment became due and payable or was duly provided for,
whichever occurs later. The Company or the Guarantors, as applicable, will also
(i) make such withholding or deduction and (ii) remit the full amount deducted
or withheld to the relevant authority in accordance with applicable law, and, in
any such case, the Company will furnish to each Holder on whose behalf an amount
was so remitted, within 30 calendar days after the date the payment of any
Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment by the
Company or the Guarantors, as applicable. The Company will, upon written request
of each Holder (other than an Excluded Holder), reimburse each such Holder for
the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other
Taxes so levied or imposed and paid by such holder as a result of payments made
under or with respect to any Notes, and (ii) any Canadian Taxes, Russian Taxes,
Cypriot Taxes or Other Taxes so levied or imposed with respect to any
reimbursement under the foregoing clause (i) so that the net amount received by
such Holder (net of payments made under or with respect to such Notes or the
Guarantees) after such reimbursement will not be less than the net amount which
the Holder would have received if Canadian Taxes, Russian Taxes, Cypriot Taxes
or Other Taxes on such reimbursement had not been imposed.
(b) At least 30 calendar days prior to each date on which any payment
under or with respect to the Notes is due and payable, if the Company or the
Guarantors, as applicable, will be obligated to pay Additional Amounts with
respect to such payment, the Company or the Guarantors, as applicable, will
deliver to the Trustee an Officers' Certificate stating the fact that such
Additional Amounts will be payable and the amounts so payable and will set forth
such other information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
(c) The Company or the Guarantors will pay any stamp, issue,
registration, documentary or other similar taxes and duties, including interest
and penalties, in respect
73
<PAGE> 83
of the creation, issue and offering of the Notes payable in Canada, the United
States, the Russian Federation or Cyprus or any political subdivision thereof or
taxing authority of or in the foregoing. The Company and the Guarantors will
also pay and indemnify the Holders and the Trustee from and against all court
fees and taxes or other taxes and duties, including interest and penalties, paid
by any of them in any jurisdiction in connection with any action permitted to be
taken by the Trustee or the Holders to create the Liens on the Collateral and to
enforce the obligations of the Company or the Guarantors under the Notes, the
Indenture, the Guarantees or the Collateral Documents.
SECTION 4.23 Leasing Companies and NWE Cyprus.
(a) Each Leasing Company shall at all times remain a special purpose
Cypriot corporation which is a Guarantor and a Wholly-Owned Restricted
Subsidiary with corporate organizational documents containing the provisions set
forth on Schedule 1.1(b) attached hereto.
(b) NWE Cyprus shall at all times remain a Cypriot corporation and a
Wholly-Owned Subsidiary.
SECTION 4.24 Technocom. Technocom may not, in any transaction or series
of related transactions, consolidate with, or merge with or into, any other
Person or otherwise change its domicile into any other jurisdiction (through a
sale of assets or otherwise) unless Technocom or such Person, as the case may
be, continues to be owned in an identical proportion and manner as Technocom is
now owned immediately prior to such consolidation or merger or change of
domicile, the preferential $20,000,000 dividend and liquidation, dissolution or
winding-up rights of the Technocom Preferred Stock are not changed, there is no
class of Capital Stock authorized having rights superior to the Technocom
Preferred Stock after giving effect to such transaction or transactions, and
such consolidation, merger, or other change of domicile does not adversely
affect the perfection or priority of the Liens in the Technocom Preferred Stock.
SECTION 4.25 Collateral Agents. In the event that any collateral agent
appointed on or before the Issue Date or thereafter in respect of one or more
jurisdictions resigns or is terminated without the contemporaneous appointment
of a new collateral agent in such jurisdiction or jurisdictions, the Company
shall procure or cause to be procured, within 45 days after the Trustee has
given notice to the Company of such resignation or termination, a recognized
financial institution, with capital of not less than $10,000,000, in such
jurisdiction or jurisdictions, which the Trustee or the Convertible Note Trustee
may lawfully appoint as a collateral agent in respect of Collateral or
Convertible Note Collateral.
SECTION 4.26 WTC. Provided no Default or Event of Default has occurred
and is continuing or would occur as a result of the following transaction, WTC
may consolidate with or merge with NWE Cyprus or transfer all or substantially
all of its assets to NWE Cyprus in connection with a winding-up or liquidation
of WTC.
74
<PAGE> 84
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.1 Merger, Consolidation, Sale of Assets, Etc. The Company
shall not, in any transaction or series of related transactions, consolidate
with, or merge with or into, any other Person or permit any other Person to
merge with or into the Company (other than a merger of a Restricted Subsidiary
of the Company into the Company in which the Company is the continuing
corporation), or sell, convey, assign, transfer, lease or otherwise dispose of
all or substantially all of the Property and assets of the Company and its
Restricted Subsidiaries taken as a whole to any other Person, unless:
(a) either (i) the Company shall be the continuing corporation or (ii)
the corporation (if other than the Company) formed by such consolidation or into
which the Company is merged, or the Person which acquires, by sale, assignment,
conveyance, transfer, lease or disposition, all or substantially all of the
Property and assets of the Company and its Restricted Subsidiaries taken as a
whole (any such corporation or Person being the "Surviving Entity") shall be a
corporation organized and validly existing under the laws of Canada or any
province or political subdivision thereof or the United States of America, any
political subdivision thereof, any state thereof or the District of Columbia, or
the United Kingdom or Bermuda and shall expressly assume, by an indenture
supplemental hereto and other appropriate Collateral Documents in form
reasonably satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest and Additional Amounts, if any,
and Special Interest, if any, on all the Notes and the performance of every
covenant and obligation in this Indenture and the Collateral Documents on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction or series of
related transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of related transactions), no Default or
Event of Default shall have occurred and be continuing or would result
therefrom;
(c) immediately after giving effect to such transaction or series of
related transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), the Company (or the
Surviving Entity, if the Company is not continuing) would be permitted to incur
$1.00 of additional Indebtedness under Section 4.9(a) hereof;
(d) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), the Company (or the
Surviving Entity, if the Company is not continuing) shall have a
75
<PAGE> 85
Consolidated Net Worth equal to or greater than the Consolidated Net Worth of
the Company immediately prior to such transaction; and
(e) the Company (or the Surviving Entity, if the Company is not
continuing) would not be subject to any materially adverse tax effect as a
result of such transaction or series of transactions.
The provisions of clauses (c), (d) and (e) shall not apply to any
merger or consolidation into or with, or any such transfer of all or
substantially all of the Property and assets of the Company and the Restricted
Subsidiaries, taken as a whole, to a newly formed corporation solely for the
purpose of moving the Company's domicile out of Canada, provided that the
Company shall have certified to the Trustee in writing to such effect, and
provided, further, that in no case shall the adverse tax effect to the Company
(or the Surviving Entity, if the Company is not continuing) of such merger or
consolidation or such transfer be $7,500,000 or more; and provided, further,
that the Company shall not engage in any such merger or consolidation or such
transaction for the purpose of moving the Company's domicile out of Canada to
the United Kingdom if following such transaction, either the Trustee or any
Holder of a Note would be considered to be a "control person" of the Company,
either in such jurisdiction or the jurisdiction of the Trustee or such Holder.
In connection with any consolidation, merger, conveyance, lease or
other disposition contemplated by this Section 5.1, the Company shall deliver,
or cause to be delivered, to the Trustee, in form reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, lease or disposition and any
supplemental indenture in respect thereto comply with this Article V and that
all conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 5.2 Successor Corporation Substituted. Upon any consolidation
with, or merger by the Company with or into, any other corporation, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Property and assets of the Company and its Restricted
Subsidiaries taken as a whole in accordance with Section 5.1 hereof, the
successor corporation formed by such consolidation or into which the Company is
merged, or the Person to which such sale, conveyance, assignment, transfer,
lease, conveyance or other disposition is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; and thereafter except in the case of a lease the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Notes, except for the obligation to pay the principal of
(and premium, if any) and interest (including Additional Amounts, if any, and
Special Interest, if any) on the Notes.
If such Surviving Entity shall have succeeded to and been substituted
for the Company, such Surviving Entity may cause to be signed, and may issue
either in its own
76
<PAGE> 86
name or in the name of the Company prior to such succession any or all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such Surviving
Entity, instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Notes which previously shall have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any Notes
which such Surviving Entity thereafter shall cause to be signed and delivered to
the Trustee for that purpose (in each instance with endorsements of Guarantees
thereon by the Guarantors). All of the Notes so issued and so endorsed shall in
all respects have the same legal rank and benefit under this Indenture as the
Notes theretofore or thereafter issued and endorsed in accordance with the terms
of this Indenture and the Guarantee as though all of such Notes had been issued
and endorsed at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer, conveyance
or other disposal, such changes in phraseology and form (but not in substance)
may be made in the Notes thereafter to be issued or the Guarantees to be
endorsed thereon as may be appropriate.
For all purposes of this Indenture and the Notes, Subsidiaries of any
Surviving Entity will, upon such transaction or series of transactions, become
Restricted Subsidiaries or Unrestricted Subsidiaries as provided pursuant to
this Indenture and all Indebtedness, and all Liens on Property or assets, of the
Surviving Entity and its Restricted Subsidiaries immediately prior to such
transaction or series of transactions shall be deemed to have been incurred upon
such transaction or series of transactions.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. "Event of Default" wherever used herein
with respect to the Notes means any one of the following events (whatever the
reason for such event, and whether it shall be voluntary or involuntary, or be
effected by operation of law, pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of interest (or Additional Amounts and
Special Interest, if any) on, or any other amount due in respect of, any Note
when the same becomes due and payable, and the continuance of such Default for a
period of 30 calendar days; or
(b) default in the payment of the principal of (or premium, if any, on)
any Note when the same becomes due and payable whether upon Maturity, optional
redemption, required repurchase (including pursuant to a Change of Control Offer
or an Asset Sale
77
<PAGE> 87
Offer) or otherwise, or the failure to make an offer to purchase any Note as
herein required; or
(c) default in the performance, or breach, of any covenant or agreement
contained in Section 4.7, Section 4.8, Section 4.9, Section 4.12, Section 4.13,
Section 4.25 or Article V hereof; or
(d) default in the performance, or breach, of any other covenant or
warranty of the Company contained in this Indenture or the Notes (other than a
covenant or warranty addressed in Section 6.1(a), Section 6.1(b) or Section
6.1(c) hereof) or any Collateral Document or any Convertible Note Collateral
Document, and the continuance of such Default or breach for a period of 45
calendar days after written notice thereof has been given to the Company by the
Trustee or to the Company and the Trustee by a Holder or the Holders of at least
25 percent of the aggregate principal amount at Stated Maturity of the
outstanding Notes; or
(e) Indebtedness of the Company or any Restricted Subsidiary is not
paid when due within the applicable grace period, if any, or is accelerated by
the holders thereof and, in either case, the principal amount of such unpaid or
accelerated Indebtedness exceeds $10,000,000; or
(f) the entry by a court of competent jurisdiction of one or more final
judgments against the Company or any Restricted Subsidiary in an uninsured or
unindemnified aggregate amount in excess of $5,000,000 which is not discharged,
waived, appealed, stayed, bonded or satisfied for a period of 60 consecutive
calendar days; or
(g) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Significant
Restricted Subsidiary of the Company in an involuntary case or proceeding under
United States bankruptcy laws, as now or hereafter constituted, or any other
applicable federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Restricted Subsidiary of the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of, or in respect of, the Company or any Significant Restricted
Subsidiary of the Company under United States bankruptcy laws, as now or
hereafter constituted, or any other applicable federal, state or foreign
bankruptcy, insolvency or other similar law, including the Companies Creditors'
Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada) or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Significant Restricted Subsidiary
of the Company or of any substantial part of the Property or assets of the
Company or any Significant Restricted Subsidiary of the Company, or ordering the
winding-up or liquidation of the affairs of the Company or any Significant
Restricted Subsidiary of the Company, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive calendar days; or
78
<PAGE> 88
(h) (i) the commencement by the Company or any Significant Restricted
Subsidiary of the Company of a voluntary case or proceeding under United States
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal, state or foreign bankruptcy, insolvency or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent; or (ii) the
consent by the Company or any Significant Restricted Subsidiary of the Company
to the entry of a decree or order for relief in respect of the Company or any
Significant Restricted Subsidiary of the Company in an involuntary case or
proceeding under United States bankruptcy laws, as now or hereafter constituted,
or any other applicable federal, state, or foreign bankruptcy, insolvency, or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company or any Significant Restricted Subsidiary of the
Company; or (iii) the filing by the Company or any Significant Restricted
Subsidiary of the Company of a petition or answer or consent seeking
reorganization or relief under United States bankruptcy laws, as now or
hereafter constituted, or any other applicable federal, state or foreign
bankruptcy, insolvency or other similar law, including the Companies Creditors'
Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada); or (iv)
the consent by the Company or any Significant Restricted Subsidiary of the
Company to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or any Significant Restricted Subsidiary of
the Company or of any substantial part of the Property or assets of the Company
or any Significant Restricted Subsidiary of the Company, or the making by the
Company or any Significant Restricted Subsidiary of the Company of an assignment
for the benefit of creditors; or (v) the admission by the Company or any
Significant Restricted Subsidiary of the Company in writing of its inability to
pay its debts generally as they become due; or (vi) the taking of corporate
action by the Company or any Significant Restricted Subsidiary of the Company in
furtherance of any such action;
(i) any Guarantee, Collateral Document or Convertible Note Collateral
Document ceases to be in effect (except as otherwise permitted by this
Indenture, the Collateral Documents or the Convertible Note Collateral
Documents), or the Company or any Guarantor shall deny or disaffirm its
obligations under its Guarantee, any Collateral Documents, the Notes or any
Convertible Note Collateral Documents, or the Notes and/or the Guarantees fail
to be secured by any theretofore perfected security interests or Liens in the
Collateral or the Convertible Note Collateral (except as permitted by this
Indenture, the Collateral Documents or the Convertible Note Collateral
Documents), which in each circumstance continues for a period of 30 days after
receipt of a written notice thereof from the Trustee to the Company, or from
Holders of at least 25% of the aggregate principal amount of the Notes then
outstanding to the Company and the Trustee;
(j) a Change of Control described in clause (i) of the definition of
"Change of Control" set forth in Section 1.1 hereof occurs; or
(k) if any assets of the Company or any of its Restricted Subsidiaries
shall be nationalized, expropriated, declared forfeit or otherwise permanently
taken by governmental
79
<PAGE> 89
action (the "Seized Assets"), and the book value of such Seized Assets (less the
book value of the expropriation proceeds) shall constitute more than 15% of the
book value, on a consolidated basis, of all of the Company's assets minus
current assets as they are reported on the Company's most recent quarterly
consolidated balance sheet.
SECTION 6.2 Acceleration. If any Event of Default (other than an Event
of Default specified in Section 6.1(g) or Section 6.1(h) hereof) occurs and is
continuing, or if an Event of Default specified in Section 6.1(j) above occurs
and is continuing and the Company fails to make the Change of Control Offer
required pursuant to Section 4.7 hereof, then and in every such case the Trustee
or the holders of not less than 25% of the outstanding aggregate principal
amount at Stated Maturity of Notes may declare the Default Amount, premium, if
any, any accrued and unpaid interest (and Additional Amounts, if any, and
Special Interest, if any) on, and any other amounts then due in respect of all
Notes then outstanding to be immediately due and payable by a notice in writing
to the Company (and to the Trustee if given by the Holders of the Notes), and
upon any such declaration, such Default Amount and any accrued and unpaid
interest (and Additional Amounts, if any, and Special Interest, if any) on all
Notes then outstanding will become and be immediately due and payable. If any
Event of Default specified in Section 6.1(g) or Section 6.1(h) hereof occurs,
the Default Amount and any accrued and unpaid interest (and Additional Amounts,
if any, and Special Interest, if any) on the Notes then outstanding shall become
immediately due and payable without any declaration or other act on the part of
the Trustee or any holder of Notes.
In the event of a declaration of acceleration because an Event of
Default set forth in Section 6.1(e) hereof has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled if the
event of default triggering such Event of Default pursuant to Section 6.1(e)
hereof shall be remedied, or cured, or waived by the holders of the relevant
Indebtedness, within 60 calendar days after such event of default; provided that
no judgment or decree for the payment of the money due on the Notes has been
obtained by the Trustee as hereinafter provided in this Article VI.
Until November 30, 1998, the Default Amount in respect of any
particular Note shall equal the Accreted Value of the Note as of the date of
determination. On or after December 1, 1998, the Default Amount of any
particular Note as of the date of determination shall equal 100 percent of the
principal amount payable in respect of the Note at the Stated Maturity thereof.
At any time after a declaration of acceleration with respect to the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter provided in this Article VI, the
Holders of a majority in principal amount at Stated Maturity of the outstanding
Notes, by written notice of the Company and the Trustee, may rescind and annul
such declaration and its consequences if,
(a) the Company has paid or deposited with the Trustee a sum sufficient
to pay
80
<PAGE> 90
(i) all overdue installments of interest (including Additional
Amounts, if any, and Special Interest, if any), on, and any other
amounts then due in respect of, all Notes,
(ii) the principal of (and premium, if any, on) any Notes
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed
therefor in the Notes and this Indenture,
(iii) to the extent that payment of such interest is lawful,
interest (including Additional Amounts, if any) on the Defaulted
Interest at the rate or rates prescribed therefor in the Notes and this
Indenture, and
(iv) all moneys paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and all other amounts due to the
Trustee pursuant to Section 7.7 hereof; and
(b) all Events of Default with respect to the Notes, other than the
non-payment of the principal of Notes which have become due solely by such
declaration of acceleration, have been cured or waived by the Holders as
provided herein.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
SECTION 6.3 Other Remedies. The Company covenants that if an Event of
Default specified in Section 6.1(a) or Section 6.1(b) occurs, the Company shall,
upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders,
the whole amount then due and payable on the Notes for principal (and premium,
if any), interest (including Additional Amounts, if any, and Special Interest,
if any) and any other amounts then due in respect of the Notes, and to the
extent that payment of such interest shall be legally enforceable, interest upon
the overdue principal (and premium, if any) and upon Defaulted Interest, at the
rate or rates prescribed therefor in the Notes and this Indenture; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee pursuant to Section 7.7 hereof.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of, or pursue any available remedy (under
this Indenture, the Collateral Documents, the Convertible Note Collateral
Documents or otherwise) to collect, the sums so due and unpaid, and may
prosecute any such proceeding to judgment or final decree, and may enforce the
same against the Company, the Guarantors or any other Obligor upon such Notes
and collect the moneys adjudged or decreed to be payable in the manner provided
81
<PAGE> 91
by law out of the Property and assets of the Company, any Guarantor or any other
Obligor upon such Notes, wherever situated.
If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or the Collateral Documents or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy.
SECTION 6.4 Waiver of Past Defaults. The Holders of not less than a
majority in principal amount at Stated Maturity of the outstanding Notes may, on
behalf of the Holders of all the Notes, waive any past Default and its
consequences under this Article VI, except Default (a) in the payment of the
principal of (or premium, if any) or interest on, any Note, or (b) in respect of
a covenant or provision hereof which under Section 9.2 hereof cannot be modified
or amended without the consent of the Holder of each outstanding Note affected.
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 and the Collateral Documents; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.5 Control by Majority. The Holders of not less than a
majority in principal amount at Stated Maturity of the outstanding Notes shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture, the Collateral Documents or the Convertible Note Collateral
Documents or unduly prejudicial to the right of other Holders and would not
subject the Trustee to personal liability, and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 6.6 Limitation on Suits. No Holder of Notes shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, the Collateral Documents or the Convertible Note Collateral Documents
or for the appointment of a receiver or trustee, or for any other remedy
hereunder or thereunder, unless
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Notes;
82
<PAGE> 92
(b) the Holders of not less than 25 percent in principal amount at
Stated Maturity of the outstanding Notes shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
capacity as Trustee hereunder;
(c) such Holders or Holders have offered to the Trustee security or
indemnity satisfactory to the Trustee in its reasonable discretion against the
costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 calendar days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount at Stated Maturity of the outstanding Notes;
in any event, it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture, the Collateral Documents or the Convertible
Note Collateral Documents to affect, disturb or prejudice the rights of any
Holders of Notes, or to obtain or to seek to obtain priority or preference over
any other of such Holders or to enforce any right under this Indenture, the
Collateral Documents or the Convertible Note Collateral Documents, except in the
manner herein provided and for the equal and ratable benefit of all Holders of
Notes.
SECTION 6.7 Rights of Holders to Receive Payment. Notwithstanding any
other provisions of this Indenture, the right of any Holder to receive payment
of principal of (and premium, if any,), interest (including Additional Amounts,
if any, and Special Interest, if any) on, and any other amounts due in respect
of, the Notes held by such Holder, on or after the respective due dates
expressed in the Notes or the redemption dates or purchase dates provided for
therein, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall be absolute and unconditional and shall not be
impaired or affected without the consent of such Holder; except that no Holder
shall have the right to institute any such suit, if and to the extent that the
institution or prosecution thereof or the entry of judgment therein would under
applicable law result in the surrender, impairment, waiver, or loss of the Liens
of the Collateral Documents upon any Property or assets subject to the Liens.
SECTION 6.8 Trustee May File Proofs of Claim. The Trustee shall be
entitled and empowered, without regard to whether the Trustee or any Holder
shall have made any demand or performed any other act pursuant to the provisions
of this Article and without regard to whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise, by
intervention in any proceedings relative to the Company or other Obligor upon
the Notes, or to the creditors or Property of the Company, any Guarantor or any
other Obligor or otherwise, to take any and all actions authorized
83
<PAGE> 93
under the Trust Indenture Act in order to have claims of the Holders and the
Trustee allowed in any such proceeding. In particular, the Trustee shall be
entitled and empowered in such instances:
(a) to file and prove a claim or claims for the whole amount of
principal (and premium, if any), interest (including Additional Amounts, if any,
and Special Interest, if any) and any other amounts owing and unpaid in respect
of the Notes, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including all amounts
owing to the Trustee and each predecessor Trustee pursuant to Section 7.7
hereof) and of the Holders allowed in any judicial proceedings relative to the
Issuer or other obligor upon the Notes, or to the creditors or property of the
Company, any Guarantor, or any such other Obligor,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of the Notes in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Trustee on their behalf; and any
trustee, receiver, or liquidator, custodian or other similar official is hereby
authorized by each of the Holders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to the
Holders, to pay to the Trustee such amounts as shall be sufficient to cover all
amounts owing to the Trustee and each predecessor Trustee pursuant to Section
7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Holders of the
Notes parties to any such proceedings.
SECTION 6.9 Priorities. Any money collected by the Trustee (including
funds received from collateral agents and escrow agents under the Collateral
Documents and the Convertible Note Collateral Documents) pursuant to this
Article VI shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal (premium, if any) or interest, upon presentation of the
84
<PAGE> 94
Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 7.7 hereof including payment of all compensation, expense,
liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any), interest (including Additional
Amounts, if any, and Special Interest, if any) on, and any other
amounts due in respect of, the Notes, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Notes for principal (and premium, if any) and interest (including
Additional Amounts, if any, and Special Interest, if any), and any
other amounts due in respect hereof, respectively; and
THIRD: To the Company, the Guarantors or to such party as is
entitled to be paid as required by the terms of the Collateral
Documents or the Convertible Note Collateral Documents or as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.9. At least 15 calendar days before such
record date, the Company shall mail to each Holder and the Trustee a notice that
states such record date, the payment date and amount to be paid. The Trustee may
mail such notice in the name and at the expense of the Company.
SECTION 6.10 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, the Collateral
Documents and the Convertible Note Collateral Documents or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merit and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10 percent in principal amount at Stated Maturity of the outstanding Notes,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal (or premium, if any) or interest on any Note on or after its
Stated Maturity.
SECTION 6.11 Waiver of Stay or Extension Laws. The Company and each of
the Guarantors (to the extent they may lawfully do so) shall not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the
85
<PAGE> 95
covenants or the performance of this Indenture, the Collateral Documents or the
Convertible Note Collateral Documents; and the Company and each of the
Guarantors (to the extent that they may lawfully do so) hereby expressly waive
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power granted herein, in the Collateral Documents or in the
Convertible Note Collateral Documents to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 6.12 Trustee May Enforce Claims Without Possession of the
Notes. All rights of action and claims under this Indenture, the Collateral
Documents, the Convertible Note Collateral Documents or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name, as
trustee of an express trust, and any recovery of judgment shall be applied in
accordance with Section 6.9.
SECTION 6.13 Restoration of Rights and Remedies. If the Trustee or any
Holder of Notes has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case the Company, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding has been instituted.
SECTION 6.14 Rights and Remedies Cumulative. Except as otherwise
provided in Section 2.7 hereof, no right or remedy conferred herein, in the
Collateral Documents upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.15 Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article VI by the Collateral Documents or the Convertible
Note Collateral Documents or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
86
<PAGE> 96
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and shall use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations
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; provided that in the case of any such
certificates or opinions that by any provision of this Indenture are
specifically required to be furnished to the Trustee, the Trustee shall examine
such certificate and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not investigate or confirm the accuracy
of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, provided that: (i) this paragraph (c) shall 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 Trust 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) 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.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(f) No provision of this Indenture, the Collateral Documents or the
Convertible Note Collateral Documents shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk of liability is not reasonably assured
to it.
87
<PAGE> 97
(g) Every provision of this Indenture relating to the conduct or
affecting the liability or of affording protection to the Trustee shall be
subject to the provisions of this Article VII and to the provisions of the Trust
Indenture Act.
SECTION 7.2 Rights of Trustee.
(a) Subject to the provisions of Section 7.1(a) hereof, the Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on any
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any such agent; provided that
such agent was appointed with due care by the Trustee or, subject to Section 7.3
hereof, was selected by the Company.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided that the Trustee's conduct does not constitute willful
misconduct or negligence.
(e) The Trustee shall not be charged with knowledge of any Default or
Event of Default under Sections 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h),
6.1(i) or 6.1(j) hereof, of the identity of any Restricted Subsidiary or of the
existence of any Change of Control or Asset Sale unless either (i) a Trust
Officer shall have actual knowledge thereof, or (ii) the Trustee shall have
received notice thereof in accordance with Section 4.21 and 13.2 hereof from the
Company or in accordance with Section 13.2 hereof from any Holder of Notes,
provided that the Trustee shall comply with the "automatic stay" provisions
contained in United States bankruptcy laws, if applicable.
(f) The Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in reliance thereon.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion may make such
further inquiry or investigation into such fact or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney.
88
<PAGE> 98
(h) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
SECTION 7.3 Concerning the Trustee, Collateral Agents, and Collateral
Held by Collateral Agents.
(a) The Trustee shall have no duty to act outside of the United States
in respect of any Collateral or Convertible Note Collateral located in a
jurisdiction other than the United States ("Foreign Collateral") but shall, at
the specific request of the Company and, provided that the Company has provided
appropriate opinions, appoint a Qualified Foreign Collateral Agent (as defined
in subsection (d)) in any such jurisdiction and sign the Foreign Collateral
Documents (as defined herein) specified by the Company. Such Qualified Foreign
Collateral Agent, the Trustee (at its option, or if requested by the Company)
and the owner of each item of Foreign Collateral shall, provided the same are
reasonably acceptable to the Trustee, enter into a collateral assignment, pledge
agreement, mortgage or other security agreement purporting to create a Lien or
security interest in such item of Foreign Collateral (each such assignment or
agreement, a "Foreign Collateral Document") pursuant to which such owner shall
purport to grant to such Qualified Foreign Collateral Agent a Lien or security
interest for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Notes and for the benefit of the Convertible Note Trustee and the
equal and ratable benefit of the Holders of the Convertible Notes.
(b) The duties and responsibilities, and the rights and immunities, of
the Trustee with respect to a Qualified Foreign Collateral Agent and Foreign
Collateral with respect to which such Qualified Foreign Collateral Agent is
acting shall be limited to those required by this Section 7.3(b) as follows: (i)
both before and after an Event of Default, the Trustee shall have no duty to
supervise or monitor such Qualified Foreign Collateral Agent or its performance,
and no liability for any acts or omissions of such Qualified Foreign Collateral
Agent; provided that (x) if a Trust Officer has actual knowledge of willful
misconduct or gross negligence of such Qualified Foreign Collateral Agent, the
Trustee may replace such Qualified Foreign Collateral Agent with a successor
Qualified Foreign Collateral Agent which it may appoint and (y) the Trustee
shall satisfy itself that any instructions given by the Trustee to such
Qualified Foreign Collateral Agent have been carried out; (ii) the Trustee shall
give to such Qualified Foreign Collateral Agent such instructions to make
effective the Liens granted by the Foreign Collateral Documents as shall be
stated to be necessary in the Opinions of Counsel furnished pursuant to Section
11.2 of this Indenture with respect to the Foreign Collateral with respect to
which any such Qualified Foreign Collateral Agent is acting and the Liens
granted therein; (iii) the Trustee shall give notice to such Qualified Foreign
Collateral Agent of any Event of Default of which a Trust Officer has actual
knowledge; (iv) the Trustee may, but has no obligation to, request information
from such Qualified Foreign Collateral Agent with respect to realization on
Foreign Collateral or an
89
<PAGE> 99
alternative course of action after an Event of Default, shall evaluate any such
information supplied by such Qualified Foreign Collateral Agent and in its sole
discretion, subject, however, to the provisions of subsection (f) below relating
to the Trustee's seeking direction from Holders of a majority in principal
amount at Stated Maturity of the Notes or the right of a Holder of Notes to give
directions pursuant to the terms of Section 6.5 of this Indenture, shall
instruct such Qualified Foreign Collateral Agent either to realize on such
Foreign Collateral or to take such alternative course of action; and (v) the
Trustee shall commence an action, or take such other action as it deems
appropriate, in the event any Qualified Foreign Collateral Agent fails to follow
instructions of the Trustee or fails to provide information required to be
provided to the Trustee by such Qualified Foreign Collateral Agent; provided
that, in any circumstance in which this Section 7.3(b) requires that the Trustee
determine that such Qualified Foreign Collateral Agent has complied with
instructions, the Trustee shall be entitled to rely conclusively on a
certificate of an appropriate officer of such Qualified Foreign Collateral
Agreement to such effect.
(c) The Trustee shall not be responsible for, and makes no
representation as to, the effectiveness, perfection or priority of any Lien
which is granted pursuant to any Collateral Document or Convertible Note
Collateral Document. Notwithstanding the foregoing, if a Trust Officer has
actual knowledge of the occurrence and continuance of a Default or an Event of
Default arising under Section 6.1(i) of this Indenture the Trustee shall give
whatever notices and take whatever action it deems appropriate or necessary
under this Indenture as a result the continuance of such Default or Event of
Default.
(d) As used herein a "Qualified Foreign Collateral Agent" shall be a
collateral agent appointed in respect of one or more items of Foreign Collateral
who has signed an agency agreement with the Trustee substantially in the form of
Exhibit K hereto with such changes as may be acceptable to the Trustee.
(e) In exercising its rights and duties under this Section 7.3, the
Trustee shall use the same degree of care and skill as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(f) During the continuance of an Event of Default, the Trustee will
give no instructions to a Qualified Foreign Collateral Agent until the Holders
of a majority in aggregate principal amount at Stated Maturity of the Notes
instruct the Trustee to act or give instructions to such Qualified Foreign
Collateral Agent to act.
(g) In the event holders of a majority in aggregate principal amount at
Stated Maturity of the Notes fail to direct the Trustee to take specific action
within 30 days of a request by the Trustee for direction, the Trustee may retain
such investment banker, broker/dealer, or other expert as the Trustee may
determine, and the advice of such investment banker, broker/dealer or other
expert shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by the Trustee hereunder
90
<PAGE> 100
in good faith and in reliance thereon, provided such investment banker,
broker/dealer or other expert was selected by the Trustee with due care.
SECTION 7.4 Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture, the Collateral Documents or the Notes, it shall not be accountable
for the Company's use of the proceeds from the Notes, and it shall not be
responsible (a) for any statement of the Company in this Indenture, including
the recitals contained herein, in the Collateral Documents or in any other
document issued in connection with the sale of the Notes or in the Notes other
than the Trustee's certificate of authentication or (b) for compliance by the
Company with the Registration Agreement.
SECTION 7.5 Notice of Defaults. Within 90 calendar days after the
occurrence of any Default or Event of Default hereunder with respect to the
Notes, the Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Note Register, notice of such Default hereunder actually
known by the Trustee, unless such Default shall have been cured or waived;
provided that, except in the case of a Default in the payment of the principal
of (or premium, if any) or interest (including Additional Amounts, if any, or
Special Interest, if any) on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Trust Officers of the Trustee
in good faith determine that the withholding of such notice is in the interest
of the Holders.
SECTION 7.6 Preservation of Information; Reports by Trustee to Holders.
(a) The Company shall furnish or cause to be furnished to the Trustee:
(i) not less than 10 calendar days prior to each Interest
Payment Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of the Record
Date immediately preceding such Interest Payment Date; and
(ii) at such other times as the Trustee may request in
writing, within 30 calendar days after the receipt by the Company of
any such request, a list of similar form and content as of a date not
more than 15 calendar days prior to the time such list is furnished;
provided, that if and so long as the Trustee shall be the Registrar for the
Notes, no such list need be furnished with respect to the Notes.
(b) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.6(a) hereof and the names
and addresses of Holders received by the Trustee in its capacity as Registrar,
if so acting. The Trustee may destroy
91
<PAGE> 101
any list furnished to it as provided in Section 7.6(a) hereof upon receipt of a
new list so furnished.
(c) Holders may communicate as provided by the Trust Indenture Act with
other Holders with respect to their rights under this Indenture, under the
Collateral Documents or under the Notes.
(d) Each Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders in accordance with this Section 7.6,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under this Section 7.6.
(e) Within 60 calendar days after May 15 of each year commencing with
the year 1997, the Trustee shall transmit by mail to all Holders of Notes, a
brief report dated as of such May 15 if and to the extent required under Section
313(a) of the Trust Indenture Act.
(f) The Trustee shall comply with Sections 313(b) and 313(c) of the
Trust Indenture Act.
(g) A copy of each report described in Section 7.6(e) hereof shall, at
the time of its transmission to Holders, be filed by the Trustee with each stock
exchange, if any, upon which the Notes are then listed, with the Commission and
also with the Company. The Company shall promptly notify the Trustee of any
stock exchange upon which the Notes are listed.
SECTION 7.7 Compensation and Indemnity. The Company and the Guarantors
jointly and severally agree to pay to the Trustee from time to time such
compensation for its services hereunder and under the Collateral Documents as
the Company, the Guarantors and the Trustee may from time to time agree for all
services rendered by the Trustee hereunder and under the Collateral Documents.
The Company and the Guarantors jointly and severally agree to reimburse the
Trustee upon request for all reasonable disbursements, advances and expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents
and counsel. The Trustee's compensation shall not be limited by any law or
compensation of a trustee of an express trust.
The Company and the Guarantors jointly and severally agree to assume,
and do hereby assume, liability for, and do hereby indemnify and agree to
protect, defend, save and keep harmless each Indemnitee (which term, for the
purposes of this Indenture, shall mean the Trustee (in its individual and trust
capacities) and each Qualified Foreign Collateral Agent) and their respective
Affiliates, agents, successors, permitted assigns, directors, officers
92
<PAGE> 102
and servants; a "Related Indemnitee" of an Indemnitee shall mean any Affiliate,
agent, director, officer and servant of such Indemnitee except that no Qualified
Foreign Collateral Agent shall be a Related Indemnitee of the Trustee) from and
against, any and all liabilities, obligations, losses, damages, penalties,
settlements, claims, actions, suits or proceedings of any kind and nature,
costs, expenses (including reasonable attorney's fees) and disbursements
(including, without limitation, any act or omission of any agent appointed by
the Trustee hereunder or by any Qualified Foreign Collateral Agent) of any kind
and nature whatsoever which may be imposed on, incurred by or asserted against
any Indemnitee, (A) in any way relating to or arising out of or incurred by such
Indemnitee in connection with the acceptance or administration of the trust
created by this Indenture or of any Collateral or Convertible Note Collateral
pursuant to the agency agreement pursuant to which any Qualified Foreign
Collateral Agent is appointed (an "Agency Agreement") or any Collateral Document
and the performance of such Indemnitee's duties hereunder and thereunder, or (B)
arising out of any failure by the Company to perform or observe any covenant,
condition or agreement in or the falsity of any representation or warranty of
the Company made in or pursuant to this Indenture, any Agency Agreement or any
Collateral Document or any Convertible Note Collateral Document (all of the
foregoing, including clauses (A) and (B), collectively, "Costs or Expenses");
provided that, except as and to the extent attributable to default by the
Company in performing or observing its obligations hereunder or under any Agency
Agreement, Collateral Document or any Convertible Note Collateral Document or
breach by the Company of any of its representations or warranties herein or
therein, the Company shall not be required to indemnify for any Costs or
Expenses:
(a) imposed on an Indemnitee to the extent that such
Costs or Expenses arise out of or are caused by any act,
misrepresentation or omission of such Indemnitee or any of its
Related Indemnitees where such act, misrepresentation or
omission (x) is in breach of the express obligations or
representations of such Indemnitee or any of its Related
Indemnitees under the Operative Documents or any related
document, (y) constitutes negligence or willful misconduct of
such Indemnitee or any of its Related Indemnitees or (z) is in
violation of any applicable law (unless, in any such instance,
such breach, negligence, willful misconduct or violation
results from any misrepresentation, gross negligence, willful
misconduct or violation of applicable law by the Company or
any of its Affiliates); or
(b) that are taxes on, based on or measured by or
with respect to the gross or net income, gross or net
receipts, minimum or alternative minimum taxable income,
excess profits, personal holdings, tax preferences,
accumulated earnings, capital gains, capital, franchises,
doing business, net worth or conduct of business of such
Indemnitee (excluding taxes in the nature of sales, use,
property or rental taxes and taxes based on doing business or
conduct of business if such taxes are imposed solely as a
result the performance of duties under this Indenture, any
Agency Agreement, any Collateral Document or any Convertible
Note Collateral Document).
93
<PAGE> 103
If the Company has knowledge of any claim or liability indemnified
against under this Section 7.7, it shall give prompt written notice thereof to
the applicable Indemnitees, and if any Indemnitee shall have any such knowledge,
it shall give prompt written notice thereof to Company (provided that failure to
give such notice shall not affect the Company's indemnity obligations hereunder
except to the extent that Company is prejudiced thereby). In case any action,
suit or proceeding shall be brought against any Indemnitee for which indemnity
may be sought under this Section 7.7, such Indemnitee shall notify the Company
of the commencement thereof (provided that failure to give such notice shall not
affect the Company's obligations hereunder except to the extent that the Company
is prejudiced thereby), and the Company may, at its expense, participate in and,
to the extent that it shall wish (subject to the following provisions of this
paragraph), assume in good faith in a commercially reasonable manner the defense
thereof, with counsel reasonably satisfactory to such Indemnitee; provided that
the Company shall not admit liability on such Indemnitee's part or settle such
action without the consent of such Indemnitee, which consent shall not be
unreasonably withheld; and provided, further, that no Event of Default shall
have occurred and be continuing and the Company shall have agreed in writing
that the Company is obligated to indemnify such Indemnitee for such Costs and
Expenses hereunder. If the Company assumes the defense of such action, suit or
proceeding, such Indemnitee may participate in such defense at such Indemnitee's
expense. Notwithstanding the foregoing, if and to the extent that (i) in the
written opinion of independent counsel to such Indemnitee an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel, (ii) in the reasonable opinion of such
Indemnitee such action, suit or proceeding involves the potential imposition of
criminal liability on such Indemnitee in connection with a claim not excluded by
Section 7.7(a) hereof, or (iii) such proceedings will involve a material risk of
the sale, forfeiture or loss of the Collateral or any part thereof, and such
Indemnitee informs the Company that such Indemnitee desires to be represented by
separate counsel, such Indemnitee shall have the right to control its own
defense of such claim and the Costs and Expenses in connection therewith shall
be borne by the Company. With respect to any amount which the Company is
requested by an Indemnitee to pay by reason of this Section 7.7, the Indemnitee
shall, if requested by the Company and prior to any payment, submit such
additional information to the Company as the Company may reasonably request
properly to substantiate the requested payment. The Company or its insurers
shall have the right to investigate or (provided that the Company or its
insurers shall not reserve the right to dispute liability hereunder or under any
insurance policies pursuant to which coverage is sought), subject to the second
and fourth sentences of this paragraph, defend or compromise any claim for which
indemnification is sought pursuant to this Section 7.7 and each Indemnitee shall
cooperate with the Company or its insurers with respect thereto.
The Company's obligations under the indemnities provided for in this
Indenture (i) are intended for the benefit of, and shall be enforceable by, each
Indemnitee, whether or not such Indemnitee is a party to this Indenture, and
(ii) shall be those of a primary obligor whether or not the Person indemnified
shall also be indemnified with respect to the same matter under the terms of
this Indenture, an Agency Agreement, any Collateral Document
94
<PAGE> 104
or any Convertible Note Collateral Document. The Person seeking indemnification
from the Company pursuant to any provision of this Indenture may proceed
directly against the Company without first seeking to enforce any other right of
indemnification. Upon the payment in full by the Company of any indemnity
provided for hereunder, the Company shall be, to the extent permitted by law,
subrogated to any right of the Person indemnified, other than with respect to
any of such Indemnitee's insurance policies.
To secure the Company's and the Guarantors' payment obligations in this
Section 7.7 the Trustee for the benefit of the Indemnitees shall have a Lien
prior to the Notes on all money or Property held or collected by the Trustee
other than money or Property held in trust to pay principal of, premium, if any,
and interest on, particular Notes.
The Company's and the Guarantors' payment obligations pursuant to this
Section 7.7 shall survive the resignation or removal of the Trustee or any
Collateral Agent, the termination of any Agency Agreement or the discharge of
this Indenture, any Collateral Document or any Convertible Note Collateral
Document. Subject to any other rights available to the Trustee under applicable
bankruptcy law, when the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.1(g) or Section 6.1(h) hereof, the expenses are
intended to constitute expenses of administration under bankruptcy law.
Payments by the Company shall be payable in the same currency as the
indemnified liability. Nothing contained herein shall give the Company the right
to waive, amend or otherwise modify any rights of any Indemnitee under this
Indenture except with the written consent of such Indemnitee.
SECTION 7.8 Replacement of Trustee. (a) No resignation or removal of
the Trustee and no appointment of a successor Trustee pursuant to this Article
VII shall become effective until the acceptance of appointment by the successor
Trustee under this Section 7.8.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 60 calendar days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the outstanding Notes, delivered to the Trustee,
to the Company and to the Guarantors.
(d) If at any time;
(i) the Trustee shall fail to comply with Section 310(b) of
the Trust Indenture Act after written request thereof by the Company or
by any Holder who
95
<PAGE> 105
has been a bona fide Holder of a Note for at least six months, unless
the Trustee's duty to resign is stayed in accordance with the
provisions of Section 310(b) of the Trust Indenture Act; or
(ii) the Trustee shall cease to be eligible under Section 7.10
hereof and shall fail to resign after written request therefor by the
Company or by any Holder; or
(iii) the Trustee shall become incapable of acting or a decree
or order for relief by a court having jurisdiction in the premises
shall have been entered in respect of the Trustee in an involuntary
case under the United States bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or similar law, or a decree or order by a court having
jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trustee of its Property
and asset or affairs, or any public officer shall take charge or
control of the Trustee or of its Property and assets or affairs for the
purpose of rehabilitation, conservation, winding-up or liquidation; or
(iv) the Trustee shall commence a voluntary case under the
United States bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or similar law
or shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Trustee or its Property and assets or
affairs, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they
become due, or shall take corporate action in furtherance of any such
action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to the Notes, or (ii) subject to Section 6.10 hereof, any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee for the Notes.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by the Holders of a majority in principal amount of the outstanding
Notes delivered to the Company and the retiring Trustee, the successor trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with this Section 7.8, become the successor Trustee and to that
extent replace any successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and shall
have accepted appointment in the manner
96
<PAGE> 106
hereinafter provided, any Holder that has been a bona fide Holder of a Note for
at least six months may, subject to Section 6.10 hereof, on behalf of himself
and all others similar situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such resignation, removal and appointment by first class mail, postage
prepaid, to the Holders as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee with
respect to the Notes and the address of its Corporate Trust Office.
(g) In the event of an appointment hereunder of a successor Trustee,
each such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company, the Guarantors and the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts, and duties of the retiring Trustee but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trust of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all Property and money held by
such former Trustee hereunder, subject to its Lien, if any, provided for in
Section 7.7 hereof.
(h) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in Section 7.8(g) hereof.
(i) No successor Trustee shall accept its appointment unless at the
time of such acceptance successor Trustee shall be qualified and eligible under
this Article VII and under the Trust Indenture Act.
SECTION 7.9 Successor Trustee by Merger. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be otherwise
qualified and eligible under this Article VII and under the Trust Indenture Act,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes. In the event that
any Notes shall not have been authenticated by such predecessor Trustee, any
97
<PAGE> 107
such successor Trustee may authenticate and deliver such Notes, in either its
own name or that of its predecessor Trustee, with the full force and effect
which this Indenture provides for the certificate of authentication of the
Trustee.
SECTION 7.10 Eligibility; Disqualification. There shall at all times be
a Trustee hereunder which shall be
(i) a corporation organized and doing business under the laws
of the United States of America, any State or Territory thereof or the
District of Columbia, authorized under such laws to exercise corporate
trust powers, and subject to supervision or examination by federal,
State, Territorial or District of Columbia authority, or
(ii) a corporation or other Person organized and doing
business under the laws of a foreign government that is permitted to
act as Trustee pursuant to a rule, regulation or order of the
Commission, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by authority of such
foreign government or a political subdivision thereof substantially
equivalent to supervision or examination applicable to United States
institutional trustees,
in either case having a combined capital and surplus of at least $100,000,000.
If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 7.10, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible pursuant to the provisions of
this Section 7.10, it shall resign immediately in the manner and with the effect
specified in this Article VII.
This Indenture shall always have a Trustee which satisfies the
requirements of Section 310(a)(1), (2) and (5) of the Trust Indenture Act. If
the Trustee has or hereafter acquires any "conflicting interest" within the
meaning of Section 310(b) of the Trustee Indenture Act, the Trustee and the
Company shall in all respects comply with the provision of Section 310(b) of the
Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with
the Commission the application referred to in the penultimate paragraph of
Section 310(b) of the Trust Indenture Act.
Neither the Company, any Guarantor or any Subsidiary thereof, nor any
Affiliate of the Company or any Guarantor shall serve as Trustee hereunder.
SECTION 7.11 Preferential Collection of Claims Against Company. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned
98
<PAGE> 108
or been removed shall be subject to Section 311(a) of the Trust Indenture Act to
the extent indicated therein.
SECTION 7.12 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Collateral or the Convertible Note Collateral may at the time be located,
the Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Collateral or the
Convertible Note Collateral, and to vest in such Person or Persons, in such
capacity and for the benefit of the Holders, such interest in the Collateral or
the Convertible Note Collateral, or any part thereof, and subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 7.10, and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 7.8(f) hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of interest in the Collateral or the Convertible
Note Collateral or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the
99
<PAGE> 109
estates or property specified in its instrument of appointment, either jointly
with the Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
ARTICLE VIII
DEFEASANCE
SECTION 8.1 Company's Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may elect, at its option, at any time, to have Section
8.2 or Section 8.3 hereof applied to the outstanding Notes (in whole and not in
part) upon compliance with the conditions set forth below in this Article VIII,
such election to be evidenced by a Board Resolution delivered to the Trustee.
SECTION 8.2 Legal Defeasance and Discharge. Upon the Company's exercise
of its option to have this Section 8.2 applied to the outstanding Notes (in
whole and not in part), the Company shall be deemed to have been discharged from
its obligations with respect to such Notes as provided in this Section 8.2 on
and after the date on which the conditions set forth in Section 8.4 hereof are
satisfied (hereinafter called "Defeasance"). For this purpose, Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Notes and the Company and the Guarantors shall
be deemed to have satisfied all of their other obligations under such Notes,
this Indenture, the Guarantees and the Collateral Documents (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder:
(a) the rights of Holders of such Notes to receive, solely from the
trust fund described in Section 8.4 hereof and as more fully set forth in
Section 8.4, payments in respect of the principal of and any premium and
interest (and Additional Amounts, if any, and Special Interest, if any) on such
Notes when payments are due,
(b) the Company's obligations with respect to such Notes under Sections
2.6, 2.7, 2.9, 4.2, 4.3 and 4.4 hereof,
100
<PAGE> 110
(c) the Company's and the Guarantor's obligations with respect to
Additional Amounts under Section 4.22 hereof,
(d) the rights, powers, trusts, duties and immunities of the Trustee
under this Indenture,
(e) Article III hereof, and
(f) this Article VIII.
Subject to compliance with this Article VIII, the Company may exercise
its option to have this Section 8.2 applied to the outstanding Notes (in whole
or in part) notwithstanding the prior exercise of its option to have Section 8.3
hereof applied to such Notes.
SECTION 8.3 Covenant Defeasance. Upon the Company's exercise of its
option to have this Section 8.3 applied to the outstanding Notes (in whole and
not in part), (i) the Company and the Guarantors shall be released from their
respective obligations under Section 5.1(c) or (d), Sections 4.5 through 4.20,
inclusive, and any covenant added to this Indenture subsequent to the Issue Date
pursuant to Section 9.1 hereof, and (ii) the occurrence of any event specified
in Section 6.1(c) or 6.1(d) hereof, with respect to any of Section 5.1(c) or
(d), Sections 4.5 through 4.20, inclusive, and any covenant added to this
Indenture subsequent to the Issue Date pursuant to Section 9.1 hereof, shall be
deemed not to be or result in an Event of Default, in each case with respect to
such Notes as provided in this Section 8.3 on and after the date on which the
conditions set forth in Section 8.4 hereof are satisfied (hereinafter called
"Covenant Defeasance"). For this purpose, Covenant Defeasance means that, with
respect to such Notes, the Company and the Guarantors may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section (to the extent so specified in the case of
Section 6.1(c) and 6.1(d) hereof), whether directly or indirectly by reason of
any reference elsewhere herein to any such Section or by reason of any reference
in any such Section to any other provisions herein or in any other document; but
the remainder of this Indenture, the Guarantees, the Collateral Documents and
such Notes shall be unaffected thereby.
SECTION 8.4 Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to the application of Section 8.2 or Section
8.3 hereof to the outstanding Notes:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to the benefits of the Holders of such Notes, (i) money in an amount, or (ii)
U.S. Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(iii) a combination thereof, in each case sufficient, in the opinion of a
nationally
101
<PAGE> 111
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge the
principal of and any installment of interest (including Special Interest, if
any, and Additional Amounts, if any, which would be required based on the laws,
regulations or rulings in effect on the date of deposit) on such Notes on the
Stated Maturity thereof, in accordance with the terms of this Indenture and such
Notes.
(b) In the event of an election to have Section 8.2 hereof apply to the
outstanding Notes, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling and the Company has received
from Revenue Canada, Customs, Excise & Taxation an advance income tax ruling or
(ii) since the date of this Indenture, there has been a change in the applicable
United States federal, Canadian federal, Bermuda or United Kingdom income tax
law, in either case (i) or (ii) to the effect that, and based thereon such
opinion shall confirm that, the Holders of such Notes will not recognize gain or
loss for United States federal, Canadian federal, Bermuda or United Kingdom
income tax purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Notes and will be subject to United States federal
income tax and Canadian federal, Bermuda or United Kingdom tax, including
Canadian withholding tax, in the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge were not to
occur.
(c) In the event of an election to have Section 8.3 hereof apply to the
outstanding Notes, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Notes will not recognize gain or
loss for United States federal, Canadian federal, Bermuda or United Kingdom
income tax purposes or under the tax laws of any other jurisdiction as a result
of the deposit and Covenant Defeasance to be effected with respect to such Notes
and will be subject to United States federal, Canadian federal, Bermuda or
United Kingdom or any other income tax in the same amount, in the same manner
and at the same times as would be the case if such deposit, Covenant Defeasance
and discharge were not to occur.
(d) No Default or Event of Default with respect to the outstanding
Notes shall have occurred and be continuing at the time of such deposit after
giving effect thereto or and no Default or Event of Default under Section 6.1(g)
or 6.1(h) shall have occurred at any time on or prior to the 91st calendar day
after the date of such deposit and be continuing on such 91st day (it being
understood that this condition shall not be deemed satisfied until after such
91st calendar day).
(e) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture Act
(assuming for the purpose of this clause (e) that all Notes are in default
within the meaning of such Act).
102
<PAGE> 112
(f) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company or the Guarantor is a party or by which it is
bound.
(g) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder.
(h) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 8.5 Deposited Money and U.S. Government Obligations to be Held
in Trust: Miscellaneous Provisions. Subject to Section 8.6 hereof, all money and
U.S. Government Obligations (including the proceeds thereof) deposited with the
Trustee pursuant to Section 8.4 hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through any
such Paying Agent as the Trustee may determine, to the Holders of such Notes, of
all sums due and to become due thereon in respect of principal and any premium
and interest (including Special Interest, if any, and Additional Amounts, if
any, which would be required based on the laws, regulations and rulings in
effect on the date of deposit pursuant to Section 8.4(a) hereof), but money so
held in trust 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 U.S. Government
Obligations deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than such tax, fee or other charge
imposed on or assessed against the U.S. Government Obligations 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 outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company Order
any money or U.S. Government Obligations 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, are in excess of the amount thereof that would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be,
with respect to the outstanding Notes.
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, premium, if any, or interest, if any, on any Note and
remaining unclaimed for two years after such principal, premium, if any, or
interest (including Special Interest, if any, and
103
<PAGE> 113
Additional Amounts, if any), if any, have 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 Note shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, 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 money in accordance with this Article VIII with respect to any Notes
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
obligations under this Indenture, the Guarantees, such Notes and the Collateral
Documents from which the Company or the Guarantors have been discharged or
released pursuant to Section 8.2 or 8.3 hereof shall be revived and reinstated
as though no deposit had occurred pursuant to this Article VIII with respect to
such Notes, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 8.5 hereof with respect to such
Notes in accordance with this Article VIII; provided that if the Company or any
Guarantor makes any payment of principal of, premium, if any, or interest
(including Additional Amounts, if any, and Special Interest, if any) on any such
Note following such reinstatement of its obligations, the Company or such
Guarantor, as the case may be, shall be subrogated to the Holders of such Notes
to receive such payment from the money so held in trust.
ARTICLE IX
AMENDMENTS
SECTION 9.1 Without Consent of Holders. The Company, the Guarantors and
the Trustee may, at any time, and from time to time, without notice to or
consent of any Holder of Notes, enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes.
(a) to evidence the succession of another Person to the Company or the
Guarantors, as applicable, and the assumption by such successor of the covenants
of the Company contained in the Notes, this Indenture, the Collateral Documents
or the Convertible Note Collateral Documents or such Guarantors in the
Guarantees, this Indenture, the Collateral Documents or the Convertible Note
Collateral Documents; or
104
<PAGE> 114
(b) to add to the covenants of the Company, for the benefit of the
Holders of all of the Notes, or to surrender any right or power herein conferred
upon the Company or the Guarantors by the Indenture, the Collateral Documents or
the Convertible Note Collateral Documents; or
(c) to add any additional Events of Default; or
(d) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; or
(e) to evidence and provide for the acceptance of appointment hereunder
of a successor Trustee; or
(f) to add additional security for the Notes and/or the Guarantees; or
(g) to cure any ambiguity herein or in the Collateral Documents or the
Convertible Note Collateral Documents, to correct or supplement any provision
hereof or in the Collateral Documents which may be inconsistent with any other
provisions herein or therein or to add any other provisions with respect to
matters or questions arising under this Indenture or the Collateral Documents or
the Convertible Note Collateral Documents; provided that such actions shall not
adversely affect the affect the interests of the Holders of Notes in any
material respect; or
(h) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
SECTION 9.2 With Consent of Holders. With the consent of the Holders of
not less than a majority in principal amount at Stated Maturity of the
outstanding Notes, by Act of said Holders delivered to the Company, the
Guarantors and the Trustee, the Company, the Guarantors and the Trustee may
enter into one or more indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture, the Collateral Documents or the Convertible Note Collateral
Documents or of modifying in any manner the rights of the Holders; provided that
no such supplemental indenture shall, without the consent of the Holder of each
outstanding Note:
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount (including the Accreted
Value at any time) thereof (or any premium, if any), or the interest (including
Additional Amounts, if any, or Special Interest, if any) thereon, that would be
due and payable upon Maturity thereof, or change the place of payment where, or
in the coin or currency in which, any Note or any premium or interest (including
Additional Amounts, if any) thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Maturity thereof;
or
105
<PAGE> 115
(b) reduce the percentage in principal amount of the outstanding Notes,
the consent of whose Holders is required for any such supplemental indenture or
required for any waiver of compliance with the provisions of this Indenture, the
Collateral Documents or the Convertible Note Collateral Documents; or
(c) modify any of the provisions of Section 6.4 hereof, except to
increase the percentage set forth therein or to provide that certain other
provisions of this Indenture cannot be amended or waived without the consent of
the Holder of each outstanding Note affected thereby; or
(d) subordinate in right of payment, or otherwise subordinate, the
Notes or the Guarantees to any other Indebtedness other than Senior
Indebtedness; or
(e) modify any provision of this Indenture relating to the obligations
of the Company to make offers to purchase Notes upon a Change of Control or from
the proceeds of an Asset Sale; or
(f) modify any of the provisions of this Section 9.2, except to
increase any percentage set forth herein or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holders of each outstanding Note affected thereby; or
(g) amend, supplement or otherwise modify the provisions of the
Indenture relating to the Guarantees.
It shall not be necessary for any Act of Holders under this Section 9.2
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Notwithstanding the foregoing, so long as the Convertible Notes are outstanding
and the Convertible Note Indenture has not been satisfied and discharged, the
Trustee shall not cause to become effective a supplemental indenture (i)
amending any Collateral Documents or Convertible Note Collateral Documents
unless a supplemental indenture to the Convertible Note Indenture making the
same amendment to such Collateral Document or Convertible Note Collateral
Document becomes simultaneously effective, or (ii) amending either Section 4.8
or Section 11.4 of the Indenture unless a supplemental indenture to the
Convertible Note Indenture making the same amendment to Section 4.8 or Section
11.4 of the Convertible Note Indenture, as the case may be, becomes
simultaneously effective.
SECTION 9.3 Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.
106
<PAGE> 116
SECTION 9.4 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall comply with the Trust Indenture
Act as then in effect.
SECTION 9.5 Revocation and Effect of Consents and Waivers. A consent to
an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder
and every subsequent Holder of such Note or portion of such Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
or waiver is not made on such Note; provided that such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Note or portion of
such Note if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective. After an amendment,
supplement or waiver becomes effective pursuant to this Article IX, it shall
bind every Holder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
calendar days after such record date.
SECTION 9.6 Changed Terms of Notes. If a supplemental indenture changes
the terms of a Note, the Trustee may require the Holder thereof to deliver such
Note to the Trustee. The Trustee may place an appropriate notation on such Note
regarding the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for such Note
shall issue and the Trustee shall authenticate a new Note (accompanied by a
notation of the Guarantees duly endorsed by the Guarantors) that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Note
shall not affect the validity of such amendment or supplement.
SECTION 9.7 Trustee to Execute Supplemental Indentures. The Trustee
shall execute any supplemental indenture authorized pursuant to this Article IX
if such supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but shall
not be required to, execute such supplemental indenture. In executing any
supplemental indenture, the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.1
hereof) shall be fully protected in relying upon, an Officers' Certificate
(which need only cover the matters set forth in clause (a) below) and an Opinion
of Counsel provided by the Company stating that:
107
<PAGE> 117
(a) such supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent to the execution, delivery and
performance of such supplemental indenture have been satisfied;
(b) the Company and the Guarantors have all necessary corporate power
and authority to execute and deliver the supplemental indenture and that the
execution, delivery and performance of such supplemental indenture has been duly
authorized by all necessary corporate action of the Company and the Guarantors;
(c) the execution, delivery and performance of the supplemental
indenture do not conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of (i) this Indenture,
(ii) the charter documents and by-laws of the Company or any Guarantor, or (iii)
any material agreement or instrument to which the Company or any Guarantor is
subject and of which such counsel is aware;
(d) to the knowledge of legal counsel writing such Opinion of Counsel,
the execution, delivery and performance of the supplemental indenture do not
conflict with, or result in the breach of any of the terms, conditions or
provisions of (i) any law or regulation applicable to the Company or any
Guarantor, or (ii) any material order, writ, injunction or decree of any court
or governmental instrumentality applicable to the Company or any Guarantor;
(e) such supplemental indenture has been duly and validly executed and
delivered by the Company and the Guarantors, and the Indenture together with
such supplemental indenture constitutes a legal, valid and binding obligations
of the Company and the Guarantors enforceable against the Company and the
Guarantors, as applicable, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles; and
(f) the Indenture together with such amendment or supplement complies
with the Trust Indenture Act.
SECTION 9.8 Solicitation of Consents. Neither the Company nor any of
its Subsidiaries nor any of their Affiliates shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fees or
otherwise, to any Holders of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture, the
Collateral Documents, the Convertible Note Documents or the Notes unless such
consideration is offered to be paid or agreed to be paid to all Holders of the
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
108
<PAGE> 118
ARTICLE X
GUARANTEES
SECTION 10.1 Guarantees. (a) For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the
Guarantors, together with each Restricted Subsidiary of the Company which in
accordance with Section 4.10 is required in the future to guarantee the
obligations of the Company and the Guarantors under the Notes, the Guarantees,
the Collateral Documents and the Convertible Note Collateral Documents upon
execution of a supplemental indenture, hereby jointly and severally, irrevocably
and unconditionally guarantees to the Trustee and to each Holder of a Note
authenticated and delivered by the Trustee irrespective of the validity or
enforceability of this Indenture, the Notes, or any of the Collateral Documents
or the Convertible Note Collateral Documents or the obligations of the Company
and the Guarantors, under this Indenture, that: (i) the principal of, premium,
if any, and any interest, Additional Amounts, if any, and Special Interest, if
any, on the Notes (including, without limitation, any interest that accrues
after the filing of a proceeding of the type described in Sections 6.1(g) and
(h)) and any fees, expenses and other amounts owing under this Indenture and the
Collateral Documents will be duly and punctually paid in full when due, whether
at Stated Maturity, by acceleration, call for redemption, upon a Change of
Control Offer, Asset Sale Offer, purchase or otherwise, and interest on the
overdue principal and (to the extent permitted by law) interest, if any,
Additional Amounts, if any, and Special Interest, if any, on the Notes and any
other amounts due in respect of the Notes, if lawful, and all other obligations
of the Company and the Guarantors to the Holders of the Notes under this
Indenture, the Notes, the Collateral Documents and the Convertible Note
Collateral Documents, whether now or hereafter existing, will be promptly paid
in full or performed, all strictly in accordance with the terms hereof, of the
Notes, the Collateral Documents and the Convertible Note Collateral Documents;
and (ii) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, the same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at Stated Maturity, by acceleration, call for redemption, upon a Change of
Control Offer, Asset Sale Offer, purchase or otherwise. If payment is not made
when due of any amount so guaranteed for whatever reason, each Guarantor shall
be jointly and severally obligated to pay the same individually whether or not
such failure to pay has become an Event of Default which could cause
acceleration pursuant to Section 6.2. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection. An Event of Default
under this Indenture, any Collateral Document, the Convertible Note Collateral
Documents or the Notes shall constitute an Event of Default under this
Guarantee, and shall entitle the Holders to accelerate the obligations of each
Guarantor hereunder in the same manner and to the same extent as the obligations
of the Company. This Guarantee is intended to be superior to or pari passu in
right of payment with all Indebtedness of the Guarantors and each Guarantor's
obligations are independent of any obligation of the Company or any other
Guarantor.
109
<PAGE> 119
(b) Each Guarantor hereby agrees that its obligations hereunder shall
be joint and several, absolute, irrevocable and unconditional, irrespective of
the validity, regularity or enforceability of the Notes, any Collateral
Document, any Convertible Note Document, this Indenture or any other document
relating thereto, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, any
release or non-perfection of Collateral, any release of any other Guarantor, any
delays in obtaining or realizing upon failure to obtain or realize upon or
application of Collateral, the recovery of any judgment against the Company or
any other Person, any action to enforce the same or any other circumstance
(including, without limitation, any statute of limitations) which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives promptness, diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company or any other Person, any right to require a proceeding first
against the Company or any other Person, protest, notice and all demands
whatsoever and covenants that its Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes, this Indenture,
the Collateral Documents, the Convertible Note Documents and this Guarantee. If
any Holder or the Trustee is required by any court or otherwise to return to the
Company or to any Guarantor, or any receiver, trustee, assignee, liquidator or
similar official under any applicable bankruptcy or insolvency or other similar
law any amount paid by the Company or such Guarantor to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(c) Until such time as the Notes and the other obligations of the
Company guaranteed hereby have been satisfied in full, each Guarantor hereby
irrevocably waives any claim or other rights that it may now or hereafter
acquire against the Company or any other Guarantor that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guarantee, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Holders or the Trustee against the
Company or any other Guarantor or any Collateral or Convertible Note Collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company or any other Guarantor, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right. If any amount shall be paid to such
Guarantor in violation of the preceding sentence at any time prior to the later
of the payments in full of the Notes and all other amounts payable under this
Indenture, this Guarantee, the Collateral Documents, the Convertible Note
Collateral Documents and the Stated Maturity of the Notes, such amount shall be
held in trust for the benefit of the Holders and the Trustee and shall forthwith
be paid to the Trustee to be credited and applied to the Notes and all other
amounts payable under this Guarantee, whether matured or unmatured, in
accordance with the terms of this Indenture, or to be held as Collateral for any
obligations or other amounts payable under this Guarantee thereafter arising.
110
<PAGE> 120
(d) Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that the waiver set forth in this Section 10.1(d) is knowingly made in
contemplation of such benefits. Each Guarantor further agrees that, as between
it, on the one hand, and the Holders and the Trustee, on the other hand, (x)
subject to this Article X, the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article VI for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations guaranteed hereby as provided in
Article VI, such obligations (whether or not due and payable) shall further then
become due and payable by the Guarantors for the purposes of this Guarantee.
(e) A Guarantor that makes a distribution or payment under a Guarantee
shall be entitled to contribution from each other Guarantor in a pro rata amount
based on the Adjusted Net Assets of each such other Guarantor for all payments,
damages and expenses incurred by that Guarantor in discharging the Company's
obligations with respect to the Notes, this Indenture, the Collateral Documents
and the Convertible Note Collateral Documents or any other Guarantor with
respect to its Guarantee, the Collateral Documents and the Convertible Note
Collateral Documents, so long as the exercise of such right does not impair the
rights of the Holders of the Notes under the Guarantees, any Collateral Document
or any Convertible Note Collateral Document.
SECTION 10.2 Limitation of Guarantor's Liability. Each Guarantor and,
by its acceptance hereof, each beneficiary hereof, hereby confirms that it is
its intention that the Guarantee by such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of the United States Bankruptcy Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, the
Companies Creditors' Arrangement Act (Canada), the Bankruptcy and Insolvency Act
(Canada) or any other bankruptcy, receivership, insolvency, liquidation or other
similar legislation or legal principles under any applicable foreign law to the
extent applicable to any Guarantees. To effectuate the foregoing intention, each
such Guarantor hereby irrevocably agrees that the obligation of such Guarantor
under its Guarantee under this Article X shall be limited to the lesser of (a)
an amount equal to such Guarantor's Adjusted Net Assets as of the date such
Guarantee is executed and delivered or (b) the maximum amount as will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, (including, if
applicable, its obligations under the Convertible Notes) and after giving effect
to any collections from, rights to receive contribution from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article X result in the obligations of such Guarantor in
respect of such maximum amount not constituting a fraudulent conveyance or
fraudulent transfer or not otherwise being void, voidable or unenforceable under
any bankruptcy, reorganization, receivership, insolvency, liquidation or other
similar legislation or legal principles under any applicable foreign law.
111
<PAGE> 121
SECTION 10.3 Execution and Delivery of Guarantees. To further evidence
its Guarantee set forth in Section 10.1 hereof, each Guarantor hereby agrees
that notation of such Guarantee shall be endorsed on each Note authenticated and
delivered by the Trustee and executed by either manual or facsimile signature of
an authorized officer of such Guarantor. Each Guarantor hereby agrees that its
Guarantee set forth in Section 10.1 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Guarantee. If an officer of a Guarantor whose signature is on this Indenture or
a Note no longer holds that office at the time the Trustee authenticates such
Note or at any time thereafter, such Guarantor's Guarantee of such Note shall be
valid nevertheless. The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of any Guarantee
set forth in this Indenture on behalf of the Guarantor.
SECTION 10.4 When a Guarantor May Merge, etc.. No Guarantor shall
consolidate with or merge with or into (whether or not such Guarantor is the
surviving person) another corporation, Person or entity whether or not
affiliated with such Guarantor (but excluding any consolidation, amalgamation or
merger if the surviving corporation is no longer a Subsidiary) unless (i)
subject to the provisions of Section 10.6 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor pursuant to a supplemental
indenture and appropriate Collateral Documents and Convertible Note Collateral
Documents in form reasonably satisfactory to the Trustee under the Notes, this
Indenture and the Collateral Documents and Convertible Note Collateral
Documents; (ii) in the case of a Leasing Company, such Guarantor or the Person
formed by or surviving any such consolidation or merger is a separate,
special-purpose, Wholly-Owned Restricted Subsidiary constituting a Leasing
Company; (iii) immediately after giving effect to such transaction, no Default
or Event of Default exists; and (iv) such Guarantor, or any Person formed by or
surviving any such consolidation or merger, (A) will have Consolidated Net Worth
(immediately after giving effect to such transaction but prior to any purchase
accounting adjustments resulting from the transaction), equal to or greater than
the Consolidated Net Worth of such Guarantor immediately preceding the
transaction and (B) will be permitted by virtue of the Company's Indebtedness to
Operating Cash Flow Ratio to incur, immediately after giving effect to such
transaction, at least $1.00 of additional Indebtedness pursuant to the terms of
Section 4.9(a) hereof. In connection with any such consolidation or merger, the
Trustee shall be entitled to receive an Officers' Certificate and an Opinion of
Counsel stating that such consolidation or merger is permitted by this Section
10.4.
SECTION 10.5 Additional Guarantors (a) The Company shall cause each
Subsidiary which, after the date of this Indenture, is required pursuant to
Section 4.10(a) hereof to become a Guarantor to (a) execute and deliver to the
Trustee a supplemental indenture in form and substance reasonably satisfactory
to the Trustee which subjects such Restricted Subsidiary to the provisions of
this Indenture as a Guarantor, (b) execute and deliver to the Trustee,
simultaneous with its execution and delivery to the Trustee of a supplemental
indenture and any applicable Collateral Documents and Convertible Note
112
<PAGE> 122
Collateral Documents; and (c) deliver to the Trustee an Opinion of Counsel to
the effect that such supplemental indenture has been duly authorized and
executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning debtor's rights and equitable principles as may be acceptable to the
Trustee in its reasonable discretion) and containing such other matters as the
Trustee may reasonably request.
(b) Any Person that was not a Guarantor on the Issue Date may become a
Guarantor by executing and delivering to the Trustee (a) a supplemental
Indenture in form and substance reasonably satisfactory to the Trustee and any
applicable Collateral Documents and Convertible Note Collateral Documents and
(b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning creditors' rights and equitable principles as
may be acceptable to the Trustee in its reasonable discretion) and containing
such other matters as the Trustee may reasonably request.
SECTION 10.6 Release of a Guarantor. (a) Upon the sale or other
transfer of all of the Capital Stock of a Guarantor, other than a Leasing
Company or NWE Cyprus, to any Person that is not an Affiliate of the Company in
compliance with the terms of this Indenture (including, without limitation,
Section 4.8 hereof), such Guarantor shall be deemed automatically and
unconditionally released and discharged from all obligations under this
Indenture and any Collateral Document or any Convertible Note Collateral
Document to which it is a party without any further action required on the part
of the Trustee or any Holder; provided that the Net Cash Proceeds of such sale
or other disposition are applied in accordance with Section 4.8 of this
Indenture as if such sale or disposition were an Asset Sale and in accordance
with the applicable provisions of this Indenture. The Trustee shall deliver an
appropriate instrument or instruments evidencing such release upon receipt of a
request of the Company accompanied by an Officers' Certificate and Opinion of
Counsel certifying as to the compliance with this Section 10.6(a) and the other
applicable provisions of this Indenture.
(b) Notwithstanding the foregoing, any Guarantee by a Restricted
Subsidiary other than NWE Cyprus, a Leasing Company, BCL, WTC or a future
Wholly-Owned Subsidiary of the Company shall be automatically and
unconditionally released and discharged upon the release or discharge of the
guarantee of Guaranteed Indebtedness which resulted in the creation of such
Guarantee pursuant to Section 4.10 hereof, except a discharge or release by, or
as a result of, payment under such guarantee. The Trustee shall deliver an
appropriate instrument or instruments evidencing such release upon receipt of a
request of the Company accompanied by an Officers' Certificate and Opinion of
Counsel certifying as to compliance with this Section 10.6(b) and the other
applicable provisions of this Indenture.
113
<PAGE> 123
ARTICLE XI
COLLATERAL AND SECURITY
SECTION 11.1 Collateral Documents. The due and punctual payment of the
principal of, premium, if any, interest (including Additional Amounts, if any,
and Special Interest, if any) on, and any other amounts due in respect of, the
Notes when and as the same shall be due and payable, whether on an Interest
Payment Date, at Stated Maturity, by acceleration, call for redemption, upon a
Change of Control Offer, Asset Sale Offer, purchase or otherwise, and interest
on the overdue principal of and interest (including Additional Amounts, if any,
and Special Interest, if any) (to the extent permitted by law), on the Notes and
performance of all other obligations of the Company and any Guarantor to the
Holders of the Notes or the Trustee under this Indenture, the Notes, the
Guarantees, the Collateral Documents, and the Convertible Note Collateral
Documents, according to the terms hereunder or thereunder, shall be secured (i)
as provided in the Collateral Documents, (ii) as provided in the Convertible
Note Collateral Documents, (iii) by a pledge by any future Guarantor of the
Capital Stock of any Wholly-Owned Subsidiary (whether now owned or hereafter
acquired) of such future Guarantor and any and all dividends, distributions and
proceeds thereof, and (iv) by a pledge by all Wholly-Owned Subsidiaries of all
Intercompany Notes owned by such WhollyOwned Restricted Subsidiaries from a
Restricted Subsidiary (other than any Intercompany Notes made with the
dividends, distributions, payments and proceeds of Technocom Preferred Stock or
other Convertible Note Collateral or otherwise constituting Convertible Note
Collateral). The Company will cause such future Guarantors and Wholly-Owned
Subsidiaries to grant a Lien and security interest pursuant to Collateral
Documents substantially similar to the Company Senior Note Security Agreement,
and any other additional Collateral Documents as may be necessary or appropriate
to create or make effective such Lien and security interest, such Lien and
security interest to be for the benefit of the Trustee and the Holders of the
Notes to secure the Notes, the Guarantees and the other obligations of the
Company and the Guarantors under this Indenture, the other Collateral Documents
and the Convertible Note Collateral Documents. Each Holder, by its acceptance of
a Note, consents and agrees to the terms of the Collateral Documents and the
Convertible Note Collateral Documents (including, without limitation, the
provisions providing for foreclosure and release of Collateral and Convertible
Note Collateral, as applicable) as the same may be in effect or may be amended
from time to time in accordance with the terms thereof and hereof and authorizes
and directs the Trustee to enter into each of the Collateral Documents and the
Convertible Note Collateral Documents and to perform its respective obligations
and exercise its respective rights thereunder in accordance therewith. The
Company and each Guarantor will do or cause to be done all such acts and things
as may be necessary or proper, or as may be required by the provisions of the
Collateral Documents and the Convertible Note Collateral Documents to which it
is a party, to assure and confirm to the collateral agent and the Trustee the
Liens in the Collateral and the Convertible Note Collateral contemplated hereby
and by the Collateral Documents and the Convertible Note Collateral Documents to
which it is a party, as from time to time constituted, so as to render the same
available
114
<PAGE> 124
to the fullest extent permitted by law for the security and benefit of this
Indenture and of the Notes and the Guarantees secured thereby, according to the
intent and purposes herein expressed. The Company and each Guarantor shall to
the fullest extent permitted by law take, upon request of the Trustee, any and
all actions reasonably required to cause the Collateral Documents and the
Convertible Note Collateral Documents to which it is a party to create and
maintain, as security for the obligations of the Company and the Guarantors
under this Indenture, the Notes, the Guarantees, the Collateral Documents and
the Convertible Note Collateral Documents, valid and enforceable, perfected
(except as expressly provided therein), Liens in and on all the Collateral and
the Convertible Note Collateral, in favor of the Trustee or a collateral agent
for the benefit of the Trustee and for the equal and ratable benefit of the
Holders of the Notes and for the benefit of the Convertible Note Trustee and the
equal and ratable benefit of the Holders of the Convertible Notes so long as the
Convertible Notes remain outstanding without preference, priority or distinction
of any thereof over any other by reason of difference in time of issuance, sale
or otherwise, superior to and prior to the rights of all third persons except,
with respect to the Convertible Note Collateral, the Convertible Note Trustee
and the Holders of the Convertible Notes, and subject to no other Liens, other
than as provided herein and therein.
SECTION 11.2 Recording and Opinions. (a) Each of the Company and the
Guarantors represents that it has caused or will promptly cause to be executed
and delivered, filed and recorded and covenants that it will promptly cause to
be executed and delivered and filed and recorded, all instruments and documents,
and represents that it has done and will do or will cause to be done all such
acts and other things, at the Company's or the Guarantor's expense, as
applicable, as are necessary to subject the Collateral and the Convertible Note
Collateral to valid Liens and to perfect those Liens, all to the fullest extent
permitted by law. Each of the Company and the Guarantors shall, as promptly as
practicable, cause to be executed and delivered, filed and recorded all
instruments and do all acts and other things as may be required by law to
perfect, maintain and protect the Liens under the Collateral Documents and the
Convertible Note Collateral Documents (except as otherwise expressly provided
herein and therein), all to the fullest extent permitted by law.
(b) The Company shall furnish to the Trustee promptly after the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments or otherwise necessary to make effective the
Liens intended to be created by the Collateral Documents and the Convertible
Note Collateral Documents, and reciting the details of such action, or (ii)
stating that, in the opinion of such counsel, no such action is necessary to
make such Lien effective. Such opinion of counsel shall cover the necessity for
recordings, registrations and filings required in all relevant jurisdictions.
115
<PAGE> 125
(c) The Company shall furnish to the Trustee within 3 months after each
anniversary of the Issue Date, an Opinion of Counsel, dated as of such date,
stating either that (i) in the opinion of such counsel, all action has been
taken with respect to the recording, registering, filing, re-recording,
re-registering and refiling of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance or
otherwise as is necessary to maintain the effectiveness of the Liens intended to
be created by the Collateral Documents and by the Convertible Note Collateral
Documents and reciting the details of such action or (ii) in the opinion of such
counsel, no such action is necessary to maintain the effectiveness of such
Liens. Such opinion of counsel shall cover the necessity of recordings,
registrations, filings, re-recordings, re-registrations and refilings in all
relevant jurisdictions.
(d) The Company shall otherwise comply with the provisions of Section
314(b) of the Trust Indenture Act.
SECTION 11.3 Further Assurances and Security. The Company and each
Guarantor will execute, acknowledge and deliver to the Trustee, at the Company's
and/or such Guarantor's expense, at any time and from time to time such further
assignments, transfers, assurances or other instruments as may be reasonably
required to effectuate the terms of this Indenture, the Collateral Documents and
the Convertible Note Collateral Documents, and will at any time and from time to
time do or cause to be done all such acts and things as may be necessary or
proper, or as may be reasonably required by the Trustee, to assure and confirm
to the Trustee the Liens in the Collateral and the Convertible Note Collateral
contemplated hereby and by the Collateral Documents and the Convertible Note
Collateral Documents, all to the fullest extent permitted by law. The Trustee
shall have no duty to determine whether any filing or recording is necessary
hereunder or under any Collateral Document.
SECTION 11.4 Possession, Use and Release of Collateral.
(a) $46,000,000 of net proceeds of the Notes shall be deposited in the
Company Senior Note Escrow Account and shall be subject to a first priority
Lien. All funds deposited in the Company Senior Note Escrow Account representing
net proceeds of the Notes constitute Collateral and will, at the direction of
the Company except during the continuance of a Default or an Event of Default
and at the direction of the Trustee during the continuance of a Default or an
Event of Default, be invested in Eligible Cash Equivalents in the manner
provided for in the Company Senior Note Escrow Account Agreement. No funds shall
be released from the Company Senior Note Escrow Account except as provided
herein and in the Company Senior Note Escrow Account Agreement.
(b) Subject to the provisions of subsections (k) and (l) of this
Section 11.4, up to $9,000,000 of the net proceeds of the Notes may be withdrawn
from the Company Senior Note Escrow Account and utilized by the Company to make
Qualified Investments if, in
116
<PAGE> 126
respect of each such Qualified Investment, the following conditions are
satisfied, and the Trustee shall have received an Officers' Certificate of the
Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing, or will occur as a result thereof;
(ii) a Lien on the Qualified Investment is granted to the
Trustee or a collateral agent for the benefit of the Trustee and the
equal and ratable benefit of the Holders and the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the
Holders of the Convertible Notes so long as the Convertible Notes
remain outstanding to secure the Notes, the Guarantees and the other
obligations of the Company and the Guarantors under this Indenture and
the other Collateral Documents and to secure the Convertible Notes and
the other obligations of the Company and the Guarantors under the
Convertible Notes, the Convertible Note Indenture and the Convertible
Note Collateral Documents;
(iii) the entity in which such Qualified Investment is made
has all licenses, registrations and permits necessary to operate the
Telecommunications Business in which it is engaging or proposes to
engage on the date of such Qualified Investment;
(iv) all licenses, registrations and permits required for such
Qualified Investment and such Liens have been obtained; and
(v) appropriate Collateral Documents have been executed and
delivered and properly recorded, registered and filed to the extent
necessary to make effective the Liens intended to be created therein.
The Company shall also deliver to the Trustee (x) an Opinion of Counsel covering
clause (v) above and (y) such other documents as may be required by the
Collateral Documents to be delivered by the Company to a collateral agent or the
Trustee.
(c) Subject to the provisions of subsections (k) and (l) of this
Section 11.4, the net proceeds of the Notes (including any portion of $9,000,000
of net proceeds of the Notes not used as provided in subsection (b) above)
retained in the Company Senior Note Escrow Account may be withdrawn from the
Company Senior Note Escrow Account and utilized by the Company to purchase
Capital Stock of the Leasing Companies or to make intercompany loans to the
Leasing Companies evidenced by Intercompany Notes, each of which will constitute
Collateral, by transferring such funds to the applicable Leasing Company Escrow
Accounts of such Leasing Companies, if the following conditions are satisfied,
and the Trustee shall have received an Officers' Certificate of the Company and
the applicable Leasing Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing or will occur as a result thereof;
117
<PAGE> 127
(ii) the applicable Leasing Company utilizes such funds
(except for funds to be utilized for Qualified Investments to the
extent permitted by this Indenture) to purchase Telecommunications
Assets contemporaneously with such purchase of Capital Stock or
intercompany loan, as applicable, from a supplier located in the United
States, Canada, Western Europe (including Scandinavia), Israel, Japan,
Taiwan and South Korea;
(iii) the applicable Leasing Company contemporaneously enters
into a Telecommunications Asset Lease covering such Telecommunications
Assets with a Restricted Subsidiary or a Qualified Joint Venture;
(iv) Liens on such Telecommunications Asset Lease are granted
to the Trustee or a collateral agent for the benefit of the Trustee and
the equal and ratable benefit of the Holders to secure the Notes, the
Guarantees and the other obligations of the Company and the Guarantors
under this Indenture and the other Collateral Documents and to secure
any applicable Intercompany Note and, so long as the Convertible Notes
remain outstanding for the benefit of the Convertible Note Trustee and
the Holders of the Convertible Notes, to secure the Convertible Notes
and the guarantees under the Convertible Note Indenture and the other
obligations of the Company or the Guarantors under the Convertible Note
Indenture and the Convertible Note Collateral Documents;
(v) the Restricted Subsidiary or Qualified Joint Venture that
will be the lessee under the applicable Telecommunications Asset Lease
has or has applied for all licenses, registrations and permits
necessary to operate the Telecommunications Assets subject to such
Telecommunications Asset Lease and the Telecommunications Business for
which such Telecommunications Assets are intended to be utilized;
(vi) if a Qualified Investment is to be made by a Leasing
Company with that portion of the $9,000,000 of net proceeds of the
Notes not utilized by the Company for Qualified Investments pursuant to
subsection (b) of this Section 11.4, (x) the Leasing Company has
granted a Lien on such Qualified Investment to the Trustee or a
collateral agent for the benefit of the Trustee and the equal and
ratable benefit of the Holders to secure the Notes, the Guarantees and
the other obligations of the Company and the Guarantors under this
Indenture and the other Collateral Documents and to secure any
applicable Intercompany Note and, so long as the Convertible Notes
remain outstanding for the benefit of the Convertible Note Trustee and
the Holders of the Convertible Notes, to secure the Convertible Notes
and the guarantees under the Convertible Note Indenture and the other
obligations of the Company or the Guarantors under the Convertible Note
Indenture and the Convertible Note Collateral Documents, and (y) all
licenses, registrations and permits required for such Qualified
Investment and such Lien have been obtained; and
118
<PAGE> 128
(vii) appropriate Collateral Documents have been executed and
delivered and properly recorded, registered and filed to the extent
necessary to make effective the Lien intended to be created therein and
have been delivered to the Trustee or the collateral agent.
The Company shall also deliver to the Trustee (x) an Opinion of Counsel covering
clause (vii) above in form and substance reasonably satisfactory to the Trustee
and (y) such other documents as may be required by the Collateral Documents to
be delivered to the Trustee or a collateral agent by the Company or the
applicable Leasing Company. If the foregoing conditions are satisfied, the funds
representing the net proceeds of the Notes in the applicable Leasing Company
Escrow Account derived from the Investment in the Capital Stock of the
applicable Leasing Company or the intercompany loan evidenced by an Intercompany
Note may be withdrawn and utilized by such Leasing Company to purchase the
applicable Telecommunications Assets or make the applicable Qualified
Investments.
(d) All payments made to the Company in respect of any Qualified
Investments or Intercompany Notes evidencing loans of the net proceeds of the
Notes to the Leasing Companies held by the Company or any Pledged Stock of the
Leasing Companies shall be promptly deposited, without commingling prior to such
deposit, in the Company Senior Note Escrow Account and will also constitute
Collateral and be subject to a first priority perfected Lien in favor of a
collateral agent or the Trustee for the benefit of the Trustee and the equal and
ratable benefit of the Holders of the Notes and for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the Holders of the
Convertible Notes; and unless and until an Event of Default has occurred and is
continuing, the Company and/or the Leasing Companies and/or the Restricted
Subsidiaries will be entitled to receive and retain, free from the Liens of the
Collateral Documents, payments made under any Intercompany Notes not evidencing
loans to Leasing Companies and any instruments not constituting Pledged Stock of
the Leasing Companies or Qualified Investments.
(e) All payments made by an investee, an obligor or a lessee to any
Leasing Company in respect of any Qualified Investments or Intercompany Notes
held by such Leasing Company or any Telecommunications Asset Lease shall be
promptly deposited, without commingling prior to such deposit, in the applicable
Leasing Company Escrow Account and will also constitute Collateral and be
subject to a first priority perfected Lien in favor of the Trustee or a
collateral agent and subject to subsections (k) and (l) of this Section 11.4 may
be utilized
(x) to purchase additional Telecommunications Assets for
additional Telecommunications Asset Leases if the following conditions are
satisfied, and the Trustee shall have received an Officer's Certificate of the
Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing or will occur as a result thereof;
119
<PAGE> 129
(ii) the applicable Leasing Company utilized such funds to
purchase such Telecommunications Assets from a supplier located in the
United States, Canada, Western Europe (including Scandinavia), Israel,
Japan, Taiwan and South Korea;
(iii) the applicable Leasing Company contemporaneously enters
into a Telecommunications Asset Lease covering such Telecommunications
Assets with a Restricted Subsidiary or a Qualified Joint Venture;
(iv) Liens on such Telecommunications Asset Lease are granted
to the Trustee or a collateral agent for the benefit of the Trustee and
the equal and ratable benefit of the Holders to secure the Notes, the
Guarantees and the other obligations of the Company and the Guarantors
under this Indenture and the other Collateral Documents and to secure
any applicable Intercompany Note;
(v) the Restricted Subsidiary or Qualified Joint Venture that
will be the lessee under the applicable Telecommunications Asset Lease
has or has applied for all licenses, registrations and permits
necessary to operate the Telecommunications Assets subject to such
Telecommunications Asset Lease; and
(vi) appropriate Collateral Documents have been executed and
delivered and properly recorded, registered or filed to the extent
necessary to make effective to the fullest extent permitted by law the
Lien intended to be created therein;
provided that the Leasing Company shall also deliver (x) an Opinion of Counsel
covering clause (vi) above and in form and substance reasonably satisfactory to
the Trustee and (y) such other documents as may be required by the Collateral
Documents to be delivered to the Trustee or a collateral agent by the Company or
the Leasing Company.
(y) to pay when due the Accreted Value, premium, if any, on
and interest (including Additional Amounts, if any, and Special Interest, if
any) on the Notes; and
(z) provided that an aggregate amount equal to the interest
due on the Senior Notes in the next succeeding 12 months (the "Minimum Amount")
exclusive of amounts constituting the net proceeds of the Notes or the Net Cash
Proceeds of any Asset Sale (whether or not constituting Excess Proceeds or
Aggregate Unused Proceeds) is in the Company Senior Note Escrow Account and the
Leasing Company Escrow Accounts, which Minimum Amount may be utilized only for
the purposes set forth in clauses (x) and (y) above, any amount in excess of
such Minimum Amount may be invested by the Leasing Companies or the Company in
Qualified Investments to the extent permitted by this Indenture if, in respect
of each such Qualified Investment, the following conditions are satisfied and
the Trustee shall have received an Officers' Certificate to such effect:
(i) no Default or Event of Default under this Indenture has
occurred and is continuing or will occur as a result thereof;
120
<PAGE> 130
(ii) a Lien on the Qualified Investment is granted to the
Trustee or a collateral agent for the benefit of the Trustee and the
equal and ratable benefit of the Holders to secure the Notes and the
Guarantees and to secure any applicable Intercompany Note;
(iii) the entity in which such Qualified Investment is made
has all licenses, registrations and permits necessary to operate the
Telecommunications Business in which it is engaging or proposes to
engage on the date of such Qualified Investment;
(iv) all licenses, registrations and permits required for such
Qualified Investment and such Lien have been obtained; and
(v) appropriate Collateral Documents have been executed and
delivered and properly recorded, registered or filed to the extent
necessary to make effective to the fullest extent permitted by law the
Lien intended to be created therein.
The Company shall also deliver to the Trustee (x) an Opinion of Counsel covering
clause (v) above and (y) such other documents as may be required by the
Collateral Documents to be delivered by the Company to the Trustee or the
collateral agent.
(f) Although all Pledged Stock, all Intercompany Notes and all other
instruments included in the Collateral, including those representing Qualified
Investments, will be delivered to and held by the Trustee, the Convertible Note
Trustee or a collateral agent, unless and until an Event of Default has occurred
and is continuing, the Company and/or the Leasing Companies and/or other
Restricted Subsidiaries, as applicable, shall be entitled to exercise any voting
and consensual rights with respect to such Collateral.
(g) Any Telecommunications Assets purchased with the net proceeds of
the Notes that are subject to a Telecommunications Asset Lease or a series of
related Telecommunications Asset Leases may not be transferred or shipped to the
lessee under the applicable Telecommunications Asset Lease or Leases or to a
jurisdiction other than the United States, Canada, Western Europe (including
Scandinavia), Israel, Japan, Taiwan and South Korea unless the applicable lessee
has all licenses, registrations and permits necessary to operate such
Telecommunications Assets and the Telecommunications Business for which such
Telecommunications Assets are intended and the Company delivers to the Trustee a
favorable Opinion of Counsel to such effect. With respect to any
Telecommunications Assets not purchased with the net proceeds of the Notes, up
to $5,000,000 of such Telecommunications Assets may be shipped or transferred to
such lessee at any time without such Opinion of Counsel being required but
thereafter, on each occasion when $5,000,000 in the aggregate of such
Telecommunications Assets shall have been shipped or transferred, such Opinion
of Counsel shall be delivered before any additional Telecommunications Assets
may be shipped or transferred.
121
<PAGE> 131
(h) If no Default or Event of Default has occurred and is continuing,
funds or Eligible Cash Equivalents held in any Leasing Company Escrow Account
may be loaned or advanced to any other Leasing Company Escrow Account or
transferred to the Company Senior Note Escrow Account and, subject to the
provisions of this Indenture with respect to Investments of funds from the
Company Senior Note Escrow Account to a Leasing Company Escrow Account, funds or
Eligible Cash Equivalents in the Company Senior Note Escrow Account may be
transferred from the Company Escrow Account to any Leasing Company Escrow
Account.
(i) Subject to subsections (k) and (l) of this Section 11.4, Collateral
may be released from the Liens created by the Collateral Documents (a) upon
payment in full of the Notes in accordance with the terms of the Notes and this
Indenture and the other obligations then due and owing under the Notes, this
Indenture and the Collateral Documents; (b) with respect to inventory, upon the
sale of such inventory in the ordinary course of business; (c) with respect to
Collateral sold or disposed of in an Asset Sale if such sale or other
disposition is not prohibited under this Indenture and if the Net Cash Proceeds
of such sale or other disposition are applied as provided in Section 4.8 hereof;
(d) to the extent that a Lien is granted on such Collateral pursuant to
subsection (iv) of the definition of "Permitted Liens" set forth in Section 1.1
hereof; (e) with respect to amounts in the Company Senior Note Escrow Account
and the Leasing Company Escrow Accounts consisting of Net Cash Proceeds of Asset
Sales, upon the expenditure of such cash if such expenditure is made in
accordance with this Indenture; (f) with respect to amounts in the Company
Senior Note Escrow Account and the Leasing Company Escrow Accounts constituting
net proceeds of the Notes if the procedures described in subsections (a), (b) or
(c) above are complied with; (g) with respect to other amounts in the Company
Senior Note Escrow Account and the Leasing Company Escrow Accounts other than
the Net Cash Proceeds of any Asset Sale, including payments received on Pledged
Stock, Telecommunications Asset Leases and Qualified Investments, if the
procedures described in this Section 11.4 are complied with; (h) with respect to
Collateral that is Capital Stock of a Guarantor, if such Guarantor is released
pursuant to Section 10.6 of this Indenture; and (i) with respect to any
Intercompany Note not evidencing a loan of net proceeds of the Notes to the
Leasing Companies, upon the repayment, forgiveness or other termination of such
Intercompany Note; provided that all such releases described above are in
compliance with the Trust Indenture Act.
(j) In the event of any Asset Sale, the Company or the relevant
Restricted Subsidiary shall cause the Net Cash Proceeds derived or resulting
from any Asset Sale that involves any Collateral or involves Telecommunications
Assets subject to a Telecommunications Asset Lease to be deposited in the
Company Senior Note Escrow Account or the applicable Leasing Company Escrow
Account, as applicable, on or before the fifth Business Day following the
Business Day on which such Net Cash Proceeds are received by the Company or such
Restricted Subsidiary. In the event that the Company or the relevant Restricted
Subsidiary engages in an Asset Sale with respect to Collateral which is
permitted by this Indenture and the Collateral Documents (or the Company
designates
122
<PAGE> 132
a Guarantor to be an Unrestricted Subsidiary in accordance with the Indenture),
the Trustee shall execute and deliver such documents as requested by the Company
to evidence the release of the Liens of the Collateral Documents on the assets
subject to the Asset Sale or on the assets owned by such Unrestricted
Subsidiary, as applicable. The proceeds of such Collateral or such
Telecommunications Assets (including any earnings thereon) may be released from
the Company Senior Note Escrow Account or the applicable Leasing Company Escrow
Account, in order to, and in only such amount as is required to, (a) pay the
principal amount of the Notes or Convertible Notes tendered pursuant to an Asset
Sale Offer, or (b) purchase Replacement Assets or Replacement Telecommunications
Assets, as applicable, to the extent permitted by Section 4.8 hereof, in which
case the proceeds of such Collateral may be released to the Company, the
Guarantor or Restricted Subsidiary, as applicable, if such proceeds are to be
used in accordance with this Indenture; provided that upon consummation of such
Investment or purchase the Trustee or a collateral agent shall have received
first priority fully perfected Liens, subject to Permitted Liens and the
interest of the Convertible Note Trustee and the Holders of Convertible Notes,
in the Property or assets acquired by the Company or any of its Restricted
Subsidiaries in connection therewith or in the case of Replacement
Telecommunications Assets, in the relevant Telecommunications Asset Lease.
(k) Notwithstanding any provision of Section 11.5 to the contrary, the
disposition of inventory in the ordinary course of the Company's and Guarantors'
businesses, as applicable, may be made without delivery to the Trustee of
certificates required by the Trust Indenture Act. However, in lieu thereof, the
Company will be required to deliver semi-annual Officers' Certificates to the
effect that all such dispositions have been made in the ordinary course of the
applicable Company's or Guarantors' business and that the proceeds therefrom
have been applied in a manner permitted by this Indenture. The Trustee shall, in
the absence of negligence or bad faith on its part, be entitled to rely on such
Officers' Certificates and Opinions of Counsel with respect to the Company's and
the Guarantors' compliance with the collateral release provisions of this
Indenture.
(l) The release of any Collateral from the terms of the Collateral
Documents, or the release, in whole or in part, of the Liens created by the
Collateral Documents, will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof and of the Collateral
Documents if and to the extent that the Collateral is released pursuant to this
Indenture and the Collateral Documents. In connection with the release of
Collateral, the Trustee shall determine whether it has received all
documentation required by Section 314(d) of the Trust Indenture Act to permit
such release.
(m) Notwithstanding anything elsewhere contained in this Section 11.4,
at all times on or after November 30, 1998, the Company will be required to have
funds or Eligible Cash Equivalents in the Company Senior Note Escrow Account
and/or the Leasing Company Escrow Accounts in an aggregate amount not less than
an amount necessary to pay on the next succeeding Interest Payment Date the
interest, including Additional Interest, if any, and Special Interest, if any,
on the Notes then outstanding.
123
<PAGE> 133
(n) The Company and the Leasing Companies may utilize at the Company's
option any funds in the Company Senior Note Escrow Account or the Leasing
Company Escrow Accounts to pay when due the Accreted Value, the premium, if any,
on, and any interest (including Additional Amounts, if any, and Special
Interest, if any) on the Notes, provided, that after giving effect to any such
withdrawal there remains in the Company Senior Note Escrow Account and/or the
Leasing Company Escrow Accounts funds and/or Eligible Cash Equivalents required
by Section 11.4(m) to be so retained.
SECTION 11.5 Certificates of the Company. The Company will furnish to
the Trustee prior to each proposed release of Collateral pursuant to the
Collateral Documents other than by reason of transactions referred to in Section
11.4(k) above, all documents required by Section 314(d) of the Trust Indenture
Act. The Trustee may, to the extent permitted by Sections 7.1 and 7.2 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such instruments. Any certificate or opinion
required by Section 314(d) of the Trust Indenture Act may be made by an Officer
of the Company or a Guarantor, as the case may be, except in cases where Section
314(d) of the Trust Indenture Act requires that such certificate or opinion be
made by an independent engineer, appraiser or other expert within the meaning of
Section 314(d) of the Trust Indenture Act.
SECTION 11.6 Authorization of Actions to be Taken by the Trustee Under
the Collateral Documents. The Trustee may, in its sole discretion and without
the consent of the Holders, on behalf of the Holders, take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the
Collateral Documents and (b) collect and receive any and all amounts payable in
respect of the obligations of the Company and the Guarantors hereunder. The
Trustee shall have the power to institute and to maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
by any acts that may be unlawful or in violation of the Collateral Documents, or
this Indenture, and such suits and proceedings as the Trustee may deem expedient
to preserve or protect its interests and the interests of the Holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
government enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders or of the Trustee).
SECTION 11.7 Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents. The Trustee is authorized to receive any funds for the
benefit of the Holders distributed under the Collateral Documents, and to make
further distributions of such funds to the Holders according to the provisions
of this Indenture and the Collateral Documents.
SECTION 11.8 Possession, Use and Release of Convertible Note
Collateral.
124
<PAGE> 134
(a) All payments received on any Convertible Note Collateral, including
on the Technocom Preferred Stock or in respect of any Qualified Investments or
Intercompany Notes that constitute Convertible Note Collateral, shall be
promptly deposited, without commingling prior to such deposit, in the Company
Convertible Note Escrow Account and will also constitute Convertible Note
Collateral and be subject to a first priority perfected lien in favor of a
collateral agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Trustee and the equal and ratable benefit of the Holders of the Notes.
All funds deposited in the Company Convertible Note Escrow Account shall be
invested in Eligible Cash Equivalents pursuant to the terms and conditions of,
and in the manner provided for in, the Company Convertible Note Escrow Account
Agreement.
(b) Funds or Eligible Cash Equivalents in the Company Convertible Note
Escrow Account may, subject to Sections 11.8(f) below and Section 11.4(k) above,
be utilized
(i) to pay when due principal of, premium, if any, interest
(including Additional Amounts, if any, and Special Interest, if any)
on, and any other amounts due in respect of, the Convertible Notes; or
(ii) to make Qualified Investments if such Qualified
Investment is made in a manner which complies with subsection (c)
below; or
(iii) to make an intercompany loan to a Leasing Company
evidenced by an Intercompany Note (which will constitute Convertible
Note Collateral), so long as such Leasing Company thereafter utilizes
the funds received to make Qualified Investments in a manner which
complies with subsection (c) below.
(c) A Qualified Investment shall be deemed to have been made in
compliance with this subsection (c) if, in respect of such Qualified Investment,
THE FOLLOWING CONDITIONS ARE SATISFIED AND the Trustee shall have received an
Officer's Certificate of the Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing, or will occur as a result thereof;
(ii) a Lien on the Qualified Investment is granted to the
Trustee or a collateral agent for the benefit of the Trustee and the
equal and ratable benefit of the Holders to secure the Notes, the
Guarantees and the other obligations of the Company and the Guarantors
under this Indenture and the other Collateral Documents and, on a
junior basis, to secure any applicable Intercompany Note;
(iii) the entity in which such Qualified Investment is made
has all licenses, registrations and permits necessary to operate the
Telecommunications Business in which it is engaging or proposes to
engage on the date of such Qualified Investment;
125
<PAGE> 135
(iv) all licenses, registrations and permits required for such
Qualified Investment and such Liens have been obtained;
(v) appropriate Convertible Note Collateral Documents have
been executed and delivered and properly recorded, registered and filed
to the extent necessary to make effective the Liens intended to be
created therein.
The Company shall also deliver (x) an Opinion of Counsel covering
clause (v) above in the form and substance reasonably satisfactory to the
Trustee, and (y) such other documents as may be required by the Convertible Note
Collateral Documents.
(d) Subject to Section 11.8(f) below and Section 11.4(k) above,
Convertible Note Collateral may be released from the Liens created by the
Convertible Note Collateral Documents to the extent that such Liens secure the
obligations of the Company and the Guarantors under the Notes, this Indenture,
and the Collateral Documents (a) upon payment in full of the Notes in accordance
with the terms of the Notes and this Indenture and the other obligations then
due and owing under the Notes, this Indenture and the Collateral Documents; (b)
with respect to inventory, upon the sale of such inventory in the ordinary
course of business; (c) with respect to Convertible Note Collateral sold or
disposed of in an Asset Sale, if such sale or other disposition is not
prohibited under this Indenture and if the Net Cash Proceeds of such sale or
other disposition are applied as provided in Section 4.8 hereof; (d) with
respect to amounts in the Company Convertible Note Escrow Account consisting of
Net Cash Proceeds of Asset Sales, upon the expenditure of such cash if such
expenditure is made in accordance with the Convertible Note Indenture; and (e)
with respect to other amounts in the Company Convertible Note Escrow Account
other than the Net Cash Proceeds of any Asset Sale, including payments received
on the Technocom Preferred Stock, Qualified Investments or Intercompany Notes
that constitute Convertible Note Collateral, if the procedures described in this
Section 11.8 are complied with; provided that all such releases described above
are in compliance with the Trust Indenture Act.
(e) In the event of any Asset Sale, the Company or the relevant
Restricted Subsidiary shall cause the Net Cash Proceeds derived or resulting
from any Asset Sale that involves any Convertible Note Collateral to be
deposited in the Company Convertible Note Escrow Account (or if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged, then in the Company Senior Note Escrow Account) on or
before the fifth Business Day following the Business Day on which such Net Cash
Proceeds are received by the Company or such Restricted Subsidiary. In the event
that the Company or the relevant Restricted Subsidiary engages in an Asset Sale
with respect to Convertible Note Collateral which is permitted by this Indenture
and the Convertible Note Collateral Documents (or the Company designates a
Guarantor to be an Unrestricted Subsidiary in accordance with this Indenture),
the Trustee shall execute and deliver such documents as requested by the Company
to evidence the release of the Liens of the Convertible Note Collateral
Documents on the assets subject to the Asset Sale or on the assets owned by such
Unrestricted Subsidiary, as applicable. The proceeds of such
126
<PAGE> 136
Convertible Note Collateral (including any earnings thereon) may be released
from the Company Convertible Note Escrow Account in order to, and in only such
amount as is required to, (a) pay the principal amount of the Notes tendered
pursuant to an Asset Sale Offer, or (b) purchase Replacement Assets to the
extent permitted by Section 4.8 hereof, in which case the proceeds of such
Convertible Note Collateral may be released to the Company, if such proceeds are
to be used in accordance with this Indenture; provided that upon consummation of
such Investment or purchase the Trustee or a collateral agent shall have
received a first priority fully perfected Lien, subject to Permitted Liens and
the interest of the Convertible Note Trustee and the Holders of the Convertible
Notes in the Property or assets acquired by the Company.
(f) The release of any Convertible Note Collateral from the terms of
the Convertible Note Collateral Documents, or the release, in whole or in part,
of the Liens created by the Convertible Note Collateral Documents, will not be
deemed to impair the security under this Indenture in contravention of the
provisions hereof and of the Convertible Note Collateral Documents if and to the
extent that the Collateral is released pursuant to this Indenture and the
Convertible Note Collateral Documents. In connection with the release of
Collateral, the Trustee shall determine whether it has received all
documentation required by Section 314(d) of the Trust Indenture Act to permit
such release.
(g) The Company will furnish to the Trustee prior to each proposed
release of Convertible Note Collateral pursuant to the Convertible Note
Collateral Documents other than by reason of transactions referred to in Section
11.4(k) above, all documents required by Section 314(d) of the Trust Indenture
Act. The Trustee may, to the extent permitted by Sections 7.1 and 7.2 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such instruments. Any certificate or opinion
required by Section 314(d) of the Trust Indenture Act may be made by an Officer
of the Company or a Guarantor, as the case may be, except in cases where Section
314(d) of the Trust Indenture Act requires that such certificate or opinion be
made by an independent engineer, appraiser or other expert within the meaning of
Section 314(d) of the Trust Indenture Act.
(h) The Trustee may, in its sole discretion and without the consent of
the Holders of the Notes, on behalf of the Holders of the Notes, take all
actions it deems necessary or appropriate in order to (a) enforce any of the
terms of the Convertible Note Collateral Documents and (b) collect and receive
any and all amounts payable in respect of the obligations of the Company and the
Guarantors hereunder. The Trustee shall have the power to institute and to
maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the Convertible Note Collateral by any acts that may be unlawful
or in violation of the Convertible Note Collateral Documents, or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of the Notes in the
Convertible Note Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other government enactment, rule or order that may be
127
<PAGE> 137
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders of the Notes or of the Trustee).
(i) The Trustee is authorized to receive for the benefit of the Holders
of the Notes any funds distributed under the Convertible Note Collateral
Documents, and to make further distributions of such funds to such Holders
according to the provisions of this Indenture and the Convertible Note
Collateral Documents.
ARTICLE XII
SATISFACTION AND DISCHARGE
SECTION 12.1 Satisfaction and Discharge. This Indenture and the
Collateral Documents shall upon the request of the Company cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for, the Company's obligations under
Sections 4.22, 7.7 and 12.4 hereof, and the Company's, the Trustee's and the
Paying Agent's obligations under Section 12.3 hereof) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture and releasing all Liens in the
Collateral when
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (A) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7 and (B) Notes for
whose payment money has been deposited in trust with the Trustee or any
Paying Agent and thereafter paid to the Company or discharged from such
trust) have been delivered to the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable, or
(B) will become due and payable at their stated
maturity within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of clause (A), (B) or (C) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such
128
<PAGE> 138
purpose money or U.S. Government Obligations in an amount sufficient
(as certified by an independent public accountant designated by the
Company) to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal
(and premium, if any) and interest and Special Interest, if any, to the
date of such deposit (in the case of Notes which have become due and
payable) or the Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums then due
and payable hereunder by the Company;
(c) no Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit and after giving effect
to such deposit; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
Company's obligations in Sections 2.3, 2.4, 2.6, 2.7, 2.11, 4.22, 7.7, 7.8,
12.2, 12.3 and 12.4, and the Trustee's and Paying Agent's obligations in Section
12.3 shall survive until the Notes are no longer outstanding. Thereafter, only
the Company's obligations in Sections 4.22, 7.7, 12.3 and 12.4 and the Trustee's
and Paying Agent's obligations in Section 12.3 shall survive.
In order to have money available on a payment date to pay principal or
interest on the Notes, the U.S. Government Obligations shall be payable as to
principal or interest at least one Business Day before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
SECTION 12.2 Application of Trust Money. All money deposited with the
Trustee pursuant to Section 12.1 shall be held in trust and, at the written
direction of the Company, be invested prior to maturity in U.S. Government
Obligations, and applied by the Trustee in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any Paying
Agent as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest (including Special Interest, if
any) for the payment of which money has been deposited with the Trustee; but
such money need not be segregated from other funds except to the extent required
by law.
SECTION 12.3 Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for
129
<PAGE> 139
two years after the date upon which such payment shall have become due;
provided, however, that the Company shall have either caused notice of such
payment to be mailed to each Securityholder entitled thereto no less than 30
days prior to such repayment or within such period shall have published such
notice in a financial newspaper of widespread circulation published in The City
of New York, including, without limitation, The Wall Street Journal. After
payment to the Company, Holders entitled to the money must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
SECTION 12.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 12.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and Guarantors' obligations under this Indenture, the Notes, the
Guarantees and the Collateral Documents shall be revived and reinstated as
through no deposit has occurred pursuant to Section 12.1 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 12.2; provided, however, that if the
Company or the Guarantors have made any payment of interest on or principal of
any Notes because of the reinstatement of their Obligations, the Company or such
Guarantors shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provisions (an "incorporated provision") included in
this Indenture by operation of, Section 310 to 318, inclusive, of the Trust
Indenture Act, such imposed duties or incorporated provision shall control.
SECTION 13.2 Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first class mail, postage prepaid,
addressed as follows or by facsimile transmission: if to the Company: Petersburg
Long Distance Inc.: 166 Pearl Street, Toronto, Ontario, Canada M5H 1L3; if to
NWE Cyprus: c/o Phoebus, Christos Clerides, N. Pirilides & Associates, Nicosia
Office, Stassinos Court, Corner of Stassinos Avenue & Ayias Elenis 2, 3rd Floor,
P. O. Box 1884,
130
<PAGE> 140
Nicosia, Cyprus, Tel. 02-443015, fax: 02-356065; if to the Leasing Companies:
c/o Phoebus, Christos Clerides, N. Pirilides & Associates, Nicosia office,
Stassinos Avenue & Ayias Elenis 2, 3rd Floor, P. O. Box 1884, Nicosia, Cyprus,
Tel. 02-443015, fax: 02-356065; if to BCL: Baltic Communications Limited, Baltic
Communications Limited, c/o Morgan, Lewis & Bockius LLP, 2000 One Logan Square,
Philadelphia, Pennsylvania 19103-6993, Attn: E. Clive Anderson, Esquire, Tel.
215-963-5000, fax: 215-963-5299; if to WTC: Wireless Technology Corporations
Limited, c/o Morgan, Lewis & Bockius LLP, 2000 One Logan Square, Philadelphia,
Pennsylvania 19103-6993, Attn: E. Clive Anderson, Esquire, Tel. 215-963-5000,
fax: 215-963-5299; if to the Trustee: The Bank of New York, 101 Barclay Street,
Floor 21 West, New York, New York 10286, Attn: Corporate Trust Department, Fax:
(212) 815-5915 or 5917.
The Company, the Guarantors or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications. Any notice or communication mailed to a Holder shall be sent to
the Holder by first class mail, postage prepaid, at the Holder's address as it
appears in the Note Register and shall be given if so sent within the time
prescribed. Failure to mail a notice or communications 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 or faxed to the Company, the Guarantors, the
Trustee or a Holder in the manner provided above, it is duly given, whether or
not the addressee receives it but shall not be effective unless in the case of
the Company, the Guarantors or the Trustee actually received. In case by reason
of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give notice by mail to Holders, then such notification
as shall be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
SECTION 13.3 Communications by Holders with Other Holders. Holders may
communicate pursuant to Section 312(b) of the Trust Indenture Act with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of Section 312(c) of the Trust Indenture Act.
SECTION 13.4 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company or the Guarantors to the Trustee to
take or refrain from taking any action under this Indenture or the Collateral
Documents (other than a certificate provided pursuant to Section 314(a)(4) of
the Trust Indenture Act), the Trustee may require, and in such event the Company
or the Guarantors, as applicable, 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 13.5, if applicable) stating
that, in the opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture and the Collateral Documents relating to the
proposed action have been complied with; and (b) an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent and
covenants have been complied with.
SECTION 13.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture and the Collateral Documents (other than a
certificate provided pursuant to
131
<PAGE> 141
Section 314(a)(4) of the Trust Indenture Act) shall include: (a) a statement
that the individual 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 statement or opinions contained in such
certificate or opinion are based; (c) a statement that, in the opinion of such
individual, such person has made such examination or investigation as is
necessary to enable such person to express an informed opinion as to whether or
not such covenant or condition has been complied with; and (d) a statement as to
whether or not, in the opinion of such person, such covenant or condition has
been complied with; provided that with respect to matters of fact, an Opinion of
Counsel may rely upon Officers' Certificates or certificates of public
officials.
SECTION 13.6 Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Holders, and any
Registrar and Paying Agent may make reasonable rules for their functions;
provided that no such rule shall conflict with terms of this Indenture or the
Trust Indenture Act.
SECTION 13.7 Payments on Business Days. If a payment hereunder is
scheduled to be made on a date that is not a Business Day, payment shall be made
on the next succeeding day that is a Business Day, and no interest shall accrue
with respect to that payment during the intervening period. If a regular record
date is a date that is not a Business Day, such record date shall not be
affected.
SECTION 13.8 Governing Law; Submission to Jurisdiction. (a) THIS
INDENTURE, THE GUARANTEES, EACH NOTE AND EACH COLLATERAL DOCUMENT (EXCEPT TO THE
EXTENT EXPRESSLY PROVIDED FOR OTHERWISE) SHALL EACH BE DEEMED TO BE A CONTRACT
UNDER THE LAW OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF SAID STATE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS MAY
OTHERWISE BE REQUIRED BY MANDATORY PROVISIONS OF LAW AND WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(b) Any suit, action or proceeding against the Company or any Guarantor
or their respective Properties, assets or revenues with respect to this
Indenture, the Guarantees, a Note or a Collateral Document (a "Related
Proceeding") may be brought in any federal or state court located in the State
of New York, County of New York. Each of the Company and the Guarantors hereby
irrevocably consents to the jurisdiction of each such court for the purposes of
any Related Proceeding, and irrevocably waives, to the fullest extent it may
effectively and lawfully do so, any objection to the laying of venue of any
Related Proceeding in any such court and the defense of an inconvenient forum to
the maintenance of any Related Proceeding in any such court. Each of the Company
and the Guarantors further submits to the jurisdiction of the courts of its own
corporate domicile in any Related Proceeding.
132
<PAGE> 142
(c) Each of the Company and the Guarantors hereby agrees that service
of all writs, process and summonses in any Related Proceeding brought against it
in the State of New York may be made upon CT Corporation System in The City of
New York, presently located at 1633 Broadway, New York, New York 10019 (the
"Process Agent"), and each of the Company and the Guarantors have irrevocably
appointed the Process Agent 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. Each of the Company and the Guarantors agrees that
service of process on the Process Agent in such instances shall be deemed in
every respect effective service of process upon it in any such Related
Proceeding and further agrees that the failure of the Process Agent to give any
notice to it of any such service of process shall not impair or affect the
validity of such service or of any judgment based thereon. Each of the Company
and the Guarantors agrees to maintain at all times an agent with an office in
New York to act as Process Agent as aforesaid. Each of the Company and the
Guarantors agrees to take any and all actions as may be necessary to maintain
such designation and appointment of such Process Agent in full force and effect.
Nothing herein shall in any way be deemed to limit the ability to serve any such
writs, process and summonses in any other manner permitted by applicable law.
(d) To the extent that the Company, the Guarantors or any of their
respective revenues, assets or Properties shall be entitled, with respect to any
Related Proceeding at any time brought against the Company, the Guarantor or any
of their respective revenues, assets or Properties in the courts identified
above, to any immunity from suit, from attachment prior to judgment, from
attachment in aid of execution of judgment, or from any other legal or judicial
remedy, and to the extent that in any such jurisdiction there shall be
attributed such an immunity, each of the Company and the Guarantors hereby
irrevocably agrees not to claim and irrevocably waives such immunity, and any
defense based on such immunity, to the extent permitted by law in respect of its
obligations under (i) this Indenture, (ii) the Guarantees, (iii) any Note or
(iv) any Collateral Document. Without limiting the foregoing, each of the
Company and the Guarantors hereby, to the fullest extent permitted by applicable
law, expressly and irrevocably waives any defense of sovereign immunity from
jurisdiction, attachment in aid of execution and execution to which it might
otherwise be entitled in any Related Proceeding; provided that each of the
Company and the Guarantors here by expressly reserves its rights, if any, to
claim immunity from attachment prior to judgment to which it may now or
hereafter be entitled. Each of the Company and the Guarantors agrees that final
judgment in any such Related Proceeding brought in such a court will be
conclusive and binding on it and may be enforced in other jurisdictions by suit
on the judgment or in any other matter provided by law, provided that service of
process is effected upon the Company or any Guarantors, as the case may be, in
the manner specified in Section 13.8(c) above or as otherwise permitted by law.
SECTION 13.9 Judgment Currency; Currency Indemnity. If for the purposes
of obtaining judgment in any court it is necessary to convert a sum due from the
Company or any Guarantor hereunder or under any Guarantee, any of the Notes or
any of the Collateral Documents in U.S. Dollars into another currency, the
parties hereto agree, to the fullest
133
<PAGE> 143
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Trustee could
purchase U.S. Dollars with such other currency at the Trustee's New York office
on the Business Day preceding that on which final judgment is given. Any amount
received or recovered in a currency other than U.S. Dollars (whether as a result
of a judgment or order of a court of any jurisdiction, or the enforcement
thereof, in the winding-up or dissolution of the Company or any Guarantor or
otherwise) by the Trustee or any Holder in respect of any sum expressed to be
due to it from the Company or such Guarantor shall only constitute discharge of
the Company or such Guarantor to the extent of the U.S. Dollar amount which the
recipient is able to purchase with the amount so received or recovered in such
other currency on the date of such receipt or recovery; provided that if it is
not practicable to make such purchase on such date, such purchase shall be made
on the first date on which is practicable to do so. If the amount of U.S.
Dollars so purchased is less than the U.S. Dollar amount expressed to be due to
such recipient hereunder or under the Guarantees, any Note or any Collateral
Document, to the extent permitted by applicable law the Company or the
Guarantors, as applicable, shall indemnify such recipient against any loss
sustained by it as a result and, in any event, the Company or the Guarantors
shall indemnify such recipient against the cost of making any such purchase. For
the purposes of this Section 13.9, it shall be sufficient for any such recipient
to certify that it would have suffered a loss had an actual purchase of U.S.
Dollars been made with the amount so received in such other currency on the date
of receipt or recovery (or, if a purchase of Dollars on such date had not been
practicable, on the first date on which it would have been practicable). To the
extent permitted by applicable law, the indemnities granted by this Section 13.9
constitute a separate and independent obligation from the other obligations of
the Company hereunder and the Guarantors hereunder and shall give rise to a
separate and independent cause of action in favor of the Trustee or any Holder,
as the case may be.
SECTION 13.10 No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company or of any Guarantor, as
such, shall have any liability for any obligations of the Company or the
Guarantors under the Notes, the Guarantees or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation,
solely by reason of his or her status as a director, officer, employee,
incorporator or stockholder of the Company or of any Guarantor. By accepting a
Note, each Holder waives and releases all such liability (but only such
liability) as part of the consideration for issuance of such Note to such
Holder.
SECTION 13.11 Successors. All agreements of the Company and the
Guarantor in this Indenture, the Notes and the Collateral Documents shall bind
its successors and assigns whether so expressed or not, unless it is
specifically and expressly provided otherwise in this Indenture. All agreements
of the Trustee in this Indenture shall bind its successors and assigns whether
so expressed or not.
SECTION 13.12 Counterparts. This Indenture may be executed in any
number of counterparts and by the parties thereto in separate counterparts, each
of which when so
134
<PAGE> 144
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 13.13 Table of Contents; Headings. 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 intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 13.14 Severability. In case any provision in this Indenture or
in the Notes 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 13.15 Further Instruments and Acts. Upon request of the
Trustee, the Company and the Guarantors will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.
SECTION 13.16 Final Expression. This Indenture, together with the
related Collateral Documents, is intended by the parties as a final, complete
and exclusive statement of the agreement of the parties on the subject hereof
and thereof.
SECTION 13.17 Independent Covenants. Each covenant contained in this
Indenture and the Collateral Documents is intended by the parties to be a
separate and independent covenant, the compliance or non-compliance with which
is to be determined independently and without regard to whether the Company, a
Guarantor or a Restricted Subsidiary is in compliance with another covenant
contained in this Indenture or the Collateral Documents.
ARTICLE XIV
SUBORDINATION OF NOTES
SECTION 14.1 Notes Subordinated to Senior Indebtedness. The Company and
the Guarantor covenant and agree, and each Holder of a Note, by acceptance
thereof, likewise covenants and agrees, that, to the limited extent and in the
manner hereinafter set forth and except as otherwise set forth in this Article,
the indebtedness represented by the Notes and this Indenture (including the
Guarantees) and the payment of the principal of and premium, if any, and
interest (including Additional Amounts, if any, and Special Interest, if any) on
each and all of the Notes of any amounts due in respect of any Notes and this
Indenture (including the Guarantees) (and any payment thereon made or to be made
by a Guarantor under its Guarantee), are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior
Indebtedness as to all assets of the Company or the Guarantors constituting
Convertible Note Collateral (but not otherwise), whether or not
135
<PAGE> 145
the Liens purporting to secure such Convertible Note Collateral are valid and
effective (hereinafter called "assets constituting Convertible Note
Collateral").
SECTION 14.2 Payment Over of Proceeds Upon Dissolution, Etc. Except as
otherwise provided in Section 14.15, in the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or other Obligor or
to its creditors, as such, or to a substantial part of its assets, or (b) any
proceeding for the liquidation, dissolution or other winding-up of the Company
or any other Obligor, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company or
any other Obligor, then and in any such event the holders of Senior Indebtedness
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of all Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holders of the Notes are entitled
to receive any payment or distribution of any kind or character, whether in
cash, property or securities, on account of principal of or premium, if any, or
interest (including Additional Amounts, if any, and Special Interest, if any) on
the Notes and on account of any amounts due in respect of any Notes and any
payment thereon made or to be made by a Guarantor under its Guarantee, from or
with respect to the assets constituting Convertible Note Collateral (but not
otherwise), and to that end the holders of Senior Indebtedness shall be entitled
to receive, for application to the payment thereof, any payment or distribution
of any kind or character from or with respect to the assets constituting
Convertible Note Collateral (but not otherwise), whether in cash, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company or
any other Obligor being subordinated to the payment of the Notes, which may be
payable or deliverable in respect of the Notes in any such case, proceeding,
dissolution, liquidation or other winding-up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Company, from or
with respect to the assets constituting Convertible Note Collateral (but not
otherwise).
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Note shall have received any payment
or distribution of assets constituting Convertible Note Collateral (but not
otherwise) of the Company or any other Obligor of any kind or character, whether
in cash, property or securities, prohibited by the foregoing, including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company or of a Guarantor being
subordinated to the payment of the Notes or A Guarantee, as applicable, before
all Senior Indebtedness is paid in full or payment thereof provided for, and if
such fact shall, at or prior to the time of such payment or distribution, have
been made known to a Trust Officer of the Trustee in writing or such Holder, as
the case may be, then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other person making payment
or distribution of assets of the Company or any other Guarantor for application
136
s
<PAGE> 146
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include securities of the Company as
reorganized or readjusted, or securities of the Company or any other Guarantor
or any other corporation provided for by a plan of reorganization or
readjustment which are subordinated in right of payment to all Senior
Indebtedness which may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Notes or the Guarantees are so
subordinated as provided in this Article. The consolidation or amalgamation of
the Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of its properties and assets substantially as an entirety to another person upon
the terms and conditions set forth in Article V shall not be deemed a
dissolution, winding-up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company for the
purposes of this Section if the person formed by such consolidation or into
which the Company is merged or which acquires by conveyance or transfer such
properties and assets substantially as an entirety, as the case may be, shall,
as part of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article V. Similarly, the consolidation or amalgamation
of a Guarantor with, or the merger of a Guarantor into, another PERSON or the
liquidation or dissolution of a Guarantor to the extent permitted by this
Indenture shall NOT be deemed a dissolution, winding-up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of a Guarantor for the purposes of this Section.
SECTION 14.3 Prior Payment to Senior Indebtedness upon Acceleration of
Notes. In the event that any Notes are declared due and payable before their
Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Notes so become due and payable shall be entitled
to receive payment in full of all amounts due on or in respect of such Senior
Indebtedness from or with respect to the assets constituting Convertible Note
Collateral (but not otherwise) before the Holders of the Notes are entitled to
receive any payment (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company or any other Obligor being
subordinated to the payment of the Notes or the Guarantees, as applicable) by
the Company or any other Obligor on account of the principal of or premium, if
any, or interest on or other amounts due in respect of, the Notes or the
Guarantees, as applicable, or on account of the purchase or other acquisition of
Notes from or with respect to assets constituting Convertible Note Collateral.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Note prohibited by the
foregoing provisions of this Section from or with respect to the assets
constituting Convertible Note Collateral (but not otherwise), and if such fact
shall, at or prior to the time of such payment, have
137
<PAGE> 147
been made known to a Trust Officer of the Trustee in writing, or such Holder, as
the case may be, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 14.2 would be applicable.
SECTION 14.4 No Payment When Senior Indebtedness in Default.
(a) In the event (i) that any default in the payment of principal of,
premium, if any, on, interest, if any (including Additional Amounts, if any, and
Special Interest, if any), on, or other amounts due in respect of, any Senior
Indebtedness, whether at the date of a required payment, maturity, upon
mandatory prepayment, redemption or otherwise, shall have occurred and be
continuing or (ii) that any event of default with respect to any Senior
Indebtedness shall have occurred and be continuing and shall have resulted in
such Senior Indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable unless and until
such event of default shall have been cured or waived in writing or shall have
ceased to exist and such acceleration shall have been rescinded or annulled or
if any judicial proceeding is pending with respect to such event of default with
respect to the Senior Indebtedness, then no payment (including any payment which
may be payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Notes) shall be made by the Company on
account of the principal of, premium, if any, on, interest on, or other amounts
due in respect of, the Notes or on account of the purchase, redemption or other
acquisition of Notes from or with respect to assets constituting Convertible
Note Collateral (but not otherwise).
(b) In the event that, notwithstanding the foregoing, the Company shall
make any payment from assets constituting Convertible Note Collateral (but not
otherwise) to the Trustee or the Holder of any Note prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known to a Trust Officer of the Trustee in writing
or to such Holder, as the case may be, then and in such event such payment shall
be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 14.2 would be applicable.
SECTION 14.5 Payment Permitted If No Default. Nothing contained in this
Article or elsewhere in this Indenture or in any of the Notes shall prevent (a)
the Company or THE Guarantors, at any time except during the pendency of any
case, proceeding, dissolution, liquidation, or other winding-up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 14.2 or under the conditions described in Section
14.3 or 14.4, from making payments from assets constituting Convertible Note
Collateral (but not otherwise) at any time of principal of and premium, if any,
or
138
<PAGE> 148
interest (including Additional Amounts, if any, and Special Interest, if any) on
the Notes or the Guarantees as applicable, or (b) the application by the Trustee
of any money deposited with it hereunder from assets constituting Convertible
Note Collateral (but not otherwise) to the payment of or on account of the
principal of, premium, if any, on, interest, if any (including Additional
Amounts, if any, and Special Interest, if any), on, or other amounts due in
respect of, the Notes or retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 14.6 Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the prior payment in full of all amounts due on or in respect of
Senior Indebtedness from assets constituting Convertible Note Collateral of the
Company and the Guarantors (but not otherwise), with respect to which the
Holders of the Notes rank senior in right of payment to the Senior Indebtedness,
the Holders of the Notes shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities from assets constituting Convertible Note Collateral applicable to
the Senior Indebtedness until the principal of, premium, if any, on, interest
(including Additional Amounts, if any, and Special Interest, if any) on, and any
other amounts due in respect of, the Notes shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Notes or the Trustee would be entitled except for the provisions of this
Article, and no payments made pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Notes or the Trustee, shall, as
among the Company and any Guarantor, as the case may be, its respective
creditors other than holders of Senior Indebtedness and the Holders of the
Notes, be deemed to be a payment or distribution by the Company or any
Guarantor, as applicable, to or on account of the Senior Indebtedness.
SECTION 14.7 Provisions Solely to Define Relative Rights. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as among the Company or any Guarantor, its respective creditors
other than holders of Senior Indebtedness and the Holders of the Notes, the
obligation of the Company or such Guarantor, which is absolute and
unconditional, to pay to the Holders of the Notes, the principal of, premium, if
any, on, interest (including Additional Amounts, if any, and Special Interest,
if any) on, and any other amounts due in respect of, the Notes or in respect of
the Guarantees, as applicable, as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Notes and creditors of the Company other than the
holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Notes from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
of the holders of Senior
139
<PAGE> 149
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 14.8 Trustee to Effectuate Subordination. Each Holder of a Note
by his acceptance thereof authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 14.9 No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or any Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company or any Guarantor with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with. No provision of the subordination provisions contained
in this Article may be amended without the consent of a majority in principal
amount of Senior Indebtedness in the manner provided for in the Convertible Note
Indenture.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Notes to be holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment, of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness except
as otherwise expressly provided in the Collateral Documents; (iii) release any
person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company or any
Guarantor and any other Person.
SECTION 14.10 Notice to Trustee. The Company and each Guarantor shall
give prompt written notice to the Trustee of any fact known to the Company or
such Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Notes or the Guarantees, as applicable.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Notes or the Guarantees unless and until a Trust Officer of the
Trustee shall have received written notice thereof from the Company , any
Guarantor or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 7.1, shall be entitled
140
<PAGE> 150
in all respects to assume that no such facts exist; provided, however, that if a
Trust Officer of the Trustee shall not have received the notice provided for in
this Section at least three Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest
(including Additional Amounts, if any, and Special Interest, if any) on, and any
other amounts due in respect of any Note), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within three Business Days prior to such date.
Subject to the provisions of Section 7.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Indebtedness (or
a trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such person to furnish evidence to the
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 14.11 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 7.1, and the
Holders of the Notes shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding-up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered in writing
to the Trustee or to the Holders of Notes, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article.
SECTION 14.12 Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Notes or to the
Company or to any other person cash, property or securities from assets
constituting Convertible Note Collateral to which holders of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
141
<PAGE> 151
SECTION 14.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payment to, the
Trustee under or pursuant to Section 7.7.
SECTION 14.14 Article Applicable to Paying Agents. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term "Trustee" as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee; provided, however, that Section 14.13 shall not
apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
SECTION 14.15 Rights in Respect of Collateral. Notwithstanding any
other provision of this Article, the Notes are entitled to receive free of the
rights of the holders of Senior Indebtedness, payment of principal of, premium,
if any, on, interest (including Additional Amounts, if any, and Special
Interest, if any) on, and any other amounts due in respect of, the Notes from
the proceeds of the Collateral and all other assets of the Company and the
Guarantors, other than the assets constituting Convertible Note Collateral, and
as to the Collateral and all other assets of the Company and Guarantors, other
than assets constituting Convertible Note Collateral, the Notes and the
Guarantees, as applicable rank senior in right of payment to the Senior
Indebtedness as a result of the subordination provisions contained in the
Convertible Note Indenture and the Senior Note Collateral Documents.
142
<PAGE> 152
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ James Haat
------------------------------
Name: James Hatt
Title: Chairman
By: /s/ Simon Edwards
------------------------------
Name: Simon Edwards
Title: Chief Financial Officer
[Corporate Seal]
NWE CAPITAL (CYPRUS) LIMITED
Guarantor
By: /s/ Clayton A. Waite
------------------------------
Name: Clayton A. Waite
Title: Director
[Corporate Seal]
Attest:
<PAGE> 153
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came James Hatt,
to me known, who, being by me duly sworn, did depose and say that he is Chairman
of Petersburg Long Distance Inc., one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 154
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Simon Edwards,
to me known, who, being by me duly sworn, did depose and say that he is Chief
Financial Officer of Petersburg Long Distance Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Ellen Extract
--------------------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires:
March 30, 1997
<PAGE> 155
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Clayton A.
Waite, to me known, who, being by me duly sworn, did depose and say that he is
of NWE Capital (Cyprus) Limited, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 156
PLD ASSET LEASING LIMITED
Guarantor
By: /s/ Clayton A. Waite
------------------------------
Name: Clayton A. Waite
Title: Director
[Corporate Seal]
Attest:
PLD CAPITAL LIMITED
Guarantor
By: /s/ Clayton A. Waite
------------------------------
Name: Clayton A. Waite
Title: Director
[Corporate Seal]
Attest:
BALTIC COMMUNICATIONS LIMITED
Guarantor
By: /s/ Simon Edwards
------------------------------
Name: Simon Edwards
Title:
[Corporate Seal]
Attest: /s/ James Hatt
<PAGE> 157
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Clayton A.
Waite, to me known, who, being by me duly sworn, did depose and say that he is
Director of PLD Asset Leasing Limited, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 158
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Clayton A.
Waite, to me known, who, being by me duly sworn, did depose and say that he is
Director of PLD Capital Limited, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 159
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Simon Edwards,
to me known, who, being by me duly sworn, did depose and say that he is
of Baltic Communications Limited, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 160
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
Guarantor
By: /s/ James Hatt
------------------------------
Name: James Hatt
Title:
[Corporate Seal]
Attest: /s/ Simon Edwards
<PAGE> 161
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came James Hatt,
to me known, who, being by me duly sworn, did depose and say that he is
of wireless Technology Corporations Limited, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 162
THE BANK OF NEW YORK,
as Trustee
By: /s/ Steven D. Torgeson
------------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
[Corporate Seal]
Attest: /s/ Kathleen Jones
<PAGE> 163
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Steven D.
Torgeson, to me known, who, being by me duly sworn, did depose and say that he
is Assistant Treasurer of The Bank of New York, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
Notary Public, State of New York
[Seal] My Commission Expires:
/s/ Ellen Extract
March 30, 1997
<PAGE> 164
EXHIBIT B
<PAGE> 165
EXHIBIT B
FORM OF FACE OF INITIAL CERTIFICATED NOTE
PETERSBURG LONG DISTANCE INC.
CUSIP NO. 71623PAB8
No. ______ 14% SENIOR DISCOUNT NOTES DUE 2004
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND THE PROVINCES OF
CANADA.
THE NOTES EVIDENCED HEREBY WERE INITIALLY ISSUED AS PART OF AN ISSUANCE OF
UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 14% SENIOR
DISCOUNT NOTES DUE 2004 OF PETERSBURG LONG DISTANCE INC. (THE "NOTES") AND
ONE WARRANT (A "WARRANT") ENTITLING THE HOLDER THEREOF TO PURCHASE 34
COMMON SHARES WITHOUT NOMINAL OR PAR VALUE OF PETERSBURG LONG DISTANCE
INC. PRIOR TO THE EARLIEST OF (A) 180 DAYS AFTER THE DATE OF ORIGINAL
ISSUANCE OF THE UNITS, (B) THE COMMENCEMENT OF A REGISTERED EXCHANGE OFFER
FOR THE NOTES, (C) SUCH DATE AS THE INITIAL PURCHASER MAY DETERMINE AND
(D) IN THE EVENT OF A CHANGE OF CONTROL, THE DATE ON WHICH THE COMPANY
MAILS NOTICE THEREOF TO THE HOLDERS OF THE NOTES, THE NOTES EVIDENCED
HEREBY MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE WARRANTS.
FOR THE PURPOSES OF THE INTEREST ACT (CANADA) AND DISCLOSURE THEREUNDER,
WHENEVER INTEREST, ADDITIONAL AMOUNTS, SPECIAL INTEREST, OR DEFAULTED
INTEREST OR INTEREST ON DEFAULTED INTEREST RELATING TO THIS NOTE, IS TO BE
CALCULATED ON THE BASIS OF A YEAR OF 360 DAYS OR ANY OTHER PERIOD OF TIME
THAT IS LESS THAN A CALENDAR YEAR, THE YEARLY RATE OF INTEREST TO WHICH
THE RATE DETERMINED PURSUANT TO SUCH CALCULATION IS EQUIVALENT IS THE RATE
SO DETERMINED MULTIPLIED BY THE ACTUAL NUMBER OF DAYS IN THE CALENDAR YEAR
IN WHICH THE SAME IS TO BE ASCERTAINED AND DIVIDED BY EITHER 360 OR SUCH
OTHER PERIOD OF TIME, AS THE CASE MAY BE. THE RATE ACCRUING ON THE NOTES
FOR PAYMENT PURPOSES SHALL BE DETERMINED AS SET FORTH ON THE REVERSE
HEREOF.
<PAGE> 166
Petersburg Long Distance Inc., an Ontario corporation (the
"Company"), for value received, hereby promises to pay to ______________, or
its registered assigns, the principal amount of ____________________ on June
1, 2004.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth in this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated: ______________
PETERSBURG LONG DISTANCE INC.
By:________________________________
Name:
Title:
[Corporate Seal]
By: _______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By: ________________________
Authorized Signatory
B-2
<PAGE> 167
FORM OF REVERSE SIDE OF INITIAL CERTIFICATED NOTE
PETERSBURG LONG DISTANCE INC.
14% SENIOR DISCOUNT NOTES DUE 2004
1. Indenture.
This Note is one of a duly authorized issue of debt securities of
Petersburg Long Distance Inc., an Ontario corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), designated as its "14% Senior Discount Notes due 2004"
(herein called the "Notes") limited in aggregate principal amount of Stated
Maturity to $123,000,000, issued under an indenture dated as of May 31, 1996 (as
amended or supplemented from time to time, the "Indenture") among the Company,
the corporations acting as guarantors and named therein (the "Guarantors") and
The Bank of New York, as trustee (the "Trustee," which term includes any
successor Trustee under the Indenture), to which Indenture reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and each
Holder of Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The summary of the terms of this Note contained
herein does not purport to be complete and is qualified by reference to the
Indenture. All terms used in this Note which are not defined herein shall have
the meanings assigned to them in the Indenture.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into or permit certain transactions
with Affiliates, create Liens, enter into or permit certain Sale and Leaseback
Transactions, make Asset Sales and engage in businesses other than the
Telecommunications Business. The Indenture also imposes limitations on the
ability of the Company to consolidate or merge with or into any other Person or
permit any other Person to merge with or into the Company, or sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Property of the Company to any other Person. In addition, the Indenture imposes
limitations on the ability of Restricted Subsidiaries to issue guarantees and
Preferred Shares and to create consensual restrictions upon their ability to pay
dividends and make certain other payments to the Company.
2. Principal and Interest.
The Company promises to pay the principal amount set forth on the
face hereof to the Holder hereof on June 1, 2004.
The Notes have been issued at a discounted principal value of
$87,697,300. The Notes will accrete interest from the Issue Date at a rate
computed as if the Notes had been issued bearing interest at the rate of 14% per
annum on May 31, 1996 (being a rate of 14.9445% per annum for the period from
the Issue Date through November 30, 1996), compounded semiannually, to an
aggregate principal amount of $123,000,000 by December 1, 1998. The principal
amount at Stated Maturity of this Note is set forth on the face hereof.
Commencing December 1, 1998, interest on this Note, like the other Notes, will
accrue at the rate of 14% per annum, and will be payable in cash semi-annually
on June 1 and December 1 of each year, commencing June 1, 1999, until the
principal amount hereof is paid or
B-3
<PAGE> 168
made available for payment. The effect of the foregoing is that this Note will
bear interest at the rate of 14.9445% per annum from the Issue Date through
November 30, 1996 and 14% per annum thereafter. The payment of interest on this
Note in respect of the period from the Issue Date to December 1, 1998, however,
will effectively be deferred until Maturity and such deferred interest will be
compounded semi-annually and added to the outstanding principal amount of this
Note. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. If the Company has not received, on or before May 31,
1998, $20,000,000 in Cash Proceeds from a sale or sales of Qualified Stock of
the Company occurring subsequent to the Issue Date (other than Qualified Stock
issued upon the exercise of Warrants or upon conversion of the Convertible
Notes), this Note will bear interest at the rate of 14.5% per annum commencing
on June 1, 1998 until any Interest Payment Date prior to which the Company shall
have received such $20,000,000 in Cash Proceeds from such a sale of Qualified
Stock. Commencing on any such Interest Payment Date, this Note will again bear
interest at the rate of 14% per annum. For purposes of this interest rate
adjustment provision, the Company will be deemed to have received such
$20,000,000 in Cash Proceeds if a Change of Control has occurred. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, subject to certain exceptions provided in the Indenture, be paid to
the Person in whose name this Note (or the Note in exchange or substitution for
which this Note was issued) is registered at the close of business on the Record
Date for interest payable on such Interest Payment Date. The Record Date for any
Interest Payment Date is the close of business on May 15 or November 15, as the
case may be, whether or not a Business Day, immediately preceding the Interest
Payment Date on which such interest is payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") shall forthwith
cease to be payable to the Holder on such Record Date and shall be paid as
provided in Section 2.11 of the Indenture.
Each payment of interest in respect of an Interest Payment Date will
include interest (including Additional Amounts (as hereinafter defined), if any,
and Special Interest (as hereinafter defined), if any), accrued through the day
before such Interest Payment Date. If an Interest Payment Date falls on a day
that is not a Business Day, the interest payment to be made on such Interest
Payment Date will be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date, and no additional
interest will accrue as a result of such delayed payment.
If an Exchange Note is substituted for this Note in a Registered
Exchange Offer prior to the Record Date for the first Interest Payment Date
following such substitution, accrued and unpaid interest, if any, on this Note,
up to but not including the date of issuance of the Exchange Note or Exchange
Notes issued in substitution for this Note, shall be paid on the first Interest
Payment Date for such Exchange Note or Exchange Notes to the Holder or Holders
of such Exchange Note or Exchange Notes on the first Record Date with respect to
such Exchange Note or Exchange Notes. If this Note is exchanged in a Registered
Exchange Offer subsequent to the Record Date for the first Interest Payment Date
following such substitution but on or prior to such Interest Payment Date, then
any such accrued and unpaid interest with respect to this Note and any accrued
and unpaid interest on the Exchange Note or Exchange Notes issued in
substitution for this Note, including Additional Amounts, if any, and Special
Interest, if any, through the day before such Interest Payment Date, shall be
paid on such Interest Payment Date to the Holder of this Note on such Record
Date. Any accretion of value with respect to this Note up to but including the
date of issuance of the Exchange Note or Exchange Notes issued in substitution
for this Note shall be included as Accreted Value with respect to such Exchange
Note or Exchange Notes.
B-4
<PAGE> 169
To the extent lawful, the Company shall pay interest on (i) if prior
to December 1, 1998, any overdue Accreted Value of (and premium, if any, on)
this Note, or if on or after December 1, 1998 any overdue principal of (and
premium, if any, on) this Note, at the interest rate borne on this Note, plus 1%
per annum, and (ii) Defaulted Interest (without regard to any applicable grace
period), including Additional Amounts, if any, and Special Interest, if any, at
the same rate. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its Stated Maturity, as a result of
the Company's obligations pursuant to Section 3.6, Section 4.7 or Section 4.8 of
the Indenture, or otherwise.
3. Additional Amounts.
Except to the extent required by law, any and all payments of, or in
respect of, this Note shall be made free and clear of and without deduction for
or on account of any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto
imposed by Canada, the Russian Federation, Cyprus or any other jurisdiction with
which the Company or any Guarantor has some connection (including any
jurisdiction (other than the United States of America) from or through which
payments under the Notes are made) or any political subdivision of or any taxing
authority in any such jurisdiction ("Canadian Taxes," "Russian Taxes," "Cypriot
Taxes" or "Other Taxes," respectively). If the Company or any Guarantor shall be
required by law to withhold or deduct any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes from or in respect of any sum payable under this Note or
pursuant to a Guarantee, the sum payable by the Company or such Guarantor, as
the case may be, thereunder shall be increased by the amount ("Additional
Amounts") necessary so that after making all required withholdings and
deductions, the Holder of this Note shall receive an amount equal to the sum
that it would have received had no such withholdings and deductions been made;
provided that any such sum shall not be paid in respect of any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes to the Holder of this Note (an
"Excluded Holder") (i) resulting from the beneficial owner of this Note carrying
on business or being deemed to carry on business in or through a permanent
establishment or fixed base in the relevant taxing jurisdiction or any political
subdivision thereof or having any other connection with the relevant taxing
jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of this Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of this Note
or the Guarantees or the enforcement of this Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)), with the Holder of this Note at the
time of such payment or at the time the amount of such payment is deemed to have
been paid or credited or (iii) that would not have been imposed but for the
presentation (where presentation is required) of this Note for payment more than
180 days after the date such payment became due and payable or was duly provided
for, whichever occurs later. The Company or the Guarantors, as applicable, will
also (i) make such withholding or deduction and (ii) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law, and, in any such case, the Company will furnish to each Holder on whose
behalf an amount was so remitted, within 30 calendar days after the date the
payment of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by the Company or the Guarantors, as applicable. The Company will, upon
written request of each Holder (other than an Excluded Holder), reimburse each
such Holder for the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to such Notes, and (ii) any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed with respect to
any reimbursement under the foregoing clause (i) so that the net amount received
by such Holder (net of payments made under or with respect to the Notes or the
Guarantees) after such
B-5
<PAGE> 170
reimbursement will not be less than the net amount the Holder hereof would have
received if Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes on such
reimbursement had not been imposed.
In addition, the Company or the Guarantors will pay any stamp,
issue, registration, documentary or other similar taxes and duties, including
interest and penalties, in respect of the creation, issue and offering of the
Notes payable in Canada, the United States, the Russian Federation or Cyprus or
any political subdivision thereof or taxing authority of or in the foregoing.
The Company and the Guarantors will also pay and indemnify the Holders from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by the Trustee or the Holders to create the Liens
on the Collateral and the Convertible Note Collateral and to enforce the
obligations of the Company or the Guarantors under the Notes, the Indenture, the
Guarantees, the Collateral Documents or the Convertible Note Collateral
Documents.
4. Special Interest.
Special interest means such additional interest as is set forth in
subparagraphs (a) or (b) below.
(a) The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of May 31, 1996, between the Company and
the Initial Purchaser (the "Registration Agreement"), which agreement is
attached to the Indenture as Exhibit E thereto. In the event that (a) the
Exchange Offer Registration Statement (as such term is defined in the
Registration Agreement) is not filed with the Securities and Exchange Commission
(the "Commission") on or prior to the 45th day following the Issue Date, (b) the
Exchange Offer Registration Statement is not declared effective by the
Commission on or prior to the 120th day following the Issue Date, (c) the
Exchange Offer (as such term is defined in the Registration Agreement) is not
consummated on or prior to the 180th day following the Issue Date and in such a
case the Note Shelf Registration Statement (as such term is defined in the
Registration Agreement) is not filed with the Commission on or prior to 60 days
thereafter and such Note Shelf Registration Statement has not been declared
effective on or prior to 120 days thereafter or (d) any such Registration
Statement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose, without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective, for a period of more
than 30 consecutive days, interest shall accrue on this Note (in addition to any
accretion in value of, or accrual of stated interest on, this Note) from and
including the next day following each of (i) such 45-day period in the case of
clause (a) above, (ii) such 150-day period in the case of clause (b) above,
(iii) such 180-day period for the Exchange Offer Registration Statement, such
60-day period or 120-day period for the Note Shelf Registration Statement, as
applicable, in the case of clause (c) above and (iv) such 30-day period in the
case of clause (d) above (each such event referred to in clauses (i) through
(iv), a "Registration Default"). In each case following the occurrence of a
Registration Default, such additional interest (the "Special Interest") will be
payable to the Holder hereof during the first 90-day period immediately
following the occurrence of such Registration Default in cash semi-annually in
arrears on each Interest Record Date at a rate equal to $0.01 per week per
$1,000 of the Accreted Value of this Note (determined daily) to the Holder
hereof. The Special Interest payable to the Holder of this Note shall increase
by an additional $0.01 per week per $1,000 of the Accreted Value of this Note
for each 90-day period up to a maximum of $0.50 per week per $1,000 of the
Accreted Value of this Note (determined daily). Upon (w) the filing of the
Exchange Offer Registration Statement or a Note Shelf Registration Statement
after the 45-day period described in clause (a) above, (x) the effectiveness of
the
B-6
<PAGE> 171
Exchange Offer Registration Statement or a Note Shelf Registration Statement
after the 120-day period described in clause (b) above, (y) the consummation of
the Exchange Offer after the applicable time period described in clause (c)
above, or (z) the effectiveness of an applicable Registration Statement after
the 30-day period described in clause (d) above, the Special Interest payable on
this Note, with respect to such clause (a), (b), (c) or (d), as the case may be,
from the date of such filing, effectiveness or consummation, as the case may be,
shall cease to accrue and all accrued and unpaid Special Interest as of the
occurrence of (w), (x), (y) or (z) shall be paid to the Holder hereof on the
next Interest Payment Date with respect thereto. Following the occurrence of
(w), (x), (y) and (z) above, the interest terms of this Note shall revert to the
original terms set forth above, subject to paragraph 4(b) below.
(b) In the event of the failure of the Company to procure, on or
before July 12, 1996, a recognized financial institution with capital of not
less than $10,000,000 organized under the laws of the Republic of Ireland which
the Convertible Note Trustee may lawfully appoint as a Qualified Foreign
Collateral Agent (as defined in Section 7.3 of the Indenture) (the
"Procurement") with respect to Technocom Preferred Stock, any payments thereon
and any property substituted therefor (the "Subject Collateral") pursuant to an
agreement under which such Qualified Foreign Collateral Agent will agree not to
resign without the contemporaneous appointment of a successor Qualified Foreign
Collateral Agent (the "Prescribed Agreement"), then, commencing on July 12,
1996, the Company shall pay to each Holder of the Notes additional Special
Interest in an amount equal to 1% per annum on the principal amount at Stated
Maturity of such Holder's Notes, accruing for each day until the Procurement is
made or Technocom or a successor is reorganized under the laws of Cyprus and a
successor Qualified Foreign Collateral Agent has been appointed in respect of
the Subject Collateral (the "Reorganization") under a Prescribed Agreement. Such
Special Interest shall be payable in cash semi-annually in arrears at the times
and in the manner provided for in the Indenture, provided that for this purpose,
Section 2.11 of the Indenture shall be read to include as Interest Payment
Dates, as applicable, June 1 and December 1 of each year, commencing December 1,
1996. Such Special Interest shall cease to accrue upon the Procurement or the
Reorganization taking place and all accrued and unpaid Special Interest shall be
paid to each Holder of the Notes on the next Interest Payment Date with respect
thereto. Any Special Interest payable pursuant to this paragraph 4(b) shall be
in addition to any Special Interest that may be payable pursuant to paragraph
4(a) above.
Except as expressly provided in this paragraph 4, Special Interest
shall be treated as interest and any date on which Special Interest is due and
payable shall be treated as an Interest Payment Date, for all purposes under
this Note and the Indenture.
5. Method of Payment.
The Company, through the Paying Agent, shall pay interest on this
Note to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States of America that at
the time of payment is legal tender for payment of all debts public and private.
Principal and interest will be payable at the office of the Paying Agent but, at
the option of the Company, interest may be paid by check mailed to the
registered Holders at their registered addresses.
B-7
<PAGE> 172
6. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar under
the Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its subsidiaries may
act as Paying Agent or Registrar.
7. Optional Redemption.
Except as set forth in the following paragraph, the Notes may not be
redeemed prior to June 13, 2001. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 calendar days' nor more than 60 calendar days' notice, at the prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon (if any), Additional Amounts (if any) and Special
Interest (if any) to the applicable Redemption Date, if redeemed during the
period from June 13, 2001 through May 31, 2002 at a percentage of 108.000% and
thereafter during the twelve-month period beginning June 1 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104,000%
2003 and thereafter 100.000%
</TABLE>
The Notes may be redeemed, at the option of the Company, in whole
but not in part, upon not less than 30 or more than 60 days' notice to the
Holders in accordance with the terms of the Indenture, at a redemption price
equal to the Accreted Value thereof, plus accrued and unpaid interest, if any
(including Additional Amounts, if any, and Special Interest, if any), to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant Record Date to receive interest (including Additional Amounts, if any,
and Special Interest, if any) due on the Interest Payment Date that is on or
prior to the Redemption Date) if, as a result of any change in or amendment to
the laws or the regulations or rulings promulgated thereunder of Canada, Cyprus,
the Russian Federation or any other jurisdiction with which the Company or any
Guarantor has any connection (other than a connection arising as a result of a
continuance or a merger or consolidation of the Company with or into a newly
formed corporation solely for the purpose of moving the Company's domicile out
of Canada) or any political subdivision thereof or any authority thereof or
having power to tax therein, or any change in the application or official
interpretation of such laws or regulations, or any change in administrative
policy or assessing practice of the applicable taxing authority, which change or
amendment becomes effective on or after May 24, 1996, the Company or the
Guarantors (if the Guarantees are called) are or would be required on the next
succeeding Interest Payment Date to pay Additional Amounts with respect to the
Initial Notes, the Exchange Notes or the Guarantees and the payment of such
Additional Amounts cannot be avoided by the use of any reasonable measures
available to the Company or the Guarantors, as the case may be. The Company will
also pay to the Holders on the Redemption Date any Additional Amounts payable in
respect of the period ending on the Redemption Date. Prior to the publication of
any notice of redemption pursuant to this provision, which in no event will be
given earlier than 90 days prior to the earliest date on which the Company or
the Guarantors, as the case may be, would be required to pay such Additional
Amounts were a payment in respect of the Notes then due, the Company shall
deliver to the Trustee (i) an Officers' Certificate stating that the obligation
to pay such Additional Amounts cannot be avoided by the Company or the
Guarantors, as the case may be, taking reasonable measures and (ii) an Opinion
of Counsel, independent of the Company and the Guarantors and approved by the
Trustee, to the effect that the Company or the Guarantors have or will become
obligated to pay such Additional Amounts as a result of such change or
amendment. Such notice, once delivered by the Company to the
B-8
<PAGE> 173
Trustee, will be irrevocable. The Trustee shall accept such Officers'
Certificate and Opinion of Counsel as sufficient evidence of the satisfaction of
the condition precedent set forth in clauses (i) and (ii) above, in which event
it shall be conclusive and binding on the Holders.
8. Notice of Redemption.
At least 30 calendar days but not more than 60 calendar days before
a Redemption Date, the Company will send a notice of redemption, first class
mail, postage prepaid, to Holders of Notes to be redeemed at the addresses of
such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time, the
Notes to be redeemed will be chosen by the Trustee in accordance with the
Indenture. If any Note is redeemed subsequent to a Record Date with respect to
any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest (including Additional Amounts, if any,
and Special Interest, if any) will be paid on such Interest Payment Date to the
Holder of the Note on such Record Date. If money in an amount sufficient to pay
the Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest (including
Additional Amounts, if any, and Special Interest, if any) on the Notes to be
redeemed on the applicable Redemption Date will cease to accrue.
The Notes are not subject to any sinking fund.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to purchase such Holder's Notes, in
whole or in part in a principal amount that is an integral multiple of $1,000,
pursuant to a Change of Control Offer, at a purchase price in cash equal to 101%
of the Accreted Value thereof on any Change of Control Payment Date, plus
accrued and unpaid interest, if any, Additional Amounts, if any, and Special
Interest, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder of Notes. The Holder of
this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Require Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest, Additional Amounts, if any, and Special Interest, if any, from
and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
Subject to the limitations set forth in the next following
paragraph, if at any time the Company or any Restricted Subsidiary engages in
any Asset Sale, as a result of which the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company shall, within 30 calendar days of the date the
amount of Excess Proceeds exceeds $5,000,000, use the then-existing Excess
Proceeds to make an
B-9
<PAGE> 174
offer to purchase from all Holders, on a pro rata basis, Notes in an aggregate
principal amount equal to the maximum principal amount that may be purchased out
of the then-existing Excess Proceeds, at a purchase price in cash equal to 100%
of the Accreted Value thereof on any Asset Sale Payment Date, plus accrued and
unpaid interest thereon, if any, Additional Amounts, if any, and Special
Interest, if any, to the Asset Sale Payment Date, provided that Excess Proceeds
attributable to an Asset Sale of Convertible Note Collateral (as defined in the
Indenture) must be used first to make an "asset sale offer" pursuant to the
Convertible Note Indenture (as defined in the Indenture). Upon completion of an
Asset Sale Offer (including payment of the Asset Sale Purchase Price for
accepted Notes), any surplus Excess Proceeds that were the subject of such offer
shall cease to be Excess Proceeds, and the Company may then use such amounts for
general corporate purposes, including the making of an "asset sale offer"
pursuant to the Convertible Note Indenture.
Notwithstanding the paragraph above, the Company will not be
obligated to repurchase Notes in connection with an Asset Sale Offer
representing in aggregate more than 25% of the original aggregate principal
amount of the Notes (which original aggregate principal amount shall for these
purposes be the aggregate amount originally allocated to the Notes, net of any
amounts allocated to the Warrants, without any adjustment whatsoever) prior to
the date following the Five Year Date, and the original aggregate principal
amount of Notes repurchased in connection with any Asset Sale Offer having a
purchase date prior to the date following the Five Year Date shall represent no
more than 25% of the original aggregate principal amount of the Notes less the
original aggregate principal amount of Notes purchased pursuant to Asset Sale
Offers relating to all prior Asset Sales. To the extent that the amount of
Excess Proceeds exceeds the amount of Notes purchased because of the limitation
imposed by the immediately preceding sentence (the amount of such excess being
the "Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall
constitute Excess Proceeds for purposes of the first Asset Sale Offer that is
made after the Five Year Date and, in the event the amount of the Aggregate
Unused Proceeds exceeds $5,000,000, promptly after the Five Year Date, the
Company shall commence an Asset Sale Offer on a pro rata basis for an aggregate
principal amount of Notes equal to the Aggregate Unused Proceeds (and any other
Excess Proceeds that arise between the Five Year Date and such Asset Sale Offer)
at a purchase price equal to 100% of the Accreted Value of the Notes, plus
accrued interest, if any, Special Interest, if any, and Additional Amounts, if
any, to the date of purchase.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5,000,000, the Company shall send, or cause to be sent, by first class
mail, postage prepaid, a notice regarding the Asset Sale Offer to each Holder of
Notes. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Require Purchase" appearing below and tendering this Note pursuant
to the Asset Sale Offer. Unless the Company defaults in the payment of the Offer
Purchase Price with respect thereto, all Notes or portions thereof selected for
payment pursuant to the Asset Sale Offer will cease to accrue interest,
Additional Amounts, if any, and Special Interest, if any, from and after the
Asset Sale Payment Date.
11. The Registered Exchange Offer.
Any Initial Notes (including this Note) which are presented to the
Registrar for exchange pursuant to the Registered Exchange Offer (as defined in
the Registration Agreement) shall be replaced by Exchange Notes of equal
principal amount upon surrender of such Notes to the Registrar in accordance
with the terms of the Registered Exchange Offer and the Indenture.
B-10
<PAGE> 175
12. Transfer and Exchange.
By its acceptance of any Note represented by a certificate bearing
the Private Placement Legend, each Holder of, and beneficial owner of an
interest in, such Note acknowledges the restrictions on transfer of such Note
set forth on the face hereof and agrees that it will transfer such Note only in
accordance with the restrictions on the face hereof and the restrictions set
forth under the heading "Transfer Restrictions" under the Final Memorandum.
In connection with any transfer of a Note bearing the Private
Placement Legend, each Holder agrees to deliver to the Company such satisfactory
evidence, which may include an opinion of independent counsel licensed to
practice law in the State of New York, as reasonably may be requested by the
Company to confirm that such transfer is being made in accordance with the
limitations set forth in the Private Placement Legend. In the event the Company
determines that any such transfer is not in accordance with the Private
Placement Legend, the Company shall so inform the Registrar which shall not
register such transfer; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such evidence.
Upon the registration of transfer, exchange or replacement of a Note
not bearing the Private Placement Legend, the Trustee shall deliver a Note that
does not bear the Private Placement Legend. Upon the transfer, exchange or
replacement of a Note bearing the Private Placement Legend, the Trustee shall
deliver a Note bearing the Private Placement Legend, unless such legend may be
removed from such Note as provided in the next sentence. The Private Placement
Legend may be removed from a Note if there is delivered to the Company such
satisfactory evidence, which may include an opinion of independent counsel
licensed to practice law in the State of New York, as reasonably may be
requested by the Company to confirm that neither such legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
of such Note will not violate the registration and prospectus delivery
requirements of the Securities Act and, if the transferee is a resident of
Canada, the securities laws of the applicable provisions of Canada; provided
that the Trustee shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
evidence. Upon provision of such evidence, the Trustee shall authenticate and
deliver in exchange for such Note, a Note or Notes (representing the same
aggregate principal amount of the Note being exchanged) without such legend. If
the Private Placement Legend has been removed from a Note, as provided above, no
other Note issued in exchange for all or any part of such Note shall bear such
legend, unless the Company has reasonable cause to believe that such other Note
represents a "restricted security" within the meaning of Rule 144 and instructs
the Trustee to cause a legend to appear thereon.
This Note initially was issued as part of the issuance of Units,
each of which consists of $1,000 principal amount of Stated Maturity of Notes
and one Warrant. Prior to the date specified in the Final Memorandum and the
Unit Legend, Notes will not be transferable except as part of a transfer of
Units and prior to such date, the Registrar shall not register the transfer of
any Note unless the Company receives evidence reasonably satisfactory to it that
such transfer is part of a transfer of a Unit or Units; provided that the
Registrar shall not be required to determine (but may rely on the determination
made by the Company with respect to) the sufficiency of any such evidence.
A Holder may transfer a Note only upon the surrender of such Note
for registration of transfer. No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer in the Note Register by the Registrar. When
Notes are presented to the Registrar with a request to register the transfer of,
or to exchange, such
B-11
<PAGE> 176
Notes, the Registrar shall register the transfer or make such exchange as
requested if its requirements for such transactions and any applicable
requirements hereunder are satisfied.
Prior to the effectiveness of a Shelf Registration Statement or
following the suspension or termination thereof, the Holder of this Note (or
holders of interests therein) and prospective purchasers designated by such
Holder (or such holders of interests therein) shall have the right to obtain
from the Company upon request by such Holder (or such holders of interests) or
prospective purchasers, during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to
12g3-2(b) under the Exchange Act, the information required by paragraph
(d)(4)(i) of Rule 144 in connection with any transfer or proposed transfer of
such Note or interest.
13. Denominations.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 of principal amount at Stated Maturity and integral
multiples thereof.
14. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment unless such abandoned property
law designates another Person.
15. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate
some or all of its and the Guarantors' obligations under the Notes, the
Guarantees, the Indenture and the Collateral Documents and the Convertible Note
Collateral Documents if the Company irrevocably deposits with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be.
16. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Notes, the Collateral Documents and the Convertible Note
Collateral Documents may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes and (ii) any
past Default and its consequences may be waived with the written consent of the
Holders of at least a majority in principal amount of the outstanding Notes.
Without the consent of any Holder of Notes, the Company, the Guarantors and the
Notes, the Trustee may amend the Indenture, the Notes, the Collateral Documents
and the Convertible Note Collateral Documents (i) to evidence the succession of
another Person to the Company or the Guarantors, as applicable, and the
assumption by such successor of the covenants of the Company or the Guarantors
under the Indenture, the Collateral Documents and the Convertible Note
Collateral Documents; (ii) to add additional covenants or to surrender rights
and powers conferred on the Company or the Guarantors by the Indenture, the
Collateral Documents and the Convertible Note Collateral Documents; (iii) to add
any additional Events of Default; (iv) to provide for uncertificated Notes in
addition to or in place of Certificated Notes; (v) to evidence and provide for
the acceptance of appointment under the Indenture of a successor Trustee;
(vi) to add additional security for the Notes
B-12
<PAGE> 177
and/or the Guarantees; (vii) to cure any ambiguity in the Indenture, the
Collateral Documents or the Convertible Note Collateral Documents, to correct or
supplement any provision in the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents, provided that such actions shall not
adversely affect the interests of the Holders in any material respect; or
(viii) to comply with the requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
17. Defaults and Remedies.
Events of Default under the Indenture include in summary form:
default in payment of interest, including Additional Amounts, if any, or Special
Interest, if any, on the Notes for 30 days; default in payment of principal on
the Notes; failure to comply with certain of the covenants in the Indenture,
including the Change of Control covenant, the Asset Sale covenant or the
Restricted Payments covenant; failure by the Company to comply with certain of
its other agreements in the Indenture, the Note, any Collateral Document or any
Convertible Note Collateral Document or a breach of a representation or warranty
in any Collateral Document or any Convertible Note Collateral Document and the
continuance of such default or breach for 45 days after notice; expropriation of
assets of the Company or any of its Restricted Subsidiaries having a book value,
less the book value of the expropriation proceeds, constituting more than 15% of
the book value, on a consolidated basis, of the Company's assets minus current
assets; defaults in the payment of certain other Indebtedness, or defaults,
other than such payment defaults, which result in the acceleration prior to
express maturity of certain other Indebtedness or which consist of the failure
to pay at maturity; certain final judgments which remain undischarged, unwaived,
unappealed, unbonded, unstayed or unsatisfied; certain events of bankruptcy or
insolvency; failure of a Guarantee, a Collateral Document or a Convertible Note
Collateral Document to be in effect, the denial of obligations under a
Guarantee, a Collateral Document, a Convertible Note Collateral Document or the
Notes by the Company or the Guarantors party thereto or the failure of the Notes
and the Guarantees to be secured by the theretofore perfected Liens and security
interests in the Collateral or the Convertible Note Collateral (except as
permitted by the Indenture, the Collateral Documents or the Convertible Note
Collateral Documents), which in each circumstance continues for 30 days after
notice. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of Stated Maturity of the Notes,
subject to certain limitations, may declare all the Notes to be immediately due
and payable. Certain events of bankruptcy or insolvency are Events of Default
and shall result in the Notes being immediately due and payable upon the
occurrence of such Events of Default without any further act of the Trustee or
any Holder.
Holders of Notes may not enforce the Indenture, the Guarantees, the
Notes, the Collateral Documents or the Convertible Note Collateral Documents
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture, the Notes, the Guarantees, the Collateral Documents or the
Convertible Note Collateral Documents unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of Stated Maturity of the Notes may direct the Trustee in its exercise of
any trust or power under the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents. The Holders of a majority in principal
amount of the outstanding Notes, by written notice to the Company and the
Trustee, may rescind any declaration of acceleration and its consequences if the
rescission would not conflict with any judgment or decree, and if all Events of
Default have been cured or waived except nonpayment of principal and interest
(including Additional Amounts, if any, and Special Interest, if any) that has
become due solely because of the acceleration.
B-13
<PAGE> 178
18. Collateral Documents.
As provided in the Indenture, the Collateral Documents and the
Convertible Note Collateral Document and subject to certain limitations set
forth therein, the Obligations of the Company and the Guarantors under the
Indenture, the Collateral Documents and the Convertible Note Collateral
Documents are secured by the Collateral as provided in the Collateral Documents
and the Convertible Note Collateral Document. Each Holder, by accepting a Note,
agrees to be bound to all terms and provisions of the Collateral Documents and
the Convertible Note Collateral Documents, as the same may be amended from time
to time. The Liens created under the Collateral Documents and the Convertible
Note Collateral Documents shall be released upon the terms and subject to the
conditions set forth in the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents.
19. Individual Rights of Trustee.
Subject to certain limitations imposed by the Trust Indenture Act,
the Trustee or any Paying Agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, the Guarantors, its Restricted Subsidiaries or its Affiliates with
the same rights it would have if it were not Trustee, Paying Agent or Registrar,
as the case may be, under the Indenture.
20. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or the Guarantors under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of his or her status as a
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
21. Governing Law.
THE INDENTURE, THE GUARANTEES AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
22. 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).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and have
B-14
<PAGE> 179
directed the Trustee to 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 Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
24. Subordination.
The indebtedness evidence by this Note is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issues subject to the
provision of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
The Company will furnish to any Holder of Notes upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Note. Requests may be made to:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
Canada M5H 1L3
SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the
Guarantors (as defined in the Indenture referred to in this Note and each
hereinafter referred to as a "Guarantor," which term includes any successor or
additional Guarantor under the Indenture) have jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment of
the principal (and premium, if any) of and interest (including Additional
Amounts, if any, and Special Interest, if any) on the Notes, whether of Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest (including Additional Amounts,
if any, and Special Interest, if any) on the Notes, if any, to the extent
lawful, (c) the due and punctual performance of all other obligations of the
Company and the Guarantors to the Holders under the Indenture, the Notes, the
Collateral Documents and the Convertible Note Collateral Documents, and (d) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether of Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise. Capitalized terms used herein shall
have the same meanings assigned to them in the Indenture unless otherwise
indicated.
Payment on each Note is guaranteed jointly and severally, by the
Guarantors pursuant to Article X of the Indenture and reference is made to such
Indenture for the precise terms of the Guarantees.
B-15
<PAGE> 180
The obligations of each Guarantor are limited to the lesser of (a)
an amount equal to such Guarantor's Adjusted Net Assets as of the date of the
Guarantee and (b) the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
(including, if applicable, its obligations under the Convertible Notes), and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
its Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under federal or state law or not
otherwise being void, voidable or unenforceable under any similar other
bankruptcy, receivership, insolvency, liquidation or other similar legislation
or legal principles under applicable foreign law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Guarantor.
Certain of the Guarantors may be released from their Guarantees upon
the terms and subject to the conditions provided in the Indenture.
The Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and in the Indenture.
NWE CAPITAL (CYPRUS) LIMITED
By: ____________________________________
PLD ASSET LEASING LIMITED
By: ____________________________________
PLD CAPITAL LIMITED
By: ____________________________________
BALTIC COMMUNICATIONS LIMITED
By: ____________________________________
<PAGE> 181
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
By: ____________________________________
<PAGE> 182
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
______________________________________
(Please print name and address of transferee)
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________ Attorney to transfer
this Note on the Security Register, with full power of substitution.
Dated: _________________
_________________________ ___________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Registrar, in
which requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as
may be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
<PAGE> 183
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
/ / In connection with the Change of Control Offer made pursuant to Section
4.7 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $ __________ ($1,000 in principal amount of Stated Maturity or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or __________ an amount in cash
equal to 101% of the Accreted Value for the principal amount of
Stated Maturity indicated in the preceding sentence plus accrued and
unpaid interest thereon, if any, Additional Amounts, if any, and
Special Interest, if any, to the Change of Control Payment Date.
/ / In connection with the Asset Sale Offer made pursuant to Section 4.8 of
the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $ __________ ($1,000 in principal amount of Stated Maturity or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or __________ an amount in cash
equal to 100% of the Accreted Value of the principal amount of
Stated Maturity indicated in the preceding sentence, as the case may
be, plus accrued and unpaid interest thereon, if any, Additional
Amounts, if any, and Special Interest, if any, to the Asset Sale
Payment Date.
Dated: __________
_______________________ ________________________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Registrar, in
which requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as
may be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
<PAGE> 184
EXHIBIT C
<PAGE> 185
EXHIBIT C
FORM OF FACE OF EXCHANGE GLOBAL NOTE
PETERSBURG LONG DISTANCE INC.
CUSIP NO. 71623PAB8
14% SENIOR DISCOUNT NOTE DUE 2004
No. ______
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO AMERICAN COMMUNICATIONS SERVICES, INC. OR
THE REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS
HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[IF ISSUED PRIOR TO SEPTEMBER 1, 1996, THIS NOTE SHALL BEAR THE
FOLLOWING LEGEND: "TRANSFERS OR OTHER DISPOSITIONS OF THIS NOTE OR
BENEFICIAL INTERESTS THEREIN TO RESIDENTS IN CANADA MAY NOT BE EFFECTED
PRIOR TO SEPTEMBER 1, 1996 UNLESS IN COMPLIANCE WITH APPLICABLE
CANADIAN PROVINCIAL SECURITIES LAWS."]
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
INTERESTS IN THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.6 OF THE
INDENTURE, DATED AS OF MAY 31, 1996, BETWEEN PETERSBURG LONG DISTANCE
INC., CERTAIN CORPORATIONS ACTING AS GUARANTORS AND NAMED THEREIN, AND
THE TRUSTEE NAMED THEREIN, PURSUANT TO WHICH THIS NOTE WAS ISSUED.
FOR THE PURPOSES OF THE INTEREST ACT (CANADA) AND DISCLOSURE
THEREUNDER, WHENEVER INTEREST, ADDITIONAL AMOUNTS, SPECIAL INTERESTS,
OR DEFAULTED INTEREST OR INTEREST ON DEFAULTED INTEREST RELATING TO
THIS NOTE, IS TO BE CALCULATED ON THE BASIS OF A YEAR OF 360 DAYS OR
ANY OTHER PERIOD OF TIME THAT IS LESS THAN A CALENDAR YEAR, THE YEARLY
RATE OF INTEREST TO WHICH THE RATE DETERMINED PURSUANT
<PAGE> 186
TO SUCH CALCULATION IS EQUIVALENT IS THE RATE SO DETERMINED MULTIPLIED
BY THE ACTUAL NUMBER OF DAYS IN THE CALENDAR YEAR IN WHICH THE SAME IS
TO BE ASCERTAINED AND DIVIDED BY EITHER 360 OR SUCH OTHER PERIOD OF
TIME, AS THE CASE MAY BE. THE RATE ACCRUING ON THIS NOTE FOR PAYMENT
PURPOSES SHALL BE DETERMINED AS SET FORTH ON THE REVERSE HEREOF.
C-2
<PAGE> 187
Petersburg Long Distance Inc., an Ontario corporation (the "Company"),
for value received, hereby promises to pay to CEDE & CO., or its registered
assigns, the principal sum indicated on Schedule A hereof, on June 1, 2004.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth in this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
PETERSBURG LONG DISTANCE INC.
By:_________________________________
Name:
Title:
(Corporate Seal)
By:_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:__________________________
Authorized Signatory
C-3
<PAGE> 188
FORM OF REVERSE SIDE OF EXCHANGE GLOBAL NOTE
PETERSBURG LONG DISTANCE INC.
GLOBAL NOTE
REPRESENTING 14% SENIOR DISCOUNT NOTES DUE 2004
1. Indenture.
This Note is one of a duly authorized issue of debt securities
of Petersburg Long Distance Inc., an Ontario corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), designated as its "14% Senior Discount Notes due
2004" (herein called the "Notes") limited in aggregate principal amount at
Stated Maturity to $123,000,000, issued under an indenture dated as of May 31,
1996 (as amended or supplemented from time to time, the "Indenture") among the
Company, the corporations acting as guarantors and named therein (the
"Guarantors") and The Bank of New York, as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder of Notes and of the terms upon which the Notes are, and
are to be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. All terms used in this Note which are not defined herein shall
have the meanings assigned to them in the Indenture.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into or permit certain transactions
with Affiliates, create Liens, enter into or permit certain Sale and Leaseback
Transactions, make Asset Sales and engage in businesses other than the
Telecommunications Business. The Indenture also imposes limitations on the
ability of the Company to consolidate or merge with or into any other Person or
permit any other Person to merge with or into the Company, or sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Property of the Company to any other Person. In addition, the Indenture imposes
limitations on the ability of Restricted Subsidiaries to issue guaranties and
Preferred Shares and to create consensual restrictions upon their ability to pay
dividends and make certain other payments to the Company.
2. Principal and Interest.
The Company promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2004.
This Note is issued at a discounted principal value of
$87,697,300. This Note will accrete interest at a rate computed as if this Note
had been issued bearing interest at the rate of 14% per annum on May 31, 1996
(being a rate of 14.9445% per annum for the period from the Issue Date through
November 30, 1996), compounded semi-annually, to an aggregate principal amount
of $123,000,000 by December 1, 1998. Thereafter interest on this Note will
accrue at the rate of 14% per annum and will be payable in cash semi-annually on
June 1 and December 1 of each year, commencing June 1, 1999, until the principal
amount hereof is paid or made available for payment. The effect of the
C-4
<PAGE> 189
foregoing is that this Note will bear interest at the rate of 14.9445% per annum
from the Issue Date through November 30, 1996 and 14% per annum thereafter. The
payment of interest on this Note in respect of the period from the Issue Date to
December 1, 1998, however, will effectively be deferred until Maturity and such
deferred interest will be compounded semi-annually and added to the outstanding
principal amount of this Note. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. If the Company has not received
on or before May 31, 1998, $20,000,000 in Cash Proceeds from a sale or sales of
Qualified Stock of the Company occurring subsequent to the Issue Date (other
than Qualified Stock issued upon the exercise of Warrants or upon conversion of
the Convertible Notes), this Note will bear interest at the rate of 14.5% per
annum commencing on June 1, 1998 until any Interest Payment Date prior to which
the Company shall have received such $20,000,000 in Cash Proceeds from such a
sale of Qualified Stock. Commencing on such Interest Payment Date, this Note
will again bear interest at the rate of 14% per annum. For purposes of this
interest rate adjustment provision, the Company will be deemed to have received
such $20,000,000 in Cash Proceeds if a Change of Control has occurred. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions provided in the Indenture, be
paid to the Person in whose name this Note (or the Note in exchange or
substitution for which this Note was issued) is registered at the close of
business on the Record Date for interest payable on such Interest Payment Date.
The Record Date for any Interest Payment Date is the close of business on May 15
or November 15, as the case may be, whether or not a Business Day, immediately
preceding the Interest Payment Date on which such interest is payable. Any such
interest not so punctually paid or duly provided for ("Defaulted Interest")
shall forthwith cease to be payable to the Holder on such Record Date and shall
be paid as provided in Section 2.11 of the Indenture.
Each payment of interest in respect of an Interest Payment
Date will include interest (including Additional Amounts (as hereinafter
defined), if any, and Special Interest (as defined in the Indenture, if any)
accrued through the day before such Interest Payment Date. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to
be made on such Interest Payment Date will be made on the next succeeding
Business Day with the same force and effect as if made on such Interest Payment
Date, and no additional interest will accrue as a result of such delayed
payment.
If this Note was issued in substitution for an Initial Note
pursuant to a Registered Exchange Offer on or prior to the Record Date for the
first Interest Payment Date following such substitution, accrued and unpaid
interest, if any, on the equivalent principal amount of the Initial Note in
substitution for which this Note was issued, up to but not including the date of
issuance of this Note, shall be paid on the first Interest Payment Date for this
Note to the Holder of this Note on the first Record Date with respect to this
Note. If this Note was issued in substitution for an Initial Note pursuant to a
Registered Exchange Offer subsequent to the Record Date for the first Interest
Payment Date following such substitution but on or prior to such Interest
Payment Date, then any accrued and unpaid interest with respect to the
equivalent principal amount of the Initial Note in substitution for which this
Note was issued and any accrued and unpaid interest on this Note, including
Additional Amounts, if any, and Special Interest, if any, through the day before
such Interest Payment Date shall be paid on such Interest Payment Date to the
Holder of such Initial Note on such Record Date. Any accretion of value with
respect to the principal amount at Stated Maturity of the Initial Note for which
this Note was issued up to but including the date of issuance of this Note shall
be included as Accreted Value with respect to this Note.
To the extent lawful, the Company shall pay interest on (i) if
prior to December 1, 1998, any overdue Accreted Value of (and premium, if any,
on) this Note, or if on or after December 1, 1998,
C-5
<PAGE> 190
any overdue principal of (and premium, if any, on) this Note, at the interest
rate borne on this Note, plus 1% per annum, and (ii) Defaulted Interest (without
regard to any applicable grace period), including Additional Amounts, if any,
and Special Interest, if any, at the same rate. The Company's obligation
pursuant to the previous sentence shall apply whether such overdue amount is due
at its Stated Maturity, as a result of the Company's obligations pursuant to
Section 3.6, Section 4.7 or Section 4.8 of the Indenture, or otherwise.
3. Additional Amounts.
Except to the extent required by law, any and all payments of,
or in respect of, this Note shall be made free and clear of and without
deduction for or on account of any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto imposed by Canada, the Russian Federation, Cyprus or any other
jurisdiction with which the Company or any Guarantor has some connection
(including any jurisdiction (other than the United States of America) from or
through which payments under the Notes are made) or any political subdivision of
or any taxing authority in any such jurisdiction ("Canadian Taxes," "Russian
Taxes," "Cypriot Taxes" or "Other Taxes," respectively). If the Company or any
Guarantor shall be required by law to withhold or deduct any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes from or in respect of any sum
payable under this Note or pursuant to a Guarantee, the sum payable by the
Company or such Guarantor, as the case may be, thereunder shall be increased by
the amount ("Additional Amounts") necessary so that after making all required
withholdings and deductions, the Holder of this Note shall receive an amount
equal to the sum that it would have received had no such withholdings and
deductions been made; provided that any such sum shall not be paid in respect of
any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes to the Holder of
this Note (an "Excluded Holder") (i) resulting from the beneficial owner of this
Note carrying on business or being deemed to carry on business in or through a
permanent establishment or fixed base in the relevant taxing jurisdiction or any
political subdivision thereof or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of this Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of this Note
or the Guarantees or the enforcement of this Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)) with the Holder of this Note at the
time of such payment or at the time the amount of such payment is deemed to have
been paid or credited or (iii) that would not have been imposed but for the
presentation (where presentation is required) of this Note for payment more than
180 days after the date such payment became due and payable or was duly provided
for, whichever occurs later. The Company or the Guarantors, as applicable, will
also (i) make such withholding or deduction and (ii) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law, and, in any such case, the Company will furnish to each Holder on whose
behalf an amount was so remitted, within 30 calendar days after the date the
payment of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by the Company or the Guarantors, as applicable. The Company will, upon
written request of each Holder (other than an Excluded Holder), reimburse each
such Holder for the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Notes, and (ii) any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed with respect to
any reimbursement under the foregoing clause (i) so that the net amount received
by such Holder (net of payments made under or with respect to such Notes or the
Guarantees) after such reimbursement will not be less than the net amount the
Holder hereof would have received if Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes on such reimbursement had not been imposed.
C-6
<PAGE> 191
In addition, the Company or the Guarantors will pay any stamp,
issue, registration, documentary or other similar taxes and duties, including
interest and penalties, in respect of the creation, issue and offering of the
Notes payable in Canada, the United States, the Russian Federation or Cyprus or
any political subdivision thereof or taxing authority of or in the foregoing.
The Company and the Guarantors will also pay and indemnify the Holders from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by the Trustee or the Holders to create the Liens
on the Collateral and the Convertible Note Collateral and to enforce the
obligations of the Company or the Guarantors under the Notes, the Indenture, the
Guarantees, the Collateral Documents or the Convertible Note Collateral
Documents.
4. Special Interest.
In the event of the failure of the Company to procure, on or
before July 12, 1996, a recognized financial institution with capital of not
less than $10,000,000 organized under the laws of the Republic of Ireland which
the Convertible Note Trustee may lawfully appoint as a Qualified Foreign
Collateral Agent (as defined in Section 7.3 of the Indenture) (the
"Procurement") with respect to Technocom Preferred Stock, any payments thereon
and any property substituted therefor (the "Subject Collateral") pursuant to an
agreement under which such Qualified Foreign Collateral Agent will agree not to
resign without the contemporaneous appointment of a successor Qualified Foreign
Collateral Agent (the "Prescribed Agreement"), then, commencing on July 12,
1996, the Company shall pay to each Holder of the Notes Special Interest in an
amount equal to 1% per annum on the principal amount at Stated Maturity of such
Holder's Notes, accruing for each day until the Procurement is made or Technocom
or a successor is reorganized under the laws of Cyprus and a successor Qualified
Foreign Collateral Agent has been appointed in respect of the Subject Collateral
(the "Reorganization") under a Prescribed Agreement. Such Special Interest shall
be payable in cash semi-annually in arrears at the times and in the manner
provided for in the Indenture, provided that for this purpose, Section 2.11 of
the Indenture shall be read to include as Interest Payment Dates, as applicable,
December 1, 1996 and June 1 and December 1 of each year commencing December 1,
1996. Such Special Interest shall cease to accrue upon the Procurement or the
Reorganization taking place and all accrued and unpaid Special Interest shall be
paid to each Holder of the Notes on the next Interest Payment Date with respect
thereto. Special Interest, as defined in the Indenture, may include Special
Interest arising as a result of the occurrence of a "Registration Default" under
the Registration Agreement (as defined in the Indenture).
Except as expressly provided in this paragraph 4, Special
Interest shall be treated as interest and any date on which Special Interest is
due and payable shall be treated as an Interest Payment Date, for all purposes
under this Note and the Indenture.
5. Method of Payment.
The Company, through the Paying Agent, shall pay interest on
this Note to the registered Holder of this Note, as provided above. The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States of America
that at the time of payment is legal tender for payment of all debts public and
private. Principal and interest will be payable at the office of the Paying
Agent but, at the option of the Company, interest may be paid by check mailed to
the registered Holders at their registered addresses.
C-7
<PAGE> 192
6. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar
under the Indenture. The Company may, upon written notice to the Trustee,
appoint and change any Paying Agent or Registrar. The Company or any of its
subsidiaries may act as Paying Agent or Registrar.
7. Optional Redemption.
Except as set forth in the following paragraph, the Notes may
not be redeemed prior to June 13, 2001. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 calendar days' nor more than 60 calendar days' notice, at the prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon (if any), Additional Amounts (if any) and Special
Interest (if any) to the applicable Redemption Date, if redeemed during the
period from June 13, 2001 through May 31, 2002 at a percentage of 108.000% and
thereafter during the twelve-month period beginning June 1 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104.000%
2003 and thereafter 100.000%
</TABLE>
The Notes may be redeemed, at the option of the Company, in whole but
not in part, upon not less than 30 or more than 60 days' notice to the Holders
in accordance with the terms of the Indenture, at a redemption price equal to
the Accreted Value thereof, plus accrued and unpaid interest, if any, (including
Additional Amounts, if any, and Special Interest, if any) to the applicable
Redemption Date (subject to the right of Holders of record on the relevant
Record Date to receive interest (including Additional Amounts, if any, and
Special Interest, if any) due on the Interest Payment Date that is on or prior
to the Redemption Date) if, as a result of any change in or amendment to the
laws or the regulations or rulings promulgated thereunder of Canada, Cyprus, the
Russian Federation or any other jurisdiction with which the Company or any
Guarantor has any connection (other than as a result of a merger or
consolidation of the Company with or into a newly formed corporation solely for
the purpose of moving the Company's domicile out of Canada) or any political
subdivision thereof or any authority thereof or having power to tax therein, or
any change in the application or official interpretation of such laws or
regulations, or any change in administrative policy or assessing practice of the
applicable taxing authority, which change or amendment becomes effective on or
after May 24, 1996, the Company or the Guarantors (if the Guarantees are called)
are or would be required on the next succeeding Interest Payment Date to pay
Additional Amounts with respect to the Notes or the Guarantees and the payment
of such Additional Amounts cannot be avoided by the use of any reasonable
measures available to the Company or the Guarantors, as the case may be. The
Company will also pay to the Holders on the Redemption Date any Additional
Amounts payable in respect of the period ending on the Redemption Date. Prior to
the publication of any notice of redemption pursuant to this provision, which in
no event will be given earlier than 90 days prior to the earliest date on which
the Company or the Guarantors, as the case may be, would be required to pay such
Additional Amounts were a payment in respect of the Notes then due, the Company
shall deliver to the Trustee (i) an Officers' Certificate stating that the
obligation to pay such Additional Amounts cannot be avoided by the Company or
the Guarantors, as the case may be, taking reasonable measures and (ii) an
Opinion of Counsel, independent of the Company and the Guarantors and approved
by the Trustee, to the effect that the Company or the Guarantors have or will
become obligated to pay such Additional Amounts as a result of such change or
amendment. Such notice, once delivered by the Company to the Trustee, will be
irrevocable. The Trustee shall accept such Officers' Certificate
C-8
<PAGE> 193
and Opinion of Counsel as sufficient evidence of the satisfaction of the
condition precedent set forth in clauses (i) and (ii) above, in which event it
shall be conclusive and binding on the Holders.
8. Notice of Redemption.
At least 30 calendar days but not more than 60 calendar days
before a Redemption Date, the Company will send a notice of redemption, first
class mail, postage prepaid, to Holders of Notes to be redeemed at the addresses
of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time,
the Notes to be redeemed will be chosen by the Trustee in accordance with the
Indenture. If any Note is redeemed subsequent to a Record Date with respect to
any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest (including Additional Amounts, if any,
and Special Interest, if any) will be paid on such Interest Payment Date to the
Holder of the Note at the close of business on such Record Date. If money in an
amount sufficient to pay the Redemption Price of all Notes (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent on or
before the applicable Redemption Date and certain other conditions are
satisfied, interest (including Additional Amounts, if any, and Special Interest,
if any) on the Notes to be redeemed on the applicable Redemption Date will cease
to accrue.
The Notes are not subject to any sinking fund.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to purchase such Holder's
Notes, in whole or in part in a principal amount that is an integral multiple of
$1,000, pursuant to a Change of Control Offer, at a purchase price in cash equal
to 101% of the Accreted Value thereof on any Change of Control Payment Date,
plus accrued and unpaid interest, if any, Additional Amounts, if any, and
Special Interest, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the
Company shall send, or cause to be sent, by first class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder of Notes. The Holder
of this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Require Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest, Additional Amounts, if any, and Special Interest, if any, from
and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
Subject to the limitations set forth in the next following
paragraph, if at any time the Company or any Restricted Subsidiary engages in
any Asset Sale, as a result of which the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company shall, within 30 calendar days of the date the
amount of Excess Proceeds exceeds $5,000,000, use the then-existing Excess
Proceeds to make an offer to purchase from all Holders, on a pro rata basis,
Notes in an aggregate principal amount equal to
C-9
<PAGE> 194
the maximum principal amount that may be purchased out of the then-existing
Excess Proceeds, at a purchase price in cash equal to 100% of the Accreted Value
thereof on any Asset Sale Payment Date plus accrued and unpaid interest thereon,
if any, Additional Amounts, if any, and Special Interest, if any, to the Asset
Sale Payment Date, provided that Excess Proceeds attributed to an Asset Sale of
Convertible Note Collateral (as defined on the Indenture) must be used first to
make an "Asset Sale Offer" pursuant to the Convertible Note Indenture (as
defined in the Indenture). Upon completion of an Asset Sale Offer (including
payment of the Asset Sale Purchase Price for accepted Notes), any surplus Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds,
and the Company may then use such amounts for general corporate purposes,
including the making of an "Asset Sale Offer" pursuant to the Convertible Note
Indenture.
Notwithstanding the paragraph above, the Company will not be
obligated to repurchase Notes in connection with an Asset Sale Offer
representing in aggregate more than 25% of the original aggregate principal
amount of the Notes (which original aggregate principal amount shall for these
purposes be the aggregate amount originally allocated to the Notes, net of any
amounts allocated to the Warrants, without any adjustment whatsoever) prior to
the date following the Five Year Date, and the original aggregate principal
amount of Notes repurchased in connection with any Asset Sale Offer having a
purchase date prior to the date following the Five Year Date shall represent no
more than 25% of the original aggregate principal amount of the Notes less the
original aggregate principal amount of Notes purchased pursuant to Asset Sale
Offers relating to all prior Asset Sales. To the extent that the amount of
Excess Proceeds exceeds the amount of Notes purchased because of the limitation
imposed by the immediately preceding sentence (the amount of such excess being
the "Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall
constitute Excess Proceeds for purposes of the first Asset Sale Offer that is
made after the Five Year Date and, in the event the amount of the Aggregate
Unused Proceeds exceeds $5,000,000, promptly after the Five Year Date, the
Company shall commence an Asset Sale Offer on a pro rata basis for an aggregate
principal amount of Notes equal to the Aggregate Unused Proceeds (and any other
Excess Proceeds that arise between the Five Year Date and such Asset Sale Offer)
at a purchase price equal to 100% of the Accreted Value of the Notes, plus
accrued interest, if any, Additional Amounts, if any, and Special Interest, if
any, to the date of purchase.
Within 30 calendar days of the date the amount of Excess
Proceeds exceeds $5,000,000, the Company shall send, or cause to be sent, by
first class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder of Notes. The Holder of this Note may elect to have this Note or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Require Purchase" appearing below and tendering
this Note pursuant to the Asset Sale Offer. Unless the Company defaults in the
payment of the Offer Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest, Additional Amounts, if any, and Special Interest, if any, from
and after the Asset Sale Payment Date.
11. The Global Note.
So long as this Global Note is registered in the name of the
Depositary or its nominee, members of, or participants in, the Depositary
("Agent Members") shall have no rights under the Indenture with respect to this
Global Note held on their behalf by the Depositary or the Trustee as its
custodian, and the Depositary may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of this Global Note for all purposes. Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other
C-10
<PAGE> 195
authorization furnished by the Depositary or (ii) impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of Notes.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder of Notes is entitled to take under the Indenture or the Notes.
Whenever, as a result of an optional redemption of Notes by
the Company, a Change of Control Offer, an Asset Sale Offer or an exchange for
Certificated Notes, this Global Note is redeemed, repurchased or exchanged in
part, this Global Note shall be surrendered by the Holder thereof to the Trustee
who shall cause an adjustment to be made to Schedule A hereof so that the
principal amount of this Global Note will be equal to the portion not redeemed,
repurchased or exchanged and shall thereafter return this Global Note to such
Holder; provided that this Global Note shall be in a principal amount at Stated
Maturity of $1,000 or an integral multiple of $1,000.
12. Transfer and Exchange.
The Holder of this Global Note shall, by its acceptance of
this Global Note, agree that transfers of beneficial interests in this Global
Note may be effected only through a book entry system maintained by such Holder
(or its agent), and that ownership of a beneficial interest in the Notes
represented thereby shall be required to be reflected in book entry form.
Transfers of this Global Note shall be limited to transfers in
whole, and not in part, to the Depositary, its successors and their respective
nominees. Interests of beneficial owners in this Global Note may be transferred
in accordance with the rules and procedures of the Depositary (or its
successors).
This Global Note will be exchanged by the Company for one or
more Certificated Notes if (a) the Depositary (i) has notified the Company that
it is unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Exchange Act and (ii) a successor to the
Depositary registered as a "Clearing Agency" under Section 17A of the Exchange
Act is not appointed by the Company within 90 calendar days or (b) the
Depositary is at any time unwilling or unable to continue as Depositary and a
successor to the Depositary is not able to be appointed by the Company within 90
calendar days. If an Event of Default occurs and is continuing, the Company
shall, at the request of the Holder hereof, exchange all or part of this Global
Note for one or more Certificated Notes; provided that the principal amount at
Stated Maturity of each of such Certificated Notes and this Global Note, after
such exchange, shall be $1,000 or an integral multiple thereof. Whenever this
Global Note is exchanged as a whole for one or more Certificated Notes, it shall
be surrendered by the Holder to the Trustee for cancellation. Whenever this
Global Note is exchanged in part for one or more Certificated Notes, it shall be
surrendered by the Holder to the Trustee and the Trustee shall make the
appropriate notations thereon pursuant to Section 2.5(c) of the Indenture. All
Certificated Notes issued in exchange for this Global Note or any portion hereof
shall be registered in such names as the Depositary shall instruct the Trustee.
Any Certificated Notes issued in exchange for this Global Note shall include the
Unit Legend except as set forth in Section 2.6(j) of the Indenture. Interests in
this Global Note may not be exchanged for Certificated Notes other than as
provided in this paragraph.
Following the suspension or termination of a Shelf
Registration Statement, the Holder of this Note (or holders of interests
therein) and prospective purchasers designated by such Holder (or such holders
of interests therein) shall have the right to obtain from the Company upon
request by such Holder
C-11
<PAGE> 196
(or such holders of interests) or prospective purchasers, during any period in
which the Company is not subject to Section 13 or 15(d) of the Exchange Act, or
exempt from reporting pursuant to 12g3-2(b) under the Exchange Act, the
information required by paragraph (d)(4)(i) of Rule 144 in connection with any
transfer or proposed transfer of such Note or interest.
13. Denominations.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 of principal amount at Stated Maturity and integral
multiples thereof.
14. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment unless such abandoned property
law designates another Person.
15. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its and the Guarantors' obligations under the Notes,
the Guarantees, the Indenture, the Collateral Documents and the Convertible Note
Collateral Documents if the Company irrevocably deposits with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be.
16. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture, the Notes, the Collateral Documents and the Convertible Note
Collateral Documents may be amended with the written consent of the Holders of
at least a majority in principal amount at Stated Maturity of the outstanding
Notes and (ii) any past Default and its consequences may be waived with the
written consent of the Holders of at least a majority in principal amount at
Stated Maturity of the outstanding Notes. Without the consent of any Holder of
Notes, the Company, the Guarantors and the Trustee may amend the Indenture, the
Notes, the Collateral Documents and the Convertible Note Collateral Document (i)
to evidence the succession of another Person to the Company or the Guarantors,
as applicable, and the assumption by such successor of the covenants of the
Company or the Guarantors under the Notes, the Indenture, the Collateral
Documents or the Convertible Note Collateral Documents; (ii) to add additional
covenants or to surrender rights and powers conferred on the Company or the
Guarantors by the Indenture, the Collateral Documents and the Convertible Note
Collateral Documents; (iii) to add any additional Events of Default; (iv) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (v) to evidence and provide for the acceptance of appointment under the
Indenture of a successor Trustee; (vi) to add additional security for the Notes
and/or the Guarantees; (vii) to cure any ambiguity in the Indenture, the
Collateral Documents or the Convertible Note Collateral Documents, to correct or
supplement any provision in the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents, provided that such actions shall not
adversely affect the
C-12
<PAGE> 197
interests of the Holders in any material respect; or (viii) to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
17. Defaults and Remedies.
Events of Default under the Indenture include in summary form:
default in payment of interest, including Additional Amounts, if any, or Special
Interest, if any, on the Notes for 30 days; default in payment of principal on
the Notes; failure to comply with certain of the covenants in the Indenture,
including the Change of Control covenant, the Asset Sale covenant or the
Restrictive Payments covenant; failure by the Company to comply with certain of
its other agreements in the Indenture or the Notes or any Collateral Document or
any Convertible Note Collateral Document or a breach of a representation or
warranty in any Collateral Document or any Convertible Note Collateral Document
and the continuance of such default or breach for 45 days after notice;
expropriation of assets of the Company or any of its Restricted Subsidiaries
having a book value, less the book value of the expropriation proceeds,
constituting more than 15% of the book value, on a consolidated basis, of the
Company's assets minus current assets; defaults in the payment of certain other
Indebtedness, or defaults, other than such payment defaults, which result in the
acceleration prior to express maturity of certain other Indebtedness or which
consist of the failure to pay at maturity; certain final judgments which remain
undischarged, unwaived, unappealed, unbonded, unstayed or unsatisfied; certain
events of bankruptcy or insolvency; failure of a Guarantee, a Collateral
Document or any Convertible Note Collateral Document to be in effect, the denial
of obligations under a Guarantee, a Collateral Document, a Convertible Note
Collateral Document or the Notes by the Company or the Guarantors party thereto
or the failure of the Notes and the Guarantees to be secured by the theretofore
perfected security interests in the Collateral or the Convertible Note
Collateral (except as permitted by the Indenture, the Collateral Documents or
the Convertible Note Collateral Documents), which in each circumstance continues
for 30 days after notice. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount at Stated Maturity of
the Notes, subject to certain limitations, may declare all the Notes to be
immediately due and payable. Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Notes being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Notes may not enforce the Indenture, the
Guarantees, the Notes, the Collateral Documents or the Convertible Note
Collateral Documents except as provided in the Indenture. The Trustee may refuse
to enforce the Indenture, the Notes, the Guarantees, the Collateral Documents or
the Convertible Note Collateral Documents unless it receives reasonable
indemnity or security. Subject to certain limitations, Holders of a Majority in
principal amount at Stated Maturity of the Notes may direct the Trustee in its
exercise of any trust or power under the Indenture, the Collateral Documents and
the Convertible Note Collateral Documents. The Holders of a majority in
principal amount at Stated Maturity of the outstanding Notes, by written notice
to the Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all Events of Default have been cured or waived except nonpayment
of principal and interest (including Additional Amounts, if any, and Special
Interest, if any) that has become due solely because of the acceleration.
C-13
<PAGE> 198
18. Collateral Documents.
As provided in the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents and subject to certain limitations set
forth therein, the obligations of the Company and the Guarantors under the
Indenture, the Collateral Documents and the Convertible Note Collateral
Documents are secured by the Collateral and the Convertible Note Collateral as
provided in the Collateral Documents and the Convertible Note Collateral
Documents. Each Holder, by accepting a Note, agrees to be bound to all terms and
provisions of the Collateral Documents and the Convertible Note Collateral
Documents, as the same may be amended from time to time. The Liens created under
the Collateral Documents shall be released upon the terms and subject to the
conditions set forth in the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents.
19. Individual Rights of Trustee.
Subject to certain limitations imposed by the Trust Indenture
Act, the Trustee or any Paying Agent or Registrar, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with the Company, the Guarantors, its Restricted Subsidiaries or its Affiliates
with the same rights it would have if it were not Trustee, Paying Agent or
Registrar, as the case may be, under the Indenture.
20. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Guarantees or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of his or her status as a
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
21. Governing Law.
THE INDENTURE, THE GUARANTEES AND THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
22. 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).
C-14
<PAGE> 199
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and have directed the Trustee to 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 Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
24. Subordination.
The indebtedness evidenced by this Note is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
The Company will furnish to any Holder of Notes upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Note. Requests may be made to:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the
Guarantors (as defined in the Indenture referred to in this Note and each
hereinafter referred to as a "Guarantor," which term includes any successor or
additional Guarantor under the Indenture) have, jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment of
the principal (and premium, if any) of and interest (including Additional
Amounts, if any, and Special Interest, if any) on the Notes, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest (including Additional Amounts,
if any, and Special Interest, if any) on the Notes, if any, to the extent
lawful, (c) the due and punctual performance of all other obligations of the
Company and the Guarantors to the Holders under the Indenture, the Notes, the
Collateral Documents and the Convertible Note Collateral Documents and (d) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise. Capitalized terms used herein shall
have the same meanings assigned to them in the Indenture unless otherwise
indicated.
C-15
<PAGE> 200
Payment on each Note is guaranteed jointly and severally, by
the Guarantors pursuant to Article X of the Indenture and reference is made to
such Indenture for the precise terms of the Guarantees.
The obligations of each Guarantor are limited to the lesser of
(a) an amount equal to such Guarantor's Adjusted Net Assets as of the date of
the Guarantee and (b) the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
(including, if applicable, its obligations under the Convertible Notes), and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
its Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent conveyance or fraudulent transfer under
federal or state law or not otherwise being void, voidable or unenforceable
under any similar other bankruptcy, receivership, insolvency, liquidation or
other similar legislation or legal principles under applicable foreign law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in a pro rata amount based
on the Adjusted Net Assets of each Guarantor.
Certain of the Guarantors may be released from their
Guarantees upon the terms and subject to the conditions provided in the
Indenture.
The Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof and in the Indenture.
NWE CAPITAL (CYPRUS) LIMITED
By: _____________________________________
PLD ASSET LEASING LIMITED
By: _____________________________________
PLD CAPITAL LIMITED
By: _____________________________________
BALTIC COMMUNICATIONS LIMITED
C-16
<PAGE> 201
By: _____________________________________
WIRELESS TECHNOLOGY CORPORATIONS
LIMITED
By: _____________________________________
<PAGE> 202
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at Stated Maturity of this Note shall be $________.
The following decreases/increase in the principal amount at maturity of this
Note have been made:
<TABLE>
<CAPTION>
TOTAL PRINCIPAL
AMOUNT AT NOTATION
DECREASE IN INCREASE IN MATURITY MADE BY
DATE OF PRINCIPAL PRINCIPAL FOLLOWING SUCH OR ON
DECREASE/ AMOUNT AT AMOUNT AT DECREASE/ BEHALF OF
INCREASE MATURITY MATURITY INCREASE TRUSTEE
<S> <C> <C> <C> <C>
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________
</TABLE>
<PAGE> 203
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
____________________________________
____________________________________
(Please print name and address of transferee)
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________ Attorney to transfer
this Note on the Security Register, with full power of substitution.
Dated:_________________
____________________________________ ____________________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, in which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
<PAGE> 204
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
/ / In connection with the Change of Control Offer made pursuant to Section
4.7 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $_____________($1,000 in principal amount at Stated Maturity
or an integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or __________________ an
amount in cash equal to 101% of the Accreted Value of this
Note, plus accrued and unpaid interest thereon, if any, and
Additional Amounts, if any, and Special Interest, if any, to
the Change of Control Payment Date.
/ / In connection with the Asset Sale Offer made pursuant to Section 4.8 of
the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $_____________($1,000 in principal amount at Stated Maturity
or an integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or __________________ an
amount in cash equal to 100% of the Accreted Value of this
Note, plus accrued and unpaid interest thereon, if any, and
Additional Amounts, if any, and Special Interest, if any, to
the Asset Sale Payment Date.
Dated:_____________
____________________________________ ____________________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, in which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
<PAGE> 205
EXHIBIT D
<PAGE> 206
EXHIBIT D
FORM OF FACE OF EXCHANGE CERTIFICATED NOTE
PETERSBURG LONG DISTANCE INC.
No. _____ CUSIP No. 71623PAB8
14% SENIOR DISCOUNT NOTE DUE 2004
[IF ISSUED PRIOR TO SEPTEMBER 1, 1996, THIS NOTE SHALL BEAR THE FOLLOWING
LEGEND: "TRANSFERS OR OTHER DISPOSITIONS OF THIS NOTE TO RESIDENTS OF CANADA MAY
NOT BE EFFECTED PRIOR TO SEPTEMBER 1, 1996 UNLESS IN COMPLIANCE WITH APPLICABLE
CANADIAN PROVINCIAL SECURITIES LAWS."]
FOR THE PURPOSES OF THE INTEREST ACT (CANADA) AND DISCLOSURE THEREUNDER,
WHENEVER INTEREST, ADDITIONAL AMOUNTS, SPECIAL INTEREST, OR DEFAULTED INTEREST
OR INTEREST ON DEFAULTED INTEREST RELATING TO THIS NOTE, IS TO BE CALCULATED ON
THE BASIS OF A YEAR OF 360 DAYS OR ANY OTHER PERIOD OF TIME THAT IS LESS THAN A
CALENDAR YEAR, THE YEARLY RATE OF INTEREST TO WHICH THE RATE DETERMINED PURSUANT
TO SUCH CALCULATION IS EQUIVALENT IS THE RATE SO DETERMINED MULTIPLIED BY THE
ACTUAL NUMBER OF DAYS IN THE CALENDAR YEAR IN WHICH THE SAME IS TO BE
ASCERTAINED AND DIVIDED BY EITHER 360 OR SUCH OTHER PERIOD OF TIME, AS THE CASE
MAY BE. THE RATE ACCRUING ON THE NOTES FOR PAYMENT PURPOSES SHALL BE DETERMINED
AS SET FORTH ON THE REVERSE HEREOF.
Petersburg Long Distance Inc., an Ontario corporation, (the "Company"),
for value received, hereby promises to pay to _________________, or its
registered assigns, the principal sum of ___________________________, on June 1,
2004.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth in this place.
<PAGE> 207
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
PETERSBURG LONG DISTANCE INC.
By:_________________________________
Name:
Title:
[Corporate Seal]
By:_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:____________________________________
Authorized Signatory
D-2
<PAGE> 208
FORM OF REVERSE SIDE OF EXCHANGE CERTIFICATED NOTE
PETERSBURG LONG DISTANCE INC.
14% SENIOR DISCOUNT NOTE DUE 2004
1. Indenture.
This Note is one of a duly authorized issue of debt securities
of Petersburg Long Distance Inc., an Ontario corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), designated as its "14% Senior Discount Notes due
2004" (herein called the "Notes") limited in aggregate principal amount at
Stated Maturity to $123,000,000, issued under an indenture dated as of May 31,
1996 (as amended or supplemented from time to time, the "Indenture") among the
Company, the corporations acting as guarantors and named therein (the
"Guarantors") and The Bank of New York, as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder of Notes and of the terms upon which the Notes are, and
are to be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. All terms used in this Note which are not defined herein shall
have the meanings assigned to them in the Indenture.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into or permit certain transactions
with Affiliates, create Liens, enter into or permit certain Sale and Leaseback
Transactions, make Asset Sales and engage in businesses other than the
Telecommunications Business. The Indenture also imposes limitations on the
ability of the Company to consolidate or merge with or into any other Person or
permit any other Person to merge with or into the Company, or sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Property of the Company to any other Person. In addition, the Indenture imposes
limitations on the ability of Restricted Subsidiaries to issue guarantees and
Preferred Shares and to create consensual restrictions upon their ability to pay
dividends and make certain other payments to the Company.
2. Principal and Interest.
The Company promises to pay the principal amount set forth on
the face hereof to the Holder hereof on June 1, 2004.
The Notes have been issued at a discounted principal value of
$87,697,300. The Notes will accrete interest from the Issue Date at a rate
computed as if the Notes had been issued bearing interest at the rate of 14% per
annum on May 31, 1996 (being a rate of 14.9445% per annum for the period from
the Issue Date through November 30, 1996), compounded semiannually, to an
aggregate principal amount of $123,000,000 by December 1, 1998. The principal
amount at Stated Maturity of this Note is set forth on the face hereof.
Commencing December 1, 1998, interest on this Note, like the other Notes, will
accrue at the rate of 14% per annum, and will be payable in cash semi-annually
on June 1 and December 1 of each year, commencing June 1, 1999, until the
principal amount hereof is paid or
D-3
<PAGE> 209
made available for payment. The effect of the foregoing is that this Note will
bear interest at the rate of 14.9445% per annum from the Issue Date through
November 30, 1996 and 14% per annum thereafter. The payment of interest on this
Note in respect of the period from the Issue Date to December 1, 1998, however,
will effectively be deferred until Maturity and such deferred interest will be
compounded semi-annually and added to the outstanding principal amount of this
Note. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. If the Company has not received, on or before May 31,
1998, $20,000,000 in Cash Proceeds from a sale or sales of Qualified Stock of
the Company occurring subsequent to the Issue Date (other than Qualified Stock
issued upon the exercise of Warrants or upon conversion of the Convertible
Notes), this Note will bear interest at the rate of 14.5% per annum commencing
on June 1, 1998 until any Interest Payment Date prior to which the Company shall
have received such $20,000,000 in Cash Proceeds from such a sale of Qualified
Stock. Commencing on any such Interest Payment Date, this Note will again bear
interest at the rate of 14% per annum. For purposes of this interest rate
adjustment provision, the Company will be deemed to have received such
$20,000,000 in Cash Proceeds if a Change of Control has occurred. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, subject to certain exceptions provided in the Indenture, be paid to
the Person in whose name this Note (or the Note in exchange or substitution for
which this Note was issued) is registered at the close of business on the Record
Date for interest payable on such Interest Payment Date. The Record Date for any
Interest Payment Date is the close of business on May 15 or November 15, as the
case may be, whether or not a Business Day, immediately preceding the Interest
Payment Date on which such interest is payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") shall forthwith
cease to be payable to the Holder on such Record Date and shall be paid as
provided in Section 2.11 of the Indenture.
Each payment of interest in respect of an Interest Payment
Date will include interest (including Additional Amounts (as hereinafter
defined), if any, and Special Interest (as hereinafter defined), if any) accrued
through the day before such Interest Payment Date. If an Interest Payment Date
falls on a day that is not a Business Day, the interest payment to be made on
such Interest Payment Date will be made on the next succeeding Business Day with
the same force and effect as if made on such Interest Payment Date, and no
additional interest will accrue as a result of such delayed payment.
If this Note was issued, pursuant to a Registered Exchange
Offer prior to the Record Date for the first Interest Payment Date following
such substitution, accrued and unpaid interest, if any, on this Note, up to but
not including the date of issuance of this Note, shall be paid on the first
Interest Payment Date for this Note to the Holder of this Note or on the first
Record Date with respect to this Note. If this Note was issued in a Registered
Exchange Offer subsequent to the Record Date for the first Interest Payment Date
following such substitution but on or prior to such Interest Payment Date, then
any such accrued and unpaid interest with respect to this Note and any accrued
and unpaid interest with respect to the equivalent principal amount at Stated
Maturity of the Initial Note in substitution for which this Note was issued,
including Additional Amounts, if any, and Special Interest, if any, through the
day before such Interest Payment Date, shall be paid on such Interest Payment
Date to the Holder of this Note on such Record Date. Any accretion of value with
respect to the equivalent principal amount and Stated Maturity of the Initial
Note for which this Note, up to but including the date of issuance of this Note
shall be included as Accreted Value with respect to this Note.
To the extent lawful, the Company shall pay interest on (i) if
prior to December 1, 1998, any overdue Accreted Value of (and premium, if any,
on) this Note, or if on or after December 1, 1998, any overdue principal of (and
premium, if any, on) this Note, at the interest rate borne on this Note, plus
D-4
<PAGE> 210
1% per annum, and (ii) Defaulted Interest (without regard to any applicable
grace period), including Additional Amounts, if any, and Special Interest, if
any, at the same rate. The Company's obligation pursuant to the previous
sentence shall apply whether such overdue amount is due at its Stated Maturity,
as a result of the Company's obligations pursuant to Section 3.6, Section 4.7 or
Section 4.8 of the Indenture, or otherwise.
3. Additional Amounts.
Except to the extent required by law, any and all payments of,
or in respect of, this Note shall be made free and clear of and without
deduction for or on account of any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto imposed by Canada, the Russian Federation, Cyprus or any other
jurisdiction with which the Company or any Guarantor has some connection
(including any jurisdiction (other than the United States of America) from or
through which payments under the Notes are made) or any political subdivision of
or any taxing authority in any such jurisdiction ("Canadian Taxes," "Russian
Taxes," "Cypriot Taxes" or "Other Taxes," respectively). If the Company or any
Guarantor shall be required by law to withhold or deduct any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes from or in respect of any sum
payable under this Note or pursuant to a Guarantee, the sum payable by the
Company or such Guarantor, as the case may be, thereunder shall be increased by
the amount ("Additional Amounts") necessary so that after making all required
withholdings and deductions, the Holder of this Note shall receive an amount
equal to the sum that it would have received had no such withholdings and
deductions been made; provided that any such sum shall not be paid in respect of
any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes to the Holder of
this Note (an "Excluded Holder") (i) resulting from the beneficial owner of this
Note carrying on business or being deemed to carry on business in or through a
permanent establishment or fixed base in the relevant taxing jurisdiction or any
political subdivision thereof or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of this Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of this Note
or the Guarantees or the enforcement of this Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)), with the Holder of this Note at the
time of such payment or at the time the amount of such payment is deemed to have
been paid or credited or (iii) that would not have been imposed but for the
presentation (where presentation is required) of this Note for payment more than
180 days after the date such payment became due and payable or was duly provided
for, whichever occurs later. The Company or the Guarantors, as applicable, will
also (i) make such withholding or deduction and (ii) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law, and, in any such case, the Company will furnish to each Holder on whose
behalf an amount was so remitted, within 30 calendar days after the date the
payment of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by the Company or the Guarantors, as applicable. The Company will upon
written request of each Holder (other than an Excluded Holder), reimburse each
such Holder for the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Notes, and (ii) any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed with respect to
any reimbursement under the foregoing clause (i) so that the net amount received
by such Holder (net of payments made under or with respect to such Notes or the
Guarantees) after such reimbursement will not be less than the net amount the
Holder hereof would have received if Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes on such reimbursement had not been imposed.
D-5
<PAGE> 211
In addition, the Company or the Guarantors will pay any stamp,
issue, registration, documentary or other similar taxes and duties, including
interest and penalties, in respect of the creation, issue and offering of the
Notes payable in Canada, the United States, the Russian Federation or Cyprus or
any political subdivision thereof or taxing authority of or in the foregoing.
The Company and the Guarantors will also pay and indemnify the Holders from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by the Trustees or the Holders to create the Liens
on the Collateral and the Convertible Note Collateral and to enforce the
obligations of the Company or the Guarantors under the Notes, the Indenture, the
Guarantees or the Collateral Documents or the Convertible Note Collateral
Documents.
4. Special Interest.
In the event of the failure of the Company to procure, on or
before July 12, 1996, a recognized financial institution with capital of not
less than $10,000,000 organized under the laws of the Republic of Ireland which
the Convertible Note Trustee may lawfully appoint as a Qualified Foreign
Collateral Agent (as defined in Section 7.3 of the Indenture) (the
"Procurement") with respect to Technocom Preferred Stock, any payments thereon
and any property substituted therefor (the "Subject Collateral") pursuant to an
agreement under which such Qualified Foreign Collateral Agent will agree not to
resign without the contemporaneous appointment of a successor Qualified Foreign
Collateral Agent (the "Prescribed Agreement"), then, commencing on July 12,
1996, the Company shall pay to each Holder of the Notes Special Interest in an
amount equal to 1% per annum on the principal amount at Stated Maturity of such
Holder's Notes, accruing for each day until the Procurement is made or Technocom
or a successor is reorganized under the laws of Cyprus and a successor Qualified
Foreign Collateral Agent has been appointed in respect of the Subject Collateral
(the "Reorganization") under a Prescribed Agreement. Such Special Interest shall
be payable in cash semi-annually in arrears at the times and in the manner
provided for in the Indenture, provided that for this purpose, Section 2.11 of
the Indenture shall be read to include as Interest Payment Dates, as applicable,
June 1 and December 1 of each year, commencing December 1, 1996. Such Special
Interest shall cease to accrue upon the Procurement or the Reorganization taking
place and all accrued and unpaid Special Interest shall be paid to each Holder
of the Notes on the next Interest Payment Date with respect thereto. Special
Interest, as defined in the Indenture, may include Special Interest arising as a
result of the occurrence of a "Registration Default" under the Registration
Agreement (as defined in the Indenture).
Except as expressly provided in this paragraph 4, Special
Interest shall be treated as interest and any date on which Special Interest is
due and payable shall be treated as an Interest Payment Date, for all purposes
under this Note and the Indenture.
5. Method of Payment.
The Company, through the Paying Agent, shall pay interest on
this Note to the registered Holder of this Note, as provided above. The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States of America
that at the time of payment is legal tender for payment of all debts public and
private. Principal and interest will be payable at the office of the Paying
Agent but, at the option of the Company, interest may be paid by check mailed to
the registered Holders at their registered addresses.
D-6
<PAGE> 212
6. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar
under the Indenture. The Company may, upon written notice to the Trustee,
appoint and change any Paying Agent or Registrar. The Company or any of its
subsidiaries may act as Paying Agent or Registrar.
7. Optional Redemption.
Except as set forth in the following paragraph, the Notes may
not be redeemed prior to June 13, 2001. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 calendar days' nor more than 60 calendar days' notice, at the prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon (if any), Additional Amounts (if any) to the and Special
Interest (if any) to the applicable Redemption Date, if redeemed during the
period from June 13, 2001 through May 31, 2002 at a percentage of 108.000% and
thereafter during the twelve-month period beginning June 1 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C> <C>
2002 104.000%
2003 and thereafter 100.000%
</TABLE>
The Notes may be redeemed, at the option of the Company, in
whole but not in part, upon not less than 30 or more than 60 days' notice to the
Holders in accordance with the terms of the Indenture, at a redemption price
equal to the Accreted Value thereof, plus accrued and unpaid interest, if any,
(including Additional Amounts, if any, and Special Interest, if any) to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant Record Date to receive interest (including Additional Amounts and
Special Interest if any) due on the Interest Payment Date that is on or prior to
the Redemption Date) if, as a result of any change in or amendment to the laws
or the regulations or rulings promulgated thereunder of Canada, Cyprus, the
Russian Federation or any other jurisdiction with which the Company or any
Guarantor has any connection (other than as a result of a merger or
consolidation of the Company with or into a newly formed corporation solely for
the purpose of moving the Company's domicile out of Canada) or any political
subdivision thereof or any authority thereof or having power to tax therein, or
any change in the application or official interpretation of such laws or
regulations, or any change in administrative policy or assessing practice of the
applicable taxing authority, which change or amendment becomes effective on or
after May 24, 1996, the Company or the Guarantors (if the Guarantees are called)
are or would be required on the next succeeding Interest Payment Date to pay
Additional Amounts with respect to the Initial Notes, the Exchange Notes or the
Guarantees and the payment of such Additional Amounts cannot be avoided by the
use of any reasonable measures available to the Company or the Guarantors, as
the case may be. The Company will also pay to the Holders on the Redemption Date
any Additional Amounts payable in respect of the period ending on the Redemption
Date. Prior to the publication of any notice of redemption pursuant to this
provision, which in no event will be given earlier than 90 days prior to the
earliest date on which the Company or the Guarantors, as the case may be, would
be required to pay such Additional Amounts were a payment in respect of the
Notes then due, the Company shall deliver to the Trustee (i) an Officers'
Certificate stating that the obligation to pay such Additional Amounts cannot be
avoided by the Company or the Guarantors, as the case may be, taking reasonable
measures and (ii) an Opinion of Counsel, independent of the Company and the
Guarantors and approved by the Trustee, to the effect that the Company or the
Guarantors have or will become obligated to pay such Additional Amounts as a
result of such change or amendment. Such
D-7
<PAGE> 213
notice, once delivered by the Company to the Trustee, will be irrevocable. The
Trustee shall accept such Officers' Certificate and Opinion of Counsel as
sufficient evidence of the satisfaction of the condition precedent set forth in
clauses (i) and (ii) above, in which event it shall be conclusive and binding on
the Holders.
8. Notice of Redemption.
At least 30 calendar days but not more than 60 calendar days
before a Redemption Date, the Company will send a notice of redemption, first
class mail, postage prepaid, to Holders of Notes to be redeemed at the addresses
of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time,
the Notes to be redeemed will be chosen by the Trustee in accordance with the
Indenture. If any Note is redeemed subsequent to a Record Date with respect to
any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest (including Additional Amounts, if any,
and Special Interest, if any) will be paid on such Interest Payment Date to the
Holder of the Note at the close of business on such Record Date. If money in an
amount sufficient to pay the Redemption Price of all Notes (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent on or
before the applicable Redemption Date and certain other conditions are
satisfied, interest (including Additional Amounts, if any, and Special Interest,
if any) on the Notes to be redeemed on the applicable Redemption Date will cease
to accrue.
The Notes are not subject to any sinking fund.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to purchase such Holder's
Notes, in whole or in part in a principal amount that is an integral multiple of
$1,000, pursuant to a Change of Control Offer, at a purchase price in cash equal
to 101% of the Accreted Value thereof on any Change of Control Payment Date,
plus accrued and unpaid interest, if any, Additional Amounts, if any, and
Special Interest, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder of Notes. The Holder
of this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Require Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest, Additional Amounts, if any, and Special Interest, if any, from
and after the Change of Control Payment Date.
D-8
<PAGE> 214
10. Repurchase at the Option of Holders upon Asset Sale.
Subject to the limitations set forth in the next following
paragraph, if at any time the Company or any Restricted Subsidiary engages in
any Asset Sale, as a result of which the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company shall, within 30 calendar days of the date the
amount of Excess Proceeds exceeds $5,000,000, use the then-existing Excess
Proceeds to make an offer to purchase from all Holders, on a pro rata basis,
Notes in an aggregate principal amount equal to the maximum principal amount
that may be purchased out of the then-existing Excess Proceeds, at a purchase
price in cash equal to 100% of the Accreted Value thereof on any Asset Sale
Payment Date, plus accrued and unpaid interest thereon, if any, Additional
Amounts, if any, and Special Interest, if any, to the Asset Sale Payment Date,
provided that Excess Proceeds attributable to an Asset Sale of Convertible Note
Collateral (as defined in the Indenture) must be used first to make an "Asset
Sale Offer" pursuant to the Convertible Note Indenture (as defined in the
Indenture). Upon completion of an Asset Sale Offer (including payment of the
Asset Sale Purchase Price for accepted Notes), any surplus Excess Proceeds that
were the subject of such offer shall cease to be Excess Proceeds, and the
Company may then use such amounts for general corporate purposes, including the
making of an "Asset Sale Offer" pursuant to the Convertible Note Indenture.
Notwithstanding the paragraph above, the Company will not be
obligated to repurchase Notes in connection with an Asset Sale Offer
representing in aggregate more than 25% of the original aggregate principal
amount of the Notes (which original aggregate principal amount shall for these
purposes be the aggregate amount originally allocated to the Notes, net of any
amounts allocated to the Warrants, without any adjustment whatsoever) prior to
the date following the Five Year Date, and the original aggregate principal
amount of Notes repurchased in connection with any Asset Sale Offer having a
purchase date prior to the date following the Five Year Date shall represent no
more than 25% of the original aggregate principal amount of the Notes less the
original aggregate principal amount of Notes purchased pursuant to Asset Sale
Offers relating to all prior Asset Sales. To the extent that the amount of
Excess Proceeds exceeds the amount of Notes purchased because of the limitation
imposed by the immediately preceding sentence (the amount of such excess being
the "Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall
constitute Excess Proceeds for purposes of the first Asset Sale Offer that is
made after the Five Year Date and, in the event the amount of the Aggregate
Unused Proceeds exceeds $5,000,000, promptly after the Five Year Date, the
Company shall commence an Asset Sale Offer on a pro rata basis for an aggregate
principal amount of Notes equal to the Aggregate Unused Proceeds (and any other
Excess Proceeds that arise between the Five Year Date and such Asset Sale Offer)
at a purchase price equal to 100% of the Accreted Value of the Notes, plus
accrued interest, if any, Special Interest, if any, and Additional Amounts, if
any, to the date of purchase.
Within 30 calendar days of the date the amount of Excess
Proceeds exceeds $5,000,000, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder of Notes. The Holder of this Note may elect to have this Note or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Require Purchase" appearing below and tendering
this Note pursuant to the Asset Sale Offer. Unless the Company defaults in the
payment of the Asset Sale Purchase Price with respect thereto, all Notes or
portions thereof selected for payment pursuant to the Asset Sale Offer will
cease to accrue interest, Additional Amounts, if any, and Special Interest, if
any, from and after the Asset Sale Payment Date.
D-9
<PAGE> 215
11. Transfer and Exchange.
A Holder may transfer a Note only upon the surrender of such
Note for registration of transfer. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer in the Security Register by the
Registrar. When Notes are presented to the Registrar with a request to register
the transfer of, or to exchange, such Notes, the Registrar shall register the
transfer or make such exchange as requested if its requirements for such
transactions and any applicable requirements hereunder are satisfied.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer of Notes (other than in respect of
a Registered Exchange Offer, except as provided in the Registration Agreement).
Following the suspension or termination of a Shelf
Registration Statement, the Holder of this Note (or holders of interests herein)
and prospective purchasers designated by such Holder shall have the right to
obtain from the Company upon request by such Holder (or holders of interests
herein) or prospective purchasers, during any period in which the Company is not
subject to Section 13 or 15(d) of the Exchange Act, or exempt from reporting
pursuant to 12g3-2(b) under the Exchange Act, the information required by
paragraph (d)(4)(i) of Rule 144 in connection with any transfer or proposed
transfer of such Note or interest.
12. Denominations.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 of principal amount at Stated Maturity and integral
multiples thereof.
13. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment unless such abandoned property
law designates another Person.
14. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its and the Guarantors' obligations under the Notes,
the Guarantees, the Indenture and the Collateral Documents and the Convertible
Note Collateral Documents if the Company irrevocably deposits with the Trustee
money or U.S. Government Obligations for the payment of principal and interest
on the Notes to redemption or maturity, as the case may be.
D-10
<PAGE> 216
15. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture, the Notes, the Collateral Documents and the Convertible Note
Collateral Documents may be amended with the written consent of the Holders of
at least a majority in principal amount at Stated Maturity of the outstanding
Notes and (ii) any past Default and its consequences may be waived with the
written consent of the Holders of at least a majority in principal amount at
Stated Maturity of the outstanding Notes. Without the consent of any Holder of
Notes, the Company, the Guarantors and the Trustee may amend the Indenture, the
Notes, the Collateral Documents and the Convertible Note Collateral Documents
(i) to evidence the succession of another Person to the Company or the
Guarantors, as applicable, and the assumption by such successor of the covenants
of the Company or the Guarantors under the Notes, the Indenture, the Collateral
Documents and the Convertible Note Collateral Documents; (ii) to add additional
covenants or to surrender rights and powers conferred on the Company or the
Guarantors by the Indenture, the Collateral Documents and the Convertible Note
Collateral Documents; (iii) to add any additional Events of Default; (iv) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (v) to evidence and provide for the acceptance of appointment under the
Indenture of a successor Trustee; (vi) to add additional security for the Notes
and/or the Guarantees; (vii) to cure any ambiguity in the Indenture, the
Collateral Documents or the Convertible Note Collateral Documents to correct or
supplement any provision in the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents, provided that such actions shall not
adversely affect the interests of the Holders in any material respect; or (viii)
to comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
16. Defaults and Remedies.
Events of Default under the Indenture include in summary form:
default in payment of interest, including Additional Amounts, if any, or Special
Interest, if any, on the Notes for 30 days; default in payment of principal on
the Notes; failure to comply with certain of the covenants in the Indenture,
including the Change of Control covenant the Asset Sale covenant or the
Restrictive Payments covenant, failure by the Company to comply with certain of
its other agreements in the Indenture or the Notes or any Collateral Document or
any Convertible Note Collateral Document or a breach of a representation or
warranty in any Collateral Document or any Convertible Note Collateral Document
and the continuance of such default or breach for 45 days after notice;
expropriation of assets of the Company or any of its Restricted Subsidiaries
having a book value, less the book value of the expropriation proceeds,
constituting more than 15% of the book value, on a consolidated basis, of the
Company's assets minus current assets; defaults in the payment of certain other
Indebtedness, or defaults, other than such payment defaults, which result in the
acceleration prior to express maturity of certain other Indebtedness or which
consist of the failure to pay at maturity; certain final judgments which remain
undischarged, unwaived, unappealed, unbonded, unstayed or unsatisfied; certain
events of bankruptcy or insolvency; failure of a Guarantee, a Collateral
Document or a Convertible Note Collateral Document to be in effect, the denial
of obligations under a Guarantee, a Collateral Document, a Convertible Note
Collateral Document or the Notes by the Company or the Guarantors party thereto
or the failure of the Notes and the Guarantees to be secured by the theretofore
perfected Liens and security interests in the Collateral or the Convertible Note
Collateral (except as permitted by the Indenture, the Collateral Documents or
the Convertible Note Collateral Documents), which in each circumstance continues
for 30 days after
D-11
<PAGE> 217
notice. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency are Events of Default and shall
result in the Notes being immediately due and payable upon the occurrence of
such Events of Default without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture, the
Guarantees, the Notes, the Collateral Documents or the Convertible Note
Collateral Documents except as provided in the Indenture. The Trustee may refuse
to enforce the Indenture, the Notes, the Guarantees, the Collateral Documents or
the Convertible Note Collateral Documents unless it receives reasonable
indemnity or security. Subject to certain limitations, Holders of a majority in
principal amount at Stated Maturity of the Notes may direct the Trustee in its
exercise of any trust or power under the Indenture, the Collateral Documents and
the Convertible Note Collateral Documents. The Holders of a majority in
principal amount at Stated Maturity of the outstanding Notes, by written notice
to the Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all Events of Default have been cured or waived except nonpayment
of principal and interest (including Additional Amounts, if any, and Special
Interest, if any) that has become due solely because of the acceleration.
17. Collateral Documents.
As provided in the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents and subject to certain limitations set
forth therein, the obligations of the Company and the Guarantors under the
Indenture, the Collateral Documents and the Convertible Note Collateral
Documents are secured by the Collateral and the Convertible Note Collateral as
provided in the Collateral Documents and the Convertible Note Collateral
Documents. Each Holder, by accepting a Note, agrees to be bound to all terms and
provisions of the Collateral Documents and the Convertible Note Collateral
Documents, as the same may be amended from time to time. The Liens created under
the Collateral Documents and the Convertible Note Collateral Documents shall be
released upon the terms and subject to the conditions set forth in the Indenture
and the Collateral Documents and the Convertible Note Collateral Documents.
18. Individual Rights of Trustee.
Subject to certain limitations imposed by the Trust Indenture
Act, the Trustee or any Paying Agent or Registrar, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with the Company, the Guarantors, its Restricted Subsidiaries or its Affiliates
with the same rights it would have if it were not Trustee, Paying Agent or
Registrar, as the case may be, under the Indenture.
19. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Guarantees or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of his or her status as a
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor. By accepting a Note, each Holder waives
D-12
<PAGE> 218
and releases all such liability (but only such liability) as part of the
consideration for issuance of such Note to such Holder.
20. Governing Law.
THE INDENTURE, THE GUARANTEES AND THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
21. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and have directed the Trustee to 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 Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
23. Subordination.
The indebtedness evidenced by this Note is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
The Company will furnish to any Holder of Notes upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Note. Requests may be made to:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
SUBSIDIARY GUARANTEE
D-13
<PAGE> 219
Subject to the limitations set forth in the Indenture, the
Guarantors (as defined in the Indenture referred to in this Note and each
hereinafter referred to as a "Guarantor," which term includes any successor or
additional Guarantor under the Indenture) have, jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment of
the principal (and premium, if any) of and interest (including Additional
Amounts, if any, and Special Interest, if any) on the Notes, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest (including Additional Amounts,
if any, and Special Interest, if any) on the Notes, if any, to the extent
lawful, (c) the due and punctual performance of all other obligations of the
Company and the Guarantors to the Holders under the Indenture, the Notes, the
Collateral Documents and the Convertible Note Collateral Documents and (d) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise. Capitalized terms used herein shall
have the same meanings assigned to them in the Indenture unless otherwise
indicated.
Payment on each Note is guaranteed on a senior basis, jointly
and severally, by the Guarantors pursuant to Article X of the Indenture and
reference is made to such Indenture for the precise terms of the Guarantees.
The obligations of each Guarantor are limited to the lesser of
(a) an amount equal to such Guarantor's Adjusted Net Assets as of the date of
the Guarantee and (b) the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
(including, if applicable, its obligations under the Convertible Notes) and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
its Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under federal or state law or not
otherwise being void, voidable or unenforceable under any similar other
bankruptcy, receivership, insolvency, liquidation or other similar legislation
or legal principles under applicable foreign law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Guarantor.
Certain of the Guarantors may be released from their
Guarantees upon the terms and subject to the conditions provided in the
Indenture.
The Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Trustee and the
holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and in the Indenture.
NWE CAPITAL (CYPRUS) LIMITED
By:______________________________________
D-14
<PAGE> 220
PLD ASSET LEASING LIMITED
By:______________________________________
PLD CAPITAL LIMITED
By:______________________________________
BALTIC COMMUNICATIONS LIMITED
By:______________________________________
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
By:______________________________________
D-15
<PAGE> 221
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
____________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ___________________ Attorney to transfer this
Note on the Security Register, with full power of substitution.
Dated:__________________
______________________________ ______________________________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
D-16
<PAGE> 222
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
// In connection with the Change of Control Offer made pursuant to Section
4.7 of the Indenture, the undersigned hereby elects to have
// the entire principal amount
// $______________ ($1,000 in principal amount at Stated Maturity
or an integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or _______ an amount in
cash equal to 101% of the Accreted Value of this Note plus
accrued and unpaid interest thereon, if any, Additional
Amounts, if any, and Special Interest, if any, to the Change
of Control Payment Date.
// In connection with the Asset Sale Offer made pursuant to Section 4.8 of
the Indenture, the undersigned hereby elects to have
// the entire principal amount
// $______________ ($1,000 in principal amount at Stated Maturity
or an integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or _______ an amount in
cash equal to 100% of the Accreted Value of this Note as the
case may be, plus accrued and unpaid interest thereon, if any,
Additional Amounts, if any, and Special Interest, if any, to
the Asset Sale Payment Date.
Dated:______________
______________________________ ______________________________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
D-17
<PAGE> 223
EXHIBIT K
<PAGE> 224
AGENCY AGREEMENT
THIS AGENCY AGREEMENT (this "Agency Agreement") is made and entered
into as of June 12, 1996 by and among THE BANK OF NEW YORK, a New York banking
corporation, in its capacity as trustee under the Senior Note Indenture (as
defined herein) and as trustee under the Convertible Note Indenture (as defined
herein) (the "Trustee"), and AOZT INTERNATIONALE NEDERLANDEN BANK EURASIA, as
Russian collateral agent (the "Collateral Agent") and, but only for the purposes
of Sections 4 and 5, PETERSBURG LONG DISTANCE INC. (the "Company").
RECITALS
A. The Company, as issuer, the Trustee, and NWE Capital (Cyprus)
Limited, a Cypriot corporation ("NWE Cyprus"), PLD Asset Leasing Limited, a
Cypriot corporation ("PLD Leasing"), PLD Capital Limited, a Cypriot corporation
("PLD Capital", together with PLD Leasing, the "Leasing Companies"), Wireless
Technology Corporations Limited, a British Virgin Islands company ("WTC"), and
Baltic Communications Limited, a Russian joint stock company of the closed type
("BCL"), as Senior Note Guarantors, have entered into an indenture dated as of
May 31, 1996 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Senior Note Indenture") pursuant to which the
Company is issuing $123,000,000 in aggregate principal amount at maturity of its
14% Senior Discount Notes due 2004 (the "Senior Notes"); and
B. The Company, as issuer, the Trustee, and NWE Cyprus, the Leasing
Companies, WTC and BCL, as Convertible Note Guarantors, have entered into an
indenture dated as of May 31, 1996 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Convertible Note
Indenture") pursuant to which the Company is issuing $26,500,000 in aggregate
principal amount of its 9% Convertible Subordinated Notes due 2006 (the
"Convertible Notes"); and
C. To secure its obligations under the Senior Note Indenture, the
Senior Notes, the Convertible Note Indenture and the Convertible Notes, the
Company has agreed, among other things, to execute and deliver the Pledge
Agreement (as defined below) in order to implement and more fully secure the
payment and performance by the Company of the Obligations (as defined in the
Pledge Agreement); and
D. The Company has selected and desires the Trustee to appoint the
Collateral Agent, and the Collateral Agent desires to act, as the pledgee under
the agreement attached hereto as Exhibit A (the "Pledge Agreement") and, subject
to the agreement of the Collateral Agent at such time, such other agreements as
may be entered into from time to time with respect to collateral located in the
Russian Federation (collectively, the "Foreign Collateral Documents").
<PAGE> 225
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Senior Note
Indenture.
SECTION 2. APPOINTMENT OF COLLATERAL AGENT; SUCCESSOR COLLATERAL AGENT.
(a) The Trustee hereby appoints the Collateral Agent, and the
Collateral Agent accepts its appointment, in accordance with the terms of this
Agency Agreement, to act as collateral agent for the Trustee (acting in its
capacity as trustee under the Senior Note Indenture and the Convertible Note
Indenture) in respect of the Foreign Collateral Documents. The Collateral Agent
shall be permitted to exercise such rights, powers and discretions as are
reasonably necessary or incidental to its obligations as Collateral Agent under
this Agency Agreement and the Foreign Collateral Documents.
(b) The Collateral Agent may resign at any time by giving written
notice thereof to the Trustee and may be removed at any time with or without
cause upon the Trustee giving 30 days prior written notice. Prior to the
effectiveness of any such resignation or removal, the Trustee shall have the
right to appoint a successor Collateral Agent which shall be a commercial bank
organized or chartered under the laws of the Russian Federation having combined
capital and surplus of at least $50,000,000. If no successor Collateral Agent
shall have been so appointed by the Trustee, and shall have accepted such
appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation, then the retiring Collateral Agent shall, prior to the
effectiveness of its resignation, on behalf of the Senior Note Trustee, the
Holders of the Senior Notes, the Convertible Note Trustee and the Holders of the
Convertible Notes, appoint a successor Collateral Agent, which shall be a
commercial bank organized under the laws of the Russian Federation having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent, and
the retiring Collateral Agent shall be discharged from its duties and
obligations under this Agency Agreement. After any retiring Collateral Agent's
resignation or removal hereunder as Collateral Agent, the provisions of this
Agency Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Collateral Agent under this Agency Agreement and
the other relevant documents (including, for the avoidance of doubt, the Pledge
Agreement). Any corporation into which the Collateral Agent may be merged, or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Collateral Agent shall be a party, shall be the
Collateral Agent under this Agency Agreement without the execution or filing of
any paper or any further act on the part of the parties hereto.
2
<PAGE> 226
SECTION 3. RESPONSIBILITIES OF COLLATERAL AGENT. The obligations of the
Collateral Agent under this Agency Agreement shall be to:
(a) execute the Pledge Agreement as Russian collateral agent
for the Trustee;
(b) inspect upon request of the Trustee extracts from the
Register of Shareholders and the Pledge Book of BCL to ascertain to its
satisfaction that the Pledge has been properly entered in the Register of
Shareholders and the Pledge Book of BCL;
(c) receive and maintain in safe-keeping copies of extracts
from the Register of Shareholders of BCL provided in accordance with the Pledge
Agreement and provide the Trustee with copies of such extracts;
(d) upon the occurrence of an Event of Default, take such
action as may be requested by the Trustee, provided such action does not
contradict Applicable Legislation (as defined herein);
(e) remit any proceeds recovered from enforcement of the
Foreign Collateral Documents;
(f) subject to the provision of Section 4(c) of this Agency
Agreement, receive and maintain in safe-keeping any share certificates of BCL
provided pursuant to the Pledge Agreement; and
(g) take such other actions as may be mutually agreed between
the Trustee and the Collateral Agent.
For the avoidance of doubt, the Collateral Agent shall be under no
obligation to take any action under the Foreign Collateral Documents save and to
the extent that it has received directions (together with any necessary
information in connection therewith) from the Trustee.
The Collateral Agent shall be entitled to rely upon the instructions of
the Trustee and shall be entitled to assume that such instructions have been
issued in compliance with the terms of the Senior Note Indenture, the
Convertible Note Indenture and other agreements relating to the issue of the
Senior Notes and the Convertible Notes.
The Collateral Agent shall not be required to investigate and shall
have no liability with respect to the form, validity or enforceability of any
Foreign Collateral Documents unless it expressly undertakes such role in
writing.
SECTION 4. FEES.
The Company shall pay the Collateral Agent the following fees:
3
<PAGE> 227
(a) an agency fee in the amount of US$25,000 payable upon
execution of this Agency Agreement;
(b) maintenance fees in the amount of US$30,000 payable
quarterly in advance. The maintenance fee may be reviewed annually by the
Collateral Agent in line with its then current fee schedule for the provision of
services equivalent to those provided under this Agency Agreement.
(c) custody fees in respect of safe-keeping of paper form
share certificates and related activities payable quarterly in advance, should
the Collateral Agent be required to keep custody of share certificates provided
pursuant to the Pledge Agreement. The custody fee shall be determined, and may
be reviewed annually by the Collateral Agent in line with its then current fee
schedule for depository and custody services;
(d) transactional fees in respect of payment of dividends or
other distributions received on any Collateral; and
(e) such other fees as may be mutually agreed between the
Collateral Agent and the Company with respect to actions relating to this Agency
Agreement and the Foreign Collateral Documents.
SECTION 5. INDEMNIFICATION; WAIVER OF DAMAGES.
(a) The Company shall be liable for and shall reimburse and
indemnify the Collateral Agent and hold the Collateral Agent harmless from and
against any and all claims, losses, liabilities, costs, damages or expenses
(including reasonable attorneys' fees and expenses) (collectively, "Losses")
arising from or in connection with or related to this Agreement or being
Collateral Agent hereunder (including but not limited to Losses incurred by the
Collateral Agent in connection with its successful defense, in whole or in part,
of any claim of negligence or willful misconduct on its part), provided,
however, that nothing contained herein shall require the Collateral Agent to be
indemnified for Losses caused by its gross negligence or willful misconduct.
(b) The Collateral Agent shall be under no obligation to act
in pursuance of the directions of the Trustee unless and until the Collateral
Agent shall have received, in a form and substance satisfactory to it, security
(including indemnities) from the Company or any other person or persons in
respect of any Losses which may be incurred by the Collateral Agent in respect
of such action. For the avoidance of doubt, the Collateral Agent shall have no
obligation to act in accordance with the direction of any person save, subject
to terms of this Agency Agreement, the Trustee. The Collateral Agent shall owe
no duty of care to any person in respect of the taking or refraining from taking
any action relating to the Foreign Collateral Documents, save to the extent as
expressly undertaken in this Agency Agreement.
4
<PAGE> 228
(c) THE TRUSTEE AND THE COMPANY AGREE THAT THE COLLATERAL
AGENT SHALL HAVE NO LIABILITY TO THE TRUSTEE OR THE COMPANY (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE TRUSTEE OR THE COMPANY
IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGENCY AGREEMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON
THE COLLATERAL AGENT THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON
THE PART OF THE COLLATERAL AGENT CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(d) WITHOUT PREJUDICE TO ANY SECURITY ARRANGEMENTS
CONTEMPLATED BY SECTION 5(b), THE COLLATERAL AGENT AND THE COMPANY AGREE THAT
THE TRUSTEE SHALL HAVE NO LIABILITY TO THE COLLATERAL AGENT OR THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COLLATERAL AGENT OR THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED
BY THIS AGENCY AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A
COURT THAT IS BINDING ON THE TRUSTEE THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE CONSTITUTING NEGLIGENCE OR WILLFUL
MISCONDUCT. THE COLLATERAL AGENT AND THE COMPANY FURTHER AGREE THAT THE TRUSTEE
SHALL HAVE NO LIABILITY HEREUNDER EXCEPT IN ITS CAPACITY AS TRUSTEE AND,
FURTHER, THAT ANY LIABILITY SHALL BE LIMITED TO THE AMOUNTS RECOVERABLE FROM THE
TRUST ESTATE.
SECTION 6. ILLEGALITY.
Nothing in this Agreement or in the Foreign Collateral Documents shall
require or shall operate so as to require the Collateral Agent to take any
action that may be inconsistent with, or in violation of, Applicable
Legislation. For the purposes of this Agency Agreement, "Applicable Legislation"
shall mean any and all legislation of the Russian Federation, including, for the
avoidance of doubt, all laws, statutes, decrees, orders, instructions,
regulations, letters, directions of agencies of state power and any other
normative acts of the Russian Federation.
SECTION 7. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in writing and
delivered in person or mailed by first class mail, postage prepaid, addressed as
follows, or by facsimile transmission:
5
<PAGE> 229
if to the Trustee,
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Fax: (212) 815-5915 or 5917
if to the Collateral Agent,
Leningradsky Prospect 80
125178 Moscow, Russia
Attention: Alexander Chistiakov
Fax: (7502) 224-5037
and, if to the Company:
166 Pearl Street
Toronto, Ontario
Canada
M5H 1L3
Attention: Secretary
Fax: (416) 597-1776
(b) Severability. The provisions of this Agency Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agency Agreement in any jurisdiction.
(c) Termination. Termination of this Agency Agreement shall be
without prejudice to any liability with respect to fees or indemnities owed to
any party after (and arising either before or after) the date of such
termination.
(d) Headings. The headings in this Agency Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
6
<PAGE> 230
(e) Counterpart Originals. This Agency Agreement may be signed
in two or more counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same agreement.
(f) Amendments. This Agency Agreement may be changed, waived,
discharged or terminated only by an instrument in writing signed by each of the
parties hereto.
(g) Final Expression. This Agency Agreement is intended by the
parties as a final expression of this Agency Agreement and is intended as a
complete and exclusive statement of the terms and conditions hereof.
(h) Governing Law. THIS AGENCY AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE TRUSTEE AND THE COLLATERAL AGENT IN CONNECTION WITH THIS
AGENCY AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(i) Submission to Jurisdiction. Any suit, action or proceeding
against the Trustee, the Company or the Collateral Agent or their respective
Properties, assets or revenues with respect to this Agency Agreement (a "Related
Proceeding") may be brought in any federal or state court located in the State
of New York, County of New York. Each of the Company, the Trustee and the
Collateral Agent hereby irrevocably consents to the jurisdiction of each such
court for the purposes of any Related Proceeding, and irrevocably waives, to the
fullest extent it may effectively and lawfully do so, any objection to the
laying of venue of any Related Proceeding in any such court and the defense of
an inconvenient forum to the maintenance of any Related Proceeding in any such
court. Each of the Company, the Trustee and the Collateral Agent further submits
to the jurisdiction of the courts of its own corporate domicile in any Related
Proceeding.
[SIGNATURE PAGE FOLLOWS]
7
<PAGE> 231
IN WITNESS WHEREOF, the parties hereto have caused this Agency
Agreement to be duly executed and delivered as of the day and year first above
written.
THE BANK OF NEW YORK, as Trustees
By: /s/ STEVEN D. TORGESON
-------------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
AOZT INTERNATIONALE NEDERLANDEN BANK
EURASIA, as Collateral Agent
By: /s/ ALEXANDER CHISTIAKOV
-------------------------------
Name: Alexander Chistiakov
Title: Risk Manager
By: /s/ DENNIS J. REYNARD [SEAL]
-------------------------------
Name: Dennis J. Reynard
Title: Assistant General Manager
PETERSBURG LONG DISTANCE INC.
By: /s/ SIMON EDWARDS
-------------------------------
Name: Simon Edwards
Title: CFO
8
<PAGE> 232
EXHIBIT A
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of June 12, 1996, by and between
PETERSBURG LONG DISTANCE INC., a corporation organized under the laws of the
Province of Ontario, Canada (the "Pledgor"), and AOZT INTERNATIONALE NEDERLANDEN
BANK EURASIA, in its capacity as Russian collateral agent for the trustee under
the Senior Note Indenture (as hereinafter defined) and as Russian collateral
agent for such trustee and the collateral agent acting under the Senior Note
Security Agreement (as hereinafter defined), and as Russian collateral agent for
the trustee under the Convertible Note Indenture (as hereinafter defined) (the
"Pledgee").
RECITALS
A. The Pledgor is the owner of certain outstanding shares of
capital stock issued by Baltic Communications Limited, a closed joint stock
company organized under the laws of the Russian Federation ("BCL").
B. The Pledgor, The Bank of New York, as trustee (in such
capacity, the "Senior Note Trustee"), BCL, NWE Capital (Cyprus) Limited, a
Cypriot corporation, PLD Asset Leasing Limited, a Cypriot corporation, PLD
Capital Limited, a Cypriot corporation, and Wireless Technology Corporations
Limited, a British Virgin Islands corporation, as guarantors (collectively, the
"Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Senior Note Indenture") pursuant to which the Company is issuing
U.S.$123,000,000 in aggregate principal amount at maturity of its 14% Senior
Discount Notes due 2004 (the "Senior Notes").
C. To secure its obligations under the Senior Note Indenture and
the Senior Notes and the other Collateral Documents referred to in the Senior
Note Indenture (together with the Guarantors' obligations under the Senior Note
Indenture and such other Collateral Documents, the "Senior Note Obligations"),
the Pledgor entered into that certain Company Senior Note Security and Pledge
Agreement dated as of May 31, 1996 (the "Senior Note Security Agreement") with
the Senior Note Trustee, The Bank of New York as collateral agent (in such
capacity, the "Collateral Agent") and the Convertible Note Trustee (as
hereinafter defined), in which the Company has agreed (i) to grant to the
Collateral Agent for the benefit of the Senior Note Trustee and the equal and
ratable benefit of the holders of the Senior Notes liens and security interests
in and to certain collateral specified therein, including but not limited to the
Collateral (as defined herein) and (ii) to execute and deliver this Pledge
Agreement in order to implement and more fully secure the payment and
performance by the Company of the Senior Note Obligations.
A-1
<PAGE> 233
D. The Pledgor, The Bank of New York, as trustee (in such
capacity, the "Convertible Note Trustee") and the Guarantors, as guarantors,
have entered into an indenture dated as of May 31, 1996 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Convertible
Note Indenture") pursuant to which the Company is issuing U.S.$26,500,000 in
aggregate principal amount of its 9% Convertible Subordinated Notes due 2006
(the "Convertible Notes").
E. To secure its obligations under the Convertible Note
Indenture and the Convertible Notes and the other Collateral Documents referred
to in the Convertible Note Indenture (together with the Guarantors' obligations
under the Convertible Note Indenture and such other Collateral Obligations, the
"Convertible Note Obligations"), the Pledgor entered into the Senior Note
Security Agreement in which the Pledgor has agreed to grant to the Collateral
Agent for the benefit of the Convertible Note Trustee and the equal and ratable
benefit of the holders of the Convertible Notes liens and security interests in
and to certain collateral specified therein, including but not limited to the
Collateral (as defined herein) (but subordinated to the liens and security
interests of the Collateral Agent therein) and (ii) to execute and deliver this
Pledge Agreement in order to implement and more fully secure the payment and
performance by the Company of the Convertible Note Obligations.
F. The Senior Note Obligations and the Convertible Note
Obligations are hereinafter referred to as the "Obligations", the Senior Notes
and the Convertible Notes are hereinafter referred to as the "Notes", the Senior
Note Trustee and the Convertible Note Trustee are hereinafter referred to as the
"Trustees", the Senior Note Indenture and the Convertible Note Indenture are
hereinafter referred to as the "Indentures" and the Senior Note Collateral
Documents and the Convertible Note Collateral Documents are hereinafter referred
to as the "Collateral Documents".
NOW THEREFORE, in consideration of the premises and in order
to induce the holders of the notes to purchase the Notes, the Pledgor hereby
makes the following representations and warranties to the Pledgee and hereby
covenants and agrees with the Pledgee as follows:
1. DEFINITIONS. Unless otherwise defined herein, the following terms shall
have the meanings listed below:
"Applicable Legislation" shall mean applicable legislation of the
Russian Federation (including, for the avoidance of doubt, all laws,
statutes, decrees, orders, regulations, letters, directions of agencies
of state power and any other normative acts of the Russian Federation).
"Collateral" shall mean the Pledged Stock together with any
certificates representing the Pledged Stock and, except as otherwise
provided in Section 4 or elsewhere herein, all products and proceeds of
any of the Pledged Stock, including, without limitation, all dividends,
cash, options, warrants, rights, instruments, subscriptions and other
property
A-2
<PAGE> 234
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Stock; and all additional shares of, and all securities convertible
into, and warrants, options or other rights to purchase, stock of, or
equity interest in, BCL from time to time acquired by the Pledgor in
any manner, and the certificates representing such additional shares
(any such additional shares shall constitute part of the Pledged Stock
under and as defined in this Pledge Agreement), and, except as
otherwise provided in Section 4 or elsewhere herein, all products and
proceeds of any of such additional Pledged Stock, including, without
limitation, all dividends, cash, options, warrants, rights,
instruments, subscriptions, and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional Pledged Stock including all
proceeds received or receivable by the Pledgor from any
recapitalization, reclassification, merger, dissolution, liquidation or
other termination of the existence of BCL.
"Pledged Stock" shall mean the shares of Stock listed in Annex A
attached hereto and all other Stock, whether now owned or hereafter
acquired, pledged or required to be pledged under this Agreement.
"Stock" shall mean stock of, or other equity interest in, BCL of any
class or classes, whether certificated or uncertificated.
2. SECURITY FOR OBLIGATIONS. This Agreement is for the benefit of the
Pledgee in its capacity as collateral agent for the Trustees to secure
the payment and performance by the Pledgor of the Obligations. As
specified by Article 339(1) of the Civil Code of the Russian
Federation, the parties hereto acknowledge and agree that the
Obligations secured hereunder are (1) the repayment by the Pledgor to
the Senior Note Trustee on or before May 31, 2004 of U.S.$123,000,000,
together with interest thereon and the other amounts due in respect
thereof as described in the Senior Note Indenture, and the repayment by
the Pledgor to the Convertible Note Trustee on or before May 31, 2006
of U.S.$26,500,000, together with interest thereon and the other
amounts due in respect thereof as described in the Convertible Note
Indenture, and (2) the performance by the Pledgor and the Guarantors of
various other obligations which relate to and serve to secure and
assure the payment of the sums described above.
The parties hereto hereby agree that, as of the date hereof, the value
of the Collateral is U.S.$5,000,000 being the total consideration paid
by the Pledgor for the acquisition of the Pledged Stock in March 1996.
The foregoing statement is being made solely in order to comply with
Article 339(1) of the Civil Code, and is not intended to, and shall not
in any way limit the amount of the Obligations intended to be secured
by, or which may be recovered in respect of any realization on the
Collateral.
A-3
<PAGE> 235
3. PLEDGE OF STOCK
3.01 Pledge. To secure the Obligations and for the purposes set
forth in Section 2, the Pledgor hereby pledges to the
Pledgee all of the Pledgor's right, title and interest in
and to the Pledged Stock (and in and to any certificates
or instruments evidencing the Pledged Stock), to be held
by the Pledgee upon the terms and conditions set forth in
this Agreement.
3.02 Registration of Pledge. Contemporaneously with the
execution and delivery of this Agreement, Pledgor shall
direct BCL to (i) register the pledge of the Collateral
pursuant to this Agreement on the BCL share register
promptly after execution of this Agreement, and (ii)
provide the Pledgee, within thirty (30) days of any
written request therefor, with an extract from the share
register of BCL, evidencing the Pledgor's continued
ownership of the Pledged Stock and the registration of the
pledge under this Agreement.
3.03 Certificates. Currently, there are no certificates for the
Pledged Stock. In the event that the Pledged Stock becomes
certificated, the Pledgor will deliver all certificates
representing the Pledged Stock to the Pledgee in pledge
hereunder. The Pledgee will continue to hold such
certificates unless and until requested by the Collateral
Agent to deliver the same, subject always to the
requirements of Applicable Legislation, to the Collection
Agent or its designee to be also held pursuant to the
Senior Note Security Agreement. If the Pledgor shall
acquire (by stock dividend or otherwise) any additional
Stock at any time or from time to time after the date
hereof, the Pledgor shall forthwith pledge and deposit
such Stock with the Pledgee as security and deliver to the
Pledgee any certificates therefor (if such Stock has been
certificated), and promptly thereafter deliver to the
Pledgee a certificate of the Pledgor describing such Stock
and certifying that the same has been duly pledged with
the Pledgee hereunder. The Pledgee will also continue to
hold any such Certificates unless and until directed
otherwise by the Collateral Agent, subject always to the
requirements of Applicable Legislation.
3.04 No Liability. The pledge granted hereby is granted as
security only and shall not subject the Pledgee, the
Trustees, the Collateral Agent or the holders of the Notes
to, or transfer or in any way affect or modify any
obligation or liability of the Pledgor with respect to any
of the Collateral or any transaction in connection
therewith.
3.05 Standard of Care. Beyond the exercise of reasonable care
in the custody of certificated shares in accordance with
Section 3.03, the Pledgee, the Trustees and the Collateral
Agent shall have no duty as to any Collateral in its
possession or control or in the possession or control of
any agent or nominee of any of them or any income or any
other rights pertaining thereto. The
A-4
<PAGE> 236
Pledgee, the Trustees and the Collateral Agent shall each be
deemed to have exercised reasonable care in the custody and
preservation of the certificated shares in its possession if
the certificated shares is accorded treatment substantially
equal to that which it accords its own property.
Notwithstanding the foregoing, nothing contained herein shall
be construed to require insurance of the Collateral by the
Pledgee, the Trustees or the Collateral Agent.
4. DIVIDENDS AND OTHER DISTRIBUTIONS. So long as no Event of Default (as
defined in the Indenture) shall have occurred and be continuing, and subject to
the other terms and conditions hereof, of the Senior Note Security Agreement and
of the Indentures, the Company shall be entitled to receive, and to utilize free
and clear of the pledge created by this Agreement, all dividends and
distributions paid from time to time in respect of the Pledged Stock other than
dividends and distributions in the form of additional shares of Stock to BCL.
Upon the occurrence and during the continuance of an Event of Default (as
defined in the Indentures), all dividends and distributions paid from time to
time in respect of the Pledged Stock shall constitute Collateral and shall be
paid to the Pledgee as collateral agent for the Senior Note Trustee, who shall
thereupon pay the amount to the Collateral Agent (or as the Trustees shall
otherwise jointly direct), and the Pledgor's right to receive such payments
pursuant to the first sentence of this Section 4 shall immediately cease and all
such payments shall be deposited in the Company Senior Note Escrow Account (as
defined in the Senior Note Indenture) or in the Company Convertible Note Escrow
Account (as defined in the Convertible Note Indenture).
5. RIGHTS OF PLEDGEE IN RESPECT OF COLLATERAL.
5.01 Exercise of Shareholder Rights to Pledge Stock. So long as no
Event of Default shall have occurred and be continuing, the
Company shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Stock or any
part thereof for any purpose not inconsistent with the terms
of this Agreement, the Indentures or any other Collateral
Documents (including the Senior Note Security Agreement);
provided that the Company shall not exercise or shall refrain
from exercising any such right if such action would be
inconsistent with or violate any provisions of this Agreement,
the Indenture or any other Collateral Documents (including the
Senior Note Security Agreement).
5.02 Levy of Execution Upon Collateral. Upon the occurrence of an
Event of Default and a judgment by a court of competent
jurisdiction (or other procedures stipulated by Applicable
Legislation), the Pledgee shall be entitled to satisfy all or
any portion of the Obligations by selling, assigning and
delivering, or granting options to purchase, all or any part
of the Collateral, or any interest therein, at any sale in
accordance with the requirements of Applicable Legislation.
A-5
<PAGE> 237
6. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee upon any
sale or other disposition of the Collateral, together with all other moneys
received by the Pledgee in respect of the Collateral, shall be paid to the
Collateral Agent (or as the Trustees shall otherwise jointly direct).
7. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral hereunder,
the receipt of the Pledgee or any duly authorized third party making the sale
shall be a sufficient discharge to the purchaser or purchasers of the Collateral
so sold, and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Pledgee or such
third party or be answerable in any way for the misapplication or
non-application thereof.
8. FURTHER ASSURANCES. The Pledgor shall cooperate with the Pledgee, the
Trustees and the Collateral Agent (and shall direct BCL so to cooperate) in any
and all registrations of such pledge as the Pledgee, the Trustees or the
Collateral Agent may deem necessary or desirable and which shall be possible
under existing and future registration systems or procedures under Applicable
Legislation to perfect and preserve the Pledgee's rights in the Collateral.
Additionally, the Pledgor agrees to do such further acts and to execute and
deliver to the Pledgee such additional powers of attorney, conveyances,
assignments, agreements and instruments as the Pledgee may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to further
assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
9. CONCERNING THE PLEDGEE. The Pledgee shall hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed that the obligations of the Pledgee as
holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement (and the agreement relating to its
appointment as collateral agent for the Trustees). In particular, but without
limiting the generality of the foregoing, the Pledgee shall not be charged with
knowledge of the terms of the Indentures, the Notes, the Senior Note Security
Agreement or any other Collateral Documents, nor shall the Pledgee have any
responsibility for monitoring or ensuring the Pledgor's compliance with such
terms, whether required or contemplated under this Agreement or otherwise.
10. TRANSFER BY THE PLEDGOR. Except as permitted by the Indentures, the
Pledgor shall not (and shall not enter into any agreement to) sell, lease,
exchange, assign or otherwise dispose of, grant any option with respect to, or
create, incur, assume or suffer to exist any encumbrance (except the encumbrance
created by this Agreement and the Senior Note Security Agreement and the other
Collateral Documents) on any portion of the Collateral. Notwithstanding the
foregoing, with the prior written consent of the Pledgee, the Pledgor may, or
may enter into an agreement to, sell all or any portion of the Collateral in a
transaction the proceeds of which will be promptly transferred to the Pledgee
and applied in accordance with the provisions of Article 6 hereof.
A-6
<PAGE> 238
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The
Pledgor represents and warrants that:
(a) it is legal, registered and beneficial owner of, and
has good and marketable title to the shares of Stock
described in Annex A, subject to no encumbrances or
restrictions on transfer (except such encumbrances
and restrictions on transfer created by this
Agreement, the Senior Note Security Agreement and the
other Collateral Documents);
(b) the shares of Stock described in Annex A hereto
constitute one hundred (100%) percent of the
authorized, issued and outstanding shares of Stock of
BCL;
(c) it has full power, authority and legal right to
pledge of all such Stock pursuant to this Agreement;
(d) all the shares of such Stock have been duly and
validly issued, and are fully paid and nonassessable;
(e) there are no restrictions on the pledge of the
Pledged Stock under the terms of the foundation
documents of BCL;
(f) this Agreement together with the Senior Note Security
Agreement create, as security for the Obligations, a
valid and enforceable first priority security
interest in and lien on all of the Collateral, in
favor of the Pledgee and for the benefit of the
Pledgee, provided, that the Pledgee's security
interest may be subordinated to the claims of higher
priority non-secured creditors in certain
circumstances under Applicable Legislation; and
(g) there are no certificates representing the Pledged
Stock.
The Pledgor covenants and agrees that:
(a) it shall defend the Pledgee's right, title and
security interest in and to the Collateral against
the claim and demands of all persons; and
(b) it shall have like title to and right to pledge any
other property at any time hereafter pledged to the
Pledgee as Collateral hereunder.
12. PLEDGOR'S OBLIGATIONS ABSOLUTE. The obligations of the Pledgor under
this Agreement shall be absolute and unconditional and shall remain in full
force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation:
A-7
<PAGE> 239
(a) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of this
Agreement or any exercise or non-exercise of any
right, power or privilege under or in respect of this
Agreement;
(b) any furnishing of any additional security to the
Pledgee or any acceptance thereof or any sale,
exchange, release, surrender or realization of or
upon any security to the Pledgee or any acceptance
thereof or upon any security by the Pledgee;
(c) any invalidity, irregularity or unenforceability of
all or part of the Obligations or of any security
therefor;
(d) any change in the time, manner or place of payment
of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or
any consent to any departure from the Indentures or
any other Collateral Documents;
(e) any exchange, surrender, release or non-perfection of
any liens on any other collateral, or any release or
amendment or waiver of or consent to departure from
any guarantee for all or any of the Obligations; or
(f) any other circumstance which might otherwise
constitute a defense available to, or a discharge of,
the Pledgor in respect of the Obligations or of this
Agreement.
13. ILLEGALITY. Nothing in this Agreement shall require or shall
operate so as to require the Pledgee to take any action that may be
inconsistent with, or in violation of, Applicable Legislation.
14. TERMINATION; RELEASE; REINSTATEMENT.
14.01 Subject to the provisions of Section 14.03 hereof,
this Agreement shall terminate upon payment in full
of (A) the Notes under the terms of the Indentures
and (B) all Obligations then due and owing under the
Indentures, the Notes and the other Collateral
Documents.
14.02 Upon any termination of this Agreement or release of
any Collateral as permitted by the Indenture, the
Pledgee, the Trustees and the Collateral Agent will,
at the expense of the Pledgor, execute and deliver to
the Pledgor such documents and take such other
actions as the Pledgor shall reasonably request to
evidence the termination of this Agreement or the
release of such Collateral, as the case may be. Any
such action taken by the Pledgee, the Trustees and
the Collateral Agents shall be without warranty by or
recourse to the Pledgee, except as to the absence of
any prior unauthorized assignments by the Pledgee
A-8
<PAGE> 240
of its interests in the Collateral, and shall be at
the expense of the Pledgor. The Pledgee may
conclusively rely on any certificate delivered to it
by the Pledgor stating that the execution of such
documents and release of the Collateral is in
accordance with and permitted by the terms of this
Agreement, the Senior Note Security Agreement and the
Indentures.
14.03 This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any
amount received by any of the Trustees, the
Collateral Agents or the holders of the Notes in
respect of the Obligations is rescinded or must
otherwise be restored or returned by such party upon
the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Pledgor or upon the
appointment of any receiver, intervenor, conservator,
trustee or similar official for the Pledgor or any
substantial part of its assets, or otherwise, all as
though such payments had not been made.
15. NOTICES. All notices, approvals, consents or other communications
required or desired to be given hereunder shall be in writing and
delivered in person or mailed by first class mail, postage prepaid,
addressed as follows, or by facsimile transmission:
if to the Pledgor,
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
Canada M5H 1L3
Attention: Chairman
Fax: (416) 979-9754
and if to the Pledgee,
AZOT Internationale Nederlanden Bank Eurasia
Leningradsky Prospect 80
125178 Moscow, Russia
Attention: Alexander Chistiakov
Fax: (7502) 224-5037
16. EXPENSES
16.01 Expenses. The Pledgor agrees that it will promptly
upon demand pay to the Pledgee:
A-9
<PAGE> 241
(a) the amount of any taxes which the Pledgee, or any
of the Trustees or the Collateral Agent may have
been required to pay by reason of the pledge
created hereby, other than taxes based upon the
overall net income of the Pledgee, or such Trustee
or Collateral Agent or to free any of the
Collateral from any encumbrance thereon; and
(b) the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and
disbursements of legal counsel and of any agents or
other experts, which the Pledgee, the Trustees or
the Collateral Agent may incur in connection with
(i) the administration (out of the ordinary course)
of this Agreement, (ii) the collection, sale or
other disposition of any of the Collateral, or
(iii) the exercise by the Pledgee, the Trustees or
the Collateral Agent of any of the rights conferred
upon it hereunder.
16.02 Payment of Expenses. All sums so paid or incurred by the
Pledgee, the Trustees or the Collateral Agent for any of
the foregoing and any and all other sums for which the
Pledgee may become liable hereunder and all costs and
expenses (including reasonable attorney's fees, legal
expenses and court costs) reasonably incurred by the
Pledgee, the Trustees or the Collateral Agent in enforcing
or protecting the pledge created hereby or any of the
rights or remedies under this Agreement, together with
interest thereon until paid at such rate per annum, shall
be additional Obligations.
17. MISCELLANEOUS
17.01 Complete Agreement. Subject to the final sentence of
Section 9 hereof, this Agreement, the Senior Note Security
Agreement, the Indentures, the Notes, the agreement
relating to the appointment of the Pledgee as collateral
agent for the Trustees and the other Collateral Documents
contain the complete agreement of the parties with respect
to the matters covered hereby and supersede any previous
written or oral agreements between the parties.
17.02 Successors. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective
legal successors and assigns of the parties hereto.
17.03 Modification. This Agreement may be changed, waived,
discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
17.04 Severability. Any provision of this Agreement which may be
determined by competent authority to be prohibited or
unenforceable shall be ineffective only to the extent of
such prohibition or unenforceability and shall not
invalidate the remaining provisions thereof.
A-10
<PAGE> 242
17.05 Governing Law. This Agreement shall be governed by the law of
the Russian Federation, without regard to the choice of law or
conflict of laws principles thereof.
17.06 Arbitration. Any dispute, controversy or claim arising out of
or relating to this contract, or the breach, termination or
invalidity thereof, shall be settled by arbitration in
accordance with the UNCITRAL Arbitration Rules as at present
in force. The place of arbitration shall be London, England.
The number of arbitrators shall be one and such arbitrator
shall be appointed by the President for the time being of the
Law Society of England and Wales. The language of arbitration
shall be English.
17.07 Headings. The headings of the several sections and subsections
in this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any
provision of this Agreement.
17.08 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered
shall constitute one and the same instrument.
17.9 Languages. This Agreement may be executed in both the English
and Russian languages and, in the event of any conflict
between the English and Russian language versions, the English
version shall prevail.
A-11
<PAGE> 243
* * * * *
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
PETERSBURG LONG DISTANCE INC.
as Pledgor:
By /s/ JAMES HATT
---------------------------------
Name: James Hatt
Title: Chairman
AOZT INTERNATIONALE NEDERLANDEN BANK EURASIA
as Pledgee:
By /s/ ALEXANDER CHISTAKOV
---------------------------------
Name: Alexander Chistiakov [SEAL]
Title:Risk Manager
By:/s/ DENNIS J. REYNARD
---------------------------------
Name: Dennis J. Reynard
Title: Assistant General Manager
A-12
<PAGE> 244
ANNEX A
PLEDGED STOCK
72,540 Shares with a
Nominal Value of 100 rubles
A-13
<PAGE> 245
Disclosure Schedules to
Indenture
14% Senior Discount Notes Due 2004
Dated as of May 31, 1996
Any item disclosed on one Schedule included herein shall also be deemed
to be disclosed on all other relevant Schedules on which such item should be
disclosed and qualifies all relevant representations set forth in the Indenture.
<PAGE> 246
SCHEDULE 1.1(a)
EXISTING INDEBTEDNESS
1. All intercompany indebtedness existing on the Issue Date, including
intercompany indebtedness in existence as of March 31, 1996, as shown
on the consolidation working schedules used in production of the
consolidated accounts of the Company for the three months ended March
31, 1996. There has been no material increase in this amount since
March 31, 1996, except as described in this Schedule 1.1(a).
2. The Company has advanced to Technocom approximately $1,100,000 since
March 31, 1996.
3. Under the Technocom subscription agreement, the Company has an
obligation to purchase Technocom Preferred Stock in an amount of
$20,000,000, which amount will be paid in full with the net proceeds of
the Convertible Notes.
4. As of March 31, 1996, Technocom owed approximately $8,100,000 to
certain banks. There has been no material increase in this amount since
March 31, 1996.
5. In connection with the Company's acquisition of BCL, the Company has
agreed to an additional capital commitment to BCL of up to $1,500,000,
to the extent such obligation constitutes Indebtedness.
6. In connection with the Company's acquisition of BCL, the Company has an
obligation to pay approximately $2,000,000 representing deferred
consideration to the former shareholders of BCL.
7. Intercompany indebtedness of approximately $5,500,000 from BCL to NWE
Cyprus, acquired in connection with the Company's acquisition of BCL.
8. The Company owes an aggregate amount to Cable & Wireless, as of
December 31, 1995, of approximately $1.8 million under arrangements
whereby Cable & Wireless has provided services to, and met certain
liabilities of, the Company.
<PAGE> 247
SCHEDULE 1.1(b)
SPECIAL PURPOSES PROVISIONS FOR LEASING COMPANIES
"1. Notwithstanding any other provision of this Memorandum of
Association, the Articles of Association or any provision of law that otherwise
so empowers the company, the company shall not, (i) without the prior written
consent of the trustee from time to time ("the Trustee") under any indenture or
similar agreement among Petersburg Long Distance Inc., an Ontario corporation
(together with its successors and assigns, "PLD"), the company, certain other
guarantors and a financial institution acting as a trustee (the "Indenture") or
any related guarantee, collateral documents or similar agreements, if any,
pursuant to which PLD shall issue notes, debentures or bonds and (ii) without
each rating agency then rating the notes, debentures or bonds affirming in
writing that the rating of such notes, debentures or bonds will not be adversely
effective by such action, do any of the following:
(a) engage in any business or activity other than in
connection with or relating to facilitating the issuance of such notes,
debentures or bonds of PLD and other than acquiring Telecommunications Assets
and leasing such Telecommunications Assets to Restricted Subsidiaries or
Qualified Joint Ventures in Russia or Kazakstan pursuant to Telecommunications
Asset Leases and making Qualified Investments in entities primarily engaged in,
or proposing to engage in, the Telecommunications Business in Russia and
Kazakstan;
(b) incur any Indebtedness, or assume or guaranty any
Indebtedness or any other entity, other than in connection with a guarantee (the
"Guarantee") of the notes issued by PLD pursuant to the Indenture and other than
indebtedness evidenced by Intercompany Notes owing to PLD or a special-purpose
corporation constituting a Restricted Subsidiary and a "Leasing Company" (as
such may be defined in the Indenture) which is also a guarantor of the notes
under such Indenture;
(c) commingle its assets with those of any other Person;
(d) dissolve or liquidate, in whole or in part;
(e) consolidate or merge with or into any other entity or
convey or transfer its properties and assets substantially as an entirety to any
other entity, unless:
(i) the entity (if other than the company) formed or
surviving the consolidation or merger or which acquires the
properties and assets of the company is organized and existing
under the laws of Cyprus, Canada or any province or any
subdivision thereof, the United States, any political
subdivision thereof, any state
<PAGE> 248
thereof or the District of Columbia, United Kingdom or
Bermuda, expressly assumes the due and punctual payment of,
and all obligations of the company in connection with
indebtedness of the company, and has Articles of
incorporation, corporate charter or other organizational
documents containing provisions identical to the provisions of
this Paragraph 2 and Paragraph 3; and
(ii) immediately after giving effect to the
transaction, no default or event of default has occurred and
is continuing under any indebtedness of the company or any
agreements relating to such indebtedness; or
(f) without the affirmative vote of 100% of the members of the
Board of Directors of the company, institute proceedings to wind up, liquidate
or be adjudicated a bankrupt or insolvent, or Consent to the institution of
winding up, liquidation, bankruptcy or insolvency proceedings against it, or
file a petition seeking or consent to reorganization or relief under any
applicable law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the company or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due, or take any corporate action in
furtherance of any such action.
2. Notwithstanding any other provision of this Memorandum of
Association, the Articles of Association or any provision of law that otherwise
so empowers the company, the company shall, unless first (i) having received the
prior written consent of each Trustee under any Indenture or any related
guarantee, collateral documents or similar agreements, if any, pursuant to which
PLD shall issue notes, debentures or bonds and (ii) obtaining from each rating
agency then rating the notes, debentures or bonds affirmation in writing that
the rating of such notes, debentures or bonds will not be adversely effective by
such action, do each of the following:
(a) maintain its own bank accounts, payroll and separate books
of account; and
(b) identify itself in all dealings with the public under its
own name and as a separate and distinct entity and not identify itself as being
a division or part of any other Person.
3. At least one director of the company (an "Independent Director")
shall be none of (i) a Director, officer, employee or 10% beneficial owner of
the outstanding common stock, of any Affiliate or other person or entity owning
beneficially more than 10% of the outstanding shares of capital stock of the
company (an "Affiliated Entity") or (ii) a director, officer, employee or 5%
beneficial owner of the outstanding common stock, of any such Affiliated
Entity's subsidiaries or affiliates (other than the company).
-2-
<PAGE> 249
4. The company shall not, without the prior written consent of each
Trustee under any Indenture and of each nationally recognized rating agency
which has rated the Certificates issued pursuant to an Agreement, amend, alter,
change or repeal Paragraphs 1, 2, 4 or this Paragraph 3 of this [Memorandum of
Association].
4. For the purposes of this [Memorandum of Association], the following
terms are defined as follows:
"Affiliate means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling" "under common
control with", and "controlled by"), and as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise, provided,
further, that beneficial ownership of 10% or more of the Voting Stock of a
Person (on a fully diluted basis) shall be deemed to be control.
"Capital Lease Obligation" of any Person means the obligation
to pay rent or other payment amounts under a lease of (or other Indebtedness
arrangement conveying the right to use) real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles.
"Capital Stock" in any Person means any and all shares,
interests, participation or other equivalents in the equity interest (however
designated) in such Person and any rights (other than Indebtedness convertible
into an equity interest), warrants or options to acquire an equity interest in
such Person.
"Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, or otherwise matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the date on which
the notes issued pursuant to the Indenture mature.
"Indebtedness" means at any time (without duplication), with
respect to any Person, whether recourse is to all or a portion of the assets of
such Person, and whether or not contingent, (i) any obligation of such Person
for money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with acquisition of
Property, assets or businesses, excluding trade accounts payable made in the,
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or
-3-
<PAGE> 250
similar facilities issued for the account of such Person, (iv) any obligation of
such Person issued or assumed as the deferred purchase price of Property of
services (but excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business, which in either case are not more than 60 days
overdue or which are being contested in good faith), (v) any Capital Lease
Obligation of such Person, (vi) the maximum fixed redemption or repurchase price
of Disqualified Stock of such Person and (vii) any obligation of the type
referred to in clauses (i) through (vi) of this definition of another Person and
all dividends and distributions of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise.
"Intercompany Notes" means a promissory note representing
Indebtedness of the company owing to PLD or a Restricted Subsidiary, which, if
representing a loan of net proceeds of the notes issued by PLD pursuant to the
Indenture to the company, shall have substantially the same Maturity as the
Notes and substantially same interest payments dates, the same interest rate and
substantially the same covenants as are contained in the Indenture and the
related collateral documents and shall be secured by the applicable
Telecommunications Asset Leases and by the applicable Qualified Investments.
"Investment" in any Person means any direct, indirect or
continent (i) advance or loan to, guarantee of any Indebtedness of, extension of
credit or capital contribution to such Person, (ii) the acquisition of any
shares of Capital Stock, bonds, notes, debentures or other securities of such
Person, or (iii) the acquisition, by purchase or otherwise, of all or
substantially all of the business, assets or stock or other evidence of
beneficial ownership of such Person; provided that Investments shall exclude
accounts receivable and other extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices.
"Joint Venture" means a Telecommunications Company of which
less than 50% of the Voting Stock is held by PLD; provided that the
Telecommunications Business of such Person is principally conducted in Russia
and Kazakstan.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Qualified Investment" means an Investment in a
Telecommunications Company primarily engaged or proposing to engage in the
Telecommunications Business in Russia or Kazakstan.
"Qualified Joint Venture" means a Joint Venture in which PLD
owns directly or indirectly Voting Stock thereof an the Issue Date, which Joint
Ventures are disclosed in a schedule to the indenture, and any further joint
Venture in which PLD owns 20% or more of the Voting Stock thereof.
-4-
<PAGE> 251
"Restricted Subsidiary" means any Subsidiary of PLD that has
not been classified as an "Unrestricted Subsidiary".
"Subsidiary" means, with respect to any Person, (i) any
corporation more than 50% of the outstanding shares of Voting Stock of which is
owned, directly or indirectly, by such Person, or by one or more other
Subsidiaries of such Person, or by such Person and one or more other
Subsidiaries of such Person, (ii) any general partnership, joint venture or
similar entity, more than 50% of the outstanding partnership or similar
interests of which are owned, directly or indirectly, by such Person, or by one
or more other Subsidiaries of such Person, or by such Person and one or more
other Subsidiaries of such Person, (iii) any limited partnership of which such
Person or any Subsidiary of such Person is a general partner and (iv) BECET
International, provided that PLD owns directly or indirectly 50% of the then
outstanding shares of Voting Stock of BECET International.
"Telecommunications Asset Lease" means a lease by the company
y of Telecommunications Assets to Restricted Subsidiaries and Qualified Joint
Venture in Russian and Kazakstan.
"Telecommunications Assets" means, with respect to any Person,
assets (including, without limitation, rights of way, trademarks and licenses to
use copyrighted material), that are utilized by such Person, directly or
indirectly, in a Telecommunications Business. For purposes of determining a
Telecommunications Company but not for purposes of determining whether property
or assets may be subject to a Telecommunications Asset Lease, Telecommunications
Assets shall also include stock, joint venture or partnership interests in
another Person, provided that substantially all of the assets of such other
Person consist of Telecommunications Assets, and provided, further, that if such
stock, joint venture or partnership interests are held by PLD or a restricted
Subsidiary, such other Person either is, or immediately following the relevant
transaction shall become, a Restricted Subsidiary of PLD pursuant to the
Indenture.
"Telecommunications Business" means the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in (i) above or (iii) evaluating, participating or
pursuing any other activity or opportunity that is related to those specified in
(i) or (ii) above and includes, without limitation, any business which PLD and
its Restricted Subsidiaries are currently engaged on the Issue Date.
"Telecommunications Company" means any Person substantially
all of the assets of which consist of Telecommunications Assets.
"Unrestricted Subsidiary" means any Subsidiary of PLD that PLD
has classified as an "Unrestricted Subsidiary," and that has not been
reclassified as a Restricted Subsidiary, pursuant to the terms of the Indenture.
-5-
<PAGE> 252
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or it the times that such class of Capital Stock
has voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such
Person."
-6-
<PAGE> 253
SCHEDULE 1.1(c)
EXISTING AGREEMENTS TO MAKE INVESTMENTS
1. Under the Technocom subscription agreement, the Company has an
obligation to purchase Technocom Preferred Stock in an amount of
$20,000,000, which amount will be paid in full with the net proceeds of
the Convertible Notes.
2. In connection with the Company's acquisition of BCL, the Company has
agreed to an additional capital commitment to BCL of up to $1,500,000.
3. Technocom has expended approximately $2,400,000 in acquiring telephone
lines in Moscow which it will contribute to MTR-Sviaz.
<PAGE> 254
SCHEDULE 1.1(d)
EXISTING LIENS
None.
<PAGE> 255
SCHEDULE 1.1(e)
EXISTING QUALIFIED JOINT VENTURES
1. The Company owns a 10.4% equity interest (effectively a 13.8% voting
interest) in St. Petersburg Intercity & International Telephone
("SPMMTS").
2. Technocom holds a 41.83% interest in Teleport-TP, 38.5% directly and
3.33% indirectly through its 66.67% beneficial interest in Roscomm
Limited, a Guernsey company.
3. Technocom holds a 49% beneficial interest in MTR-Sviaz, a joint venture
between Technocom and AO Mosenergo, the Moscow city power utility.
Technocom holds 40% of this interest through its wholly-owned
subsidiary, Rosh Communications.
<PAGE> 256
SCHEDULE 4.14
EXISTING DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES
(a) Unanimous shareholder approval of Technocom is required to effect major
dispositions of assets of Technocom. Ordinary share transfers are
subject to approval of 75% of the shareholders and a right of first
refusal of the non-transferring shareholders, except for transfers to a
"holding company" (as defined therein), a subsidiary of a shareholder
or any subsidiary of such holding company.
(b) Pursuant to the Subscription and Shareholder Agreement Relating to
Technocom Limited, the approval of Elite International Limited and
Plicom Limited is required before Technocom may make any distribution
or pay any dividend other than dividends payable to holders of
Technocom Preferred Stock.
(c) The BECET joint venture agreement provides that a joint venture partner
may not sell, assign, pledge or otherwise transfer its shares without
the written consent of the other partner prior to February 4, 1999.
After February 4, 1999, such interest may be transferred provided that
the transferee agrees to be bound by the terms of the joint venture
agreement creating BECET. The BECET charter provides for similar
restrictions, but requires the approval of 75% of the holders of shares
in the joint venture.
(d) The BECET charter provides that dividends may be established at a
meeting of the General Assembly (as defined therein). To the extent
that WTC owns a 50 percent equity interest in BECET, its ability to
cause BECET to declare dividends may be restricted.
(e) The BECET charter provides a right of first refusal for newly issued
shares.
(f) The PeterStar charter and foundation agreement provide a right of first
refusal on newly issued shares and a right of first refusal in the
event of a transfer of shares.
<PAGE> 257
SCHEDULE 4.16
EXISTING CONTRACTS WITH AFFILIATES
1. Cable & Wireless has provided services to, and met certain liabilities
of, the Company. The aggregate amount owing to Cable & Wireless under
these arrangements, as of December 31, 1995, was approximately $1.8
million, which will be repaid under an agreed repayment schedule.
2. Cable & Wireless has guaranteed a revolving credit facility of the
Company with CIBC, a Canadian chartered bank. The facility totals $22.5
million and is being returned on the Issue Date. This guarantee expires
July 31, 1996.
3. Cable & Wireless provides a variety of insurance coverage for the
Company, its Subsidiaries and certain Affiliates of the Company and its
Subsidiaries.
4. The Company has granted certain demand and piggy-back registration
rights for the registration of the Company's Common Shares to Cable &
Wireless and Dominion Capital Inc.
5. Teleport-TP leases the AT&T Intelsat earth stations and 5ESS switching
equipment and certain ancillary equipment from Technocom pursuant to
ten-year leases.
6. Teleport-TP leases equipment related to the Eutelsat ground station,
purchased by Technocom from Hughes Network Systems, Inc., from
Technocom pursuant to an eight year lease.
7. Teleport-TP has agreed to lease certain equipment, to be purchased by
Technocom from Scientific-Atlanta, from Technocom.
8. MTR-Sviaz has entered into lease agreements with Technocom to lease
switching equipment installed by MTR-Sviaz.
9. By agreement with SPMMTS, PeterStar acts as a transmission mechanism
for incoming and outgoing traffic between the SPMMTS long distance and
international gateway and the local public network of Petersburg
Telephone System ("PTS").
10. PeterStar has an agreement with SPMMTS under which PeterStar provides
operator assistance services and SPMMTS provides PeterStar with access
to SPMMTS "07" (long distance) operators.
<PAGE> 258
11. PeterStar has several interconnect agreements with PTS governing the
interconnection between the PeterStar network and the PTS public
network.
12. BECET has several interconnect agreements with Kazaktelekom governing
the interconnection between the BECET network and the Kazaktelekom
public network.
-2-
<PAGE> 259
SCHEDULE A TO THE SENIOR NOTE INDENTURE
"Special Interest" shall include the amount of interest
payable pursuant to this paragraph in the event of the failure of the Company to
procure, on or before July 12, 1996, a recognized financial institution with
capital of not less than $10,000,000 organized under the laws of the Republic of
Ireland which the Convertible Note Trustee may lawfully appoint as a Qualified
Foreign Collateral Agent (as defined in Section 7.3 of this Indenture) (the
"Procurement") with respect to Technocom Preferred Stock, any payments thereon
and any property substituted therefor (the "Subject Collateral") pursuant to an
agreement under which such Qualified Foreign Collateral Agent will agree not to
resign without the contemporaneous appointment of a successor Qualified Foreign
Collateral Agent (the "Prescribed Agreement"). Commencing on July 12, 1996, if
the Company has failed to make the Procurement, the Company agrees to pay to
each Holder of the Notes additional interest in an amount equal to 1% per annum
on the principal amount at Stated Maturity of such Holder's Notes, accruing for
each day until the Procurement is made or Technocom or a successor is
reorganized under the laws of Cyprus and a successor Qualified Foreign
Collateral Agent has been appointed in respect of the Subject Collateral (the
"Reorganization") under a Prescribed Agreement. Such Special Interest on the
Notes shall be payable in cash semi-annually in arrears at the times and in the
manner provided for in the Indenture, provided that for this purpose, Section
2.11 of the Indenture shall be read to include as Interest Payment Dates, as
applicable, June 1 and December 1 of each year, commencing December 1, 1996.
Such Special Interest shall cease to accrue upon the Procurement or the
Reorganization taking place and all accrued and unpaid Special Interest shall be
paid to each Holder of the Notes on the next Interest Payment Date with respect
thereto. Any Special Interest payable pursuant to this Schedule shall be in
addition to any Special Interest that may be payable pursuant to paragraph (a)
of the definition of Special Interest contained in Section 1.1 of this
Indenture.
Schedule A - 1
<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
PETERSBURG LONG DISTANCE INC.
AS ISSUER
AND
NWE CAPITAL (CYPRUS) LIMITED
PLD ASSET LEASING LIMITED
PLD CAPITAL LIMITED
BALTIC COMMUNICATIONS LIMITED
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
AS GUARANTORS
$26,500,000
9% CONVERTIBLE SUBORDINATED NOTES DUE 2006
--------------------------------------------
INDENTURE
DATED AS OF MAY 31, 1996
--------------------------------------------
THE BANK OF NEW YORK,
TRUSTEE
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS REFERENCE TABLE
Reconciliation and tie between the Trust Indenture Act of 1939,
as amended, and the Indenture, dated as of May 31, 1996
TRUST
INDENTURE
ACT INDENTURE
SECTION SECTION
Section 310 (a)(1) ....................................... 7.10
(a)(2) ....................................... 7.10
(a)(3) ....................................... N.A.
(a)(4) ....................................... N.A.
(a)(5) ....................................... 7.10
(b) ....................................... 7.8; 7.10
(c) ....................................... N.A.
Section 311 (a) ....................................... 7.11
(b) ....................................... 7.11
(c) ....................................... N.A.
Section 312 (a) ....................................... 7.6(a); 7.6(b)
(b) ....................................... 7.6(c)
(c) ....................................... 7.6(d)
Section 313 (a) ....................................... 7.6(e)
(b) ....................................... N.A.
(c) ....................................... 7.6(e); 7.6(f)
(d) ....................................... 7.6
Section 314 (a) ....................................... 4.20; 4.21
(b) ....................................... 11.2
(c)(1) ....................................... 11.4
(c)(2) ....................................... 11.4
(c)(3) ....................................... N.A.
(d) ....................................... 11.4
(e) ....................................... 11.5
(f) ....................................... N.A
Section 315 (a) ....................................... 7.1(b)
(b) ....................................... 7.5(a)
(c) ....................................... 7.1(a)
(d) ....................................... 7.1(c)
(e) ....................................... 6.10
Section 316 (a) ....................................... 2.8
(a)(1)(A) ....................................... 6.5
(a)(1)(B) ....................................... 6.4
(a)(2) ....................................... N.A.
i
<PAGE> 3
(b) ....................................... 6.7
(c) ....................................... 9.5
Section 317 (a)(1) ....................................... N.A.
(a)(2) ....................................... 6.8
(b) ....................................... 2.4
Section 318 (a) ....................................... 11.1
(b) ....................................... N.A
(c) ....................................... 11.1
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
ii
<PAGE> 4
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions........................................ 1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.. 23
SECTION 1.3 Rules of Construction.............................. 23
SECTION 1.4 Form of Documents Delivered to Trustee............. 24
SECTION 1.5 Acts of Holders; Record Dates...................... 25
ARTICLE II THE NOTES
SECTION 2.1 Form and Dating.................................... 27
SECTION 2.2 Execution and Authentication....................... 29
SECTION 2.3 Registrar and Paying Agent......................... 30
SECTION 2.4 Paying Agent to Hold Money in Trust................ 31
SECTION 2.5 Global Note........................................ 31
SECTION 2.6 Transfer and Exchange.............................. 32
SECTION 2.7 Replacement Notes.................................. 35
SECTION 2.8 Outstanding Notes.................................. 35
SECTION 2.9 Temporary Notes.................................... 36
SECTION 2.10 Cancellation...................................... 36
SECTION 2.11 Payment of Interest; Interest Rights Preserved.... 36
SECTION 2.12 Authorized Denominations.......................... 38
SECTION 2.13 Computation of Interest, etc...................... 38
SECTION 2.14 Persons Deemed Owners............................. 38
SECTION 2.15 CUSIP Numbers..................................... 39
ARTICLE III REDEMPTION
SECTION 3.1 Notice to Trustee.................................. 39
SECTION 3.2 Selection of Notes to be Redeemed.................. 39
SECTION 3.3 Notice of Redemption............................... 40
SECTION 3.4 Effect of Notice of Redemption..................... 41
SECTION 3.5 Deposit of Redemption Price........................ 41
SECTION 3.6 Notes Redeemed in Part............................. 41
SECTION 3.7 Optional Redemption................................ 42
ARTICLE IV COVENANTS
SECTION 4.1 Payment of Notes................................... 43
SECTION 4.2 Maintenance of Office or Agency.................... 44
SECTION 4.3 Money for the Note Payments to be Held in Trust.... 44
SECTION 4.4 Corporate Existence................................ 45
SECTION 4.5 Maintenance of Property............................ 45
SECTION 4.6 Payment of Taxes and Other Claims.................. 45
i
<PAGE> 5
PAGE
SECTION 4.7 Repurchase at the Option of Holders
upon a Change of Control.............. 45
SECTION 4.8 Limitation on Asset Sales.......................... 48
SECTION 4.9 Limitation on Issuances of Guarantees by
Restricted Subsidiaries............... 54
SECTION 4.10 Restricted and Unrestricted Subsidiaries.......... 54
SECTION 4.11 Reports........................................... 55
SECTION 4.12 Compliance Certificate; Notice of Default or
Event of Default...................... 55
SECTION 4.13 Payment of Additional Amounts..................... 56
SECTION 4.14 Repurchase at the Option of Holders upon a
Termination of Trading................ 58
SECTION 4.15 Leasing Companies and NWE Cyprus.................. 60
SECTION 4.16 Technocom......................................... 60
SECTION 4.17 Collateral Agents................................. 60
SECTION 4.18 WTC............................................... 60
ARTICLE V CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.1 Merger, Consolidation, Sale of Assets, Etc......... 61
SECTION 5.2 Successor Corporation Substituted.................. 62
ARTICLE VI DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default.................................. 63
SECTION 6.2 Acceleration....................................... 65
SECTION 6.3 Other Remedies..................................... 67
SECTION 6.4 Waiver of Past Defaults............................ 68
SECTION 6.5 Control by Majority................................ 68
SECTION 6.6 Limitation on Suits................................ 68
SECTION 6.7 Rights of Holders to Receive Payment............... 69
SECTION 6.8 Trustee May File Proofs of Claim................... 69
SECTION 6.9 Priorities......................................... 70
SECTION 6.10 Undertaking for Costs............................. 71
SECTION 6.11 Waiver of Stay or Extension Laws.................. 71
SECTION 6.12 Trustee May Enforce Claims Without
Possession of the Notes............... 71
SECTION 6.13 Restoration of Rights and Remedies................ 72
SECTION 6.14 Rights and Remedies Cumulative.................... 72
SECTION 6.15 Delay or Omission Not Waiver...................... 72
ii
<PAGE> 6
PAGE
ARTICLE VII TRUSTEE
SECTION 7.1 Duties of Trustee.................................. 72
SECTION 7.2 Rights of Trustee.................................. 73
SECTION 7.3 Concerning the Trustee, Collateral Agents, and
Collateral Held by Collateral Agents........... 74
SECTION 7.4 Trustee's Disclaimer............................... 76
SECTION 7.5 Notice of Defaults................................. 76
SECTION 7.6 Preservation of Information; Reports by Trustee
to Holders..................................... 77
SECTION 7.7 Compensation and Indemnity......................... 78
SECTION 7.8 Replacement of Trustee............................. 80
SECTION 7.9 Successor Trustee by Merger........................ 83
SECTION 7.10 Eligibility; Disqualification..................... 83
SECTION 7.11 Preferential Collection of Claims Against Company. 84
ARTICLE VIII DEFEASANCE
SECTION 8.1 Company's Option to Effect Legal Defeasance
or Covenant Defeasance......................... 85
SECTION 8.2 Legal Defeasance and Discharge..................... 85
SECTION 8.3 Covenant Defeasance................................ 86
SECTION 8.4 Conditions to Defeasance or Covenant Defeasance.... 86
SECTION 8.5 Deposited Money and U.S. Government Obligations
to be Held in Trust: Miscellaneous Provisions.. 88
SECTION 8.6 Repayment to Company............................... 89
SECTION 8.7 Reinstatement...................................... 89
ARTICLE IX AMENDMENTS
SECTION 9.1 Without Consent of Holders......................... 89
SECTION 9.2 With Consent of Holders............................ 90
SECTION 9.3 Effect of Supplemental Indentures.................. 92
SECTION 9.4 Compliance with Trust Indenture Act................ 92
SECTION 9.5 Revocation and Effect of Consents and Waivers...... 92
SECTION 9.6 Changed Terms of Notes............................. 92
SECTION 9.7 Trustee to Execute Supplemental Indentures......... 92
SECTION 9.8 Solicitation of Consents........................... 93
iii
<PAGE> 7
PAGE
ARTICLE X GUARANTEES
SECTION 10.1 Guarantees........................................ 94
SECTION 10.2 Limitation of Guarantor's Liability............... 96
SECTION 10.3 Execution and Delivery of Guarantees.............. 97
SECTION 10.4 When a Guarantor May Merge, etc................... 97
SECTION 10.5 Additional Guarantors............................. 97
SECTION 10.6 Release of a Guarantor............................ 98
ARTICLE XI COLLATERAL AND SECURITY
SECTION 11.1 Collateral Documents.............................. 98
SECTION 11.2 Recording and Opinions............................100
SECTION 11.3 Further Assurances and Security...................100
SECTION 11.4 Possession, Use and Release of Collateral.........101
SECTION 11.5 Certificates of the Company.......................103
SECTION 11.6 Authorization of Actions to be Taken by the
Trustee Under the Collateral Documents.........104
SECTION 11.7 Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents.................104
SECTION 11.8 Possession, Use and Release of
Senior Note Collateral.........................104
ARTICLE XII SUBORDINATION OF NOTES
SECTION 12.1 Notes Subordinated to Senior Indebtedness.........111
SECTION 12.2 Payment Over of Proceeds Upon
Dissolution, Etc...............................112
ARTICLE XIII CONVERSION OF NOTES
SECTION 13.1 Conversion Privilege and Conversion Price;
Reset Penalty..................................118
SECTION 13.2 Exercise of Conversion Privileges.................120
SECTION 13.3 Fractions of Shares...............................121
SECTION 13.4 Adjustment of Conversion Price....................121
SECTION 13.5 Notice of Adjustments of Conversion Price.........129
SECTION 13.6 Notice of Certain Corporate Action................130
SECTION 13.7 Company to Reserve Common Stock...................131
SECTION 13.8 Taxes on Conversions..............................131
SECTION 13.9 Covenant as to Common Stock.......................131
SECTION 13.10 Cancellation of Converted Notes..................131
SECTION 13.11 Provisions as to Consolidation, Merger or
Sale of Assets.................................131
SECTION 13.12 Prohibition upon Conversion in Certain
Circumstances..................................132
iv
<PAGE> 8
PAGE
ARTICLE XIV SATISFACTION AND DISCHARGE
SECTION 14.1 Satisfaction and Discharge........................133
SECTION 14.2 Application of Trust Money........................134
SECTION 14.3 Repayment to the Company..........................134
SECTION 14.4 Reinstatement.....................................135
ARTICLE XV MISCELLANEOUS
SECTION 15.1 Trust Indenture Act Controls......................135
SECTION 15.2 Notices...........................................135
SECTION 15.3 Communications by Holders with Other Holders......136
SECTION 15.4 Certificate and Opinion as to Conditions Precedent136
SECTION 15.5 Statements Required in Certificate or Opinion.....136
SECTION 15.6 Rules by Trustee, Paying Agent and Registrar......137
SECTION 15.7 Payments on Business Days.........................137
SECTION 15.8 Governing Law; Submission to Jurisdiction.........137
SECTION 15.9 Legal Proceedings.................................137
SECTION 15.10 Service of Process...............................137
SECTION 15.11 Waiver of Immunities.............................138
SECTION 15.12 Judgment Currency; Currency Indemnity............138
SECTION 15.13 No Recourse Against Others.......................139
SECTION 15.14 Successors.......................................139
SECTION 15.15 Counterparts.....................................139
SECTION 15.16 Table of Contents; Headings......................139
SECTION 15.17 Severability.....................................140
SECTION 15.18 Further Instruments and Acts.....................140
EXHIBIT A FORM OF GLOBAL NOTE
EXHIBIT B FORM OF CERTIFICATED NOTE
EXHIBIT C REGISTRATION AGREEMENT
EXHIBIT D COMPANY CONVERTIBLE NOTE ESCROW AGREEMENT
EXHIBIT E COMPANY CONVERTIBLE NOTE SECURITY AGREEMENT
SCHEDULE 1.1(b) SPECIAL PURPOSES PROVISIONS, FOR LEASING
COMPANIES
SCHEDULE 1.1(d) EXISTING LIENS
SCHEDULE A TO THE CONVERTIBLE NOTE INDENTURE
v
<PAGE> 9
INDENTURE, dated as of May 31, 1996, between PETERSBURG LONG DISTANCE
INC., an Ontario corporation (the "Company"), as issuer, NWE CAPITAL (CYPRUS)
LIMITED, a Cypriot corporation ("NWE Cyprus"), PLD ASSET LEASING LIMITED, a
Cypriot corporation ("PLD Leasing"), PLD CAPITAL LIMITED, a Cypriot corporation
("PLD Capital"), WIRELESS TECHNOLOGY CORPORATIONS LIMITED, a British Virgin
Islands corporation ("WTC") and BALTIC COMMUNICATIONS LIMITED, a Russian joint
stock company of the closed type ("BCL"), as Guarantors, and THE BANK OF NEW
YORK, a New York banking corporation, as trustee hereunder (the "Trustee").
RECITALS
The Company has duly authorized the creation and issue of its 9%
Convertible Subordinated Notes due 2006 (the "Notes") of substantially the tenor
and amount hereinafter set forth; and to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid instrument of the Company and the Guarantors, in accordance with their
respective terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and the purchase of the Notes by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
"Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
but excluding Indebtedness which is extinguished, retired or repaid in
connection with such other Person merging with or into or becoming a Subsidiary
of such specified Person.
"Act" when used with respect to any Holder, has the meaning set forth
in Section 1.5 hereof.
"Additional Amounts" has the meaning set forth in Section 4.13 hereof.
<PAGE> 10
"Adjusted Net Assets" of a Guarantor at any date means the amount by
which the fair value of the assets and Property of such Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under its
Guarantee, of such Guarantor at such date.
"Affiliate" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person; provided that each Unrestricted Subsidiary shall be deemed to be an
Affiliate of the Company and of each other Subsidiary of the Company; provided
that, except for purposes of Sections 2.8, 4.1 and 10.6 hereof, neither the
Company nor any of its Wholly-Owned Restricted Subsidiaries shall be deemed to
be Affiliates of each other. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "under common
control with," and "controlled by"), and as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise; provided,
further, that beneficial ownership of 10% or more of the Voting Stock of a
Person (on a fully diluted basis) shall be deemed to be control.
"Agent Member" has the meaning set forth in Section 2.5(a) hereof.
"Aggregate Unused Proceeds" has the meaning set forth in Section 4.8(d)
hereof.
"Asset Sale" means, with respect to any Person, any transfer,
conveyance, sale, lease, amalgamation or other disposition (including, without
limitation, dispositions pursuant to any consolidation, amalgamation or merger)
by such Person or any of its Restricted Subsidiaries to any Person other than to
such Person or a Restricted Subsidiary of such Person, in one transaction, or a
series of related transactions (each hereinafter referred to as a
"Disposition"), of (a) Capital Stock of or other equity interests in any
Restricted Subsidiary (other than directors' qualifying shares), (b) all or
substantially all of the assets of any division or line of business of such
Person or of any of the Restricted Subsidiaries or (c) Property or assets of
such Person or any of its Restricted Subsidiaries, the Fair Market Value of
which exceeds $1,000,000, other than (i) a Disposition of Property in the
ordinary course of business consistent with industry practice, (ii) a
Disposition of Eligible Cash Equivalents, (iii) a Disposition that constitutes a
Restricted Payment permitted under Section 4.13 of the Senior Note Indenture as
in effect on the Issue Date, (iv) a Disposition by Technocom of all of its
assets and liabilities to a newly-formed corporation organized in a jurisdiction
other than Ireland formed to acquire such assets and owned in a substantially
identical proportion and manner as Technocom is owned (and the preferential
$20,000,000 dividend and liquidation, dissolution or winding-up rights of the
Technocom Preferred Stock on the Issue Date are not changed) immediately prior
to such Disposition and such Disposition does not adversely affect the
perfection or priority of the Liens in the Technocom Preferred Stock, (v) a
Disposition by WTC of its interest in BECET to NWE Cyprus in connection with a
winding up or a liquidation of WTC, and (vi) a Disposition by the Company in
connection with a transaction permitted pursuant to Article V hereof.
-2-
<PAGE> 11
"Asset Sale Offer" has the meaning set forth in Section 4.8(c) hereof.
"Asset Sale Payment Date" has the meaning set forth in Section
4.8(e)(ii) hereof.
"BECET" means BECET International, a Kazak joint stock company of the
closed type.
"Board of Directors" means the Board of Directors of the Company or any
Guarantor or any committee thereof duly authorized to act on behalf of such
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law, executive order or regulation to close.
"Cable & Wireless" means Cable and Wireless plc, an English
corporation.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Indebtedness
arrangement conveying the right to use) real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with GAAP
and the stated maturity thereof shall be the date of the last payment of rent or
any amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Capital Stock" in any Person means any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than Indebtedness convertible into an
equity interest), warrants or options to acquire an equity interest in such
Person.
"Cash Proceeds" means, with respect to any Asset Sale or issuance or
sale of Capital Stock by any Person, the aggregate consideration received in
respect of such sale or issuance by such Person in the form of cash or Eligible
Cash Equivalents; provided that with regard to an Asset Sale, any liabilities
(as shown on the Company's or such Restricted Subsidiary's most recent balance
sheet or in the notes thereto) of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the Notes, the
Guarantees, the Senior Notes and the guarantees under the Senior Note Indenture)
which are assumed by the transferee of any such assets and from which the
Company and such Restricted Subsidiary are completely released shall be deemed
Cash Proceeds.
"Certificated Notes" means Notes issued in definitive, fully registered
form to beneficial owners of interests in the Global Note pursuant to Section
2.6(b) hereof.
-3-
<PAGE> 12
"Change of Control" shall be deemed to occur if (i) the sale,
conveyance, transfer or lease, whether direct or indirect, of all or
substantially all of the assets of the Company or the Company and the Restricted
Subsidiaries taken as a whole to any "Person" or "group" (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to
either of the foregoing, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of Rule
13d-5(b)(i) under the Exchange Act) (other than any Wholly-Owned Restricted
Subsidiary of the Company) shall have occurred; (ii) any "Person" or "group"
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any
successor provision to either of the foregoing, including any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(i) under the Exchange Act), other than any Permitted Holder,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of more than 50% of the total voting power of all classes of the Voting Stock of
the Company and/or warrants or options to acquire such Voting Stock, calculated
on a fully diluted basis, and such voting power percentage is greater than or
equal to the total voting power percentage then beneficially owned by the
Permitted Holders in the aggregate; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election or appointment by such board 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.
"Change of Control Offer" has the meaning set forth in Section 4.7(a)
hereof.
"Change of Control Payment Date" has the meaning set forth in Section
4.7(b)(ii) hereof.
"Change of Control Purchase Price" has the meaning set forth in Section
4.7(a) hereof.
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock means the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on The Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on such automated quotation system but
the issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange
Act) and the principal securities exchange on which such shares are listed or
admitted to trading is a Designated Offshore Securities Market (as defined in
Rule 902(a) under the Securities Act), the average of the reported closing bid
and asked prices regular way on such principal exchange, or, if such shares are
not listed or admitted to trading on any national securities exchange or quoted
on such automated quotation system and the issuer and principal securities
exchange do not meet such requirements, the average of the closing bid and asked
prices in the over-the-
-4-
<PAGE> 13
counter market as furnished by any New York Stock Exchange member firm that is
selected from time to time by the Company for that purpose and is reasonably
acceptable to the Trustee.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all "collateral" referred to in the Collateral
Documents and all other Property or assets that become subject to a Lien in
favor of the Trustee or a collateral agent for the benefit of the Trustee and
the holders of the Notes and, if the Senior Notes are outstanding and the Senior
Note Indenture so requires, for the benefit of the Senior Note Trustee and the
Holders of the Senior Notes, but Collateral shall not include Senior Note
Collateral.
"Collateral Documents" means the Company Convertible Note Security
Agreement, the Company Convertible Note Escrow Account Agreement and/or any
other document creating a Lien that secures the Notes or the Guarantees other
than the Senior Note Collateral Documents.
"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this Indenture such commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, the body performing such duties at such time.
"Common Stock" includes any stock of any class of any person which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of such person
and which is not subject to redemption by such person, including, without
limitation, the Company's Common Shares, without par value. However, subject to
the provisions of Section 13.11, shares issuable on conversion of the Notes
shall include only shares of the class designated as Common Shares of the
Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the party named as such in the preamble to this
Indenture unless and until a successor replaces it pursuant to the applicable
provisions hereof and, thereafter, means such successor.
"Company Convertible Note Escrow Account" means the escrow account
established under the Company Convertible Note Escrow Account Agreement among
the Company, the Trustee, the Senior Note Trustee and the escrow agent named
therein.
-5-
<PAGE> 14
"Company Convertible Note Escrow Agreement" means the Company
Convertible Note Escrow Account Agreement among the Company, the Trustee, the
Senior Note Trustee and the Escrow Agent named therein, in the form attached
hereto as Exhibit D.
"Company Convertible Note Security Agreement" means the Company
Convertible Note Security and Pledge Agreement among the Company, the Trustee,
the Senior Note Trustee and the collateral agent, named herein, in the form
attached hereto as Exhibit E.
"Company Order" means a written order signed in the name of the Company
by (i) its Chairman of the Board, its President, its Chief Executive Officer,
its Chief Operating Officer, a Vice Chairman or a Vice President, and (ii) its
Chief Financial Officer, its Treasurer, and Assistant Treasurer, its Secretary
or an Assistant Secretary.
"Company Senior Note Security Agreement" means the Company Senior Note
Security and Pledge Agreement among the Company, the Senior Note Trustee, the
Trustee and the collateral agent named therein, in the form attached as an
exhibit to the Senior Note Indenture.
"Company Senior Note Escrow Account" means the escrow account
established under the Company Senior Note Escrow Account Agreement.
"Company Senior Note Escrow Account Agreement" means the Company Senior
Note Escrow Account Agreement among the Company, the Senior Note Trustee, the
Trustee and the escrow agent named therein, in the form attached as an exhibit
to the Senior Note Indenture.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person and its Restricted Subsidiaries, as
determined on a consolidated basis in accordance with GAAP, less amounts
attributable to Disqualified Stock of such Person.
"Constituent Person" has the meaning set forth in Section 13.11 hereof.
"conversion price" has the meaning set forth in Section 13.1 hereof.
"Conversion Reset" has the meaning set forth in Section 13.1 hereof.
"Conversion Reset Period" has the meaning set forth in Section 13.1
hereof.
"Conversion Reset Price" has the meaning set forth in Section 13.1
hereof.
"Convertible Note Shares Shelf Registration Statement" means the
Convertible Note Shares Shelf Registration Statement of the Company pursuant to
the provisions of the Registration Agreement that covers the issuance, or to the
extent not permitted by applicable law, the resale of all of the shares of
Common Stock issuable upon conversion of the Notes to the extent and in the
manner provided therein on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and
-6-
<PAGE> 15
supplements to such registration statement, including post-effective amendments,
and in each case including the Prospectus contained therein, all-exhibits
thereto and all material incorporated by reference therein.
"Convertible Note Shelf Registration Statement" means the Convertible
Note Shelf Registration Statement of the Company pursuant to the provisions of
the Registration Agreement relating to all Notes and are subject to restrictions
on transfer.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date of execution of this Indenture,
located at 101 Barclay Street, Floor 21-W, New York, New York 10286, Attention:
Corporate Trust Department.
"Covenant Defeasance" has the meaning set forth in Section 8.3 hereof.
"Current Market Price" has the meaning set forth in Section 13.4(f)
hereof.
"Default" means any event, act or condition, the occurrence of which
is, or after notice or the passage of time or both would be, an Event of
Default.
"Default Amount" has the meaning set forth in Section 6.2 hereof.
"Defaulted Interest" has the meaning set forth in Section 2.11 hereof.
"Defeasance" has the meaning set forth in Section 8.2 hereof.
"Depositary" means The Depository Trust Company, its nominees, and
their respective successors.
"Disposition" has the meaning set forth in the definition of "Asset
Sale" in this Section 1.1.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the date on which
the Notes mature.
"Dominion Resources" means Dominion Resources Inc.
"Eligible Cash Equivalents" 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)
-7-
<PAGE> 16
time deposits, certificates of deposit, or Eurodollar deposits of any commercial
bank organized in the United States having capital and surplus in excess of
$500,000,000 or a commercial bank organized under the laws of any other country
that is a member of the Organization for Economic Cooperation and Development
("OECD") and has total assets in excess of $500,000,000 with a maturity date not
more than one year from the date of acquisition, (iii) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing, or subject to tender
at the option of the holder thereof, within ninety days after the date of
acquisition thereof and, at the time of acquisition having a rating of A or
better from Standard & Poor's or A-2 or better from Moody's, (v) commercial
paper issued by the parent corporation of any commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 or a
commercial bank organized under the laws of any other country that is a member
of the OECD and has total assets in excess of $500,000,000 and commercial paper
issued by non-bank issuers rated A-1 by Standard & Poor's or P-1 by Moody's and
in each case maturing within 270 days after the date of acquisition, (vi)
overnight bank deposits and bankers' acceptances at any commercial bank
organized in the United States having capital and surplus in excess of
$500,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD and has total assets in excess of $500,000,000,
(vii) deposits available for withdrawal on demand with a commercial bank
organized in the United States having capital and surplus in excess of
$500,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD and has total assets in excess of $500,000,000,
(viii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) through (vi), and (ix)
with respect to a Restricted Subsidiary conducting operations in the Russian
Federation or Kazakstan, demand deposits, certificates of deposit and bank
promissory notes denominated in Russian Roubles or Kazak Tenge, as the case may
be, and used for ordinary course of business operations by such Restricted
Subsidiary solely in the jurisdiction where such Restricted Subsidiary does
business.
"Event of Default" has the meaning set forth in Section 6.1 hereof.
"Excess Proceeds" has the meaning set forth in Section 4.8(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Rate Obligation" means, with respect to any Person, any
currency swap agreements, forward exchange rate agreements, foreign currency
futures or options, exchange rate collar agreements, exchange rate insurance and
other agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates.
-8-
<PAGE> 17
"Excluded Holder" has the meaning set forth in Section 4.13 hereof.
"'ex' date," (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Prices
were obtained without the right to receive such issuance or distribution, (ii)
when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular way
on such exchange or in such market after the last time that tenders or exchanges
may be made pursuant to such tender or exchange offer (as it shall have been
amended).
"Expiration Time" shall have the meaning set forth in Section 13.4(f)
hereof.
"Extraordinary Cash Dividend" shall have the meaning set forth in
Section 13.4(d) hereof.
"Fair Market Value" means, with respect to any asset or Property, the
net sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy, as determined in good faith by the
Board of Directors of the Company or a Restricted Subsidiary, as applicable.
"Final Memorandum" means the final Offering Memorandum, dated May 24,
1996, used in connection with the Initial Placement, as supplemented on June 6,
1996.
"Five Year Date" means the fifth anniversary of the Issue Date.
"GAAP" means United States generally accepted accounting principles,
consistently applied, as 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 may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination; provided that, except as otherwise specifically provided, all
calculations made for purposes of determining compliance with the terms of the
provisions of the Indenture shall utilize GAAP as in effect on the Issue Date.
"Global Note" has the meaning set forth in Section 2.1(c) hereof.
"guarantee" means any direct or indirect obligation, contingent or
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person
-9-
<PAGE> 18
in any manner (and "guaranteed", "guaranteeing" and "guarantor" shall have
meanings correlative to the foregoing).
"Guarantee" means a guarantee of a Guarantor pursuant to Article X.
"Guaranteed Indebtedness" has the meaning set forth in Section 4.9
hereof.
"Guarantor" means NWE Cyprus, PLD Leasing, PLD Capital, WTC and BCL,
any other Leasing Company, any Person that becomes a Wholly-Owned Subsidiary of
the Company after the Issue Date and any other Subsidiaries that guarantee any
Indebtedness of an Obligor.
"Holder" means (i) in the case of any Certificated Note, the Person in
whose name such Certificated Note is registered in the Note Register, (ii) in
the case of any Global Note, the Depositary and (iii) in the case of the Senior
Notes any Person constituting a Holder (as such term is defined in the Senior
Note Indenture).
"Indebtedness" means at any time (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with acquisition of
Property, assets or businesses, excluding trade accounts payable made in the
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business, which in either case are not more than 60 days overdue or which are
being contested in good faith), (v) any Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person and, to the extent held by other Persons, the maximum fixed
redemption or repurchase price of Disqualified Stock of such Person's Restricted
Subsidiaries, at the time of determination, (vii) the notional amount of any
Interest Hedging Obligations or Exchange Rate Obligations of such Person at the
time of determination, (viii) any Attributable Indebtedness with respect to any
Sale and Leaseback Transaction to which such Person is a party and (ix) any
obligation of the type referred to in clauses (i) through (viii) of this
definition of another Person and all dividends and distributions of another
Person the payment of which, in either case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise.
"Indenture" means this Indenture as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this Indenture and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Indenture, and any such supplemental indenture,
respectively.
-10-
<PAGE> 19
"Independent Financial Expert" shall have the meaning set forth in
Section 13.4(i) hereof.
"Initial Placement" means the initial sales of the Notes by the Initial
Purchaser.
"Initial Purchaser" means the Initial Purchaser, as such term is
defined in the Purchase Agreement.
"Intercompany Notes" means a promissory note representing Indebtedness
of a Restricted Subsidiary owing to the Company or a Restricted Subsidiary
provided that all of the proceeds of any intercompany loan made to a Leasing
Company with Collateral shall be utilized by such Leasing Company to make a
Qualified Investment.
"Interest Hedging Obligation" means, with respect to any Person, an
obligation of such Person pursuant to any interest rate swap agreement, interest
rate cap, collar or floor agreement or other similar agreement or arrangement
designed to protect against or manage such Person's or any of its Restricted
Subsidiaries' exposure to fluctuations in interest rates.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"International Vendor Indebtedness" means Indebtedness of the Company
or any Restricted Subsidiary other than the Leasing Companies or NWE Cyprus
incurred or assumed in connection with the purchase within 180 days of such
incurrence or assumption of Property or assets to be used in the business of
such Person or any of its Restricted Subsidiaries in the Russian Federation or
Kazakstan; provided that the net cash proceeds from the issuance of such
Indebtedness do not exceed 100% of the lesser of the cost or Fair Market Value
of the Property or assets constructed or acquired.
"Inventory" means, with respect to any Person, all present or future
inventory in which a Person has any interest, including goods, wares and
merchandise held for sale or lease or leased or furnished or to be leased or
furnished under a contract of service and all of a Person's present and future
raw materials, work in process, finished goods, parts, components, assemblies,
and packing and shipping materials, wherever located, and documents of title
representing any of the above.
"Investment" in any Person means any direct, indirect or contingent (i)
advance or loan to, guarantee of any Indebtedness of, or extension of credit or
capital contribution to, such Person, (ii) acquisition of any shares of Capital
Stock, bonds, notes, debentures or other securities of such Person, or (iii)
acquisition, by purchase or otherwise, of all or substantially all of the
business, assets or stock or other evidence of beneficial ownership of such
Person; provided that Investments shall exclude accounts receivable and other
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices. The amount of an Investment shall be the original cost
of such Investment, plus the cost of all additions thereto and minus the amount
of any portion of such Investment repaid to such Person in cash as a
-11-
<PAGE> 20
repayment of principal or a return of capital, as the case may be, but without
any other adjustments for increases or decrease in value, or write-ups,
write-downs or write-offs with respect to such Investment. In determining the
amount of any Investment involving a transfer of any Property other than cash,
such Property shall be valued at its Fair Market Value at the time of such
transfer.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under this Indenture, being June 12, 1996.
"Joint Venture" means a Telecommunications Company of which less than
50 percent of the Voting Stock is held by the Company, provided that the
Telecommunications Business of such Person is principally conducted in the
Russian Federation and/or Kazakstan.
"junior securities" has the meaning set forth in Section 12.15 hereof.
"Leasing Company" means a special purpose Cypriot corporation which is
a Guarantor and a Wholly-Owned Restricted Subsidiary organized for the limited
purpose of acquiring Telecommunications Assets and leasing such
Telecommunications Assets to Restricted Subsidiaries pursuant to
Telecommunications Asset Leases and/or making Qualified Investments permitted by
this Indenture. Each Leasing Company will have corporate organizational
documents containing the provisions set forth on Schedule 1.1(b) attached
hereto. Each Leasing Company must execute a Leasing Company Security Agreement
and a Leasing Company Escrow Account Agreement.
"Leasing Company Escrow Account" means an escrow account established
pursuant to a Leasing Company Escrow Account Agreement.
"Leasing Company Escrow Account Agreement" means a Leasing Company
Escrow Account Agreement among the Leasing Company party thereto, the Senior
Note Trustee, the Trustee and the escrow agent named therein in the form
attached as an exhibit to the Senior Note Indenture.
"Leasing Company Security Agreement" means a Leasing Company Security
and Pledge Agreement among the Leasing Company party thereto, the Senior Note
Trustee, the Trustee and the collateral agent named therein, in the form
attached as an exhibit to the Senior Note Indenture.
"Lien" means, with respect to any Property or other asset, any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien (statutory or other), charge, easement, encumbrance,
preference, priority or other security or similar agreement or preferential
arrangement of any nature whatsoever on or with respect to such Property or
other asset (including, without limitation, any conditional sale or title
retention agreement having substantially the same economic effect as any of the
foregoing).
-12-
<PAGE> 21
"Maturity" means, when used with respect to a Note, the date on which
the principal of such Note becomes due and payable as provided therein or in
this Indenture, whether at Stated Maturity, on the Change of Control Payment
Date or purchase date established pursuant to the terms of the Indenture with
regard to a Change of Control Offer, an Asset Sale Offer or an offer to
repurchase upon a Termination of Trading of the Common Stock of the Company, as
applicable, or by declaration of acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc., or, if Moody's
Investors Service, Inc. shall cease rating the specified debt securities and
such ratings business with respect thereto shall have been transferred to a
successor Person, such successor Person; provided that if Moody's Investors
Service, Inc. ceases rating the specified debt securities and its ratings
business with respect thereto shall not have been transferred to any successor
Person or such successor Person is Standard & Poor's, then "Moody's" shall mean
any other nationally recognized rating agency (other than Standard & Poor's)
that rates the specified debt securities selected by the Trustee.
"NASD" means the National Association of Securities Dealers, Inc.
"Navona" means Navona Communications Corporation, Ltd., a wholly-owned
indirect Subsidiary of Cable & Wireless.
"Net Cash Proceeds" means, with respect to the sale of any Property or
assets by any Person or any of its Restricted Subsidiaries, Cash Proceeds (other
than any liabilities assumed by the transferee constituting Cash Proceeds
referred to in the proviso contained in the definition of "Cash Proceeds" set
forth in this Section 1.1) received, net of (i) all reasonable out-of-pocket
expenses of such Person or such Restricted Subsidiary incurred in connection
with such sale, including, without limitation, all legal, title and recording
tax expenses, commissions and other fees and expenses incurred (but excluding
any finder's fee or broker's fee payable to any Affiliate of such Person) and
all federal, state, foreign and local taxes arising in connection with such sale
that are paid or required to be accrued as a liability under GAAP by such Person
or its Restricted Subsidiaries, (ii) all payments made or required to be made by
such Person or its Restricted Subsidiaries on any Indebtedness which is secured
by such Properties or other assets in accordance with the terms of any Lien upon
or with respect to such Properties or other assets or which must, by the terms
of such Lien, or in order to obtain a necessary consent to such transaction or
by applicable law, be repaid in connection with such sale and (iii) all
contractually required distributions and other payments made to minority
interest holders (but excluding distributions and payments to Affiliates of such
Person) in Restricted Subsidiaries of such Person as a result of such
transaction; provided that, in the event that any consideration for a
transaction (which would otherwise constitute Net Cash Proceeds) is required to
be held in escrow pending determination of whether a purchase price adjustment
will be made, such consideration (or any portion thereof) shall become Net Cash
Proceeds only at such time as it is released to such Person or its Restricted
Subsidiaries from escrow; provided, further, that any non-cash consideration
received in connection with any transaction, which is subsequently converted to
cash, shall be deemed to be Net Cash Proceeds at such time, and shall thereafter
be applied in accordance with this Indenture.
-13-
<PAGE> 22
"nonelecting share" shall have the meaning set forth in Section 13.11.
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.3 hereto.
"Notes" has the meaning set forth in the Recitals to this Indenture and
more particularly means any of the Notes authenticated and delivered under this
Indenture.
"NWE Cyprus" means NWE Capital (Cyprus) Limited, a Cypriot corporation
and Wholly- Owned Subsidiary of the Company.
"NWE Cyprus Senior Note Security and Pledge Agreement" means the NWE
Cyprus Senior Note Security and Pledge Agreement among NWE Cyprus, the Senior
Note Trustee, the Trustee and the collateral agent named therein in the form
attached as an exhibit to the Senior Note, Indenture.
"Obligors" means the Company and the Guarantors, collectively;
"Obligor" means any of the Obligors, singly.
"Offer Purchase Price" has the meaning set forth in Section 4.8(c)
hereof.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, its Chief Executive Officer, its Chief
Operating Officer, the President or a Vice President, and by the Chief Financial
Officer, its Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, a Guarantor or a Restricted Subsidiary, as applicable,
and delivered to the Trustee, which shall comply with this Indenture.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or a Guarantor (including inside counsel of the Company
or a Guarantor), and who shall be acceptable to the Trustee.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any), interest (including Additional Amounts, if
any, and Special Interest, if any) on, or other amounts in respect of, any Notes
on behalf of the Company.
"Permitted Holders" means Cable & Wireless, Navona and Dominion
Resources and their respective Affiliates (other than the Company and the
Restricted Subsidiaries).
"Permitted Liens" means (i) Liens created by this Indenture and the
Collateral Documents or that otherwise secure the payment of the Notes, the
Guarantees and the other obligations under this Indenture and the Collateral
Documents, and liens created by the Senior Note Indenture or the Senior Note
Collateral Documents or which otherwise secure the payment of the Senior Notes
and the other obligations under the Senior Note Indenture, the guarantees
contained therein and the Senior Note Collateral Documents; (ii) Liens on
Property or assets of
-14-
<PAGE> 23
a Person existing at the time such Person is merged into or consolidated with
the Company or any Restricted Subsidiary of the Company or becomes a Restricted
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not secure any Property
or assets of the Company or any of its Restricted Subsidiaries other than the
Property or assets subject to the Liens prior to such merger or consolidation;
(iii) Liens on Property or assets existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary, provided that such Liens were not
given in contemplation of such acquisition; (iv) Liens to secure the payment of
all or a part of the purchase price or construction cost of Property or assets
acquired or constructed in the ordinary course of business after the Issue Date,
provided that the Indebtedness secured by such Liens shall not exceed the lesser
of 80% of the cost or Fair Market Value of the Property or assets acquired or
constructed and such Liens shall not extend to any other Property or assets; (v)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases not constituting Capitalized Lease Obligations, statutory or regulatory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business consistent with industry
practice; (vi) Liens existing as of the Issue Date and disclosed in Schedule
1.1(d) to the Senior Note Indenture; (vii) Liens on Receivables and Inventory of
the Company and its Restricted Subsidiaries provided so long as the Senior Note
Indenture is not satisfied and discharged, such Liens secure Indebtedness
permitted to be incurred under the Senior Note Indenture; (viii) any Lien on
Property of the Company in favor of the United States of America or any state
thereof, or any instrumentality of either, to secure certain payments pursuant
to any contract or statute; (ix) any Lien for taxes or assessments or other
governmental charges or levies not then due and payable (or which, if due and
payable, are being contested in good faith and for which adequate reserves are
being maintained, to the extent required by GAAP); (x) easements, rights-of-way,
licenses and other similar restrictions on the use of Properties or minor
imperfections of title that, in the aggregate, are not material in amount and do
not in any case materially detract from the Properties subject thereto or
interfere with the ordinary conduct of the business of the Company or its
Restricted Subsidiaries; (xi) any Lien to secure obligations under workmen's
compensation laws or similar legislation, including any Lien with respect to
judgments which are not currently dischargeable; (xii) any statutory
warehousemen's, materialmen's or other similar Liens for sums not then due and
payable (or which, if due and payable, are being contested in good faith and
with respect to which adequate reserves are being maintained, to the extent
required by GAAP); (xiii) Liens to secure any International Vendor Indebtedness,
provided that such Liens do not extend to any Property or assets other than the
Property or assets the acquisition of which was financed by such Indebtedness;
(xiv) Liens in favor of the Company or any Wholly-Owned Restricted Subsidiary,
including Liens securing the Intercompany Notes and the Telecommunications Asset
Leases; (xv) Liens in favor of Technocom securing any leases by Technocom of
Telecommunications Assets to its Restricted Subsidiaries; (xvi) Liens in favor
of a Restricted Subsidiary which is a lessee under a Telecommunications Asset
Lease securing a sublease of such Telecommunications Assets to its Restricted
Subsidiary; (xvii) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other Property relating to such
letters of credit and the products and proceeds thereof; and (xviii) Liens to
secure any permitted extension, renewal, refinancing or refunding (or successive
extensions, renewals, refinancings or refundings), in
-15-
<PAGE> 24
whole or in part, of any Indebtedness secured by Liens referred to in the
foregoing clauses (ii) and (iii), provided that such Liens do not extend to any
other Property or assets and the principal amount of the Indebtedness secured by
such Liens is not increased.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Pledged Stock" means all of the Capital Stock of each of the Leasing
Companies, BCL, NWE Cyprus, WTC and any other future Wholly-Owned Subsidiary of
the Company or future Guarantor, and any and all dividends, distributions,
payments and proceeds thereof.
"Predecessor Security" means, with respect to any particular Security,
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.7 in exchange for a
mutilated Security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Stock" means, as applied to the Capital Stock of any person,
Capital Stock of such person of any class or classes (however designated) that
ranks prior as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
person, to shares of Capital Stock of any other class of such person.
"Private Placement Legend" means the legend in the form set forth in
Section 2.1(d)(i) hereof.
"Process Agent" has the meaning set forth in Section 15.10 hereof.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, excluding Capital Stock in any other Person.
"Purchase Agreement" means the Purchase Agreement relating to the Notes
and Units described therein, dated May 24, 1996, between the Company and the
Initial Purchaser.
"Purchased Shares" shall have the meaning set forth in Section 13.4(f)
hereof.
"Qualified Investment" means an Investment in a Telecommunications
Company primarily engaged or proposing to engage in the Telecommunications
Business in the Russian Federation or Kazakstan.
"Qualified Joint Venture" means a Joint Venture in which the Company
owns directly or indirectly Voting Stock thereof on the Issue Date, and any
future Joint Venture in which the Company owns 20% or more of the Voting Stock
thereof.
-16-
<PAGE> 25
"Qualified Stock" of any Person means a class of Capital Stock other
than Disqualified Stock.
"Receivables" means, with respect to any Person, all of the following
Property and interests in Property of such Person, whether now existing or
existing in the future or hereafter acquired or arising: (i) accounts, (ii)
accounts receivable, including, without limitation, all rights to payment
created by or arising from sales of goods, leases of goods or the rendition of
services no matter how evidenced, whether or not earned by performance, (iii)
all unpaid seller's or lessor's rights including, without limitation,
rescission, replevin, reclamation and stoppage in transit, relating to any of
the foregoing or arising therefrom, (iv) all rights to any goods or merchandise
represented by any of the foregoing after creation of the foregoing, including,
without limitation, returned or repossessed goods, (v) all reserves and credit
balances with respect to any such accounts receivable or account debtors, (vi)
all letters of credit, security or guarantees for any of the foregoing, (vii)
all insurance policies or reports relating to any of the foregoing, (viii) all
collection or deposit accounts relating to any of the foregoing, (ix) all
proceeds of any of the foregoing, and (x) all books and records relating to any
of the foregoing.
"Record Date" means, for the interest payable on any Interest Payment
Date, the date specified in Section 2.11 hereof.
"Record Expiration Date" has the meaning set forth in Section 1.5
hereof.
"Redemption Date" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the date fixed for redemption of such Notes
pursuant to the terms of the Notes and this Indenture.
"Redemption Price" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the price fixed for redemption of such Note
pursuant to the terms of the Notes and this Indenture, plus accrued and unpaid
interest thereon, if any (including Additional Amounts, if any, and Special
Interest, if any), to the Redemption Date.
"Registrable Securities" shall mean the Notes and the Common Stock
issuable upon the conversion thereof; provided that the Notes and such Common
Stock shall cease to be Registrable Securities when (i) in the case of the
Notes, a Note Shelf Registration Statement with respect to the Notes shall have
been declared effective under the Securities Act and the Notes shall have been
disposed of pursuant to such Note Shelf Registration Statement, (ii) (A) in the
case of the Common Stock, except as otherwise provided in clause (ii)(B), a
Convertible Note Shelf Registration Statement with respect to such Common Stock
shall have been declared effective under the Securities Act and such Common
Stock shall have been disposed of pursuant to such Convertible Note Shelf
Registration Statement, or (B) in the case of any Common Stock actually issued
upon conversion of Notes, a Convertible Note Shelf Registration Statement with
respect to the issuance of such Common Stock shall have been declared effective
under the Securities Act and, following the issuance thereof, such Common Stock
is not subject to restrictions on transfer pursuant to the Securities Act, (iii)
the Notes or such Common Stock may
-17-
<PAGE> 26
be distributed to the public pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144A under the Securities Act) under the Securities
Act or (iv) the Notes or such Common Stock shall have ceased to be outstanding.
"Registrar" has the meaning set forth in Section 2.3 hereof.
"Registration Agreement" means the Registration Rights Agreement
relating to the Notes, dated as of May 31, 1996, between the Company and the
Initial Purchaser, substantially in the form attached hereto as Exhibit C.
"Related Proceeding" has the meaning set forth in Section 15.9 hereof.
"Required Filing Date" has the meaning set forth in Section 4.11
hereof.
"Repurchase Date" has the meaning set forth in Section 4.14(a) hereof.
"Repurchase Price" has the meaning set forth in Section 4.14(a) hereof.
"Replacement Assets" has the meaning set forth in Section 4.8(b)
hereof.
"Replacement Telecommunication Assets" has the meaning set forth in
Section 4.8(b) hereof.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been classified as an "Unrestricted Subsidiary."
"Revolving Credit Facilities" means revolving credit agreements to
which the Company and the Restricted Subsidiaries are or become parties, and all
related amendments, notes, collateral documents, guarantees, instruments and
other agreements executed in connection therewith, as the same may be amended,
modified, supplemented, restated, renewed, extended, refinanced, substituted or
replaced from time to time.
"Rule 144" means Rule 144 under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.
-18-
<PAGE> 27
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Indebtedness" means all obligations of the Company under the
Senior Notes, the Senior Note Indenture, the guarantees contained in the Senior
Note Indenture and the Senior Note Collateral Documents.
"Senior Note Asset Sale Offer" has the meaning set forth in Section
4.8(b)(iv) hereof.
"Senior Note Collateral" means all "collateral" referred to in the
Senior Note Collateral Documents and all other Property or assets that become
subject to a Lien in favor of the Senior Note Trustee or a collateral agent for
the benefit of the Senior Trustee and the holders of the Senior Notes and, if
the Senior Notes are outstanding and the Senior Note Indenture so requires, for
the benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of Senior Notes, but Senior Note Collateral shall not include the
Collateral.
"Senior Note Collateral Documents" means the Company Senior Note
Security Agreement, the Company Senior Note Escrow Account Agreement, the
Leasing Company Security Agreements, the Leasing Company Escrow Agreements, the
NWE Cyprus Senior Note Security and Pledge Agreement and/or any other document
creating a Lien that secures the Senior Notes or the guarantees contained in the
Senior Note Indenture other than the Collateral Documents, all as such documents
are defined or otherwise described in the Senior Note Indenture.
"Senior Note Indenture" means the Indenture, dated the date hereof,
among the Company, the Guarantors and The Bank of New York, as trustee
thereunder, relating to the Senior Notes, as amended and supplemented from time
to time.
"Senior Note Trustee" means The Bank of New York, as trustee under the
Senior Note Indenture and any successor appointed in accordance with the terms
thereof.
"Senior Notes" means the 14% Senior Discount Notes due 2004 of the
Company to be issued pursuant to the Senior Note Indenture.
"Significant Restricted Subsidiary" means a Restricted Subsidiary that
is a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under
the Securities Act and the Exchange Act.
"Special Interest" means (a) such additional interest as is specified
as such in paragraph 4(a) of each Note and the Registration Agreement, and/or
(b) such additional interest as is specified as such in paragraph 4(b) of each
Note and Schedule A to this Indenture.
"Special Record Date" means a date fixed by the Trustee pursuant to
Section 2.11 for the payment of Defaulted Interest.
-19-
<PAGE> 28
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc., or if Standard & Poor's Ratings Group shall cease rating
the specified debt securities and such ratings ceases with respect thereto shall
have been transferred to a successor Person, such successor Person, provided
that if Standard & Poor's Ratings Group ceases rating the specified debt
securities and its ratings business with respect thereto shall not have been
transferred to any successor Person or such successor Person is Moody's, then
"Standard & Poor's" shall mean any other materially recognized rating agency
selected by the Trustee.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred), and, when used with respect
to any installment of interest on such security, the fixed date on which such
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation
more than 50% of the outstanding shares of Voting Stock of which is owned,
directly or indirectly, by such Person, or by one or more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries of such
Person, (ii) any general partnership, joint venture or similar entity, more than
50% of the outstanding partnership or similar interests of which are owned,
directly or indirectly, by such Person, or by one or more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries of such
Person, or (iii) any limited partnership of which such Person or any Subsidiary
of such Person is a general partner, and (iv) with respect to the Company or any
Restricted Subsidiary, BECET, provided that the Company owns directly or
indirectly 50% of the then outstanding shares of Voting Stock of BECET.
"Surviving Entity" has the meaning set forth in Section 5.1 hereof.
"Suspension Event" means any event which makes any statement made in
the Note Shelf Registration Statement or the related prospectus untrue in any
material respect or which requires the making of any changes in the Note Shelf
Registration Statement or prospectus in order to make the statements therein not
misleading.
"Technocom" means Technocom Limited, an Irish corporation and a
Restricted Subsidiary, including any transferee in a Disposition contemplated by
clause (iv) of the definition of "Asset Sale" set forth in this Section 1.1.
"Technocom Preferred Stock" means all Preferred Stock of Technocom
owned directly or indirectly by the Company.
"Telecommunications Asset Lease" means a lease by a Leasing Company of
Telecommunications Assets to Restricted Subsidiaries and Qualified Joint
Ventures in the Russian Federation and Kazakstan.
-20-
<PAGE> 29
"Telecommunications Assets" means, with respect to any Person, assets
(including, without limitation, rights of way, trademarks and licenses to use
copyrighted material), that are utilized by such Person, directly or indirectly,
in a Telecommunications Business. For purposes of determining a
Telecommunications Company, but not for purposes of determining whether Property
or assets may be subject to a Telecommunications Asset Lease, Telecommunications
Assets shall also include stock, joint venture or partnership interests in
another Person, provided that substantially all of the assets of such other
Person consist of Telecommunications Assets, and provided, further, that if such
stock, joint venture or partnership interests are held by the Company or a
Restricted Subsidiary, such other Person either is, or immediately following the
relevant transaction shall become, a Restricted Subsidiary of the Company
pursuant to this Indenture. The determination of what constitutes
Telecommunication Assets shall be made by the Board of Directors of the Company
and evidenced by a Board Resolution delivered to the Trustee.
"Telecommunications Business" means the business of (i) transmitting,
or providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing or
marketing communications related network equipment, software and other devices
for use in (i) above or (iii) evaluating, participating or pursuing any other
activity or opportunity that is related to those specified in (i) or (ii) above
and includes, without limitation, any business which the Company and its
Restricted Subsidiaries are currently engaged on the Issue Date.
"Telecommunications Company" means any Person substantially all of the
assets of which consist of Telecommunications Assets.
"Temporary Notes" has the meaning set forth in Section 2.9 hereof.
"Termination of Trading" has the meaning set forth in Section 4.14
hereof.
"Total Common Equity" of any person means, as of any day of
determination, the product of (a) the aggregate number of outstanding primary
shares of Common Stock of such person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such person) and (b) the average Closing Price of such Common
Stock over the 20 consecutive Trading Days immediately preceding such day. If no
such Closing Price exists with respect to shares of any such class, the value of
such shares for purposes of clause (b) of the preceding sentence shall be
determined by the Board of Directors in good faith and evidenced by a written
opinion as to such value issued by an investment banking firm of recognized
national standing.
"Total Market Capitalization" of any person means, as of any day of
determination, the sum of (a) the consolidated indebtedness of such person and
its Subsidiaries on such day, plus (b) the product of (i) the aggregate number
of outstanding primary shares of Common Stock of such person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of Common Stock of such person other than, in the case
-21-
<PAGE> 30
of the Company, any shares of Preferred Stock of the Company, that, as of the
day of determination, cannot, pursuant to the terms thereof as in effect on the
date of this Indenture, be required to be redeemed by the Company in cash, and
(ii) the average Closing Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day, plus (c) the liquidation value of
any outstanding shares of Preferred Stock of such person on such day. If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (b) for the preceding sentence shall be determined
by the Company's Board of Directors in good faith and evidenced by a written
opinion as to such value issued by an investment banking firm of recognized
national standing.
"Trading Day" means, with respect to a securities exchange or automated
quotation system, a day on which such exchange or system is open for a full day
of trading.
"Trigger Event" shall have the meaning set forth in Section 13.4(g)
hereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Section Section 77aaa-77bbbb) as in effect on the date of this Indenture except
as required by Section 9.4 hereof, provided that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939,
as so amended.
"Trust Officer" means any Vice President, Assistant Vice President,
Secretary, Assistant Secretary, Treasurer or Assistant Treasurer of the Trustee
assigned by the Trustee to administer this Indenture or any other officer
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means such successor.
"U.S. Government Obligations" means (x) securities that are (i) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which in either case are not callable or redeemable at the
option of the issuer thereon, and (y) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (x) above and held
by such bank for the account of the holder of such depository receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the
-22-
<PAGE> 31
specific payment of principal or interest of the U.S. Government Obligation
evidenced by such depository receipt.
"Unrestricted Subsidiary" means any Subsidiary of the Company that the
Company has classified as an "Unrestricted Subsidiary," and that has not been
reclassified as a Restricted Subsidiary, pursuant to the terms of this
Indenture.
"Voting Stock" means, with respect to any Person, any class or classes
of Capital Stock in such Person entitling the holders thereof (whether at all
times or at the times that such class of Capital Stock has voting power by
reason of the happening of any contingency) to vote in the election of members
of the board of directors or comparable body of such Person.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary,
all of the outstanding Capital Stock (other than directors' qualifying shares)
of which are owned, directly or indirectly, by the Company.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms incorporated by reference in
this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or other
obligor on the Notes, if any.
All other Trust Indenture Act terms used or incorporated by reference
in this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act reference to another statute or defined by Commission rule have
the meanings assigned to them therein.
SECTION 1.3 Rules of Construction. Unless context otherwise requires:
(a) the words "herein," "hereof" and "hereunder," and other
words of similar import, refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(b) "or" is not exclusive;
-23-
<PAGE> 32
(c) a term has the meaning assigned to it;
(d) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(e) words in the singular include the plural, and words in the
plural includes the singular;
(f) provisions apply to successive events and transactions;
(g) the principal amount of any non-interest bearing or other
discount security (other than the Senior Notes), at any date shall be
the principal amount thereof that would be shown on a balance sheet of
the issuer dated such date prepared in accordance with GAAP;
(h) when used with respect to the Senior Notes, the term
"principal amount" shall mean the principal amount thereof at the
Stated Maturity of such principal amount; and
(i) unless otherwise expressly provided herein, the principal
amount of any Preferred Stock shall be the greater of (i) the maximum
liquidation value of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred
Stock.
SECTION 1.4 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or a Guarantor
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or a Guarantor stating
that the information with respect to such factual matters is in the possession
of the Company or such Guarantor, as applicable, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
-24-
<PAGE> 33
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.5 Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company and
the Guarantors. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 7.1) conclusive in favor of
the Trustee, the Company and the Guarantors, if made in the manner provided in
this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
an acknowledgment of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than such signer's individual capacity, such
certificate or affidavit shall also constitute sufficient proof of the signer's
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Notes shall be proved by the Note Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company or the Guarantors
in reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of outstanding Notes entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Notes, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
outstanding Notes on such record date, and no other Holders, shall be entitled
to take the relevant actions whether or not such Holders remain
-25-
<PAGE> 34
Holders after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Record Expiration Date by
Holders of the requisite principal amount of outstanding Notes on such record
date; and provided, further, that for the purpose of determining whether Holders
of the requisite principal amount of such Notes have taken such action, no Note
shall be deemed to have been outstanding on such record date unless it is also
outstanding on the date such action is to become effective. Nothing in this
paragraph shall prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), nor shall anything in
this paragraph be construed to render ineffective any action taken by Holders of
the requisite principal amount of outstanding Notes on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Company at its own expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Record Expiration Date to be given to the
Trustee in writing and to each Holder of Notes in the manner set forth in
Section 15.2 hereof.
The Trustee may set any day as a record date for the purpose of
determining the Holders of outstanding Notes entitled to join in the giving or
making of (i) any notice of Default under Section 6.1(d) or (i) hereof, (ii) any
declaration of acceleration referred to in Section 6.2 hereof, (iii) any request
to institute proceedings referred to in Section 6.6 hereof or (iv) any direction
referred to in Section 6.5 hereof. If any record date is set pursuant to this
paragraph, the Holders of outstanding Notes on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Record Expiration Date by Holders of the requisite
principal amount of outstanding Notes on such record date; and provided,
further, that for the purpose of determining whether Holders of the requisite
principal amount of such Notes have taken such action, no Security shall be
deemed to have been outstanding on such record date unless it is also
outstanding on the date such action is to become effective. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be cancelled and of no
effect), nor shall anything in this paragraph be construed to render ineffective
any action taken by Holders of the requisite principal amount of outstanding
Notes on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the matter(s) to be submitted for potential action
by Holders and the applicable Record Expiration Date to be given to the Company
in writing and to each Holder of Notes in the manner set forth in Section 15.2
hereof.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Record
Expiration Date" and from time to time may change the Record Expiration Date to
any earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Record Expiration Date is given to the other party
hereto in writing, and to each Holder of Notes in the manner set forth in
Section 15.2 hereof, on or before the existing Record Expiration Date. If a
Record Expiration Date is not
-26-
<PAGE> 35
designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Record Expiration Date
with respect thereto, subject to its right to change the Record Expiration Date
as provided in this paragraph. Notwithstanding the foregoing, no Record
Expiration Date shall be later than the 180th day after the applicable record
date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Note may do so with regard to all
or any part of the principal amount of such Note or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating.
(a) The Notes, with the notation of the Guarantees endorsed thereon and
the certificate of authentication of the Trustee thereon, shall be substantially
in the form of Exhibit A or Exhibit B hereto, as applicable, which are hereby
incorporated in and expressly made a part of this Indenture.
(b) The Notes may have such letters, numbers or other marks of
identification and such legends and endorsements, stamped, printed, lithographed
or engraved thereon, (i) as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, (ii) as may be required to
comply with this Indenture, any law or any rule of any securities exchange on
which the Notes may be listed and (iii) as may be necessary to conform to
customary usage. Each Note shall be dated the date of its authentication by the
Trustee.
(c) The Notes, with the notation of the Guarantees endorsed thereon,
shall be issued initially in the form of a permanent, global note in definitive,
fully registered form, without coupons, substantially in the form of Exhibit A
hereto (the "Global Note"). Upon issuance, such Global Note shall be duly
executed by the Company, with the endorsement of Guarantees thereon executed by
the Guarantors, and authenticated by the Trustee as hereinafter provided and
deposited with the Trustee as custodian for the Depositary. Any Certificated
Note that may be issued pursuant to Section 2.6(b) hereof, shall be issued in
the form of a note in definitive, fully registered form, without coupons,
substantially in the form set forth in Exhibit B hereof. Upon issuance, any such
Certificated Note shall be duly executed by the Company, with the endorsement of
Guarantees therein executed by the Guarantors, and authenticated by the Trustee
as hereinafter provided.
(d) The following legends shall appear on each Global Note and each
Certificated Note as indicated below:
-27-
<PAGE> 36
(i) Except as provided in Section 2.6(a)(iii) hereof, each
Global Note and Certificated Note shall bear the following legend on
the face thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND THE PROVINCES OF CANADA.
(ii) Each Global Note shall bear the following legend on the
face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO
PETERSBURG LONG DISTANCE INC. OR THE REGISTRAR FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS HAS BEEN
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.6 OF THE INDENTURE, DATED AS OF MAY 31,
1996, AMONG PETERSBURG LONG DISTANCE INC., CERTAIN
CORPORATIONS ACTING AS GUARANTORS AND
-28-
<PAGE> 37
NAMED THEREIN AND THE TRUSTEE NAMED THEREIN, PURSUANT TO WHICH
THIS NOTE WAS ISSUED.
(e) Definitive Notes shall be typed, printed, lithographed or engraved
or produced by any combination of such methods or produced in any other manner
permitted by the rules of any securities exchange on which such Notes may be
listed, all as determined by the officers of the Company executing such Notes,
as evidenced by their execution of such Notes.
SECTION 2.2 Execution and Authentication. The Notes shall be issued in
a single series. The aggregate principal amount of Notes outstanding at any time
shall not exceed $26,500,000 except as provided in Section 2.7 hereof. The Notes
shall be executed by manual or facsimile signature on behalf of the Company by
its Chief Executive Officer, its Chief Operating Officer, its President or any
Vice President or either its Secretary or any Assistant Secretary (but not
both). The Company's corporate seal shall be reproduced or imprinted on the
Notes by facsimile or otherwise, and shall be attested by the Company's
Secretary or one of its Assistant Secretaries, in each case by manual or
facsimile signature. The Notes shall have the notation relating to the
Guarantees executed by each Guarantor in the manner provided for in Section 10.3
hereof and endorsed thereon.
In case any officer of the Company whose signature shall have been
placed upon any of the Notes shall cease to be such officer of the Company
before authentication of such Notes by the Trustee and the issuance and delivery
thereof, such Notes may, nevertheless, be authenticated by the Trustee and
issued and delivered with the same force and effect as though such Person had
not ceased to be such officer of the Company.
Notwithstanding any other provision hereof, the Trustee shall
authenticate and deliver Notes only upon receipt by the Trustee of an Officers'
Certificate and Opinion of Counsel complying with Sections 15.4 and 15.5 hereof
with respect to satisfaction of all conditions precedent contained in this
Indenture to authentication and delivery of such Notes.
Upon compliance by the Company with the provisions of the previous
paragraph, the Trustee shall, upon receipt of a Company Order requesting such
action, authenticate Notes for original issuance in an aggregate principal
amount not to exceed $26,500,000 in the form of the Global Note. Such Company
Order shall specify the amount of Notes to be authenticated and the date on
which the Notes are to be authenticated and shall further provide instructions
concerning registration, amounts for each Holder and delivery.
Upon the occurrence of any event specified in Section 2.6(b) hereof and
compliance by the Company with the provisions of the paragraph preceding the
immediately preceding paragraph, the Company shall execute and the Trustee shall
authenticate and deliver to each beneficial owner identified by the Depositary,
in exchange for such beneficial owner's interest in the Global Note,
Certificated Notes representing Notes theretofore represented by the Global
Note.
-29-
<PAGE> 38
A Note shall not be valid or entitled to any benefit under this
Indenture or obligatory for any purpose unless appropriately executed by the
Company and the Guarantors and authenticated by the manual signature of the
Trustee as provided herein. The signature of an authorized officer of the
Trustee shall be conclusive evidence, and the only evidence, that such Note has
been authenticated and delivered under this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference to this Indenture to authentication by the Trustee
includes authentication by such agent. Any authenticating agent of the Trustee
shall have the same rights hereunder as any Registrar or Paying Agent.
SECTION 2.3 Registrar and Paying Agent. The Company shall maintain,
pursuant to Section 4.2 hereof, an office or agency where the Notes may be
presented for payment, for registration of transfer or for exchange. The Company
shall cause to be kept at such office a register (the register maintained in
such office being herein sometimes referred to as the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes entitled to be
registered or transferred as provided herein. The Trustee, at its Corporate
Trust Office, is initially appointed "Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided, and as "Paying Agent" for the
payment of principal of (and premium if any), interest (including Additional
Amounts, if any, and Special Interest, if any) on, or other amounts due in
respect of the Notes as provided herein. The Company may, upon written notice to
the Trustee, change the designation of the Trustee as Registrar or Paying Agent
and appoint another Person to act as Registrar for purposes of this Indenture
except that, for the purposes of Article III, Article XIV and Sections 4.7, 4.8
and 4.14, none of the Company, any Guarantor, any Restricted Subsidiary or any
Affiliate of the Company or of any Guarantor shall act as Paying Agent. If any
Person other than the Trustee acts as Registrar, the Trustee shall have the
right at any time, upon reasonable notice, to inspect or examine the Note
Register and to make such inquiries of the Registrar as the Trustee shall in its
discretion deem necessary or desirable in performing its duties hereunder.
The Company shall enter into an appropriate agreement with any Person
designated by the Company as Registrar or Paying Agent that is not a party to
this Indenture, which agreement shall incorporate the provisions of the Trust
Indenture Act and shall implement the provisions of this Indenture that relate
to such Registrar or Paying Agent. Prior to the designation of any such Person,
the Company shall, by written notice (which notice shall include the name and
address of such Person), inform the Trustee of such designation. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such.
Upon surrender for registration of transfer of any Note at an office or
agency of the Company designated for such purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more
-30-
<PAGE> 39
new Notes of any authorized denomination or denominations, of like tenor and
aggregate principal amount, all as requested by the transferor.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee or the Registrar) be
duly endorsed, or be accompanied by a duly executed instrument of transfer in
form satisfactory to the Company, the Trustee and the Registrar, by the Holder
thereof or such Holder's attorney duly authorized in writing.
SECTION 2.4 Paying Agent to Hold Money in Trust. On or prior to each
due date of the principal, premium, or any payment of interest or any other
amount due with respect to any Note, the Company shall deposit with the Paying
Agent a sum sufficient to pay such principal, premium, interest or other amount
when so becoming due.
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent (i) shall hold in trust for the benefit
of Holders or the Trustee all money held by such Paying Agent for the payment of
principal, premium, interest (including Additional Amounts, if any, and Special
Interest, if any) or other amount due with respect to the Notes (whether such
money has been distributed to it by the Company, a Guarantor or any other
Obligor), (ii) shall notify the Trustee of any default by the Company in making
any such payment and (iii) at any time during the continuance of any such
default, upon the written request of the Trustee, shall forthwith pay to the
Trustee all sums held in trust by such Paying Agent.
The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section 2.4, the Paying Agent shall have no
further liability for the money delivered to the Trustee.
SECTION 2.5 Global Note.
(a) So long as the Global Note is registered in the name of the
Depositary or its nominee, members of, or participants in, the Depositary
("Agent Members") shall have no rights under this Indenture with respect to the
Global Note held on their behalf by the Depositary or the Trustee as its
custodian, and the Depositary may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes. Notwithstanding the foregoing, nothing herein
shall (i) prevent the Company, the Guarantors, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or (ii) impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of Notes.
(b) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in such Global Note
-31-
<PAGE> 40
through Agent Members, to take any action which a Holder of Notes is entitled to
take under this Indenture or the Notes.
(c) Whenever, as a result of an optional redemption of Notes by the
Company, a Change of Control Offer, an Asset Sale Offer, a repurchase upon a
Termination of Trading pursuant to Section 4.14 hereof, or an exchange pursuant
to the second sentence of Section 2.6(b) hereof, a Global Note is redeemed,
repurchased or exchanged in part, such Global Note shall be surrendered by the
Holder thereof to the Trustee who shall cause an adjustment to be made to
Schedule A thereof so that the principal amount of such Global Note will be
equal to the portion of such Global Note not redeemed, repurchased or exchanged
and shall thereafter return such Global Note to such Holder, provided that each
such Global Note shall be in a principal amount of $1,000 or an integral
multiple thereof.
SECTION 2.6 Transfer and Exchange.
(a) With respect to the Notes:
(i) By its acceptance of any Note represented by a certificate
bearing the Private Placement Legend, each Holder of, and beneficial
owner of an interest in, such Note acknowledges the restrictions on
transfer of such Note set forth in the Private Placement Legend and
under the heading "Transfer Restrictions" in the Final Memorandum and
agrees that it will transfer such Note only in accordance with the
Private Placement Legend and the restrictions set forth under the
heading "Transfer Restrictions" in the Final Memorandum.
(ii) In connection with any transfer of a Note bearing the
Private Placement Legend, each Holder agrees to deliver to the Company
such satisfactory evidence, which may include an opinion of independent
counsel licensed to practice law in the State of New York, as
reasonably may be requested by the Company or by the Trustee to confirm
that such transfer is being made in accordance with the limitations set
forth in the Private Placement Legend. In the event the Company
determines that any such transfer is not in accordance with the Private
Placement Legend, the Company shall so inform the Registrar which shall
not register such transfer; provided that the Registrar shall not be
required to determine (but may rely on a determination made by the
Company with respect to) the sufficiency of any such evidence.
(iii) Upon the registration of transfer, exchange or
replacement of a Note not bearing the Private Placement Legend, the
Trustee shall deliver a Note or Notes that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of a Note
bearing the Private Placement Legend, the Trustee shall deliver a Note
or Notes bearing the Private Placement Legend, unless such legend may
be removed from such Note as provided in the next sentence. The Private
Placement Legend may be removed from a Note if there is delivered to
the Company and the Trustee such satisfactory evidence, which may
include an opinion of independent counsel licensed to practice law
-32-
<PAGE> 41
in the State of New York, as reasonably may be requested by the Company
to confirm that neither such legend nor the restrictions on transfer
set forth therein are required to ensure that transfers of such Note
will not violate the registration and prospectus delivery requirements
of the Securities Act and, if the transferee is a resident of Canada,
the securities laws of the applicable province of Canada; provided that
the Trustee shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of
any such evidence. Upon provision of such evidence, the Trustee shall
authenticate and deliver in exchange for such Note, a Note or Notes
(representing the same aggregate principal amount of the Note or Notes
being exchanged) without such legend. If the Private Placement Legend
has been removed from a Note, as provided above, no other Note issued
in exchange for all or any part of such Note shall bear such legend,
unless the Company has reasonable cause to believe that such other Note
represents a "restricted security" within the meaning of Rule 144 and
instructs the Trustee in writing to cause a legend to appear thereon.
(iv) The Company shall deliver to the Trustee, and the Trustee
shall retain for two years, copies of all documents received pursuant
to this Section 2.6(a). The Company shall have the right to inspect and
make copies of all such documents at any reasonable time upon the
giving of reasonable written notice to the Trustee.
(b) The Global Note shall be exchanged by the Company for one or more
Certificated Notes if (x) the Depositary (i) has notified the Company that it is
unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Exchange Act and (ii) a successor to the
Depositary registered as a "Clearing Agency" under Section 17A of the Exchange
Act is not appointed by the Company within 90 calendar days or (y) the
Depositary is at any time unwilling or unable to continue as Depositary and a
successor to the Depositary is not appointed by the Company within 90 calendar
days. If an Event of Default occurs and is continuing, the Company shall, at the
request of the Holder thereof, exchange all or part of the Global Note for one
or more Certificated Notes provided that the principal amount of each of such
Certificated Notes and the Global Note, after such exchange, shall be $1,000 or
an integral multiple thereof. Whenever the Global Note is exchanged as a whole
for one or more Certificated Notes, it shall be surrendered by the Holder
thereof to the Trustee for cancellation. Whenever the Global Note is exchanged
in part for one or more Certificated Notes, it shall be surrendered by the
Holder thereof to the Trustee and the Trustee shall make the appropriate
adjustments to Schedule A thereof pursuant to Section 2.5(c) hereof. All
Certificated Notes issued in exchange for the Global Note or any portion thereof
shall be registered in such names, and delivered, as the Depositary shall
instruct the Trustee. Any Certificated Notes issued pursuant to this Section
2.6(b) shall include the Private Placement Legend, except as set forth in
Section 2.6(a)(iii) hereof. Interests in the Global Note may not be exchanged
for Certificated Notes other than as provided in this Section 2.6(b).
(c) A Holder may transfer a Note only upon the surrender of such Note
for registration of transfer. No such transfer shall be effected until, and the
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer in the Note
-33-
<PAGE> 42
Register by the Registrar. When Notes are presented to the Registrar with a
request to register the transfer of, or to exchange, such Notes, the Registrar
shall register the transfer or make such exchange as requested if its
requirements for such transactions and any applicable requirements hereunder are
satisfied. To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Certificated Notes at the Registrar's
request.
(d) The Company shall not be required to make and the Registrar need
not register transfers or exchanges of (i) Certificated Notes selected for
redemption (except, in the case of Certificated Notes to be redeemed in part,
the portion thereof not to be redeemed), or (ii) any Certificated Note for a
period of 15 calendar days before a selection of Certificated Notes to be
redeemed or the mailing of a notice of a Change of Control Offer pursuant to
Section 4.7 hereof, an Asset Sale Offer pursuant to Section 4.8 hereof, or an
offer to repurchase upon a Termination of Trading pursuant to Section 4.14
hereof, and ending on the close of business on the day of such mailing.
(e) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer of Notes (other than in respect of exchanges
or transfers pursuant to Sections 2.9, 3.6, 4.7, 4.8, 4.14 and 9.6).
(f) All Notes issued upon any registration of transfer, exchange or
substitution pursuant to the terms of this Indenture will evidence the same debt
and will be entitled to the same benefits under this Indenture as the Notes
surrendered for such registration of transfer or exchange.
(g) Prior to the effectiveness under the Securities Act of a
Convertible Note Shelf Registration Statement, or at any time during the
suspension or following the termination thereof, Holders of Notes (or holders of
interests therein) and prospective purchasers designated by such Holders of
Notes (or such holders of interests therein) shall have the right to obtain from
the Company upon request by such Holders (or such holders of interests) or
prospective purchasers, during any period in which the Company is not subject to
Section 13 or Section 15(d) of the Exchange Act, or is exempt from reporting
pursuant to 12g3-2(b) under the Exchange Act, the information required by
paragraph (d)(4)(i) of Rule 144A in connection with any transfer or proposed
transfer of such Notes or interests.
(h) Any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Notes represented hereby shall be required to be reflected in book entry form.
Transfers of a Global Note shall be limited to transfers in whole and not in
part, to the Depositary, its successors, and their respective nominees.
Interests of beneficial owners in a Global Note may be transferred in accordance
with the rules and procedures of the Depositary (or its successors).
-34-
<PAGE> 43
SECTION 2.7 Replacement Notes. If any mutilated Note is surrendered to
the Trustee, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in exchange for any such mutilated Note, a new
Note containing identical provisions and of like principal amount, bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Note and (ii)
such security or indemnity as may be required by them to save either of them and
any agent of each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note containing identical provisions and of like principal amount, bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note, provided that such payment is
either not made prior to the day following the Five Year Date or is made only
following the occurrence of an Event of Default.
Upon the issuance of any new Note under this Section 2.7, the Company
may require the payment by the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 2.7 in lieu of any
destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost of stolen Notes.
SECTION 2.8 Outstanding Notes. Notes outstanding at any time are all
Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation and those described in this Section 2.8 as not
outstanding. A Note does not cease to be outstanding because the Company, a
Guarantor or an Affiliate of the Company or a Guarantor holds such Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that such replaced Note is held by a bona fide purchaser. A mutilated Note
ceases to be outstanding upon surrender of such Note and replacement thereof
pursuant to Section 2.7.
-35-
<PAGE> 44
If the Paying Agent (other than the Company, a Guarantor or an
Affiliate of the Company or a Guarantor) segregates and holds in trust, in
accordance with this Indenture, on a Redemption Date or Maturity date money
sufficient to pay all principal, premium, if any, and interest (including
Additional Amounts, if any, and Special Interest, if any) and any other amounts
payable on that date with respect to the Notes (or portions thereof) to be
redeemed or maturing, as the case may be, then on and after that date such Notes
(or such portions thereof) shall cease to be outstanding and interest on them
shall cease to accrue.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent or any amendment,
modification or other change to this Indenture, Notes held or beneficially owned
by the Company or Guarantor or an Affiliate of the Company or a Guarantor of the
Company or by agents of any of the foregoing shall be disregarded, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes which a Trust Officer knows are so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee establishes to the satisfaction of
the Trustee such pledgee's right so to act with respect to the Notes and that
the pledgee is not the Company, a Guarantor or an Affiliate of the Company or of
a Guarantor or any of their agents.
SECTION 2.9 Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute, the Guarantors shall endorse and the Trustee
shall authenticate, temporary notes ("Temporary Notes") which are printed,
lithographed, or otherwise produced, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations.
If Temporary Notes are issued, the Company shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the Temporary Notes shall be exchangeable for definitive Notes upon
surrender of the Temporary Notes to the Trustee, without charge to the Holder.
Until so exchanged, Temporary Notes will evidence the same debt and will be
entitled to the same benefits under this Indenture as the definitive Notes in
lieu of which they have been issued.
SECTION 2.10 Cancellation. The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar and the Paying Agent shall forward
to the Trustee any Notes surrendered to them for registration of transfer,
exchange, purchase, payment or conversion. The Trustee shall cancel all Notes
surrendered for registration of transfer, exchange, purchase, payment,
cancellation or conversion and shall dispose of such Notes in accordance with
the Trustee's policy of disposal; provided, however, that the Trustee shall not
be required to destroy such canceled Notes. The Company may not issue new Notes
to replace Notes it has redeemed or paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.11 Payment of Interest; Interest Rights Preserved. Interest
(including Additional Amounts, if any, and Special Interest, if any) on any Note
and any other amounts
-36-
<PAGE> 45
which are payable, and are punctually paid or duly provided for, on any Interest
Payment Date, which shall be June 1 or December 1, commencing on December 1,
1996, shall be paid to the Person in whose name such Note is registered at the
close of business on the Record Date for such interest payment, which shall be
May 15 or November 15 (whether or not a Business Day) immediately preceding such
Interest Payment Date.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Record Date, and, except as hereinafter provided, such Defaulted
Interest, together with any interest payable on such Defaulted Interest may be
paid by the Company, at its election, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest, and any interest payable on such Defaulted Interest, to the
Persons in whose names the Notes are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on the Notes and the date of the proposed payment,
and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest (including Additional Amounts, if
any, and Special Interest, if any) or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided
in this clause (a). Thereupon the Trustee shall fix a Special Record
Date for the payment of such Default Interest which shall be not more
than 15 calendar days and not less than 10 calendar days prior to the
date of the proposed payment and not less than 10 calendar days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be sent, first class mail, postage prepaid, to
each Holder at such Holder's address as it appears in the Security
Register, not less than 10 calendar days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Notes are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following clause
(b).
(b) The Company may make payment of any Defaulted Interest,
(including Additional Amounts, if any, and Special Interest, if any)
and any interest payable on such Defaulted Interest, on the Notes in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
-37-
<PAGE> 46
Subject to the foregoing provisions of this Section 2.11, each Note
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, any other Note, shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.12 Authorized Denominations. The Notes shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.13 Computation of Interest, etc.
(a) Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months. The Notes will commence to accrue
interest from the Issue Date, at a rate computed as if the Notes had
been issued bearing interest at the rate of 9% per annum on May 31,
1996 (being the rate of 9.5858% per annum from the Issue Date through
November 30, 1996), and the Notes shall bear interest at the rate of 9%
per annum from December 1, 1996.
(b) For the purposes of the Interest Act (Canada) and
disclosure thereunder, whenever interest, Additional Amounts, Special
Interest, or Defaulted Interest or interest on Defaulted Interest
relating to the Notes, is to be calculated on the basis of a year of
360 days or any other period of time that is less than a calendar year,
the yearly rate of interest to which the rate determined pursuant to
such calculation is equivalent is the rate so determined multiplied by
the actual number of days in the calendar year in which the same is to
be ascertained and divided by either 360 or such other period of time,
as the case may be. The rate accruing on the Notes for payment purposes
shall be determined in accordance with Subsection 2.13(a) hereof, and
for greater certainty for purposes of the Interest Act (Canada), for
the period from the Issue Date through November 30, 1996 the interest
rate hereunder shall be 9.5858% per annum, subject to the initial
sentence of this Section 2.13(b).
(c) Notwithstanding any other term of this Indenture, the
Company shall not be obliged to pay any interest or other amounts under
or in connection with this Indenture in excess of the amount or rate
permitted under or consistent with applicable law. In particular, the
Company shall not be obliged to pay any interest or other amounts which
would result in the receipt by the Holders of interest on credit
advanced at a rate in excess of the rate permitted under the Criminal
Code (Canada).
SECTION 2.14 Persons Deemed Owners. Prior to the due presentation for
registration of transfer of any Notes, the Company, the Guarantors, the Trustee,
the Paying Agent, the Registrar and any co-Registrar may deem and treat the
person in whose name a Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of, premium, if any, and interest
(including Special Interest, if any, but excluding Additional Amounts, if any,
which shall be determined by the beneficial ownership of such Note) on such Note
and for all other purposes whatsoever, whether or not such Note is overdue, and
none of
-38-
<PAGE> 47
the Company, the Guarantors, the Trustee, the Paying Agent, the Registrar or any
co-Registrar shall be affected by notice to the contrary.
SECTION 2.15 CUSIP Numbers. The Company, in issuing the Notes, may use
a "CUSIP" number for each series of Notes and, if so, the Trustee shall use the
relevant CUSIP number in any notices to Holders as a convenience to such
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 Notes and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company shall promptly notify the Trustee of
any change in any CUSIP number used.
ARTICLE III
REDEMPTION
SECTION 3.1 Notice to Trustee. If the Company elects to redeem Notes
pursuant to the optional redemption provisions of Section 3.7 and the Notes, it
shall furnish an Officers' Certificate to the Trustee setting forth the
Redemption Date, the principal amount of Notes to be redeemed and the Redemption
Price. The Company shall give each such notice to the Trustee at least 60
calendar days prior to the Redemption Date unless the Trustee consents to a
shorter period. Such notice shall be accompanied by an Officers' Certificate and
an Opinion of Counsel from the Company to the effect that such redemption will
comply with any conditions to such redemption set forth herein and in the Notes.
SECTION 3.2 Selection of Notes to be Redeemed. If less than all the
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed on a pro rata basis, or by any other method which the Trustee shall
determine to be fair and appropriate and which complies with any stock exchange
and other applicable requirements, provided that the Trustee may select for
redemption in part only Notes in denominations larger than $1,000. In selecting
Notes to be redeemed pursuant to this Section 3.2, the Trustee shall make such
adjustments, reallocations and eliminations as it shall deem proper so that the
principal amount of each Note to be redeemed shall be $1,000 or an integral
multiple thereof, by increasing, decreasing or eliminating any amount less than
$1,000 which would be allocable to any Holder. If the Notes to be redeemed are
Certificated Notes, the Certificated Notes to be redeemed shall be selected by
the Trustee by prorating, as nearly as may be, or by any other method which the
Trustee shall determine to be fair and appropriate and which complies with any
stock exchange and other applicable requirements, the principal amount of
Certificated Notes to be redeemed among the Holders of Certificated Notes
registered in their respective names. The Trustee in its discretion may
determine the particular Notes (if there are more than one) registered in the
name of any Holder which are to be redeemed, in whole or in part. Provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be redeemed.
-39-
<PAGE> 48
SECTION 3.3 Notice of Redemption. At least 30 calendar days but not
more than 60 calendar days before a Redemption Date, the Company shall send a
notice of redemption, first class mail, postage prepaid, to Holders of Notes to
be redeemed at the addresses of such Holders as they appear in the Note
Register.
The notice shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price (and shall specify the portion of such
Redemption Price that constitutes the amount of accrued and unpaid interest to
be paid, if any);
(c) the name and address of the Paying Agent;
(d) that the Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(e) if any Global Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, the Global Note, with a notation on Schedule A thereof adjusting the
principal amount thereof to be equal to the unredeemed portion, will be returned
to the Holder thereof;
(f) if any Certificated Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the Redemption
Date, a new Certificated Note or Certificated Notes in principal amount equal to
the unredeemed portion will be issued;
(g) if fewer than all the outstanding Notes are to be redeemed, the
identification and principal amounts of the particular Notes to be redeemed;
(h) the conversion price, the date on which the right to convert the
Notes will terminate and the place or places where such Notes may be surrendered
for conversion;
(i) that, unless the Company defaults in making the redemption payment,
interest (including Additional Amounts, if any, and Special Interest, if any)
on, and any other amounts due in respect of the Notes (or portions thereof)
called for redemption shall cease to accrue and such Notes (or portions thereof)
shall cease to accrue such interest on and after the Redemption Date;
(j) the paragraph of the Notes and the Section of the Indenture
pursuant to which the Notes are being called for redemption; and
(k) any other information necessary to enable Holders to comply with
the notice of redemption.
-40-
<PAGE> 49
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.3 in a timely manner, provided that the Company shall give the Trustee
not less than 45 calendar days notice of such election prior to the Redemption
Date, unless the Trustee consents to a shorter period.
SECTION 3.4 Effect of Notice of Redemption. Once notice of redemption
is mailed in accordance with Section 3.3 hereof, Notes called for redemption
shall become due and payable on the Redemption Date and at the Redemption Price
stated in such notice, including interest, Additional Amounts and Special
Interest, if any, and any other amounts due and unpaid on the Redemption Date
(but for greater certainty, not including any amount on account of any Reset
Penalty); provided that if the Redemption Date is after a regular Record Date
and on or prior to the Interest Payment Date, the accrued interest (including
Additional Amounts, if any, and Special Interest, if any) and any other amounts
payable shall be payable to the Holder of the redeemed Note on the relevant
Record Date; and provided, further, that if a Redemption Date is not a Business
Day, 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. Upon surrender to the Paying Agent, such Notes shall be paid at
the Redemption Price stated in such notice. Failure to give notice or any defect
in the notice to any Holder shall not affect the validity of the notice to any
other Holder.
SECTION 3.5 Deposit of Redemption Price. On or prior to 10:00 a.m., New
York City time, on each Redemption Date, the Company shall deposit with the
Paying Agent money, in federal or other immediately available funds, sufficient
to pay the Redemption Price on all Notes to be redeemed on that date other than
Notes or portions of Notes called for redemption on such date which have been
delivered by the Company to the Trustee for cancellation and other than any
Notes or portions of Notes called for redemption on such date which have been
converted prior to such date.
So long as the Company complies with the preceding paragraph and the
other provisions of this Article III, interest (and Additional Amounts and
Special Interest, if any) on and any other amounts due in respect of the Notes
to be redeemed on the applicable Redemption Date shall cease to accrue from and
after such date and such Notes or portions thereof shall be deemed not to be
entitled to any benefit under this Indenture except to receive payment of the
Redemption Price on the Redemption Date. If any Note called for redemption shall
not be so paid upon surrender for redemption, then, from the Redemption Date
until such principal is paid, interest (and Additional Amounts and Special
Interest, if any) shall be paid on the unpaid principal and, to the extent
permitted by law, on any accrued but unpaid interest thereon and on any other
amounts due in respect of the Notes, in each case at the rate prescribed
therefor by such Notes.
SECTION 3.6 Notes Redeemed in Part. Upon surrender and cancellation of
a Certificated Note that is redeemed in part, the Company shall issue and the
Trustee shall authenticate and deliver to the surrendering Holder (at the
Company's expense) a new
-41-
<PAGE> 50
Certificated Note equal in principal amount to the unredeemed portion of the
Certificated Note surrendered and canceled, provided that each such Certificated
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is redeemed in part, the Paying
Agent shall forward such Global Note to the Trustee who shall make a notation on
Schedule A thereof to reduce the principal amount of such Global Note to an
amount equal to the unredeemed portion of such Global Note, as provided in
Section 2.5(c) hereof.
SECTION 3.7 Optional Redemption. (a) Except as set forth in subsection
(c) of this Section 3.7, the Company shall not have the option to redeem the
Notes pursuant to this Section 3.7 prior to June 1, 2000. During the period from
June 1, 2000 to May 31, 2002, the Company may redeem all but not less than all
of the Notes pursuant to subsection (b) of this Section 3.7. Thereafter, the
Company shall have the option to redeem the Notes, in whole or in part upon not
less than 30 calendar days' nor more than 60 calendar days' notice, at a
redemption price equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, Additional Amounts, if any, and Special Interest, if
any, to the applicable Redemption Date, and any other amounts due in respect
thereof (but, for greater certainty, not including any amount on account of any
Reset Penalty).
(b) During the period from June 1, 2000 to May 31, 2002, the Company
shall have the option to redeem all, but not less than all, of the then
outstanding Notes, upon not less than 30 or more than 60 days notice, if the
Closing Price of the Common Stock equals or exceeds 150% of the conversion price
for a period of thirty (30) consecutive days, at a redemption price equal to
100% of the principal thereof, plus accrued and unpaid interest, if any,
Additional Amounts, if any, and Special Interest, if any, to the applicable
Redemption Date, and other amounts due in respect thereof (but, for greater
certainty, not including any amount on account of any Reset Penalty). If the
Company determines to exercise its option to redeem the Notes pursuant to this
Section 3.7(b), the Company shall cause to be filed at each office or agency
maintained pursuant to Section 4.2 and shall cause to be mailed to all Holders
at their last addresses as they shall appear in the Note Register a notice
notifying such Holders that the Company has exercised its redemption right
pursuant to this Section 3.7(b).
(c) The Notes may be redeemed, at the option of the Company, in whole
but not in part, upon not less than 30 or more than 60 days' notice to the
Holders in accordance with Section 15.2 hereof, at a Redemption Price equal to
the principal amount thereof, plus accrued and unpaid interest, if any
(including Additional Amounts, if any, and Special Interest, if any), to the
Redemption Date fixed therefor (subject to the right of Holders of record on the
relevant Record Date to receive interest (including Additional Amounts, if any,
and Special Interest, if any) due on the Interest Payment Date that is on or
prior to the Redemption Date) and any other amounts due in respect of the Notes
if, as a result of any change in or amendment to the laws or the regulations or
rulings promulgated thereunder of Canada, Cyprus, the Russian Federation or any
other jurisdiction with which the Company or any Guarantor has any connection
(other than a connection arising as a result of a continuance or a merger or
consolidation of the
-42-
<PAGE> 51
Company with or into a newly formed corporation solely for the purpose of moving
the Company's domicile out of Canada) or any political subdivision thereof or
any authority thereof or having power to tax therein, or any change in the
application or official interpretation of such laws or regulations, or any
change in administrative policy or assessing practice of the applicable taxing
authority, which change or amendment becomes effective on or after May 24, 1996,
the Company or the Guarantors (if the Guarantees are called) are or would be
required on the next succeeding Interest Payment Date to pay Additional Amounts
with respect to the Notes or under the Guarantees and the payment of such
Additional Amounts cannot be avoided by the use of any reasonable measures
available to the Company or the Guarantors, as the case may be. The Company will
also pay to holders on the Redemption Date any Additional Amounts payable with
respect to that period ending on the Redemption Date. Prior to the publication
of any notice of redemption pursuant to this provision, which in no event will
be given earlier than 90 days prior to the earliest date on which the Company or
the Guarantors, as the case may be, would be required to pay such Additional
Amounts were a payment in respect of the Notes then due, the Company shall
deliver to the Trustee (i) an Officers' Certificate stating that the obligation
to pay such Additional Amounts cannot be avoided by the Company or the
Guarantors, as the case may be, taking reasonable measures and (ii) an Opinion
of Counsel, independent of the Company and the Guarantors and approved by the
Trustee, to the effect that the Company or the Guarantors have or will become
obligated to pay such Additional Amounts as a result of such change or
amendment. Such notice, once delivered by the Company to the Trustee, will be
irrevocable. The Trustee shall accept such Officers' Certificate and Opinion of
Counsel as sufficient evidence of the satisfaction of the condition precedent
set forth in clauses (i) and (ii) above, in which event it shall be conclusive
and binding on the Holders. For greater certainty, any requirement to pay
Additional Amounts in respect of any Reset Penalty will not entitle the Company
to redeem the Notes under this Section 3.7(c).
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes. The Company shall promptly pay the
principal of, premium, if any, and interest (including Additional Amounts, if
any, and Special Interest, if any) on, and any other amounts due in respect of,
the Notes on the dates and in the manner provided in the Notes and in this
Indenture. Principal, premium, interest and such other amounts shall be
considered paid on the date due if, on or before 10:00 a.m., New York City time,
on such date, the Trustee or the Paying Agent, other than the Company or a
Guarantor or an Affiliate of the Company or a Guarantor, holds in accordance
with this Indenture money to pay all principal, premium, interest (including
Additional Amounts, if any, and Special Interest, if any) or other amounts then
due.
To the extent lawful, the Company shall pay interest on (i) any overdue
principal of (and premium, if any, on) the Notes, at the interest rate borne on
the Notes plus 1% per annum and (ii) Defaulted Interest (without regard to any
applicable grace period), and (iii) any Reset Penalty
-43-
<PAGE> 52
that has not been paid when due, at the same rate. The Company's obligation
pursuant to the previous sentence shall apply whether such overdue amount is due
at its Stated Maturity, as a result of the Company's obligations pursuant to
Section 3.7, Section 4.7, Section 4.8 or Section 4.14 hereof, or otherwise.
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 where Notes
may be presented or surrendered for payment or for conversion, where Notes may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee its agent to
receive all presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all of such purposes, and may from time to
time rescind such designations; provided that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in The City of New York, for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation and any change in
the location of any such other office or agency.
SECTION 4.3 Money for the Note Payments to be Held in Trust. If the
Company, any Guarantor, any Restricted Subsidiary, or any of their respective
Affiliates shall at any time act as Paying Agent with respect to the Notes, such
Paying Agent shall, on or before each due date of the principal of (and premium,
if any), interest on or other amounts in respect of any of the Notes, segregate
and hold in trust for the benefit of the Persons entitled thereto money
sufficient to pay the principal (and premium, if any), interest (including
Additional Amounts, if any and Special Interest, if any) or other amounts so
becoming due until such money shall be paid to such Persons or otherwise
disposed of as herein provided, and shall promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect
to the Notes, it shall, prior to or on each due date of the principal of (and
premium, if any), interest on or other amounts in respect of any of the Notes,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any), interest (including Additional Amounts, if any and Special Interest, if
any) or other amounts so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium, if any, or interest
(including Additional Amounts, if any and Special Interest, if any) or other
amounts, and (unless such Paying Agent is the Trustee) the Paying Agent shall
promptly notify the Trustee of the Company's action or failure so to act.
- 44 -
<PAGE> 53
SECTION 4.4 Corporate Existence. Subject to the provisions of Article V
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence, rights
(charter and statutory) and franchises of the Company and each of its Restricted
Subsidiaries; provided that the Company and any such Restricted Subsidiary other
than the Leasing Companies and NWE Cyprus shall not be required to preserve the
corporate existence of any such Restricted Subsidiary other than the Leasing
Companies and NWE Cyprus or any such right or franchise 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 that the loss thereof is not
disadvantageous in any material respect to the Holders of Notes.
SECTION 4.5 Maintenance of Property. The Company shall cause all Property
used in the conduct of its business or the business of any of its Restricted
Subsidiaries to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted) and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as, in the judgment of
the Company, may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section 4.5 shall prevent the Company from discontinuing
the operation or maintenance of any of such Property if such discontinuance is,
in the judgment of the Company, desirable in the conduct of its business or the
business of any of its Restricted Subsidiaries and not disadvantageous in any
material respect to the Holders of the Notes.
SECTION 4.6 Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any of its Restricted Subsidiaries or upon the
income, profits or Property of the Company or any of its Restricted Subsidiaries
and (b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a Lien upon the Property of the Company or any of its
Restricted Subsidiaries; provided that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings upon stay of execution or the enforcement
thereof and for which adequate reserves in accordance with GAAP or other
appropriate provision has been made.
SECTION 4.7 Repurchase at the Option of Holders upon a Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to purchase such Holder's Notes, in whole
or in part in a principal amount that is an integral multiple of $1,000,
pursuant to an irrevocable and unconditional offer described in Section 4.7(b)
hereof (the "Change of Control Offer"), at a purchase price (the "Change of
Control Purchase Price") in cash equal to 101 percent of the principal amount of
such Notes (or portions thereof) on any Change of Control Payment Date plus
accrued and unpaid interest, if any, and Additional Amounts, if any, and Special
Interest, if any, to the Change of Control Payment Date.
- 45 -
<PAGE> 54
(b) Within 30 calendar days of the date of any Change of Control, the
Company, or the Trustee at the request and expense of the Company, shall send to
each Holder by first class mail, postage prepaid, a notice prepared by the
Company stating:
(i) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to this Section 4.7, and that all Notes
properly tendered will be accepted for payment;
(ii) the Change of Control Purchase Price, and the date Notes are to
be purchased pursuant to the Change of Control Offer (the "Change of
Control Payment Date"), which date shall be a date occurring no earlier
than 30 calendar days nor later than 40 calendar days subsequent to the
date such notice is mailed;
(iii) that any Notes or portions thereof not properly tendered will
continue to accrue interest and Additional Amounts and Special Interest,
if applicable and will continue to have conversion rights and rights to
receive Reset Penalties, if any;
(iv) that, unless the Company defaults in the payment of the Change
of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest and Additional Amounts and Special Interest, if
applicable, from and after the Change of Control Payment Date and will
cease to have any conversion rights and rights to receive Reset Penalties,
if any;
(v) that any Holder electing to have any Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of such Notes completed, to the Paying Agent at
the address specified in the notice, prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;
(vi) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter, setting forth the name
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have
such Notes or portions thereof purchased pursuant to the Change of Control
Offer;
(vii) that any Holder electing to have Notes purchased pursuant to
the Change of Control Offer must specify the principal amount that is
being tendered for purchase, which principal amount must be $1,000 or an
integral multiple thereof;
(viii) if Certificated Notes have been issued pursuant to Section
2.6(b), that any Holder of Certificated Notes whose Certificated Notes are
being purchased only in part will be issued new Certificated Notes equal
in principal amount to the unpurchased
- 46 -
<PAGE> 55
portion of the Certificated Note or Notes surrendered, which unpurchased
portion will be equal in principal amount to $1,000 or an integral
multiple thereof;
(ix) that the Trustee will return to the Holder of a Global Note
that is being purchased in part, such Global Note with a notation on
Schedule A thereof adjusting the principal amount thereof to be equal to
the unpurchased portion of such Global Note; and
(x) the instructions and any other information necessary to enable
any Holder to accept a Change of Control Offer or effect withdrawal of
such acceptance.
(c) On or before the Change of Control Payment Date, the Company shall (i)
accept for payment any Notes or portions thereof properly tendered pursuant to
the Change of Control Offer; (ii) irrevocably deposit with the Paying Agent, by
10:00 a.m., New York City time, on such date, in immediately available funds, an
amount equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof so accepted, including interest, Additional Amounts and Special
Interest, if applicable; and (iii) deliver, or cause to be delivered, to the
Trustee the Notes so accepted together with an Officers' Certificate listing the
Notes or portions thereof tendered to the Company and accepted for payment. The
Paying Agent shall promptly send by first class mail, postage prepaid, to each
Holder of Notes or portions thereof so accepted for payment, payment in an
amount equal to the Change of Control Purchase Price for such Notes or portions
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date. For purposes of this Section 4.7, the Trustee shall act as the Paying
Agent.
(d) Upon surrender and cancellation of a Certificated Note that is
purchased in part pursuant to the Change of Control Offer, the Company shall
promptly issue and the Trustee shall authenticate and deliver to the
surrendering Holder of such Certificated Note, a new Certificated Note equal in
principal amount to the unpurchased portion of such surrendered Certificated
Note; provided that each such new Certificated Note shall be in a principal
amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is purchased in part pursuant to a
Change of Control Offer, the Paying Agent shall forward such Global Note to the
Trustee who shall make a notation on Schedule A thereof to reduce the principal
amount of such Global Note to an amount equal to the unpurchased portion of such
Global Note, as provided in Section 2.5(c) hereof.
(e) The Company shall comply with the requirements of Section 14(e) under
the Exchange Act and any other securities laws or regulations, to the extent
such laws and regulations are applicable, in connection with the purchase of
Notes pursuant to a Change of Control Offer.
- 47 -
<PAGE> 56
SECTION 4.8 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries, directly or indirectly to, consummate any Asset Sale, unless:
(i) no Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof;
(ii) the Company or such Restricted Subsidiary, as the case may be,
receives net consideration at the time of such Asset Sale at least equal
to the Fair Market Value (as evidenced by a Board Resolution delivered to
the Trustee) of the Property or assets sold or otherwise disposed of;
(iii) at least 75 percent of the consideration received in respect
of such Asset Sale by the Company or such Restricted Subsidiary, as the
case may be, for such Property or assets consists of Cash Proceeds; and
(iv) the Company or such Restricted Subsidiary, as the case may be,
uses the Net Cash Proceeds from such Asset Sale in the manner set forth in
Section 4.8(b) hereof.
To the extent that the assets which are the subject of any Asset
Sale constitute Collateral, all proceeds thereof shall, to the extent permitted
by law, be subject to a perfected Lien in favor of the Trustee or a collateral
agent for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Notes and for the benefit of the Senior Note Trustee and the
equal and ratable benefit of the Holders of the Senior Notes, which Lien shall
have the same priority as the Lien on the Collateral which was the subject of
such Asset Sale, and all Net Cash Proceeds from such an Asset Sale shall be
deposited in the Company Convertible Note Escrow Account. To the extent that the
assets which are the subject of any Asset Sale constitute Senior Note
Collateral, all proceeds thereof shall, to the extent permitted by law, be
subject to a perfected Lien in favor of the Senior Note Trustee or a collateral
agent for the benefit of the Senior Note Trustee and the equal and ratable
benefit of the Holders of Senior Notes and for the benefit of the Convertible
Note Trustee and the equal and ratable benefit of the Holders of Convertible
Notes, which Lien shall have the same priority as the Lien on the Senior Note
Collateral which was the subject of such Asset Sale, and all Net Cash Proceeds
from such an Asset Sale shall be deposited in the Company Senior Note Escrow
Account or a Leasing Company Escrow Account, if applicable, unless the Senior
Notes are not outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case such deposit shall be made in the Company Convertible
Note Escrow Account. To the extent that assets which are the subject of any
Asset Sale constitute Telecommunications Assets subject to a Telecommunications
Assets Lease which is Senior Note Collateral, all proceeds thereof shall, to the
extent permitted by applicable law, be subject to a perfected Lien in favor of
the Senior Note Trustee or a collateral agent for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of Senior Notes and for
the benefit of the Convertible Note Trustee and the equal and ratable benefit of
the Holders of Convertible Notes, which Lien shall
- 48 -
<PAGE> 57
have the same priority as the Lien on such Telecommunications Asset Leases
governing the Telecommunications Assets which were the subject of such Asset
Sale, and all Net Cash Proceeds from such an Asset Sale of Telecommunications
Assets must be deposited in the applicable Leasing Company Escrow Account unless
the Senior Notes are not outstanding and the Senior Note Indenture has been
satisfied and discharged, in which case such deposit shall be made in the
Company Convertible Note Escrow Account.
(b) (i) To the extent that assets subject to an Asset Sale consist
of Collateral, the Company shall have the option, within 365 days of such
Asset Sale, to reinvest the Net Cash Proceeds (or any portion thereof)
from such Asset Sale in another asset or business in the same or similar
lines of business as the Company and its Restricted Subsidiaries (the
"Replacement Assets") (or enter into a binding agreement to reinvest such
Net Cash Proceeds (or any portion thereof) prior to the end of such
365-day period, provided that such reinvestment is completed within 90
days after the end of such 365-day period); provided that such Replacement
Assets are subject to a Lien in favor of the Trustee or a collateral agent
for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Notes and for the benefit of the Senior Note Trustee and
the equal and ratable benefit of the Holders of the Senior Notes, which
Lien has the same priority as had the Lien on such Collateral which was
the subject of such Asset Sale.
(ii) To the extent that assets subject to an Asset Sale consist of
Senior Note Collateral other than a Telecommunications Asset Lease, the
Company shall have the option, within 365 days of such Asset Sale, to
reinvest the Net Cash Proceeds (or any portion thereof) from such Asset
Sale in Replacement Assets (or enter into a binding agreement to reinvest
such Net Cash Proceeds (or any portion thereof) prior to the end of such
365-day period, provided that such reinvestment is completed within 90
days after the end of such 365-day period); provided that such Replacement
Assets are subject to a Lien in favor of the Senior Note Trustee or a
collateral agent for the benefit of the Senior Note Trustee and for the
equal and ratable benefit of the Holders of Senior Notes and for the
benefit of the Trustee and the equal and ratable benefit of Holders of
Notes, which Lien has the same priority as had the Lien on such Senior
Note Collateral which was the subject of such Asset Sale.
(iii) To the extent that assets subject to an Asset Sale constitute
Telecommunications Assets subject to a Telecommunications Asset Lease, the
Company shall have the option, within 365 days of such Asset Sale, to
cause the applicable Leasing Company to reinvest the Net Cash Proceeds
from such Asset Sale (or any portion thereof) in Telecommunications Assets
to be leased pursuant to a new Telecommunications Asset Lease
("Replacement Telecommunication Assets") (or enter into, or cause the
applicable Leasing Company to enter into, a binding agreement to reinvest
such Net Cash Proceeds (or any portion thereof) prior to the end of such
365-day period, provided that such reinvestment is completed within 90
days after the end of such 365-day period), and with respect to any
proceeds of insurance paid on account of the loss of or damage to any such
Telecommunications Assets, or compensation or other
- 49 -
<PAGE> 58
proceeds for any such Telecommunications Assets taken by condemnation,
eminent domain or similar proceedings, such Net Cash Proceeds are applied
as provided above or applied to reimburse the applicable Leasing Company
for expenditures made, and costs incurred, to repair, rebuild, replace or
restore the Telecommunications Assets subject to such loss, damage or
taking.
(iv) To the extent that assets subject to an Asset Sale do not
constitute Collateral, Senior Note Collateral or Telecommunications Assets
subject to a Telecommunications Asset Lease, the Company shall have the
option within 365 days of such Asset Sale (x) to reinvest (or enter into a
binding agreement to reinvest prior to the end of such 365-day period,
provided that such reinvestment is completed within 90 days after the end
of such 365-day period) an amount equal to the Net Cash Proceeds (or any
portion thereof) from such Asset Sale in Replacement Assets, and/or (y)
apply an amount equal to such Net Cash Proceeds (or remaining Net Cash
Proceeds) to the permanent reduction of Indebtedness of the Company (other
than Indebtedness to a Restricted Subsidiary) that is pari passu in right
of payment with the Notes or to the permanent reduction of Indebtedness of
any Restricted Subsidiary that is pari passu in right of payment with the
Guarantees, if applicable (other than Indebtedness owed to, or Preferred
Stock owned by, the Company or a Restricted Subsidiary of the Company)
and/or (z) repurchase Senior Notes pursuant to a "Senior Note Asset Sale
Offer" (pursuant to and as defined in the Senior Note Indenture for the
purposes thereof as an "Asset Sale Offer") within 545 days of such Asset
Sale.
(v) Any Net Cash Proceeds from any Asset Sale that are not used to
reinvest in Replacement Assets or Replacement Telecommunication Assets
and/or to reduce pari passu Indebtedness of the Company or the Guarantors
to the extent permitted by this Section 4.8(b) shall constitute "Excess
Proceeds"; provided that, with respect to any Asset Sale by a Person which
is not a Wholly-Owned Restricted Subsidiary, the amount of unused Net Cash
Proceeds which shall constitute Excess Proceeds to be used to make an
Asset Sale Offer (as defined in Section 4.8(c) below) shall be limited to
the percentage of such unused Net Cash Proceeds received by such Person
equal to a percentage determined by dividing the direct or indirect
interest of the Company in the Capital Stock of such Person by the total
then outstanding Capital Stock of such Person determined as of the date of
such Asset Sale.
(c) Subject to the limitations set out in Section 4.8(d) below, if at any
time the aggregate amount of Excess Proceeds exceeds $5,000,000, the Company
shall, within 30 days thereafter, use such Excess Proceeds to make an offer to
purchase Notes (an "Asset Sale Offer") on a pro rata basis from all Holders of
Notes in an aggregate principal amount equal to the maximum principal amount
that may be purchased out of Excess Proceeds, at a purchase price (the "Offer
Purchase Price") in cash equal to 100% of the principal amount thereof on any
purchase date, plus accrued and unpaid interest, if any, Additional Amounts, if
any, Special Interest, if any, and other amounts due with respect to the Notes
to the Asset Sale Payment Date, in accordance with the procedures set forth in
this Section 4.8; provided that, if any such
- 50 -
<PAGE> 59
assets subject to such Asset Sale constitute Senior Note Collateral or
Telecommunication Assets subject to a Telecommunications Asset Lease, the
Company shall be required to apply that portion of such Excess Proceeds
attributable to such Asset Sale of Senior Note Collateral, as is permitted to be
so applied under Section 4.8(d) of the Senior Note Indenture (the "Permitted
Portion"), first, to a Senior Note Asset Sale Offer unless the Senior Notes are
no longer outstanding and the Senior Note Indenture has been satisfied and
discharged and, to the extent that the aggregate amount paid pursuant to the
Senior Note Asset Sale Offer is less than such Permitted Portion, then to an
Asset Sale Offer; and provided further that if such assets subject to such Asset
Sale are subject to a Lien which is and is permitted to be pari passu with the
Lien in favor of the Trustee or a collateral agent, the Company shall only be
required to apply a pro rata portion of such Excess Proceeds to the Asset Sale
Offer. To the extent that assets subject to an Asset Sale are not and are not
required to be subject to a Lien in favor of the Trustee or the Senior Note
Trustee, the Company may apply 100% of the Excess Proceeds thereof to the
prepayment of obligations outstanding in respect of Indebtedness that is pari
passu to the Notes or the Guarantees to the extent required thereunder; provided
that no such Excess Proceeds may be applied to the prepayment of the Senior
Notes except pursuant to a Senior Note Asset Sale Offer. If (x) no obligations
are outstanding in respect of or under such pari passu Indebtedness or (y) the
holders of such pari passu Indebtedness entitled to receive payment elect not to
receive the payments provided for in the previous sentence, or (z) the
application of such Net Cash Proceeds results in the complete prepayment of all
such Indebtedness, then such Excess Proceeds or any remaining portion thereof
will be required to be applied by the Company to an Asset Sale Offer subject to
the limitations of Section 4.8(d) below. Subject to the Company's complying with
the provisions of the Senior Note Indenture and to the limitations set out in
Section 4.8(d) below, the Company may at any time by delivering an Officers'
Certificate and Board Resolution to the Trustee waive its reinvestment options
and proceed to make an Asset Sale Offer, notwithstanding that any applicable
period for reinvestment shall not have expired.
(d) Notwithstanding Section 4.8(c) above and Section 4.8(e) below, the
Company will not be obligated to repurchase Notes in connection with an Asset
Sale Offer representing in the aggregate more than 25% of the original aggregate
principal amount of the Notes (which original aggregate principal amount shall
for these purposes be $26,500,000, without any adjustment whatsoever) prior to
the date following the Five Year Date, and the original aggregate principal
amount of Notes repurchased in connection with any Asset Sale Offer having a
purchase date prior to the date following the Five Year Date shall represent no
more than 25% of the original aggregate principal amount of the Notes less the
aggregate principal amount of Notes purchased pursuant to Asset Sale Offers
relating to all prior Asset Sales. To the extent that the amount of Excess
Proceeds exceeds the amount of Notes purchased because of the limitation imposed
by the immediately preceding sentence (the amount of such excess being the
"Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall constitute
Excess Proceeds for purposes of the first Asset Sale Offer that is made after
the Five Year Date and, in the event the amount of the Aggregate Unused Proceeds
exceeds $5,000,000, promptly after the Five Year Date, the Company shall
commence an Asset Sale Offer on a pro rata basis for an aggregate principal
amount of Notes equal to the Aggregate Unused Proceeds (and any other Excess
Proceeds that arise between the Five Year Date and such Asset Sale Offer) at a
purchase price equal to 100%
- 51 -
<PAGE> 60
of the principal amount of the Notes, plus accrued interest, if any, Special
Interest, if any, Additional Amounts, if any, and other amounts due with respect
thereto (but, for greater certainty, not including any amount on account of any
Reset Penalty), to the date of purchase.
(e) Subject to the provisions of Section 4.8(d) above, within 30 calendar
days of the date the amount of Excess Proceeds exceeds $5,000,000, the Company,
or the Trustee at the request and expense of the Company, shall send to each
Holder by first class mail, postage prepaid, a notice prepared by the Company
stating:
(i) that an Asset Sale Offer is being made pursuant to this Section
4.8, and that all Notes properly tendered will be accepted for payment,
subject to proration in the event the amount of Excess Proceeds is less
than the aggregate Offer Purchase Price of all Notes properly tendered
pursuant to the Asset Sale Offer;
(ii) the Asset Sale Purchase Price, the amount of Excess Proceeds
that are available to be applied to purchase tendered Notes, and the date
Notes are to be purchased pursuant to the Asset Sale Offer (the "Asset
Sale Payment Date"), which date shall be a date no earlier than 30
calendar days and not later than 40 calendar days subsequent to the date
such notice is mailed;
(iii) that any Notes or portions thereof not properly tendered or
accepted for payment will continue to accrue interest and Additional
Amounts, if any, and Special Interest, if any, and will continue to have
conversion rights and the right, if any, to receive Reset Penalties;
(iv) that, unless the Company defaults in the payment of the Offer
Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest and Additional Amounts, if any, and Special Interest, if
any, from and after the Asset Sale Payment Date and will cease to have any
conversion rights and the right, if any, to receive Reset Penalties;
(v) that any Holder electing to have any Notes or portions thereof
purchased pursuant to the Asset Sale Holder will be required to surrender
such Notes, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of such Notes completed, to the Paying Agent at the address
specified in the notice, prior to the close of business on the third
Business Day preceding the Asset Sale Payment Date;
(vi) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Asset Sale Payment Date, a telegram,
telex, facsimile transmission or letter, setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have
such Notes or portions thereof purchased pursuant to the Asset Sale Offer;
- 52 -
<PAGE> 61
(vii) that any Holder electing to have Notes purchased pursuant to
the Asset Sale Offer must specify the principal amount that is being
tendered for purchase, which principal amount must be $1,000 or an
integral multiple thereof;
(viii) if Certificated Notes have been issued pursuant to Section
2.6(b), that any Holder of Certificated Notes whose Certificated Notes are
being purchased only in part will be issued new Certificated Notes equal
in principal amount to the unpurchased portion of the Certificated Note or
Notes surrendered, which unpurchased portion will be equal in principal
amount to $1,000 or an integral multiple thereof;
(ix) that the Trustee will return to the Holder of a Global Note
that is being purchased in part, such Global Note with a notation on
Schedule A thereof adjusting the principal amount thereof to be equal to
the unpurchased portion of such Global Note; and
(x) the instructions and any other information necessary to enable
any Holder to tender Notes and to have such Notes purchased, or to
withdraw such tender, pursuant to this Section 4.8.
(f) If the aggregate Asset Sale Purchase Price of the Notes surrendered by
Holders exceeds the amount of Excess Proceeds that may, under Section 4.8(d)
hereof be applied to the Asset Sale Offer, as indicated in the notice required
by Section 4.8(e) hereof, the Trustee shall select the Notes to be purchased on
a pro rata basis based on the principal amount of the Notes tendered, with such
adjustments as may be deemed appropriate by the Trustee to be fair and
appropriate and to comply with any stock exchange and other applicable
requirements, so that only Notes in denominations of $1,000 or integral
multiples thereof shall be purchased.
(g) On or before the Asset Sale Payment Date, the Company shall (i) accept
for payment any Notes or portions thereof properly tendered and selected for
purchase pursuant to the Asset Sale Offer and Section 4.8(f) hereof; (ii)
irrevocably deposit with the Paying Agent, by 10:00 a.m., New York City time, on
such date, in immediately available funds, an amount equal to the Asset Sale
Purchase Price in respect of all Notes or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee the Notes so accepted
together with an Officers' Certificate listing the Notes or portions thereof
tendered to the Company and accepted for payment. The Paying Agent shall
promptly send by first class mail, postage prepaid, to each Holder of Notes or
portions thereof so accepted for payment, payment in an amount equal to the
Asset Sale Purchase Price for such Notes or portions thereof. The Company shall
publicly announce the results of the Asset Sale Offer on or as soon as
practicable after the Asset Sale Payment Date. For purposes of this Section 4.8,
the Trustee shall act as the Paying Agent.
(h) Upon surrender and cancellation of a Certificated Note that is
purchased in part, the Company shall promptly issue and the Trustee shall
authenticate and deliver to the surrendering Holder of such Certificated Note a
new Certificated Note equal in principal amount to the unpurchased portion of
such surrendered Certificated Note; provided that each such new Certificated
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
- 53 -
<PAGE> 62
Upon surrender of a Global Note that is purchased in part pursuant to an
Asset Sale Offer, the Paying Agent shall forward such Global Note to the Trustee
who shall make a notation on Schedule A thereof to reduce the principal amount
of such Global Note to an amount equal to the unpurchased portion of such Global
Note, as provided in Section 2.5(c) hereof.
(i) Upon completion of an Asset Sale Offer (including payment of the Asset
Sale Purchase Price for accepted Notes), any surplus Excess Proceeds that were
subject to such offer shall cease to be Excess Proceeds, and the Company may
then use such amounts for general corporate purposes. For greater certainty,
such Excess Proceeds do not include any Aggregate Unused Proceeds until such
Aggregate Unused Proceeds become Excess Proceeds pursuant to Section 4.8(d)
hereof.
(j) The Company shall comply with the requirements of Section 14(e) under
the Exchange Act and any other securities laws or regulations, to the extent
such laws and regulations are applicable, in connection with the purchase of
Notes pursuant to an Asset Sale Offer.
SECTION 4.9 Limitation on Issuances of Guarantees by Restricted
Subsidiaries. (a) The Company will not permit any Restricted Subsidiary which is
not a Guarantor on the Issue Date to guarantee, directly or indirectly, any
Indebtedness of the Company ("Guaranteed Indebtedness") unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for a Guarantee by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Guarantee. If the Guaranteed Indebtedness is pari passu
with the Notes or a Guarantee, then the guarantee of such Guaranteed
Indebtedness shall be pari passu with or subordinated to such Guarantee; and if
the Guaranteed Indebtedness is subordinated to the Notes or a Guarantee, then
the guarantee of such Guaranteed Indebtedness shall be subordinated to the
Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes or such Guarantee.
(b) Notwithstanding the provisions of Section 4.10(a) hereof, any
Guarantee by a Restricted Subsidiary other than a Leasing Company, NWE Cyprus,
WTC, BCL or a future Wholly-Owned Restricted Subsidiary of the Company shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon the release or discharge of the guarantee which resulted in
the creation of such Restricted Subsidiary's Guarantee, except a discharge or
release by, or as a result of, payment under such guarantee.
SECTION 4.10 Restricted and Unrestricted Subsidiaries. (a) The Company may
designate a Subsidiary (including a newly formed or newly acquired Subsidiary)
of the Company or any of its Restricted Subsidiaries, other than the Leasing
Companies, NWE Cyprus, WTC and Technocom, as an Unrestricted Subsidiary,
provided that (i) no portion of the Indebtedness or any other obligation
(contingent or otherwise) of such Subsidiary (x) is guaranteed by the
- 54 -
<PAGE> 63
Company or any Restricted Subsidiary, (y) is recourse to or obligates the
Company or any Restricted Subsidiary in any way or (z) subjects any Property or
assets of the Company or any Restricted Subsidiary, directly or indirectly,
contingent or otherwise, to the satisfaction thereof, (ii) such Subsidiary does
not have any obligations which, if in default, would result in a cross default
on Indebtedness of the Company or a Restricted Subsidiary (other than
Indebtedness to the Company or a Restricted Subsidiary) and (iii) such
Subsidiary has total assets of $50,000 or less or such designation is effective
immediately upon such Person's becoming a Subsidiary. Notwithstanding the
foregoing, no Subsidiary may be designated an Unrestricted Subsidiary if such
Subsidiary, directly or indirectly, held Capital Stock of a Restricted
Subsidiary. Unless so designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company or any of its Restricted Subsidiaries shall
be classified as a Restricted Subsidiary thereof. Except for Restricted
Subsidiaries having total assets of $50,000 or less, no Restricted Subsidiary
may be redesignated as an Unrestricted Subsidiary.
(b) An Unrestricted Subsidiary may be redesignated as a Restricted
Subsidiary. The designation of a Subsidiary as an Unrestricted Subsidiary or the
designation of an Unrestricted Subsidiary as a Restricted Subsidiary shall be
made by the Board of Directors pursuant to a Board Resolution delivered to the
Trustee and shall be effective as of the date specified in such Board
Resolution, which shall not be prior to the date such Board Resolution is
delivered to the Trustee.
SECTION 4.11 Reports. Whether or not the Company is subject to Section
13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the
Company shall file with the Commission the annual or other reports, and other
documents which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were subject thereto, such documents to be filed with the Commission
on or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required to file them. The Company shall also (whether
or not it is required to file reports with the Commission), within 30 days of
each Required Filing Date, (i) transmit by mail to all Holders, as their names
and addresses appear in the Note Register and to any Persons that request such
reports in writing, without cost to such Holders or Persons, and (ii) file with
the Trustee, copies of the annual or other reports, and other documents (without
exhibits) which the Company has filed or would have filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act, any successor provisions
thereto or this Section 4.20. The Company shall not be required to file any
report with the Commission if the Commission does not permit such filing.
SECTION 4.12 Compliance Certificate; Notice of Default or Event of
Default.
(a) The Company shall deliver to the Trustee within 120 calendar days
after the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate (which shall be signed by officers satisfying the
requirements of Section 314(a)(4) of the Trust Indenture Act) stating whether or
not, to the best knowledge of such officers, the Company has complied with all
conditions and covenants under this Indenture and the Collateral Documents, and,
if the
- 55 -
<PAGE> 64
Company shall be in Default, specifying all such Defaults and the nature thereof
of which such officer may have knowledge.
(b) The year-end financial statements delivered pursuant to Section 4.11
above shall be accompanied by a written statement of the Company's independent
public accountants (who shall be a firm of established national reputation
reasonably satisfactory to the Trustee) that in making the examination necessary
for certification of such financial statements nothing has come to their
attention which would lead them to believe that the Company or any of its
Restricted Subsidiaries has violated any provisions of Section 4.1, 4.6, 4.7,
4.8, 4.9, 4.14 hereof, or of Article V of this Indenture, 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, and it
being further understood that such statement may not be provided to the extent
contrary to the then current recommendation of the accountant's governing body.
In the event that, if the Company remains incorporated in Canada and the
Canadian Institute of Chartered Accountants provides recommendations regarding
the basis on which Canadian accountants can make all or part of the statement
referred to above, such statement shall be provided to the Trustee following the
next fiscal year end of the Company.
(c) The Company will, so long as any of the Notes are outstanding, deliver
to the Trustee, within 5 calendar days of any Officer becoming aware of (i) any
Default or Event of Default, (ii) any event of default under the Senior Note
Indenture has occurred and is continuing or (iii) any event of default under any
other mortgage, indenture or instrument referred to in Section 6.1(f), an
Officers' Certificate specifying such Default, Event of Default or other event
of default and what action the Company or applicable Restricted Subsidiary is
taking or proposes to take with respect thereto.
(d) For the purposes of this Section 4.12, compliance shall be determined
without regard to any period of grace or requirement of notice under this
Indenture.
(e) So long as either (i) The Company has not procured or caused to be
procured a recognized financial institution with capital of not less than
$10,000,000 as collateral agent in the British Virgin Islands which the Trustee
or the Senior Note Trustee may lawfully appoint in respect of Collateral or
Senior Note Collateral, or (ii) WTC has not consolidated with or merged with NWE
Cyprus or transferred all or substantially all of its assets to NWE Cyprus in
connection with a winding-up or liquidation of WTC, the Company shall deliver,
on or before the last Business Day of the month following the Issue Date and
each month thereafter, a certificate to the Trustee stating what steps have been
taken to fulfill the Company's best efforts undertaking to the Holders of the
Notes and of the Senior Notes to give effect to (i) or (ii) above and what steps
will be taken in the month immediately succeeding the month for which such
certificate is delivered.
SECTION 4.13 Payment of Additional Amounts. (a) Except to the extent
required by law, any and all payments of, or in respect of, any Note shall be
made free and clear of and
- 56 -
<PAGE> 65
without deduction for or on account of any and all present or future taxes,
levies, imposts, deductions, charges or withholdings and all liabilities with
respect thereto imposed by Canada, the Russian Federation, Cyprus or any other
jurisdiction with which the Company or any Guarantor has some connection
(including any jurisdiction (other than the United States of America) from or
through which payments under the Notes or the Guarantees are made) or any
political subdivision of or any taxing authority in any such jurisdiction
("Canadian Taxes," "Russian Taxes," "Cypriot Taxes" or "Other Taxes,"
respectively). If the Company or any Guarantor shall be required by law to
withhold or deduct any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other
Taxes from or in respect of any sum payable under a Note or pursuant to a
Guarantee, the sum payable by the Company or such Guarantor, as the case may be,
thereunder shall be increased by the amount ("Additional Amounts") necessary so
that after making all required withholdings and deductions, the Holder shall
receive an amount equal to the sum that it would have received had no such
withholdings and deductions been made; provided that any such sum shall not be
paid in respect of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other
Taxes to a Holder (an "Excluded Holder") of a Note (i) resulting from the
beneficial owner of such Note carrying on business or being deemed to carry on
business in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or any political subdivision thereof or having any other
connection with the relevant taxing jurisdiction or any political subdivision
thereof or any taxing authority therein other than the mere holding or owning of
such Note, being a beneficiary of the Guarantees, the receipt of any income or
payments in respect of such Note or the Guarantees or the enforcement of such
Note or the Guarantees, (ii) resulting from the Company or any Guarantor not
dealing at arm's length (within the meaning of the Income Tax Act (Canada)) with
such Holder at the time of such payment or at the time the amount of such
payment is deemed to have been paid or credited or (iii) that would not have
been imposed but for the presentation (where presentation is required) of such
Note for payment more than 180 days after the date such payment became due and
payable or was duly provided for, whichever occurs later. The Company or the
Guarantors, as applicable, will also (i) make such withholding or deduction and
(ii) remit the full amount deducted or withheld to the relevant authority in
accordance with applicable law, and, in any such case, the Company will furnish
to each Holder on whose behalf an amount was so remitted, within 30 calendar
days after the date the payment of any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes is due pursuant to applicable law, certified copies of tax
receipts evidencing such payment by the Company or the Guarantors, as
applicable. The Company will, upon written request of each Holder (other than an
Excluded Holder), reimburse each such Holder for the amount of (i) any Canadian
Taxes, Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed and paid
by such holder as a result of payments made under or with respect to any Notes,
and (ii) any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes so
levied or imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments made under
or with respect to such Notes or the Guarantees) after such reimbursement will
not be less than the net amount which the Holder would have received if Canadian
Taxes, Russian Taxes, Cypriot Taxes or Other Taxes on such reimbursement had not
been imposed.
- 57 -
<PAGE> 66
(b) At least 30 calendar days prior to each date on which any payment
under or with respect to the Notes is due and payable, if the Company or the
Guarantors, as applicable, will be obligated to pay Additional Amounts with
respect to such payment, the Company or the Guarantors, as applicable, will
deliver to the Trustee an Officers' Certificate stating the fact that such
Additional Amounts will be payable and the amounts so payable and will set forth
such other information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
(c) The Company or the Guarantors will pay any stamp, issue, registration,
documentary or other similar taxes and duties, including interest and penalties,
in respect of the creation, issue and offering of the Notes payable in Canada,
the United States, the Russian Federation or Cyprus or any political subdivision
thereof or taxing authority of or in the foregoing. The Company and the
Guarantors will also pay and indemnify the Holders and the Trustee from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by the Trustee or the Holders to create the Liens
on the Collateral and to enforce the obligations of the Company or the
Guarantors under the Notes, the Indenture, the Guarantees or the Collateral
Documents or the Senior Note Collateral Documents.
SECTION 4.14 Repurchase at the Option of Holders upon a Termination of
Trading.
(a) In the event of any Termination of Trading (as defined below)
occurring after the Issue Date and on or prior to Maturity, each Holder of Notes
will have the right commencing on the date following the Five Year Date, at such
Holder's option, to require the Company to repurchase all or any part of such
Holder's Notes on the date (the "Repurchase Date") that is 30 days after the
date the Company gives notice of the Termination of Trading as described below
at a price (the "Repurchase Price") equal to 100% of the principal amount
thereof, together with accrued and unpaid interest, if any, Additional Amounts,
if any, and Special Interest, if any, thereon to the Repurchase Date. On or
prior to 10:00 a.m., New York City time on the Repurchase Date, the Company
shall irrevocably deposit with the Trustee or a Paying Agent an amount of money
sufficient to pay the Repurchase Price of the Notes which are to be repaid on or
promptly following the Repurchase Date.
(b) On or before the 15th day after the occurrence of a Termination of
Trading (unless such Termination of Trading occurs prior to the Five Year Date,
then on or before the 15th day after the Five Year Date), the Company, or the
Trustee at the request and expense of the Company, shall send to each Holder by
first class mail, postage prepaid, a notice prepared by the Company stating:
(i) that a Termination of Trading has occurred and that each Holder
has the right to require a repurchase of such Holder's Notes, which
repurchase right is made pursuant to this Section 4.14, and that all Notes
properly tendered will be repurchased;
- 58 -
<PAGE> 67
(ii) the Repurchase Price, and the date Notes are to be repurchased,
which date shall be a date occurring no earlier than 30 calendar days nor
later than 40 calendar days subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not properly tendered will
continue to accrue interest and Additional Amounts and Special Interest,
if applicable, and will continue to have conversion rights and rights, if
any, to Reset Penalties.
(iv) that, unless the Company defaults in the payment of the
Repurchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the exercise of such repurchase right
shall cease to accrue interest and Additional Amounts and Special
Interest, if applicable, from and after the Repurchase Date and will cease
to have any conversion rights and rights, if any, to Reset Penalties.
(v) that any Holder electing to have any Notes or portions thereof
repurchased pursuant to the exercise of such repurchase right will be
required to surrender such Notes, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of such Notes completed, to the Paying
Agent at the address specified in the notice, prior to the close of
business on the first Business Day preceding the Repurchase Date;
(vi) that any Holder electing to have Notes purchased pursuant to
such repurchase right must specify the principal amount that is being
tendered for purchase, which principal amount must be $1,000 or an
integral multiple thereof;
(vii) if Certificated Notes have been issued pursuant to Section
2.6(b), that any Holder of Certificated Notes whose Certificated Notes are
being purchased only in part will be issued new Certificated Notes equal
in principal amount to the unpurchased portion of the Certificated Note or
Notes surrendered, which unpurchased portion will be equal in principal
amount to $1,000 or an integral multiple thereof;
(viii) that the Trustee will return to the Holder of a Global Note
that is being purchased in part, such Global Note with a notation on
Schedule A thereof adjusting the principal amount thereof to be equal to
the unpurchased portion of such Global Note; and
(ix) the instructions and any other information necessary to enable
any Holder to exercise such repurchase right or effect withdrawal of such
exercise.
(c) To exercise the repurchase right, the Holder of a Note must deliver,
on or before the close of business on the Repurchase Date, irrevocable written
notice to the Company (or an agent designated by the Company for such purpose)
and to the Trustee of the Holder's exercise of such right, together with the
certificates evidencing the Notes with respect to which the right is being
exercised, duly endorsed for transfer. Such written notice is irrevocable. The
Company or the Trustee shall promptly send by first class mail, postage prepaid,
to each Holder of Notes or portions thereof so accepted for payment, payment in
an amount equal to the
- 59 -
<PAGE> 68
Repurchase Price for such Notes or portions thereof. The Company shall publicly
announce the results of the exercises of repurchase rights upon a Termination of
Trading on or as soon as practicable after the Repurchase Date. For purposes of
this Section 4.14, the Trustee shall act as the Paying Agent.
(d) A "Termination of Trading," shall occur if the Common Stock of the
Company (or other common stock into which the Notes are then convertible) is
neither listed for trading on a U.S. national securities exchange nor approved
for trading on an established automated over-the-counter trading market in the
United States.
(e) The Company will comply with the requirements of Section 14(e) under
the Exchange Act and any other securities laws or regulations to the extent such
laws and regulations are applicable, in connection with the repurchase of the
Notes pursuant to an offer to repurchase upon a Termination of Trading.
SECTION 4.15 Leasing Companies and NWE Cyprus. (a) Each Leasing Company
shall at all times remain a special purpose Cypriot corporation which is a
Guarantor and a Wholly-Owned Restricted Subsidiary with corporate organizational
documents containing the provisions set forth in Schedule 1.1(b) attached
hereto.
(b) NWE Cyprus shall at all times remain a Cypriot corporation and a
Wholly-Owned Subsidiary.
SECTION 4.16 Technocom. Technocom may not, in any transaction or series of
related transactions, consolidate with or merge with or into, any other Person
or otherwise change its domicile into any other jurisdiction (through a sale of
assets) unless Technocom or such Person, as the case may be, continues to be
owned in a substantially identical proportion and manner as Technocom is owned
immediately prior to such consolidation or merger or change of domicile, the
preferential $20,000,000 dividend and liquidation, dissolution or winding-up
rights of the Technocom Preferred Stock are not changed and there is no class of
Capital Stock authorized having rights superior to the Technocom Preferred Stock
after giving effect to such transaction or transactions, and such consolidation
or merger or other change of domicile does not adversely affect the perfection
or priority of the Liens in the Technocom Preferred Stock.
SECTION 4.17 Collateral Agents. In the event that any collateral agent
appointed on or before the Issue Date or thereafter in respect of one or more
jurisdictions resigns or is terminated without the contemporaneous appointment
of a new collateral agent in such jurisdiction or jurisdictions, the Company
shall procure or cause to be procured, within 45 days after the Trustee has
given notice to the Company of such resignation or termination, a recognized
financial institution, with capital of not less than $10,000,000, in such
jurisdiction or jurisdictions, which the Trustee or the Convertible Note Trustee
may lawfully appoint as a collateral agent in respect of Collateral or Senior
Note Collateral.
- 60 -
<PAGE> 69
SECTION 4.18 WTC. Provided no Default or Event of Default has occurred and
is continuing or would occur as a result of the following transaction, WTC may
consolidate or merge with NWE Cyprus or transfer all or substantially all of its
assets to NWE Cyprus in connection with a winding-up or liquidation of WTC.
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.1 Merger, Consolidation, Sale of Assets, Etc. The Company shall
not, in any transaction or series of related transactions, consolidate with, or
merge with or into, any other Person or permit any other Person to merge with or
into the Company (other than a merger of a Restricted Subsidiary of the Company
into the Company in which the Company is the continuing corporation), or sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially all
of the Property and assets of the Company and its Restricted Subsidiaries taken
as a whole to any other Person, unless:
(a) either (i) the Company shall be the continuing corporation or (ii) the
corporation (if other than the Company) formed by such consolidation or into
which the Company is merged, or the Person which acquires, by sale, assignment,
conveyance, transfer, lease or disposition, all or substantially all of the
Property and assets of the Company and its Restricted Subsidiaries taken as a
whole (any such corporation or Person being the "Surviving Entity") shall be a
corporation organized and validly existing under the laws of Canada or any
province or political subdivision thereof or the United States of America, any
political subdivision thereof, any state thereof or the District of Columbia, or
the United Kingdom or Bermuda and shall expressly assume, by an indenture
supplemental hereto and other appropriate Collateral Documents in form
reasonably satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest and Additional Amounts, if any,
and Special Interest, if any, on all the Notes and the performance of every
covenant and obligation in this Indenture and the Collateral Documents on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction or series of
related transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of related transactions), no Default or
Event of Default shall have occurred and be continuing or would result
therefrom;
(c) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), the Company (or the
Surviving Entity, if the Company is not continuing) shall have a Consolidated
Net Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction; and
- 61 -
<PAGE> 70
(d) the Company (or the Surviving Entity, if the Company is not
continuing) would not be subject to any materially adverse tax effect as a
result of such transaction or series of transactions;
provided that, notwithstanding any other provision of this Article V, the
Company shall not engage in any amalgamation, consolidation, merger, sale or
transfer on or prior to the Five Year Date which would result in the Holder of a
Note not being entitled to convert such Note into any "Substituted Properties"
as a result of the provision contained in Section 13.12;
The provisions of clauses (c) and (d) shall not apply to any merger or
consolidation into or with, or any such transfer of all or substantially all of
the Property and assets of the Company and the Restricted Subsidiaries, taken as
a whole, to a newly formed corporation solely for the purpose of moving the
Company's domicile out of Canada; provided that the Company shall have certified
to the Trustee in writing to such effect; and provided, further, that in no case
shall the adverse tax effect to the Company (or the Surviving Entity, if the
Company is not continuing) of such merger or consolidation or such transfer be
$7,500,000 or more; and provided, further, that the Company shall not engage in
any such merger or consolidation or such transaction for the purpose of moving
the Company's domicile out of Canada to the United Kingdom if following such
transaction, either the Trustee or any Holder of a Note would be considered to
be a "control person" either in such new jurisdiction or the jurisdiction of the
Trustee or such Holder.
In connection with any consolidation, merger, conveyance, lease or other
disposition contemplated by this Section 5.1, the Company shall deliver, or
cause to be delivered, to the Trustee, in form reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, lease or disposition and any
supplemental indenture in respect thereto comply with this Article V and that
all conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 5.2 Successor Corporation Substituted. Upon any consolidation
with, or merger by the Company with or into, any other corporation, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Property and assets of the Company and its Restricted
Subsidiaries taken as a whole in accordance with Section 5.1 hereof, the
successor corporation formed by such consolidation or into which the Company is
merged, or the Person to which such sale, conveyance, assignment, transfer,
lease, conveyance or other disposition is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; and thereafter except in the case of a lease the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Notes, except for the obligation to pay the principal of
(and premium, if any) and interest (including Additional Amounts, if any, and
Special Interest, if any) on the Notes.
If such Surviving Entity shall have succeeded to and been substituted
for the Company, such Surviving Entity may cause to be signed, and may issue
either in its own name or in the
- 62 -
<PAGE> 71
name of the Company prior to such succession any or all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such Surviving Entity, instead
of the Company, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any Notes
which previously shall have been signed and delivered by the officers of the
Company to the Trustee for authentication, and any Notes which such Surviving
Entity thereafter shall cause to be signed and delivered to the Trustee for that
purpose (in each instance with endorsements of Guarantees thereon by the
Guarantors). All of the Notes so issued and so endorsed shall in all respects
have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued and endorsed in accordance with the terms of
this Indenture and the Guarantee as though all of such Notes had been issued and
endorsed at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer, conveyance or
other disposal, such changes in phraseology and form (but not in substance) may
be made in the Notes thereafter to be issued or the Guarantees to be endorsed
thereon as may be appropriate.
For all purposes of this Indenture and the Notes, Subsidiaries of any
Surviving Entity will, upon such transaction or series of transactions, become
Restricted Subsidiaries or Unrestricted Subsidiaries as provided pursuant to
this Indenture.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. "Event of Default" wherever used herein
with respect to the Notes means any one of the following events (whatever the
reason for such event, and whether it shall be voluntary or involuntary, or be
effected by operation of law, pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of interest (or Additional Amounts and Special
Interest, if any) on any Note or any other amount due in respect of the Note
when the same becomes due and payable, and the continuance of such Default for a
period of 30 calendar days; or
(b) default in the payment of the principal of (or premium, if any, on)
any Note when the same becomes due and payable whether upon Maturity, optional
redemption, required repurchase (including pursuant to a Change of Control
Offer, an Asset Sale Offer or a repurchase offer upon a Termination of Trading)
or otherwise, or the failure to make an offer to purchase any Note as herein
required; or
(c) default in the performance, or breach, of any covenant or agreement
contained in Section 4.7, Section 4.8, Section 4.14, Section 4.17 or Article V
hereof; or
- 63 -
<PAGE> 72
(d) default in the performance, or breach, of any covenant or warranty of
the Company contained in this Indenture or the Notes (other than a covenant or
warranty addressed in Section 6.1(a), Section 6.1(b) or Section 6.1(c) hereof)
or any Collateral Document or any Senior Note Collateral Document, and the
continuance of such Default or breach for a period of 45 calendar days after
written notice thereof has been given to the Company by the Trustee or to the
Company and the Trustee by the holders of at least 25 percent of the aggregate
principal amount at Stated Maturity of the outstanding Notes; or
(e) the occurrence and continuance of an "Event of Default" under the
Senior Note Indenture for a period of 15 days after written notice of the
occurrence of such Event of Default has been given to the Company by the Trustee
or a Holder or Holders of the Notes, which notice states that such event
constitutes a Default hereunder; or
(f) Indebtedness of the Company or any Restricted Subsidiary is not paid
when due within the applicable grace period, if any, or is accelerated by the
holders thereof and, in either case, the principal amount of such unpaid or
accelerated Indebtedness exceeds $10,000,000; or
(g) the entry by a court of competent jurisdiction of one or more final
judgments against the Company or any Restricted Subsidiary in an uninsured or
unindemnified aggregate amount in excess of $5,000,000 which is not discharged,
waived, appealed, stayed, bonded or satisfied for a period of 60 consecutive
calendar days; or
(h) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Significant
Restricted Subsidiary of the Company in an involuntary case or proceeding under
United States bankruptcy laws, as now or hereafter constituted, or any other
applicable federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Restricted Subsidiary of the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of, or in respect of, the Company or any Significant Restricted
Subsidiary of the Company under United States bankruptcy laws, as now or
hereafter constituted, or any other applicable federal, state or foreign
bankruptcy, insolvency or other similar law, including the Companies Creditors'
Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Significant Restricted Subsidiary
of the Company or of any substantial part of the Property or assets of the
Company or any Significant Restricted Subsidiary of the Company, or ordering the
winding-up or liquidation of the affairs of the Company or any Significant
Restricted Subsidiary of the Company, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive calendar days; or
(i) (i) the commencement by the Company or any Significant Restricted
Subsidiary of the Company of a voluntary case or proceeding under United States
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal, state or foreign
- 64 -
<PAGE> 73
bankruptcy, insolvency or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent; or (ii) the consent by the Company or
any Significant Restricted Subsidiary of the Company to the entry of a decree or
order for relief in respect of the Company or any Significant Restricted
Subsidiary of the Company in an involuntary case or proceeding under United
States bankruptcy laws, as now or hereafter constituted, or any other applicable
federal, state, or foreign bankruptcy, insolvency, or other similar law,
including the Companies Creditors' Arrangement Act (Canada) and the Bankruptcy
and Insolvency Act (Canada), or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company or any Significant Restricted
Subsidiary of the Company; or (iii) the filing by the Company or any Significant
Restricted Subsidiary of the Company of a petition or answer or consent seeking
reorganization or relief under United States bankruptcy laws, as now or
hereafter constituted, or any other applicable federal, state or foreign
bankruptcy, insolvency or other similar law; or (iv) the consent by the Company
or any Significant Restricted Subsidiary of the Company to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Company
or any Significant Restricted Subsidiary of the Company or of any substantial
part of the Property or assets of the Company or any Significant Restricted
Subsidiary of the Company, or the making by the Company or any Significant
Restricted Subsidiary of the Company of an assignment for the benefit of
creditors; or (v) the admission by the Company or any Significant Restricted
Subsidiary of the Company in writing of its inability to pay its debts generally
as they become due; or (vi) the taking of corporate action by the Company or any
Significant Restricted Subsidiary of the Company in furtherance of any such
action;
(j) any Guarantee, Collateral Document or Senior Note Collateral Document
ceases to be in effect (except as otherwise permitted by this Indenture, the
Collateral Documents or the Senior Note Collateral Documents), or the Company or
any Guarantor shall deny or disaffirm its obligations under its Guarantee, any
Collateral Document, the Notes or any Senior Note Collateral Document, or the
Notes and/or the Guarantees fail to be secured by any theretofore perfected
security interests or Liens in the Collateral or the Senior Note Collateral
(except as permitted by this Indenture, the Collateral Documents or the Senior
Note Collateral Documents), which in each circumstance continues for a period of
30 days after receipt of a written notice thereof from the Trustee to the
Company, or from Holders of at least 25% of the aggregate principal amount of
the Notes then outstanding to the Company and the Trustee;
(k) a Change of Control described in any of clauses (i), (ii) or (iii) of
the definition of "Change of Control" set forth in Section 1.1 hereof occurs; or
(l) if any assets of the Company or any of its Restricted Subsidiaries
shall be nationalized, expropriated, declared forfeit or otherwise permanently
taken by governmental action (the "Seized Assets"), and the book value of such
Seized Assets (less the book value of the expropriation proceeds) shall
constitute more than 15% of the book value, on a consolidated basis, of all of
the Company's assets minus currents assets as they are reported on the Company's
most recent quarterly consolidated balance sheet.
- 65 -
<PAGE> 74
SECTION 6.2 Acceleration. If any Event of Default (other than an Event of
Default specified in Section 6.1(h) or Section 6.1(i) hereof) occurs and is
continuing, or if an Event of Default specified in Section 6.1(k) above occurs
and is continuing and the Company fails to make the Change of Control Offer
required pursuant to Section 4.7 hereof, then and in every such case the Trustee
or the holders of not less than 25% of the outstanding aggregate principal
amount at Stated Maturity of the Notes may declare the Default Amount of,
premium, if any, any accrued and unpaid interest (and Additional Amounts, if
any, and Special Interest, if any) on and any other amounts then due in respect
of all Notes then outstanding to be immediately due and payable by a notice in
writing to the Company (and to the Trustee if given by the Holders of the
Notes), and upon any such declaration, all amounts payable in respect of the
Notes will become and be immediately due and payable. If any Event of Default
specified in Section 6.1(h) or Section 6.1(i) hereof occurs, the Default Amount
of, premium, if any and any accrued and unpaid interest (and Additional Amounts,
if any, and Special Interest, if any) on, and any other amounts then due in
respect of, the Notes then outstanding shall become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
Notes. In the event of a declaration of acceleration because an Event of Default
set forth in Section 6.1(e) hereof has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled (A) if
the Senior Notes have been repaid, (B) if the "Event of Default" under the
Senior Note Indenture triggering such Event of Default pursuant to clause (e)
above shall be remedied or cured, or waived by the Holders of the Senior Notes,
or (C) if the Senior Notes have been accelerated, the acceleration of the Senior
Notes shall have been rescinded within 60 days of the occurrence of such "Event
of Default" under the Senior Note Indenture, and, in the case of clauses (A),
(B) or (C) above, the Senior Note Trustee so certifies to the Convertible Note
Trustee; provided that any such event described in clause (A), (B) or (C) above
must occur prior to the commencement of foreclosure proceedings or other
enforcement proceedings with respect to this Indenture or any of the Collateral
Documents. In the event of a declaration of acceleration because an Event of
Default set forth in Section 6.1(f) hereof has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled if the
event of default triggering such Event of Default pursuant to Section 6.1(f)
hereof shall be remedied, or cured, or waived by the holders of the relevant
Indebtedness, within 60 calendar days after such event of default; provided that
no judgment or decree for the payment of the money due on the Notes has been
obtained by the Trustee as hereinafter provided in this Article VI. The "Default
Amount" in respect of any particular Note as of any particular date shall equal
100% of the principal amount payable in respect of the Note at the Stated
Maturity thereof.
At any time after a declaration of acceleration with respect to the Notes
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this Article VI, the
Holders of a majority in principal amount at Stated Maturity of the outstanding
Notes, by written notice of the Company and the Trustee, may rescind and annul
such declaration and its consequences if,
(a) the Company has paid or deposited with the Trustee a sum sufficient to
pay
- 66 -
<PAGE> 75
(i) all overdue installments of interest (including Additional
Amounts, if any, and Special Interest, if any), on, and any other amounts
then due in respect of all Notes,
(ii) the principal of (and premium, if any, on) any Notes which have
become due otherwise than by such declaration of acceleration and interest
thereon at the rate or rates prescribed therefor in the Notes and this
Indenture,
(iii) to the extent that payment of such interest is lawful,
interest (including Additional Amounts, if any and Special Interest, if
any), and any other amounts then due in respect of the Defaulted Interest
at the rate or rates prescribed therefor in the Notes and this Indenture,
and
(iv) all moneys paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due to the Trustee
pursuant to Section 7.7 hereof; and
(b) all Events of Default with respect to the Notes, other than the
non-payment of the principal of Notes which have become due solely by such
declaration of acceleration, have been cured or waived by the Holders as
provided herein.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
SECTION 6.3 Other Remedies. The Company covenants that if an Event of
Default specified in Section 6.1(a) or Section 6.1(b) occurs, the Company shall,
upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders,
the whole amount then due and payable on the Notes for principal (and premium,
if any) and interest (including Additional Amounts, if any, and Special
Interest, if any) and any other amounts then due in respect of the Notes, and,
to the extent that payment of such interest shall be legally enforceable,
interest upon the overdue principal (and premium, if any) and upon Defaulted
Interest, at the rate or rates prescribed therefor in the Notes and this
Indenture; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and all other amounts due to the Trustee pursuant to Section 7.7
hereof.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of, or pursue any available remedy (under
this Indenture, the Collateral Documents, the Senior Note Collateral Documents
or otherwise) to collect, the sums so due and unpaid, and may prosecute any such
proceeding to judgment or final decree, and may enforce the same against the
Company, the Guarantors or any other Obligor upon such Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the Property and assets of the Company, any Guarantor or any other Obligor upon
such Notes, wherever situated.
- 67 -
<PAGE> 76
If an Event of Default with respect to the Notes occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or the Collateral Documents or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy.
SECTION 6.4 Waiver of Past Defaults. The Holders of not less than a
majority in principal amount at Stated Maturity of the outstanding Notes may, on
behalf of the Holders of all the Notes, waive any past Default and its
consequences under this Article VI, except Default (a) in the payment of the
principal of (or premium, if any) or interest on, any Note, or (b) in respect of
a covenant or provision hereof which under Section 9.2 hereof cannot be modified
or amended without the consent of the Holder of each outstanding Note affected.
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 and the Collateral Documents; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.5 Control by Majority. The Holders of not less than a majority
in principal amount at Stated Maturity of the outstanding Notes shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee; provided that
(a) such direction shall not be in conflict with any rule of law or with
this Indenture, the Collateral Documents or the Senior Note Collateral Documents
or unduly prejudicial to the right of other Holders and would not subject the
Trustee to personal liability, and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 6.6 Limitation on Suits. No Holder of Notes shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture or the Collateral Documents, or for the appointment of a receiver or
trustee, or for any other remedy hereunder or thereunder, unless
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Notes;
(b) the Holders of not less than 25 percent in principal amount at Stated
Maturity of the outstanding Notes shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its capacity as
Trustee hereunder;
- 68 -
<PAGE> 77
(c) such Holders or Holders have offered to the Trustee security or
indemnity satisfactory to the Trustee in its reasonable discretion against the
costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 calendar days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount at Stated Maturity of the outstanding Notes;
in any event, it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture, the Collateral Documents or the Senior Note
Collateral Documents to affect, disturb or prejudice the rights of any Holders
of Notes, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, the
Collateral Documents or the Senior Note Collateral Documents, except in the
manner herein provided and for the equal and ratable benefit of all Holders of
Notes.
SECTION 6.7 Rights of Holders to Receive Payment. Notwithstanding any
other provisions of this Indenture, the right of any Holder to receive payment
of principal of (and premium, if any), interest (including Additional Amounts,
if any, and Special Interest, if any) on, and any other amounts due in respect
of the Notes held by such Holder, on or after the respective due dates expressed
in the Notes or the redemption dates or purchase dates provided for therein, or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall be absolute and unconditional and shall not be impaired
or affected without the consent of such Holder; except that no Holder shall have
the right to institute any such suit, if and to the extent that the institution
or prosecution thereof or the entry of judgment therein would under applicable
law result in the surrender, impairment, waiver, or loss of the Liens of the
Collateral Documents upon any Property or assets subject to the Liens.
SECTION 6.8 Trustee May File Proofs of Claim. The Trustee shall be
entitled and empowered, without regard to whether the Trustee or any Holder
shall have made any demand or performed any other act pursuant to the provisions
of this Article and without regard to whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise, by
intervention in any proceedings relative to the Issuer or other Obligor upon the
Notes, or to the creditors or Property of the Company, any Guarantor or any
other Obligor or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be entitled and
empowered in such instances:
(a) to file and prove a claim or claims for the whole amount of principal
(and premium, if any), interest (including Additional Amounts, if any, and
Special Interest, if any) and any other amounts owing and unpaid in respect of
the Notes, and to file such other papers
- 69 -
<PAGE> 78
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including all amounts owing to the Trustee and each predecessor Trustee
pursuant to Section 7.7 hereof) and of the Holders allowed in any judicial
proceedings relative to the Company or other obligor upon the Notes, or to the
creditors or property of the Company, any Guarantor, or any such other Obligor,
(b) unless prohibited by applicable law and regulations, to vote on behalf
of the Holders of the Notes in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable proceedings,
and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Trustee on their behalf; and any
trustee, receiver, or liquidator, custodian or other similar official is hereby
authorized by each of the Holders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to the
Holders, to pay to the Trustee such amounts as shall be sufficient to cover all
amounts owing to the Trustee and each predecessor Trustee pursuant to Section
7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Holders of the
Notes parties to any such proceedings.
SECTION 6.9 Priorities. Any money collected by the Trustee (including
funds received from collateral agents and escrow agents from the Collateral
Documents and the Senior Note Collateral Documents) pursuant to this Article VI
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(premium, if any) or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
7.7 hereof including payment of all compensation, expense, liabilities
incurred, and all advances made, by the Trustee and the costs and expenses
of collection;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any), interest (including Additional
Amounts, if any, and Special Interest, if any) on, and any other amounts
due in respect of, the Notes, ratably, without
- 70 -
<PAGE> 79
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal (and premium, if any) and interest
(including Additional Amounts, if any, and Special Interest, if any), and
any other amounts due in respect hereof, respectively; and
THIRD: To the Company, the Guarantors or to such party as is
entitled to be paid pursuant to the terms of the Collateral Documents or
the Senior Note Collateral Documents or as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.9. At least 15 calendar days before such
record date, the Company shall mail to each Holder and the Trustee a notice that
states such record date, the payment date and amount to be paid. The Trustee may
mail such notice in the name and at the expense of the Company.
SECTION 6.10 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, the Collateral
Documents and the Senior Note Collateral Documents, or in any suit against the
Trustee for any action taken, suffered or omitted to be taken by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merit and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10 percent in principal amount at
Stated Maturity of the outstanding Notes, or to any suit instituted by any
Holder for the enforcement of the payment of the principal (or premium, if any)
or interest on any Note on or after its Stated Maturity.
SECTION 6.11 Waiver of Stay or Extension Laws. The Company and each of the
Guarantors (to the extent they may lawfully do so) shall not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture, the Collateral Documents or the Senior Note Collateral Documents; and
the Company and each of the Guarantors (to the extent that they may lawfully do
so) hereby expressly waive all benefit or advantage of any such law, and shall
not hinder, delay or impede the execution of any power granted herein, in the
Collateral Documents or in the Senior Note Collateral Documents to the Trustee,
but shall suffer and permit the execution of every such power as though no such
law had been enacted.
SECTION 6.12 Trustee May Enforce Claims Without Possession of the Notes.
All rights of action and claims under this Indenture, the Collateral Documents,
the Convertible Note Collateral Documents or the Notes may be prosecuted and
enforced by the Trustee without the
- 71 -
<PAGE> 80
possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name, as trustee of an express trust, and any recovery of
judgment shall be applied in accordance with Section 6.9.
SECTION 6.13 Restoration of Rights and Remedies. If the Trustee or any
Holder of Notes has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case the Company, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding has been instituted.
SECTION 6.14 Rights and Remedies Cumulative. Except as otherwise provided
in Section 2.7 hereof, no right or remedy conferred herein, in the Collateral
Documents or the Convertible Note Collateral Documents upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.15 Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article VI by the Collateral Documents or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. (a) If an Event of Default has occurred and
is continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and shall use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
(b) Except during the continuance of an Event of Default: (i) the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture and no implied covenants or obligations 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
- 72 -
<PAGE> 81
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; provided that in the case of any such
certificates or opinions that by any provision of this Indenture are
specifically required to be furnished to the Trustee, the Trustee shall examine
such certificate and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not investigate or confirm the accuracy
of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, provided
that: (i) this paragraph (c) shall 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 Trust 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) 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.
(e) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(f) No provision of this Indenture, the Collateral Documents or the
Convertible Note Collateral Documents shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk of liability is not reasonably assured
to it.
(g) Every provision of this Indenture relating to the conduct or affecting
the liability or of affording protection to the Trustee shall be subject to the
provisions of this Article VII and to the provisions of the Trust Indenture Act.
SECTION 7.2 Rights of Trustee. (a) Subject to the provisions of Section
7.1(a) hereof, the Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on any
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any such agent; provided that
such agent was appointed with due care by the Trustee. No collateral agent shall
be deemed to be an agent of the Trustee.
- 73 -
<PAGE> 82
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided that the Trustee's conduct does not constitute willful
misconduct or negligence or, subject to Section 7.3 hereof, was selected by the
Company.
(e) The Trustee shall not be charged with knowledge of any Default or
Event of Default under Sections 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h),
6.1(i), 6.1(j) or 6.1(k) hereof, of the identity of any Restricted Subsidiary or
of the existence of any Change of Control, Asset Sale or Termination of Trading
unless either (i) a Trust Officer shall have actual knowledge thereof, or (ii)
the Trustee shall have received notice thereof in accordance with Section 4.12
and 15.2 hereof from the Company or in accordance with Section 15.2 hereof from
any Holder of Notes; provided that the Trustee shall comply with the "automatic
stay" provisions contained in United States bankruptcy laws, if applicable.
(f) The Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it hereunder
in good faith and in reliance thereon.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion may make such
further inquiry or investigation into such fact or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney.
(h) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
SECTION 7.3 Concerning the Trustee, Collateral Agents, and Collateral Held
by Collateral Agents.
(a) The Trustee shall have no duty to act outside of the United States in
respect of any Collateral and Senior Note Collateral located in a jurisdiction
other than the United States ("Foreign Collateral") but shall, at the specific
request of the Company and, provided that the Company has provided appropriate
opinions, appoint a Qualified Foreign Collateral Agent (as defined in subsection
(d)) in any such jurisdiction and sign the Foreign Collateral Documents (as
defined herein) specified by the Company. Such Qualified Foreign Collateral
Agent, the Trustee (at its option, or if requested by the Company), and the
owner of each item of Foreign Collateral shall, provided the same are reasonably
acceptable to the Trustee, enter into a collateral
- 74 -
<PAGE> 83
assignment, pledge agreement, mortgage or other security agreement purporting to
create a Lien or security interest in such item of Foreign Collateral (each such
assignment or agreement, a "Foreign Collateral Document") pursuant to which such
owner shall purport to grant to such Qualified Foreign Collateral Agent a Lien
or security agreement for the benefit of the Trustee and the equal and ratable
benefit of the Holders of the Notes and for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior Notes.
(b) The duties and responsibilities, and the rights and immunities, of the
Trustee with respect to a Qualified Foreign Collateral Agent and Foreign
Collateral with respect to which such Qualified Foreign Collateral Agent is
acting shall be limited to those required by this Section 7.3(b) as follows: (i)
both before and after an Event of Default, the Trustee shall have no duty to
supervise or monitor such Qualified Foreign Collateral Agent or its performance,
and no liability for any acts or omissions of such Qualified Foreign Collateral
Agent; provided that (x) if a Trust Officer has actual knowledge of willful
misconduct or gross negligence of such Qualified Foreign Collateral Agent, the
Trustee may replace such Qualified Foreign Collateral Agent with a successor
Qualified Foreign Collateral Agent which it may appoint and (y) the Trustee
shall satisfy itself that any instructions given by the Trustee to such
Qualified Foreign Collateral Agent have been carried out; (ii) the Trustee shall
give to such Qualified Foreign Collateral Agent such instructions to make
effective the Liens granted by the Foreign Collateral Documents as shall be
stated to be necessary in the Opinions of Counsel furnished pursuant to Section
11.2 of this Indenture with respect to the Foreign collateral with respect to
which any such Qualified Foreign Collateral Agent is acting and the Liens
granted therein; (iii) the Trustee shall give notice to such Qualified Foreign
Collateral Agent of any Event of Default of which a Trust Officer has actual
knowledge; (iv) the Trustee may, but has no obligation to, request information
from such Qualified Foreign Collateral Agent with respect to realization on
Foreign Collateral or an alternative course of action after an Event of Default,
shall evaluate any such information supplied by such Qualified Foreign
Collateral Agent and in its sole discretion, subject, however, to the provisions
of subsection (f) below relating to the Trustee's seeking direction from Holders
of a majority in principal amount of the Notes or the right of a Holder of Notes
to give directions pursuant to the terms of Section 6.5 of this Indenture, shall
instruct such Qualified Foreign Collateral Agent either to realize on such
Foreign collateral or to take such alternative course of action; and (v) the
Trustee shall commence an action, or take such other action as it deems
appropriate, in the event any Qualified Foreign Collateral Agent fails to follow
instructions of the Trustee or fails to provide information required to be
provided to the Trustee by such Qualified Foreign Collateral Agent; provided
that, in any circumstance in which this Section 7.3(b) requires that the Trustee
determine that such Qualified Foreign Collateral Agent has complied with
instructions, the Trustee shall be entitled to rely conclusively on a
certificate of an appropriate officer of such Qualified Foreign Collateral
Agreement to such effect.
(c) The Trustee shall not be responsible for, and makes no representation
as to, the effectiveness, perfection or priority of any Lien which is granted
pursuant to any Collateral Document or Convertible Note Collateral Document.
Notwithstanding the foregoing, if a Trust officer has actual knowledge of the
occurrence and continuance of a Default or an Event of
- 75 -
<PAGE> 84
Default arising under Section 6.1(i) of this Indenture the Trustee shall give
whatever notices and take whatever action it deems appropriate or necessary
under this Indenture as a result the continuance of such Default or Event of
Default.
(d) As used herein a "Qualified Foreign Collateral Agent" shall be a
collateral agent appointed in respect of one or more items of Foreign Collateral
who has signed an agency agreement with the Trustee substantially in the form of
Exhibit F hereto with such changes as may be acceptable to the Trustee.
(e) In exercising its rights and duties under this Section 7.3, the
Trustee shall use the same degree of care and skill as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(f) During the continuance of an Event of Default, the Trustee will give
no instructions to a Qualified Foreign Collateral Agent until the Holders of a
majority in aggregate principal amount of the Notes instruct the Trustee to act
or give instructions to such Qualified Foreign Collateral Agent to act.
(g) In the event Holders of a majority in aggregate principal amount of
the Notes fail to direct the Trustee to take specific action within 30 days of a
request by the Trustee for direction, the Trustee may retain such investment
banker, broker/dealer, or other expert as the Trustee may determine, and the
advice of such investment banker, broker/dealer or other expert shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by the Trustee hereunder in good faith and in reliance
thereon, provided such investment banker, broker/dealer or other expert was
selected by the Trustee with due care.
SECTION 7.4 Trustee's Disclaimer. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture,
the Collateral Documents or the Notes, it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
(a) for any statement of the Company in this Indenture, including the recitals
contained herein, in the Collateral Documents or in any other document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication or (b) for compliance by the Company with the
Registration Agreement.
SECTION 7.5 Notice of Defaults. Within 90 calendar days after the
occurrence of any Default or Event of Default hereunder with respect to the
Notes, the Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Note Register, notice of such Default hereunder actually
known by the Trustee, unless such Default shall have been cured or waived;
provided that, except in the case of a Default in the payment of the principal
of (or premium, if any) or interest (including Additional Amounts, if any, or
Special Interest, if any) on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Trust Officers of the Trustee
in good faith determine that the withholding of such notice is in the interest
of the Holders.
- 76 -
<PAGE> 85
SECTION 7.6 Preservation of Information; Reports by Trustee to Holders.
(a) The Company shall furnish or cause to be furnished to the Trustee:
(i) not less than 10 calendar days prior to each Interest Payment
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of the Record Date immediately
preceding such Interest Payment Date; and
(ii) at such other times as the Trustee may request in writing,
within 30 calendar days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15
calendar days prior to the time such list is furnished;
provided, that if and so long as the Trustee shall be the Registrar for the
Notes, no such list need be furnished with respect to the Notes.
(b) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.6(a) hereof and the names
and addresses of Holders received by the Trustee in its capacity as Registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 7.6(a) hereof upon receipt of a new list so furnished.
(c) Holders may communicate as provided by the Trust Indenture Act with
other Holders with respect to their rights under this Indenture, under the
Collateral Documents or under the Notes.
(d) Each Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders in accordance with this Section 7.6,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under this Section 7.6.
(e) Within 60 calendar days after May 15 of each year commencing with the
year 1997, the Trustee shall transmit by mail to all Holders of Notes, a brief
report dated as of such May 15 if and to the extent required under Section
313(a) of the Trust Indenture Act.
(f) The Trustee shall comply with Sections 313(b) and 313(c) of the Trust
Indenture Act.
(g) A copy of each report described in Section 7.6(e) hereof shall, at the
time of its transmission to Holders, be filed by the Trustee with each stock
exchange, if any, upon which the Notes are then listed, with the Commission and
also with the Company. The Company shall promptly notify the Trustee of any
stock exchange upon which the Notes are listed.
- 77 -
<PAGE> 86
SECTION 7.7 Compensation and Indemnity. The Company and the Guarantors
jointly and severally agree to pay to the Trustee from time to time such
compensation for its services hereunder and under the Collateral Documents as
the Company, the Guarantors and the Trustee may from time to time agree for all
services rendered by the Trustee hereunder and under the Collateral Documents.
The Company and the Guarantors jointly and severally agree to reimburse the
Trustee upon request for all reasonable disbursements, advances and expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents
and counsel. The Trustee's compensation shall not be limited by any law or
compensation of a trustee of an express trust.
The Company and the Guarantors jointly and severally agree to assume, and
do hereby assume, liability for, and do hereby indemnify and agree to protect,
defend, save and keep harmless each Indemnitee (which term, for the purposes of
this Indenture, shall mean the Trustee (in its individual and trust capacities)
and each Qualified Foreign Collateral Agent) and their respective Affiliates,
agents, successors, permitted assigns, directors, officers and servants; a
"Related Indemnitee" of an Indemnitee shall mean any Affiliate, agent, director,
officer and servant of such Indemnitee except that no Qualified Foreign
Collateral Agent shall be a Related Indemnitee of the Trustee) from and against,
any and all liabilities, obligations, losses, damages, penalties, settlements,
claims, actions, suits or proceedings of any kind and nature, costs, expenses
(including reasonable attorney's fees) and disbursements (including, without
limitation, any act or omission of any agent appointed by the Trustee hereunder
or by any Qualified Foreign Collateral Agent) of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against any Indemnitee, (A) in
any way relating to or arising out of or incurred by such Indemnitee in
connection with the acceptance or administration of the trust created by this
Indenture or of any Collateral or Senior Note Collateral pursuant to the agency
agreement pursuant to which any Qualified Foreign Collateral Agent is appointed
(an "Agency Agreement") or any Collateral Document and the performance of such
Indemnitee's duties hereunder and thereunder, or (B) arising out of any failure
by the Company to perform or observe any covenant, condition or agreement in or
the falsity of any representation or warranty of the Company made in or pursuant
to this Indenture, any Agency Agreement or any Collateral Document or any Senior
Note Collateral Document (all of the foregoing, including clauses (A) and (B),
collectively, "Costs or Expenses"); provided that, except as and to the extent
attributable to default by the Company in performing or observing its
obligations hereunder or under any Agency Agreement, Collateral Document or any
Senior Note Collateral Document or breach by the Company of any of its
representations or warranties herein or therein, the Company shall not be
required to indemnify for any Costs or Expenses:
(a) imposed on an Indemnitee to the extent that such Costs or
Expenses arise out of or are caused by any act, misrepresentation or
omission of such Indemnitee or any of its Related Indemnitees where such
act, misrepresentation or omission (x) is in breach of the express
obligations or representations of such Indemnitee or any of its Related
Indemnitees under the Operative Documents or any related document, (y)
constitutes negligence or willful misconduct of such
- 78 -
<PAGE> 87
Indemnitee or any of its Related Indemnitees or (z) is in violation of any
applicable law (unless, in any such instance, such breach, negligence,
willful misconduct or violation results from any misrepresentation, gross
negligence, willful misconduct or violation of applicable law by the
Company or any of its Affiliates); or
(b) that are taxes on, based on or measured by or with respect to
the gross or net income, gross or net receipts, minimum or alternative
minimum taxable income, excess profits, personal holdings, tax
preferences, accumulated earnings, capital gains, capital, franchises,
doing business, net worth or conduct of business of such Indemnitee
(excluding taxes in the nature of sales, use, property or rental taxes and
taxes based on doing business or conduct of business if such taxes are
imposed solely as a result the performance of duties under this Indenture,
any Agency Agreement, any Collateral Document or any Senior Note
Collateral Document).
If the Company has knowledge of any claim or liability indemnified against
under this Section 7.7, it shall give prompt written notice thereof to the
applicable Indemnitees, and if any Indemnitee shall have any such knowledge, it
shall give prompt written notice thereof to Company (provided that failure to
give such notice shall not affect the Company's indemnity obligations hereunder
except to the extent that Company is prejudiced thereby). In case any action,
suit or proceeding shall be brought against any Indemnitee for which indemnity
may be sought under this Section 7.7, such Indemnitee shall notify the Company
of the commencement thereof (provided that failure to give such notice shall not
affect the Company's obligations hereunder except to the extent that the Company
is prejudiced thereby), and the Company may, at its expense, participate in and,
to the extent that it shall wish (subject to the following provisions of this
paragraph), assume in good faith in a commercially reasonable manner the defense
thereof, with counsel reasonably satisfactory to such Indemnitee; provided that
the Company shall not admit liability on such Indemnitee's part or settle such
action without the consent of such Indemnitee, which consent shall not be
unreasonably withheld; and provided, further, that no Event of Default shall
have occurred and be continuing and the Company shall have agreed in writing
that the Company is obligated to indemnify such Indemnitee for such Costs and
Expenses hereunder. If the Company assumes the defense of such action, suit or
proceeding, such Indemnitee may participate in such defense at such Indemnitee's
expense. Notwithstanding the foregoing, if and to the extent that (i) in the
written opinion of independent counsel to such Indemnitee an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel, (ii) in the reasonable opinion of such
Indemnitee such action, suit or proceeding involves the potential imposition of
criminal liability on such Indemnitee in connection with a claim not excluded by
Section 7.7(a) hereof, or (iii) such proceedings will involve a material risk of
the sale, forfeiture or loss of the Collateral or any part thereof, and such
Indemnitee informs the Company that such Indemnitee desires to be represented by
separate counsel, such Indemnitee shall have the right to control its own
defense of such claim and the Costs and Expenses in connection therewith shall
be borne by the Company. With respect to any amount which the Company is
requested by an Indemnitee
- 79 -
<PAGE> 88
to pay by reason of this Section 7.7, the Indemnitee shall, if requested by the
Company and prior to any payment, submit such additional information to the
Company as the Company may reasonably request properly to substantiate the
requested payment. The Company or its insurers shall have the right to
investigate or (provided that the Company or its insurers shall not reserve the
right to dispute liability hereunder or under any insurance policies pursuant to
which coverage is sought), subject to the second and fourth sentences of this
paragraph, defend or compromise any claim for which indemnification is sought
pursuant to this Section 7.7 and each Indemnitee shall cooperate with the
Company or its insurers with respect thereto.
The Company's obligations under the indemnities provided for in this
Indenture (i) are intended for the benefit of, and shall be enforceable by, each
Indemnitee, whether or not such Indemnitee is a party to this Indenture, and
(ii) shall be those of a primary obligor whether or not the Person indemnified
shall also be indemnified with respect to the same matter under the terms of
this Indenture, an Agency Agreement, any Collateral Document or any Senior Note
Collateral Document. The Person seeking indemnification from the Company
pursuant to any provision of this Indenture may proceed directly against the
Company without first seeking to enforce any other right of indemnification.
Upon the payment in full by the Company of any indemnity provided for hereunder,
the Company shall be, to the extent permitted by law, subrogated to any right of
the Person indemnified, other than with respect to any of such Indemnitee's
insurance policies.
To secure the Company's and the Guarantors' payment obligations in this
Section 7.7 the Trustee for the benefit of the Indemnitees shall have a Lien
prior to the Notes on all money or Property held or collected by the Trustee
other than money or Property held in trust to pay principal of, premium, if any,
and interest on, particular Notes.
The Company's and the Guarantors' payment obligations pursuant to this
Section 7.7 shall survive the resignation or removal of the Trustee or any
Collateral Agent, the termination of any Agency Agreement or the discharge of
this Indenture, any Collateral Document or any Senior Note Collateral Document.
Subject to any other rights available to the Trustee under applicable bankruptcy
law, when the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.1(g) or Section 6.1(h) hereof, the expenses are intended
to constitute expenses of administration under bankruptcy law.
Payments by the Company shall be payable in the same currency as the
indemnified liability. Nothing contained herein shall give the Company the right
to waive, amend or otherwise modify any rights of any Indemnitee under this
Indenture except with the written consent of such Indemnitee.
SECTION 7.8 Replacement of Trustee. (a) No resignation or removal of the
Trustee and no appointment of a successor Trustee pursuant to this Article VII
shall become effective until the acceptance of appointment by the successor
Trustee under this Section 7.8.
- 80 -
<PAGE> 89
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 60 calendar days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the outstanding Notes, delivered to the Trustee,
to the Company and to the Guarantors.
(d) If at any time;
(i) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act after written request thereof by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
unless the Trustee's duty to resign is stayed in accordance with the
provisions of Section 310(b) of the Trust Indenture Act; or
(ii) the Trustee shall cease to be eligible under Section 7.10
hereof and shall fail to resign after written request therefor by the
Company or by any Holder; or
(iii) the Trustee shall become incapable of acting or a decree or
order for relief by a court having jurisdiction in the premises shall have
been entered in respect of the Trustee in an involuntary case under the
United States bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or similar law,
or a decree or order by a court having jurisdiction in the premises shall
have been entered for the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Trustee of its Property and asset or affairs, or any public officer
shall take charge or control of the Trustee or of its Property and assets
or affairs for the purpose of rehabilitation, conservation, winding up or
liquidation; or
(iv) the Trustee shall commence a voluntary case under the United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or similar law or shall
consent to the appointment of or taking possession by a receiver,
custodian, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trustee or its Property and assets or affairs, or shall
make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to the Notes, or (ii) subject to Section 6.10 hereof, any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of such Holder and all others similarly
- 81 -
<PAGE> 90
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee for the Notes.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by or pursuant to a Board Resolution, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be appointed by the
Holders of a majority in principal amount of the outstanding Notes delivered to
the Company and the retiring Trustee, the successor trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with this
Section 7.8, become the successor Trustee and to that extent replace any
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and shall have accepted
appointment in the manner hereinafter provided, any Holder that has been a bona
fide Holder of a Note for at least six months may, subject to Section 6.10
hereof, on behalf of himself and all others similar situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such resignation, removal and appointment by first class mail, postage
prepaid, to the Holders as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee with
respect to the Notes and the address of its Corporate Trust Office.
(g) In the event of an appointment hereunder of a successor Trustee, each
such successor Trustee so appointed shall execute, acknowledge and deliver to
the Company, the Guarantors and the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts, and duties of the retiring Trustee but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trust of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all Property and money held by
such former Trustee hereunder, subject to its Lien, if any, provided for in
Section 7.7 hereof.
(h) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
Section 7.8(g) hereof.
(i) No successor Trustee shall accept its appointment unless at the time
of such acceptance successor Trustee shall be qualified and eligible under this
Article VII and under the Trust Indenture Act.
- 82 -
<PAGE> 91
SECTION 7.9 Successor Trustee by Merger. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be otherwise
qualified and eligible under this Article VII and under the Trust Indenture Act,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes. In the event that
any Notes shall not have been authenticated by such predecessor Trustee, any
such successor Trustee may authenticate and deliver such Notes, in either its
own name or that of its predecessor Trustee, with the full force and effect
which this Indenture provides for the certificate of authentication of the
Trustee.
SECTION 7.10 Eligibility; Disqualification. There shall at all times be a
Trustee hereunder which shall be
(i) a corporation organized and doing business under the laws of the
United States of America, any State or Territory thereof or the District
of Columbia, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by federal, State,
Territorial or District of Columbia authority, or
(ii) a corporation or other Person organized and doing business
under the laws of a foreign government that is permitted to act as Trustee
pursuant to a rule, regulation or order of the Commission, authorized
under such laws to exercise corporate trust powers, and subject to
supervision or examination by authority of such foreign government or a
political subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional trustees,
in either case having a combined capital and surplus of at least $100,000,000.
If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 7.10, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible pursuant to the provisions of
this Section 7.10, it shall resign immediately in the manner and with the effect
specified in this Article VII.
This Indenture shall always have a Trustee which satisfies the
requirements of Section 310(a)(1), (2) and (5) of the Trust Indenture Act. If
the Trustee has or hereafter acquires any "conflicting interest" within the
meaning of Section 310(b) of the Trustee Indenture Act, the Trustee and the
Company shall in all respects comply with the provision of Section 310(b) of the
Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with
the
- 83 -
<PAGE> 92
Commission the application referred to in the penultimate paragraph of Section
310(b) of the Trust Indenture Act. Neither the Company, any Guarantor or any
Subsidiary thereof, nor any Affiliate of the Company or any Guarantor shall
serve as Trustee hereunder.
SECTION 7.11 Preferential Collection of Claims Against Company. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated therein.
SECTION 7.12 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Collateral or the Senior Note Collateral may at the time be located, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Collateral or the Senior
Note Collateral, and to vest in such Person or Persons, in such capacity and for
the benefit of the Holders, such interest in the Collateral or the Senior Note
Collateral, or any part thereof, and subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 7.10, and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 7.8(f) hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
interest in the Collateral or the Senior Note Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
- 84 -
<PAGE> 93
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
ARTICLE VIII
DEFEASANCE
SECTION 8.1 Company's Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may elect, at its option, at any time, to have Section
8.2 or Section 8.3 hereof applied to the outstanding Notes (in whole and not in
part) upon compliance with the conditions set forth below in this Article VIII,
such election to be evidenced by a Board Resolution delivered to the Trustee.
SECTION 8.2 Legal Defeasance and Discharge. Upon the Company's exercise of
its option to have this Section 8.2 applied to the outstanding Notes (in whole
and not in part), the Company shall be deemed to have been discharged from its
obligations with respect to such Notes as provided in this Section 8.2 on and
after the date on which the conditions set forth in Section 8.4 hereof are
satisfied (hereinafter called "Defeasance"). For this purpose, Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Notes and the Company and the Guarantors shall
be deemed to have satisfied all of their other obligations under such Notes,
this Indenture, the Guarantees and the Collateral Documents (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder:
(a) the rights of Holders of such Notes to receive, solely from the trust
fund described in Section 8.4 hereof and as more fully set forth in Section 8.4,
payments in respect of the principal of and any premium and interest (and
Additional Amounts, if any, and Special Interest,
- 85 -
<PAGE> 94
if any) on such Notes when payments are due, and any other amounts due in
respect of the Notes,
(b) the Company's obligations with respect to such Notes under Sections
2.6, 2.7, 2.9, 4.2, 4.3 and 4.4 hereof,
(c) the Company's and the Guarantor's obligations with respect to
Additional Amounts under Section 4.13 hereof,
(d) the rights, powers, trusts, duties and immunities of the Trustee under
this Indenture,
(e) Article III hereof,
(f) this Article VIII, and
(g) Article XIII hereof.
Subject to compliance with this Article VIII, the Company may exercise its
option to have this Section 8.2 applied to the outstanding Notes (in whole or in
part) notwithstanding the prior exercise of its option to have Section 8.3
hereof applied to such Notes.
SECTION 8.3 Covenant Defeasance. Upon the Company's exercise of its option
to have this Section 8.3 applied to the outstanding Notes (in whole and not in
part), (i) the Company and the Guarantors shall be released from their
respective obligations under Section 5.1(c), Sections 4.5 through 4.11,
inclusive, Section 4.14 and any covenant added to this Indenture subsequent to
the Issue Date pursuant to Section 9.1 hereof, and (ii) the occurrence of any
event specified in Section 6.1(c) or 6.1(d) hereof, with respect to any of
Section 5.1(c), Sections 4.5 through 4.11, inclusive, Section 4.14 and any
covenant added to this Indenture subsequent to the Issue Date pursuant to
Section 9.1 hereof, shall be deemed not to be or result in an Event of Default,
in each case with respect to such Notes as provided in this Section 8.3 on and
after the date on which the conditions set forth in Section 8.4 hereof are
satisfied (hereinafter called "Covenant Defeasance"). For this purpose, Covenant
Defeasance means that, with respect to such Notes, the Company and the
Guarantors may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such specified Section (to the
extent so specified in the case of Section 6.1(c) and 6.1(d) hereof), whether
directly or indirectly by reason of any reference elsewhere herein to any such
Section or by reason of any reference in any such Section to any other
provisions herein or in any other document; but the remainder of this Indenture,
the Guarantees, the Collateral Documents and such Notes shall be unaffected
thereby.
SECTION 8.4 Conditions to Defeasance or Covenant Defeasance. The following
shall be the conditions to the application of Section 8.2 or Section 8.3 hereof
to the outstanding Notes:
- 86 -
<PAGE> 95
(a) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to the
benefits of the Holders of such Notes, (i) money in an amount, or (ii) U.S.
Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(iii) a combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge the
principal of and any installment of interest (including Special Interest, if
any, and Additional Amounts, if any, which would be required based on the laws,
regulations or rulings in effect on the date of deposit) on, and any Reset
Penalties in respect of, such Notes on the respective Stated Maturities thereof,
in accordance with the terms of this Indenture and such Notes.
(b) In the event of an election to have Section 8.2 hereof apply to the
outstanding Notes, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or the Company has received
from Revenue Canada, Customs, Excise & Taxation an advance income tax ruling or
(ii) since the date of this Indenture, there has been a change in the applicable
United States federal, Canadian federal, Bermuda or United Kingdom income tax
law, in either case (i) or (ii) to the effect that, and based thereon such
opinion shall confirm that, the Holders of such Notes will not recognize gain or
loss for United States federal, Canadian federal, Bermuda or United Kingdom
income tax purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Notes and will be subject to United States federal
income tax, Canadian federal, Bermuda or United Kingdom income tax, including
Canadian withholding tax, in the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge were not to
occur.
(c) In the event of an election to have Section 8.3 hereof apply to the
outstanding Notes, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Notes will not recognize gain or
loss for United States federal, Canadian federal, Bermuda or United Kingdom
income tax purposes or under the tax laws of any other jurisdiction as a result
of the deposit and Covenant Defeasance to be effected with respect to such Notes
and will be subject to United States federal, Canadian federal, Bermuda or
United Kingdom or any other income tax in the same amount, in the same manner
and at the same times as would be the case if such deposit, Covenant Defeasance
and discharge were not to occur.
(d) No Default or Event of Default with respect to the outstanding Notes
shall have occurred and be continuing at the time of such deposit after giving
effect thereto and no Default or Event of Default under Section 6.1(h) or 6.1(i)
shall have occurred at any time on or prior to the 91st calendar day after the
date of such deposit and be continuing on such 91st day (it being understood
that this condition shall not be deemed satisfied until after such 91st calendar
day).
- 87 -
<PAGE> 96
(e) Such Defeasance or Covenant Defeasance shall not cause the Trustee to
have a conflicting interest within the meaning of the Trust Indenture Act
(assuming for the purpose of this clause (e) that all Notes are in default
within the meaning of such Act).
(f) Such Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company or the Guarantor is a party or by which it is bound.
(g) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder.
(h) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 8.5 Deposited Money and U.S. Government Obligations to be Held in
Trust: Miscellaneous Provisions. Subject to Section 8.6 hereof, all money and
U.S. Government Obligations (including the proceeds thereof) deposited with the
Trustee pursuant to Section 8.4 hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through any
such Paying Agent as the Trustee may determine, to the Holders of such Notes, of
all sums due and to become due thereon in respect of principal and any premium
and interest (including Additional Amounts, if any (which would be required
based on the laws, regulations and rulings in effect on the date of deposit
pursuant to Section 8.4(a) hereof), and Special Interest, if any) and other
amounts due in respect of the Notes, but money so held in trust 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 U.S. Government Obligations deposited pursuant to
Section 8.4 hereof or the principal and interest received in respect thereof
other than such tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations 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 outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Order any
money or U.S. Government Obligations 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, are in excess of the amount thereof that would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be,
with respect to the outstanding Notes.
- 88 -
<PAGE> 97
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, premium, if any, or Reset Penalties, if any, or interest
(including Special Interest, if any, and Additional Amounts, if any), if any, on
any Note and remaining unclaimed for two years after such principal, premium, if
any, or interest, if any, or Reset Penalties, if any, have 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 Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, 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 money in accordance with this Article VIII with respect to any Notes
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
obligations under this Indenture, the Guarantees, such Notes and the Collateral
Documents from which the Company or the Guarantors have been discharged or
released pursuant to Section 8.2 or 8.3 hereof shall be revived and reinstated
as though no deposit had occurred pursuant to this Article VIII with respect to
such Notes, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 8.5 hereof with respect to such
Notes in accordance with this Article VIII; provided that if the Company or any
Guarantor makes any payment of principal of, premium, if any, or interest on, or
Reset Penalty in respect of, any such Note following such reinstatement of its
obligations, the Company or such Guarantor, as the case may be, shall be
subrogated to the Holders of such Notes to receive such payment from the money
so held in trust.
ARTICLE IX
AMENDMENTS
SECTION 9.1 Without Consent of Holders. The Company, the Guarantors and
the Trustee may, at any time, and from time to time, without notice to or
consent of any Holder of Notes, enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes.
(a) to evidence the succession of another Person to the Company or the
Guarantors, as applicable, and the assumption by such successor of the covenants
of the Company contained in the Notes, this Indenture, the Collateral Documents
or the Senior Note Collateral Documents
- 89 -
<PAGE> 98
or such Guarantors in the Guarantees, this Indenture, the Collateral Documents
or the Senior Note Collateral Documents; or
(b) to add to the covenants of the Company, for the benefit of the Holders
of all of the Notes, or to surrender any right or power herein conferred upon
the Company or the Guarantors by the Indenture, the Collateral Documents or the
Senior Note Collateral Documents; or
(c) to add any additional Events of Default, provided that no Event of
Default shall be added if it could result in interest paid or credited on the
Notes to Persons not constituting Excluded Holders being subject to Canadian
withholding tax; or
(d) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; or
(e) to evidence and provide for the acceptance of appointment hereunder of
a successor Trustee; or
(f) to add additional security for the Notes and/or the Guarantees; or
(g) to make provisions with respect to the conversion rights of Holders
pursuant to the requirements of Section 13.4 hereof; or
(h) to cure any ambiguity herein, in the Collateral Documents or the
Senior Note Collateral Documents, to correct or supplement any provision hereof,
in the Collateral Documents or the Senior Note Collateral Documents which may be
inconsistent with any other provisions herein or therein or to add any other
provisions with respect to matters or questions arising under this Indenture,
the Collateral Documents or the Senior Note Collateral Documents; provided that
such actions shall not adversely affect the affect the interests of the Holders
of Notes in any material respect; or
(i) to comply with the requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act.
SECTION 9.2 With Consent of Holders. With the consent of the Holders of
not less than a majority in principal amount at Stated Maturity of the
outstanding Notes, by Act of said Holders delivered to the Company, the
Guarantors and the Trustee, the Company, the Guarantors and the Trustee may
enter into one or more indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture, the Collateral Documents or the Senior Note Collateral
Documents or of modifying in any manner the rights of the Holders; provided that
no such supplemental indenture shall, without the consent of the Holder of each
outstanding Note:
- 90 -
<PAGE> 99
(a) change the Stated Maturity of the principal of, or any installment of
interest on, any Note, or reduce the principal amount thereof (or any premium,
if any), or the interest (including Additional Amounts, if any, or Special
Interest, if any) thereon or any other amounts in respect thereof, that would be
due and payable upon Maturity thereof, or change the place of payment where, or
in the coin or currency in which, any Note or any premium or interest (including
Additional Amounts, if any) thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Maturity thereof;
or
(b) reduce the percentage in principal amount of the outstanding Notes,
the consent of whose Holders is required for any such supplemental indenture or
required for any waiver of compliance with the provisions of this Indenture, the
Collateral Documents or the Senior Note Collateral Documents; or
(c) modify any of the provisions of Section 6.4 hereof, except to increase
any percentage set forth therein or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holders
of each outstanding Note affected thereby; or
(d) subordinate in right of payment, or otherwise subordinate, the Notes
or the Guarantees to any other Indebtedness other than the Senior Indebtedness;
or
(e) make any change in the provisions of Article XII which would adversely
affect the holders of the Notes; or
(f) adversely affect the right of the holders of the Notes to convert such
Notes or the Reset Penalty payment provisions contained in Article XIII hereof;
or
(g) modify any provision of this Indenture relating to the obligations of
the Company to make offers to purchase Notes upon a Change of Control or from
the proceeds of an Asset Sale or upon a Termination of Trading; or
(h) modify any of the provisions of this Section 9.2, except to increase
any percentage set forth herein or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holders
of each outstanding Note affected thereby; or
(i) amend, supplement or otherwise modify the provisions of the Indenture
relating to the Guarantees.
It shall not be necessary for any Act of Holders under this Section 9.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof. Notwithstanding
the foregoing, so long as the Senior Notes are outstanding and the Senior Note
Indenture has not been satisfied and discharged, the Trustee shall not cause to
become effective a supplemental indenture (i) amending any Collateral Documents
or Senior Note Collateral Documents unless a supplemental indenture to the
Senior
- 91 -
<PAGE> 100
Note Indenture making the same amendment to such Collateral Document or Senior
Note Collateral Document becomes simultaneously effective, or (ii) amending
either Section 4.8 or Section 11.4 of the Indenture unless a supplemental
indenture to the Senior Note Indenture making the same amendment to Section 4.8
or Section 11.4 of the Senior Note Indenture, as the case may be, becomes
simultaneously effective.
SECTION 9.3 Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article IX, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Notes theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.4 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall comply with the Trust Indenture
Act as then in effect.
SECTION 9.5 Revocation and Effect of Consents and Waivers. A consent to an
amendment, supplement or a waiver by a Holder of a Note shall bind the Holder
and every subsequent Holder of such Note or portion of such Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
or waiver is not made on such Note; provided that such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Note or portion of
such Note if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective. After an amendment,
supplement or waiver becomes effective pursuant to this Article IX, it shall
bind every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent or take any
other action described above or required or permitted to be taken pursuant to
this Indenture. If a record date is fixed, then notwithstanding the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
give such consent or to revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 120 calendar
days after such record date.
SECTION 9.6 Changed Terms of Notes. If a supplemental indenture changes
the terms of a Note, the Trustee may require the Holder thereof to deliver such
Note to the Trustee. The Trustee may place an appropriate notation on such Note
regarding the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for such Note
shall issue and the Trustee shall authenticate a new Note (accompanied by a
notation of the Guarantees duly endorsed by the Guarantors) that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Note
shall not affect the validity of such amendment or supplement.
SECTION 9.7 Trustee to Execute Supplemental Indentures. The Trustee shall
execute any supplemental indenture authorized pursuant to this Article IX if
such supplemental indenture
- 92 -
<PAGE> 101
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but shall not be required to, execute such
supplemental indenture. In executing any supplemental indenture, the Trustee
shall be entitled to receive indemnity reasonably satisfactory to it and to
receive, and (subject to Section 7.1 hereof) shall be fully protected in relying
upon, an Officers' Certificate (which need only cover the matters set forth in
clause (a) below) and an Opinion of Counsel provided by the Company stating
that:
(a) such supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent to the execution, delivery and
performance of such supplemental indenture have been satisfied;
(b) the Company and the Guarantors have all necessary corporate power and
authority to execute and deliver the supplemental indenture and that the
execution, delivery and performance of such supplemental indenture has been duly
authorized by all necessary corporate action of the Company and the Guarantors;
(c) the execution, delivery and performance of the supplemental indenture
do not conflict with, or result in the breach of or constitute a default under
any of the terms, conditions or provisions of (i) this Indenture, (ii) the
charter documents and by-laws of the Company or any Guarantor, or (iii) any
material agreement or instrument to which the Company or any Guarantor is
subject and of which such counsel is aware;
(d) to the knowledge of legal counsel writing such Opinion of Counsel, the
execution, delivery and performance of the supplemental indenture do not
conflict with, or result in the breach of any of the terms, conditions or
provisions of (i) any law or regulation applicable to the Company or any
Guarantor, or (ii) any material order, writ, injunction or decree of any court
or governmental instrumentality applicable to the Company or any Guarantor;
(e) such supplemental indenture has been duly and validly executed and
delivered by the Company and the Guarantors, and the Indenture together with
such supplemental indenture constitutes a legal, valid and binding obligations
of the Company and the Guarantors enforceable against the Company and the
Guarantors, as applicable, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles; and
(f) the Indenture together with such amendment or supplement complies with
the Trust Indenture Act.
SECTION 9.8 Solicitation of Consents. Neither the Company nor any of its
Subsidiaries nor any of their Affiliates shall, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fees or
otherwise, to any Holders of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture, the
Collateral Documents, the Senior Note Collateral Documents or the Notes unless
such consideration is offered to be paid or agreed to be paid to all Holders of
the Notes that
- 93 -
<PAGE> 102
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
ARTICLE X
GUARANTEES
SECTION 10.1 Guarantees. (a) For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the
Guarantors, together with each Restricted Subsidiary of the Company which in
accordance with Section 4.9 is required in the future to guarantee the
obligations of the Company and the Guarantors under the Notes, the Indenture and
the Collateral Documents and the Senior Note Collateral Documents upon execution
of a supplemental indenture, hereby jointly and severally, irrevocably and
unconditionally guarantees to the Trustee and to each Holder of a Note
authenticated and delivered by the Trustee irrespective of the validity or
enforceability of this Indenture, the Notes, or any of the Collateral Documents
or the Senior Note Collateral Documents or the obligations of the Company and
the Guarantors, under this Indenture, that: (i) the principal of, premium, if
any, and any interest, Additional Amounts, if any, and Special Interest, if any,
on the Notes (including, without limitation, any interest that accrues after the
filing of a proceeding of the type described in Sections 6.1(h) and (i)), and
any other amount due in respect of the Notes, and any fees, expenses and other
amounts owing under the Indenture and the Collateral Documents will be duly and
punctually paid in full when due, whether at Stated Maturity, by acceleration,
call for redemption, upon a Change of Control Offer, Asset Sale Offer, exercise
of a repurchase right upon a Termination of Trading, purchase or otherwise, and
interest on the overdue principal and (to the extent permitted by law) interest,
if any, Additional Amounts, if any, and Special Interest, if any, on the Notes,
and any other amount due in respect of the Notes, if lawful, and all other
obligations of the Company and the other Guarantors to the Holders of the Notes
under this Indenture, the Notes, the Collateral Documents and the Senior Note
Collateral Documents, whether now or hereafter existing, will be promptly paid
in full or performed, all strictly in accordance with the terms hereof, of the
Notes, the Collateral Documents and the Senior Note Collateral Documents; and
(ii) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration, call for redemption, upon a Change of Control
Offer, Asset Sale Offer, exercise or a repurchase right upon a Termination of
Trading, purchase or otherwise. If payment is not made when due of any amount so
guaranteed for whatever reason, each Guarantor shall be jointly and severally
obligated to pay the same individually whether or not such failure to pay has
become an Event of Default which could cause acceleration pursuant to Section
6.2. Each Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection. An Event of Default under this Indenture, any
Collateral Document, any Senior Note Collateral Document or the Notes shall
constitute an Event of Default under this Guarantee, and shall entitle the
Holders to accelerate the obligations of each Guarantor hereunder in the same
manner and to the same extent as the obligations of the Company. This Guarantee
is intended
-94-
<PAGE> 103
to be superior to or pari passu in right of payment with all Indebtedness of the
Guarantors and each Guarantor's obligations are independent of any obligation of
the Company or any other Guarantor.
(b) Each Guarantor hereby agrees that its obligations hereunder shall
be joint and several, absolute, irrevocable and unconditional, irrespective of
the validity, regularity or enforceability of the Notes, any Collateral
Document, any Senior Note Collateral Document, this Indenture or any other
document relating thereto, the absence of any action to enforce the same, any
waiver or consent by any Holder with respect to any provisions hereof or
thereof, any release or non-perfection of Collateral, any release of any other
Guarantor, any delays in obtaining or realizing upon failure to obtain or
realize upon or application of Collateral, the recovery of any judgment against
the Company or any other Person, any action to enforce the same or any other
circumstance (including, without limitation, any statute of limitations) which
might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives promptness, diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company or any other Person, any right to require a proceeding
first against the Company or any other Person, protest, notice and all demands
whatsoever and covenants that its Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes, this Indenture,
the Collateral Documents, the Senior Note Collateral Documents and this
Guarantee. If any Holder or the Trustee is required by any court or otherwise to
return to the Company or to any Guarantor, or any receiver, trustee, assignee,
liquidator or similar official under any applicable bankruptcy or insolvency or
other similar law any amount paid by the Company or such Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(c) Until such time as the Notes and the other obligations of the
Company guaranteed hereby have been satisfied in full, each Guarantor hereby
irrevocably waives any claim or other rights that it may now or hereafter
acquire against the Company or any other Guarantor that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guarantee, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Holders or the Trustee against the
Company or any other Guarantor or any Collateral or Senior Note Collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company or any other Guarantor, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right. If any amount shall be paid to such
Guarantor in violation of the preceding sentence at any time prior to the later
of the payments in full of the Notes and all other amounts payable under this
Indenture, this Guarantee, the Collateral Documents, the Senior Note Collateral
Documents and the Stated Maturity of the Notes, such amount shall be held in
trust for the benefit of the Holders and the Trustee and shall forthwith be paid
to the Trustee to be credited and applied to the Notes and all other amounts
payable under this Guarantee, whether matured or unmatured,
-95-
<PAGE> 104
in accordance with the terms of this Indenture, or to be held as Collateral for
any obligations or other amounts payable under this Guarantee thereafter
arising.
(d) Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that the waiver set forth in this Section 10.1(d) is knowingly made in
contemplation of such benefits. Each Guarantor further agrees that, as between
it, on the one hand, and the Holders and the Trustee, on the other hand, (x)
subject to this Article X, the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article VI for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations guaranteed hereby as provided in
Article VI, such obligations (whether or not due and payable) shall further then
become due and payable by the Guarantors for the purposes of this Guarantee.
(e) A Guarantor that makes a distribution or payment under a Guarantee
shall be entitled to contribution from each other Guarantor in a pro rata amount
based on the Adjusted Net Assets of each such other Guarantor for all payments,
damages and expenses incurred by that Guarantor in discharging the Company's
obligations with respect to the Notes, this Indenture, the Collateral Documents
and the Senior Note Collateral Documents or any other Guarantor with respect to
its Guarantee, the Collateral Documents and the Senior Note Collateral
Documents, so long as the exercise of such right does not impair the rights of
the Holders of the Notes under the Guarantees, any Collateral Document or any
Senior Note Collateral Document.
SECTION 10.2 Limitation of Guarantor's Liability. Each Guarantor and,
by its acceptance hereof, each beneficiary hereof, hereby confirms that it is
its intention that the Guarantee by such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of the United States Bankruptcy Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, the
Companies Creditors' Arrangement Act (Canada), the Bankruptcy and Insolvency Act
(Canada) or any other bankruptcy, receivership, insolvency, liquidation or other
similar legislation or legal principles under any applicable foreign law to the
extent applicable to any Guarantees. To effectuate the foregoing intention, each
such Guarantor hereby irrevocably agrees that the obligation of such Guarantor
under its Guarantee under this Article X shall be limited to the lesser of (a)
an amount equal to such Guarantor's Adjusted Net Assets as of the date such
Guarantee is executed and delivered or (b) the maximum amount as will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws (including, if
applicable, its obligations under the Senior Notes), and after giving effect to
any collections from, rights to receive contribution from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article X result in the obligations of such Guarantor in
respect of such maximum amount not constituting a fraudulent conveyance or
fraudulent transfer or not otherwise being void, voidable or unenforceable under
any bankruptcy, reorganization, receivership, insolvency, liquidation or other
similar legislation or legal principles under any applicable foreign law.
-96-
<PAGE> 105
SECTION 10.3 Execution and Delivery of Guarantees. To further evidence
its Guarantee set forth in Section 10.1 hereof, each Guarantor hereby agrees
that notation of such Guarantee shall be endorsed on each Note authenticated and
delivered by the Trustee and executed by either manual or facsimile signature of
an authorized officer of such Guarantor. Each Guarantor hereby agrees that its
Guarantee set forth in Section 10.1 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Guarantee. If an officer of a Guarantor whose signature is on this Indenture or
a Note no longer holds that office at the time the Trustee authenticates such
Note or at any time thereafter, such Guarantor's Guarantee of such Note shall be
valid nevertheless. The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of any Guarantee
set forth in this Indenture on behalf of the Guarantor.
SECTION 10.4 When a Guarantor May Merge, etc.. No Guarantor shall
consolidate with or merge with or into (whether or not such Guarantor is the
surviving person) another corporation, Person or entity whether or not
affiliated with such Guarantor (but excluding any consolidation, amalgamation or
merger if the surviving corporation is no longer a Subsidiary) unless (i)
subject to the provisions of Section 10.6 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor pursuant to a supplemental
indenture and appropriate Collateral Documents and Senior Note Collateral
Documents in form reasonably satisfactory to the Trustee under the Notes, this
Indenture, the Collateral Documents; and (ii) immediately after giving effect to
such transaction, no Default or Event of Default exists. In connection with any
such consolidation or merger, the Trustee shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel stating that such consolidation
or merger is permitted by this Section 10.4.
SECTION 10.5 Additional Guarantors (a) The Company shall cause each
Subsidiary which, after the date of this Indenture, is required pursuant to
Section 4.9(a) hereof to become a Guarantor to (a) execute and deliver to the
Trustee a supplemental indenture in form and substance reasonably satisfactory
to the Trustee which subjects such Restricted Subsidiary to the provisions of
this Indenture as a Guarantor, (b) execute and deliver to the Trustee,
simultaneous with its execution and delivery to the Trustee of a supplemental
indenture and any applicable Collateral Documents and Senior Note Collateral
Documents; and (c) deliver to the Trustee an Opinion of Counsel to the effect
that such supplemental indenture has been duly authorized and executed by such
Person and constitutes the legal, valid, binding and enforceable obligation of
such Person (subject to such customary exceptions concerning debtor's rights and
equitable principles as may be acceptable to the Trustee in its reasonable
discretion) and containing such other matters as the Trustee may reasonably
request.
(b) Any Person that was not a Guarantor on the Issue Date may become a
Guarantor by executing and delivering to the Trustee (a) a supplemental
Indenture in form and substance reasonably satisfactory to the Trustee and any
applicable Collateral Documents and Senior Note Collateral Documents, and (b) an
Opinion of Counsel to the effect that such supplemental indenture has been duly
authorized and executed by such Person and constitutes the legal, valid, binding
and enforceable obligation of such Person (subject to such customary exceptions
-97-
<PAGE> 106
concerning creditors' rights and equitable principles as may be acceptable to
the Trustee in its reasonable discretion) and containing such other matters as
the Trustee may reasonably request.
SECTION 10.6 Release of a Guarantor. (a) Upon the sale or other
transfer of all of the Capital Stock of a Guarantor, other than a Leasing
Company or NWE Cyprus, to any Person that is not an Affiliate of the Company in
compliance with the terms of this Indenture (including, without limitation,
Section 4.8 hereof), such Guarantor shall be deemed automatically and
unconditionally released and discharged from all obligations under this
Indenture and any Collateral Document to which it is a party without any further
action required on the part of the Trustee or any Holder; provided that the Net
Cash Proceeds of such sale or other disposition are applied in accordance with
Section 4.8 of the Indenture as if such sale or disposition were an Asset Sale
and in accordance with the other applicable provisions of this Indenture. The
Trustee shall deliver an appropriate instrument or instruments evidencing such
release upon receipt of a request of the Company accompanied by an Officers'
Certificate and Opinion of Counsel certifying as to the compliance with this
Section 10.6(a), Section 4.8 hereof and the other applicable provisions of this
Indenture.
(b) Notwithstanding the foregoing, any Guarantee by a Restricted
Subsidiary other than NWE Cyprus, a Leasing Company, BCL, WTC or a future
Wholly-Owned Subsidiary of the Company shall be automatically and
unconditionally released and discharged upon the release or discharge of the
guarantee of Guaranteed Indebtedness which resulted in the creation of such
Guarantee pursuant to Section 4.9 hereof, except a discharge or release by, or
as a result of, payment under such guarantee. The Trustee shall deliver an
appropriate instrument or instruments evidencing such release upon receipt of a
request of the Company accompanied by an Officers' Certificate and Opinion of
Counsel certifying as to compliance with this Section 10.6(b) and the other
applicable provisions of this Indenture.
ARTICLE XI
COLLATERAL AND SECURITY
SECTION 11.1 Collateral Documents. The due and punctual payment of the
principal of, premium, if any, interest (including Additional Amounts, if any,
and Special Interest, if any) on, and any other amounts due in respect of, the
Notes when and as the same shall be due and payable, whether on an Interest
Payment Date, at Stated Maturity, by acceleration, call for redemption, upon a
Change of Control Offer, Asset Sale Offer, exercise of a repurchase right upon a
Termination of Trading, purchase or otherwise, and interest on the overdue
principal of and interest (including Additional Amounts, if any, and Special
Interest, if any) (to the extent permitted by law), on the Notes and performance
of all other obligations of the Company and any Guarantor to the Holders of the
Notes or the Trustee under this Indenture, the Notes, the Guarantees, the
Collateral Documents and the Senior Note Collateral Documents, according to the
terms hereunder or thereunder, shall be secured (i) as provided in the
Collateral Documents, (ii) as provided in the Senior Note Collateral Documents,
(iii) by a pledge by any future
-98-
<PAGE> 107
Guarantor of the Capital Stock of any Wholly-Owned Subsidiary (whether now owned
or hereafter acquired) of such future Guarantor and any and all dividends,
distributions and proceeds thereof, and (iv) by a pledge by all Wholly-Owned
Subsidiaries of all Intercompany Notes from Restricted Subsidiaries owned by
such Wholly-Owned Restricted Subsidiaries (other than any Intercompany Note made
with the dividends, distributions, payments and proceeds of Technocom Preferred
Stock or other Collateral or otherwise constituting Collateral). The Company
will cause such future Guarantors and Wholly-Owned Subsidiaries to grant a Lien
and security interest pursuant to Senior Note Collateral Documents substantially
similar to the Company Senior Note Security Agreement, and any other additional
Senior Note Collateral Documents as may be necessary or appropriate to create or
make effective such Lien and security interest, such Lien and security interest
to be for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Notes to secure the Notes, the Guarantees and the other
obligations of the Company and the Guarantors under this Indenture, the other
Collateral Documents and the Senior Note Collateral Documents. Each Holder, by
its acceptance of a Note, consents and agrees to the terms of the Collateral
Documents and the Senior Note Collateral Documents (including, without
limitation, the provisions providing for foreclosure and release of Collateral
and the Senior Note Collateral, as applicable) as the same may be in effect or
may be amended from time to time in accordance with the terms thereof and hereof
and authorizes and directs the Trustee to enter into each of the Collateral
Documents and the Senior Note Collateral Documents and to perform its respective
obligations and exercise its respective rights thereunder in accordance
therewith. The Company and each Guarantor will do or cause to be done all such
acts and things as may be necessary or proper, or as may be required by the
provisions of the Collateral Documents and the Senior Note Collateral Documents
to which it is a party, to assure and confirm to the collateral agent and the
Trustee the Liens in the Collateral and the Senior Note Collateral contemplated
hereby and by the Collateral Documents and the Senior Note Collateral Documents
to which it is a party, as from time to time constituted, so as to render the
same available to the fullest extent permitted by law for the security and
benefit of this Indenture and of the Notes and the Guarantees secured thereby,
according to the intent and purposes herein expressed. The Company and each
Guarantor shall to the fullest extent permitted by law take, upon request of the
Trustee, any and all actions reasonably required to cause the Collateral
Documents and the Senior Note Collateral Documents to which it is a party to
create and maintain, as security for the obligations of the Company and the
Guarantors under this Indenture, the Notes, the Guarantees, the Collateral
Documents and the Senior Note Collateral Documents, valid and enforceable,
perfected (except as expressly provided therein), Liens in and on all the
Collateral and Senior Note Collateral, in favor of the Trustee or a collateral
agent for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Notes and for the benefit of the Senior Note Trustee and the
equal and ratable benefit of the Holders of the Senior Notes so long as the
Senior Notes remain outstanding without preference, priority or distinction of
any thereof over any other by reason of difference in time of issuance, sale or
otherwise, superior to and prior to the rights of all third persons except with
respect to the Senior Note Collateral, the Senior Note Trustee and the Holders
of the Senior Notes, and subject to no other Liens, other than as provided
herein and therein.
-99-
<PAGE> 108
SECTION 11.2 Recording and Opinions. (a) Each of the Company and the
Guarantors represents that it has caused or will promptly cause to be executed
and delivered, filed and recorded and covenants that it will promptly cause to
be executed and delivered and filed and recorded, all instruments and documents,
and represents that it has done and will do or will cause to be done all such
acts and other things, at the Company's or the Guarantor's expense, as
applicable, as are necessary to subject the Collateral and the Senior Note
Collateral to valid Liens and to perfect those Liens, all to the fullest extent
permitted by law. Each of the Company and the Guarantors shall, as promptly as
practicable, cause to be executed and delivered, filed and recorded all
instruments and do all acts and other things as may be required by law to
perfect, maintain and protect the Liens under the Collateral Documents and the
Senior Note Collateral Documents (except as otherwise expressly provided herein
and therein), all to the fullest extent permitted by law.
(b) The Company shall furnish to the Trustee promptly after the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments or otherwise necessary to make effective the
Liens intended to be created by the Collateral Documents and the Senior Note
Collateral Documents, and reciting the details of such action, or (ii) stating
that, in the opinion of such counsel, no such action is necessary to make such
Liens effective. Such opinion of counsel shall cover the necessity for
recordings, registrations and filings required in all relevant jurisdictions.
(c) The Company shall furnish to the Trustee within three months after
each anniversary of the Issue Date, an Opinion of Counsel, dated as of such
date, stating either that (i) in the opinion of such counsel, all action has
been taken with respect to the recording, registering, filing, re-recording,
re-registering and refiling of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance or
otherwise as is necessary to maintain the effectiveness of the Liens intended to
be created by the Collateral Documents and the Senior Note Collateral Documents
and reciting the details of such action or (ii) in the opinion of such counsel,
no such action is necessary to maintain the effectiveness of such Liens. Such
opinion of counsel shall cover the necessity of recordings, registrations,
filings, re-recordings, re-registrations and refilings in all relevant
jurisdictions.
(d) The Company shall otherwise comply with the provisions of Section
314(b) of the Trust Indenture Act.
SECTION 11.3 Further Assurances and Security. The Company and each
Guarantor will execute, acknowledge and deliver to the Trustee, at the Company's
and/or such Guarantor's expense, at any time and from time to time such further
assignments, transfers, assurances or other instruments as may be reasonably
required to effectuate the terms of this Indenture or the Collateral Documents
and the Senior Note Collateral Documents, and will at any time and from time to
time do or cause to be done all such acts and things as may be necessary or
proper, or as may be reasonably required by the Trustee, to assure and confirm
to the collateral agent and the Trustee the Liens in the Collateral and the
Senior Note Collateral contemplated hereby, by
-100-
<PAGE> 109
the Collateral Documents and by the Senior Note Collateral Documents, all to the
fullest extent permitted by law. The Trustee shall have no duty to determine
whether any filing or recording is necessary hereunder or under any Collateral
Document.
SECTION 11.4 Possession, Use and Release of Collateral.
(a) All payments received on any Collateral, including on the Technocom
Preferred Stock or in respect of any Qualified Investments or Intercompany Notes
that constitute Collateral, shall be promptly deposited, without commingling
prior to such deposit, in the Company Convertible Note Escrow Account and will
also constitute Collateral and be subject to a first priority perfected lien in
favor of the Trustee and the Holders of the Notes. All funds deposited in the
Company Convertible Note Escrow Account shall be invested at the direction of
the Company, except during the continuance of a Default or an Event of Default,
and at the direction of the Trustee during the continuance of a Default or an
Event of Default, in Eligible Cash Equivalents pursuant to the terms and
conditions of and in the manner provided for in the Company Convertible Note
Escrow Account Agreement.
(b) Funds or Eligible Cash Equivalents in the Company Convertible Note
Escrow Account may, subject to subsections (f) and (g) below, be utilized
(i) to pay when due principal of, premium, if any, interest
(including Additional Amounts, if any, and Special Interest, if any)
on, and any other amounts due in respect of, the Notes; or
(ii) to make Qualified Investments if such Qualified
Investments are made in a manner which complies with subsection (c)
below; or
(iii) to make an intercompany loan to a Leasing Company
evidenced by an Intercompany Note (which will constitute Collateral),
so long as such Leasing Company thereafter utilizes the funds received
to make Qualified Investments in a manner which complies with
subsection (c) below.
(c) A Qualified Investment shall be deemed to have been made in
compliance with this subsection (c) if, in respect of such Qualified Investment,
the following conditions are satisfied, and the Trustee shall have received an
Officer's Certificate of the Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing, or will occur as a result thereof;
(ii) a Lien on the Qualified Investment is granted to the
Trustee or a collateral agent for the benefit of the Trustee and the
equal and ratable benefit of the Holders of the Notes and the benefit
of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the Senior Notes so long as the Senior Notes are outstanding
to secure
-101-
<PAGE> 110
the Notes, the Guarantees and the other Obligations of the Company and
the Guarantors under this Indenture and the other Collateral Documents
and, on a junior basis, to secure any applicable Intercompany Note and
to secure the Senior Notes and the other obligations of the Company and
the Guarantors under the Senior Notes, the Senior Note Indenture and
the Senior Note Collateral Documents;
(iii) the entity in which such Qualified Investment is made
has all licenses, registrations and permits necessary to operate the
Telecommunications Business in which it is engaging or proposes to
engage on the date of such Qualified Investment;
(iv) all licenses, registrations and permits required for
such Qualified Investment and such Liens have been obtained; and
(v) appropriate Collateral Documents have been executed and
delivered and properly recorded, registered and filed to the extent
necessary to make effective the Liens intended to be created therein.
The Company shall also deliver (x) an Opinion of Counsel covering clause (v)
above in the form and substance reasonably satisfactory to the Trustee, and (y)
such other documents as may be required by the Collateral Documents.
(d) Subject to subsections (f) and (g) of this Section 11.4, Collateral
may be released from the Liens created by the Collateral Documents (a) upon
payment in full of the Notes in accordance with the terms of the Notes and this
Indenture and the other obligations then due and owing under the Notes, this
Indenture and the Collateral Documents; (b) with respect to inventory, upon the
sale of such inventory in the ordinary course of business; (c) with respect to
Collateral sold or disposed of in an Asset Sale if such sale or other
disposition is not prohibited under this Indenture and if the Net Cash Proceeds
of such sale or other disposition are applied as provided in Section 4.8 hereof;
(d) with respect to amounts in the Company Convertible Note Escrow Account
consisting of Net Cash Proceeds of Asset Sales, upon the expenditure of such
cash if such expenditure is made in accordance with this Indenture; and (e) with
respect to other amounts in the Company Convertible Note Escrow Account other
than the Net Cash Proceeds of any Asset Sale, including payments received on the
Technocom Preferred Stock, Qualified Investments or Intercompany Notes that
constitute Collateral, if the procedures described in this Section 11.4 are
complied with; provided that all such releases described above are in compliance
with the Trust Indenture Act.
(e) In the event of any Asset Sale, the Company or the relevant
Restricted Subsidiary shall cause the Net Cash Proceeds derived or resulting
from any Asset Sale that involves any Collateral to be deposited in the Company
Convertible Note Escrow Account on or before the Business Day following the
fifth Business Day on which such Net Cash Proceeds are received by the Company
or such Restricted Subsidiary. In the event that the Company or the relevant
Restricted Subsidiary engages in an Asset Sale with respect to Collateral which
is permitted by this Indenture and the Collateral Documents (or the Company
designates a Guarantor to be an
-102-
<PAGE> 111
Unrestricted Subsidiary in accordance with this Indenture), the Trustee shall
execute and deliver such documents as requested by the Company to evidence the
release of the Liens of the Collateral Documents on the assets subject to the
Asset Sale or on the assets owned by such Unrestricted Subsidiary, as
applicable. The proceeds of such Collateral (including any earnings thereon) may
be released from the Company Convertible Note Escrow Account in order to, and in
only such amount as is required to, (a) pay the principal amount of the Notes
tendered pursuant to an Asset Sale Offer, or (b) purchase Replacement Assets to
the extent permitted by Section 4.8 hereof, in which case the proceeds of such
Collateral may be released to the Company, if such proceeds are to be used in
accordance with this Indenture; provided that upon consummation of such
Investment or purchase the collateral agent or the Trustee shall have received a
first priority fully perfected Lien, subject to Permitted Liens and the
interests of the Senior Note Trustee and the Holders of the Convertible Notes,
in the Property or assets acquired by the Company.
(f) Notwithstanding any provision of Section 11.5 to the contrary, the
disposition of inventory in the ordinary course of the Company's and Guarantors'
businesses, as applicable, may be made without delivery to the Trustee of
certificates required by the Trust Indenture Act. However, in lieu thereof, the
Company will be required to deliver semi-annual Officers' Certificates to the
effect that all such dispositions have been made in the ordinary course of the
applicable Company's or Guarantors' business and that the proceeds therefrom
have been applied in a manner permitted by the Indenture. The Trustee shall, in
the absence of negligence or bad faith on its part, be entitled to rely on such
Officers' Certificates and Opinions of Counsel with respect to the Company's and
the Guarantors' compliance with the collateral release provisions of this
Indenture.
(g) The release of any Collateral from the terms of the Collateral
Documents, or the release, in whole or in part, of the Liens created by the
Collateral Documents, will not be deemed to impair the security under this
Indenture in contravention of the provisions thereof and of the Collateral
Documents if and to the extent that the Collateral is released pursuant to this
Indenture and the Collateral Documents. In connection with the release of
Collateral, the Trustee shall determine whether it has received all
documentation required by Section 314(d) of the Trust Indenture Act to permit
such release.
SECTION 11.5 Certificates of the Company. The Company will furnish to
the Trustee prior to each proposed release of Collateral pursuant to the
Collateral Documents other than by reason of transactions referred to in Section
11.4(f) above, all documents required by Section 314(d) of the Trust Indenture
Act. The Trustee may, to the extent permitted by Sections 7.1 and 7.2 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such instruments. Any certificate or opinion
required by Section 314(d) of the Trust Indenture Act may be made by an Officer
of the Company or a Guarantor, as the case may be, except in cases where Section
314(d) of the Trust Indenture Act requires that such certificate or opinion be
made by an independent engineer, appraiser or other expert within the meaning of
Section 314(d) of the Trust Indenture Act.
-103-
<PAGE> 112
SECTION 11.6 Authorization of Actions to be Taken by the Trustee Under
the Collateral Documents. The Trustee may, in its sole discretion and without
the consent of the Holders, on behalf of the Holders, take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the
Collateral Documents and (b) collect and receive any and all amounts payable in
respect of the obligations of the Company and the Guarantors hereunder. The
Trustee shall have the power to institute and to maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
by any acts that may be unlawful or in violation of the Collateral Documents, or
this Indenture, and such suits and proceedings as the Trustee may deem expedient
to preserve or protect its interests and the interests of the Holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
government enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders or of the Trustee).
SECTION 11.7 Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents. The Trustee is authorized to receive any funds for the
benefit of the Holders distributed under the Collateral Documents, and to make
further distributions of such funds to the Holders according to the provisions
of this Indenture and the Collateral Documents.
SECTION 11.8 Possession, Use and Release of Senior Note Collateral.
(a) All funds deposited in the Company Senior Note Escrow Account
representing net proceeds of the Senior Notes constitute Senior Note Collateral
and will, at the direction of the Company except during the continuance of a
Default or an Event of Default under the Senior Note Indenture and at the
direction of the Trustee during the continuance of a Default or an Event of
Default under the Senior Note Indenture, be invested in Eligible Cash
Equivalents in the manner provided for in the Company Senior Note Escrow Account
Agreement. No funds shall be released from the Company Senior Note Escrow
Account except as provided herein or therein.
(b) Subject to the provisions of Section 4.8(k) below and Section
11.4(f) above, up to $9,000,000 of the net proceeds of the Senior Notes may be
withdrawn from the Company Senior Note Escrow Account and utilized by the
Company to make Qualified Investments if, in respect of each such Qualified
Investment, the following conditions are satisfied, and the Trustee shall have
received an Officers' Certificate of the Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing, or will occur as a result thereof;
(ii) a Lien on the Qualified Investment is granted to the
Senior Note Trustee or a collateral agent for the benefit of the
Trustee and the equal and ratable benefit of the Holders to secure the
Notes, the Guarantees and the other obligations of the Company and the
Guarantors under this Indenture and the Collateral Documents;
-104-
<PAGE> 113
(iii) the entity in which such Qualified Investment is made
has all licenses, registrations and permits necessary to operate the
Telecommunications Business in which it is engaging or proposes to
engage on the date of such Qualified Investment;
(iv) all licenses, registrations and permits required for
such Qualified Investment and such Liens have been obtained; and
(v) appropriate Senior Note Collateral Documents have been
executed and delivered and properly recorded, registered and filed to
the extent necessary to make effective the Liens intended to be created
therein.
The Company shall also deliver to the Trustee (x) an Opinion of Counsel covering
clause (v) above and (y) such other documents as may be required by the Senior
Note Collateral Documents to be delivered by the Company to a collateral agent
or the Trustee.
(c) Subject to the provisions of Section 11.8(k) and Section 11.4(f)
above, the net proceeds of the Senior Notes (including any portion of the
$9,000,000 of net proceeds of the Senior Notes not used as provided in
subsection (b) above) retained in the Company Senior Note Escrow Account may be
withdrawn from the Company Senior Note Escrow Account and utilized by the
Company to purchase Capital Stock of the Leasing Companies or to make
intercompany loans to the Leasing Companies evidenced by Intercompany Notes,
each of which will constitute Senior Note Collateral, by transferring such funds
to the applicable Leasing Company Escrow Accounts of such Leasing Companies, if
the following conditions are satisfied, and the Trustee shall have received an
Officers' Certificate of the Company and the applicable Leasing Company to such
effect:
(i) no Default or Event of Default has occurred and is
continuing or will occur as a result thereof;
(ii) the applicable Leasing Company utilizes such funds
(except for funds to be utilized for Qualified Investments to the
extent permitted by the Senior Note Indenture) to purchase
Telecommunications Assets contemporaneously with such purchase of
Capital Stock or intercompany loan, as applicable, from a supplier
located in the United States, Canada, Western Europe (including
Scandinavia), Israel, Japan, Taiwan and South Korea;
(iii) the applicable Leasing Company contemporaneously enters
into a Telecommunications Asset Lease covering such Telecommunications
Assets with a Restricted Subsidiary or a Qualified Joint Venture;
(iv) Liens on such Telecommunications Asset Lease are granted
to the Senior Note Trustee or a collateral agent for the benefit of the
Trustee and the equal and ratable benefit of the Holders to secure the
Notes, the Guarantees and the other obligations of
-105-
<PAGE> 114
the Company and the Guarantors under this Indenture and the Collateral
Documents and to secure any applicable Intercompany Note;
(v) the Restricted Subsidiary or Qualified Joint Venture that
will be the lessee under the applicable Telecommunications Asset Lease
has or has applied for all licenses, registrations and permits
necessary to operate the Telecommunications Assets subject to such
Telecommunications Asset Lease and the Telecommunications Business for
which such Telecommunications Assets are intended to be utilized;
(vi) if a Qualified Investment is to be made by a Leasing
Company with that portion of the $9,000,000 of net proceeds of the
Senior Notes not utilized by the Company for Qualified Investments
pursuant to subsection (b) of this Section 11.8, (x) the Leasing
Company has granted a Lien on such Qualified Investment to the Senior
Note Trustee or a collateral agent for the benefit of the Trustee and
the equal and ratable benefit of the Holders to secure the Notes, the
Guarantees and the other obligations of the Company and the Guarantors
under this Indenture and the other Collateral Documents and to secure
any applicable Intercompany Note, and (y) all licenses, registrations
and permits required for such Qualified Investment and such Lien have
been obtained; and
(vii) appropriate Senior Note Collateral Documents have been
executed and delivered and properly recorded, registered and filed to
the extent necessary to make effective the Lien intended to be created
therein and have been delivered to the Trustee or the collateral agent.
The Company shall also deliver to the Trustee (x) an Opinion of Counsel covering
clause (vii) above in form and substance reasonably satisfactory to the Trustee
and (y) such other documents as may be required by the Senior Note Collateral
Documents to be delivered to the Trustee or a collateral agent by the Company or
the applicable Leasing Company. If the foregoing conditions are satisfied, the
funds representing the net proceeds of the Senior Notes in the applicable
Leasing Company Escrow Account derived from the Investment in the Capital Stock
of the Leasing Company or the intercompany loan evidenced by an Intercompany
Note may be withdrawn and utilized by such Leasing Company to purchase the
applicable Telecommunications Assets or make the applicable Qualified
Investments.
(d) All payments made to the Company in respect of any Qualified
Investments or Intercompany Notes evidencing loans of the net proceeds of the
Senior Notes to Leasing Companies held by the Company or any Pledged Stock of
the Leasing Companies shall be promptly deposited, without commingling prior to
such deposit, in the Company Senior Note Escrow Account and will also constitute
Collateral and be subject to a first priority perfected Lien in favor of a
collateral agent or the Senior Note Trustee for the benefit of the Trustee and
the equal and ratable benefit of the Holders of the Notes and the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior Notes;
and unless and until an Event of Default has occurred and is continuing, the
Company and/or the Leasing Companies and/or the Restricted Subsidiaries will be
entitled to receive and retain, free from the Liens of the Senior
-106-
<PAGE> 115
Note Collateral Documents, payments made under any Intercompany Notes not
evidencing loans to Leasing Companies and any instruments not constituting
Pledged Stock of the Leasing Companies or Qualified Investments.
(e) All payments made by an investee, an obligor or the lessee to any
Leasing Company in respect of any Qualified Investments or Intercompany Notes
held by such Leasing Company or any Telecommunications Asset Lease shall be
promptly deposited, without commingling prior to such deposit, in the applicable
Leasing Company Escrow Account and will also constitute Collateral and be
subject to a first priority perfected Lien in favor of the Trustee or a
collateral agent and subject to Section 11.8(k) below and Section 11.4(f) above
may be utilized
(x) to purchase additional Telecommunications Assets
for additional Telecommunications Asset Leases if the following
conditions are satisfied, and the Trustee shall have received an
Officer's Certificate of the Company to such effect:
(i) no Default or Event of Default has occurred and is
continuing or will occur as a result thereof;
(ii) the applicable Leasing Company utilized such funds to
purchase such Telecommunications Assets from a supplier located in the
United States, Canada, Western Europe (including Scandinavia), Israel,
Japan, Taiwan and South Korea;
(iii) the applicable Leasing Company contemporaneously enters
into a Telecommunications Asset Lease covering such Telecommunications
Assets with a Restricted Subsidiary or a Qualified Joint Venture;
(iv) Liens on such Telecommunications Asset Lease are granted
to the Senior Note Trustee or a collateral agent for the benefit of the
Trustee and the equal and ratable benefit of the Holders to secure the
Notes, the Guarantees and the other obligations of the Company and the
Guarantors under this Indenture and the Collateral Documents and to
secure any applicable Intercompany Note;
(v) the Restricted Subsidiary or Qualified Joint Venture that
will be the lessee under the applicable Telecommunications Asset Lease
has or has applied for all licenses, registrations and permits
necessary to operate the Telecommunications Assets subject to such
Telecommunications Asset Lease; and
(vi) appropriate Senior Note Collateral Documents have been
executed and delivered and properly recorded, registered or filed to
the extent necessary to make effective to the fullest extent permitted
by law the Lien intended to be created therein; provided that the
Leasing Company shall also deliver (A) an Opinion of Counsel covering
clause (vi) above and in form and substance reasonably satisfactory to
the Trustee and (B) such other documents as may be required by the
Senior Note Collateral Documents
-107-
<PAGE> 116
to be delivered to a collateral agent or the Senior Note Trustee by the
Company or the Leasing Company;
(y) to pay when due the Accreted Value, premium, if
any, on and interest (including Additional Amounts, if any, and Special
Interest, if any) on the Senior Notes; and
(z) provided that an aggregate amount equal to the
interest due on the Senior Notes in the next succeeding 12 months the
(the "Minimum Amount") exclusive of amounts constituting the net
proceeds of the Senior Notes or the Net Cash Proceeds of any Asset Sale
(whether or not constituting Excess Proceeds or Aggregate Unused
Proceeds) is in the Company Senior Note Escrow Account and the Leasing
Company Escrow Accounts, which Minimum Amount may be utilized only for
the purposes set forth in clauses (x) and (y) above, any amount in
excess of such Minimum Amount may be invested by the Leasing Companies
or the Company in Qualified Investments to the extent permitted by the
Senior Note Indenture if, in respect of each such Qualified Investment,
the following conditions are satisfied and the Trustee shall have
received an Officers' Certificate to such effect:
(i) no Default or Event of Default under
the Senior Note Indenture has occurred and is continuing or
will occur as a result thereof;
(ii) a Lien on the Qualified Investment is
granted to the Senior Note Trustee or a collateral agent for
benefit of the Trustee and the equal and ratable benefit of
the Holders of the Notes to secure the Notes and the
Guarantees and to secure any applicable Intercompany Note;
(iii) the entity in which such Qualified
Investment is made has all licenses, registrations and permits
necessary to operate the Telecommunications Business in which
it is engaging or proposes to engage on the date of such
Qualified Investment;
(iv) all licenses, registrations and permits
required for such Qualified Investment and such Lien have been
obtained; and
(v) appropriate Senior Collateral Documents
have been executed and delivered and properly recorded,
registered or filed to the extent necessary to make effective
to the fullest extent permitted by law the Lien intended to be
created therein.
The Company shall also deliver to the Trustee (x) an Opinion of Counsel covering
clause (v) above and (y) such other documents as may be required by the Senior
Note Collateral Documents to be delivered by the Company to the collateral agent
or the Trustee.
-108-
<PAGE> 117
(f) Although all Pledged Stock, all Intercompany Notes and all other
instruments included in the Senior Note Collateral, including those representing
Qualified Investments, will be delivered to and held by the Trustee, the Senior
Note Trustee or the collateral agent, unless and until an Event of Default has
occurred and is continuing, the Company and/or the Leasing Companies and/or
other Restricted Subsidiaries, as applicable, shall be entitled to exercise any
voting and consensual rights with respect to such Senior Note Collateral.
(g) Any Telecommunications Assets purchased with the net proceeds of
the Senior Notes that are subject to a Telecommunications Asset Lease or a
series of related Telecommunications Asset Leases may not be transferred or
shipped to the lessee under the applicable Telecommunications Asset Lease or
Leases or to a jurisdiction other than the United States, Canada, Western Europe
(including Scandinavia), Israel, Japan, Taiwan and South Korea unless the
applicable lessee has all licenses, registrations and permits necessary to
operate such Telecommunications Assets and the Telecommunications Business for
which such Telecommunications Assets are intended and the Company delivers to
the Trustee a favorable Opinion of Counsel to such effect. With respect to any
Telecommunications Assets not purchased with the net proceeds of the Senior
Notes, up to $5,000,000 of such Telecommunications Assets may be shipped or
transferred to such lessee at any time without such Opinion of Counsel being
required but thereafter, on each occasion when $5,000,000 in the aggregate of
such Telecommunications Assets shall have been shipped or transferred, such
Opinion of Counsel shall be delivered before any additional Telecommunications
Assets may be shipped or transferred.
(h) If no Default or Event of Default has occurred and is continuing,
funds or Eligible Cash Equivalents held in any Leasing Company Escrow Account
may be loaned or advanced to any other Leasing Company Escrow Account or
transferred to the Company Senior Note Escrow Account (until the Senior Notes
are no longer outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case such transfer shall be made to the Company Convertible
Note Escrow Account), and funds or Eligible Cash Equivalents in the Company
Senior Note Escrow Account may be transferred from the Company Senior Note
Escrow Account to any Leasing Company Escrow Account.
(i) Subject to Section 11.8(k) below and Section 11.4(f) above, Senior
Note Collateral may be released from the Liens created by the Senior Note
Collateral Documents (a) upon payment in full of the Notes in accordance with
the terms of the Notes and this Indenture and the other obligations then due and
owing under the Notes, this Indenture and the Collateral Documents; (b) with
respect to inventory, upon the sale of such inventory in the ordinary course of
business; (c) with respect to Collateral sold or disposed of in an Asset Sale if
such sale or other disposition is not prohibited under this Indenture and if the
Net Cash Proceeds of such sale or other disposition are applied as provided in
Section 4.8 hereof; (d) to the extent that a Lien is granted on such Collateral
pursuant to subsection (iv) of the definition of "Permitted Liens" set forth in
Section 1.1 hereof; (e) with respect to amounts in the Company Senior Note
Escrow Account and the Leasing Company Escrow Accounts consisting of Net Cash
Proceeds of Asset Sales, upon the expenditure of such cash if such expenditure
is made in accordance with this
-109-
<PAGE> 118
Indenture; (f) with respect to amounts in the Company Senior Note Escrow Account
and the Leasing Company Escrow Accounts constituting net proceeds of the Senior
Notes if the procedures described in subsection (a), (b) or (c) above are
complied with; (g) with respect to other amounts in the Company Senior Note
Escrow Account and the Leasing Company Escrow Accounts other than the Net Cash
Proceeds of any Asset Sale, including payments received on Pledged Stock,
Telecommunications Asset Leases and Qualified Investments, if the procedures
described in this Section 11.8 are complied with; (h) with respect to Collateral
that is Capital Stock of a Guarantor, if such Guarantor is released pursuant to
Section 10.6 of this Indenture; and (i) with respect to any Intercompany Note
not evidencing a loan of net proceeds of the Senior Notes to the Leasing
Companies, upon the repayment, forgiveness or other termination of such
Intercompany Note; provided that all such releases described above are in
compliance with the Trust Indenture Act.
(j) In the event of any Asset Sale, the Company or the relevant
Restricted Subsidiary shall cause the Net Cash Proceeds derived or resulting
from any Asset Sale that involves any Senior Note Collateral or involves
Telecommunications Assets subject to a Telecommunications Asset Lease to be
deposited in the Company Senior Note Escrow Account (until the Senior Notes are
no longer outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case such transfer shall be made to the Company Convertible
Note Escrow Account) or the applicable Leasing Company Escrow Account, as
applicable, on or before the fifth Business Day following the Business Day on
which such Net Cash Proceeds are received by the Company or such Restricted
Subsidiary. In the event that the Company or the relevant Restricted Subsidiary
engages in an Asset Sale with respect to Senior Note Collateral which is
permitted by this Indenture and the Senior Note Collateral Documents (or the
Company designates a Guarantor to be an Unrestricted Subsidiary in accordance
with this Indenture), the Trustee shall execute and deliver such documents as
requested by the Company to evidence the release of the Liens of the Senior Note
Collateral Documents on the assets subject to the Asset Sale or on the assets
owned by such Unrestricted Subsidiary, as applicable. The proceeds of such
Collateral or such Telecommunications Assets (including any earnings thereon)
may be released from the Company Senior Note Escrow Account (or, if applicable,
the Company Convertible Note Escrow Account) or the applicable Leasing Company
Escrow Account, in order to, and in only such amount as is required to, (a) pay
the principal amount of the Senior Notes or Notes tendered pursuant to an Asset
Sale Offer, or (b) purchase Replacement Assets or Replacement Telecommunications
Assets, as applicable, to the extent permitted by Section 4.8 hereof, in which
case the proceeds of such Senior Note Collateral may be released to the Company,
the Guarantor or Restricted Subsidiary, as applicable, if such proceeds are to
be used in accordance with this Indenture; provided that upon consummation of
such Investment or purchase the Senior Note Trustee or a collateral agent shall
have received first priority fully perfected Liens, subject to Permitted Liens
and the interests of the Trustee and the Holders of the Notes, in the Property
or assets acquired by the Company or any of its Restricted Subsidiaries in
connection therewith or in the case of Replacement Telecommunications Assets, in
the relevant Telecommunications Asset Lease.
-110-
<PAGE> 119
(k) The release of any Senior Note Collateral from the terms of the
Senior Note Collateral Documents, or the release, in whole or in part, of the
Liens created by the Senior Note Collateral Documents, will not be deemed to
impair the security under this Indenture in contravention of the provisions
hereof and of the Senior Note Collateral Documents if and to the extent that the
Collateral is released pursuant to this Indenture and the Senior Note Collateral
Documents. In connection with the release of Senior Note Collateral, the Trustee
shall determine whether it has received all documentation required by Section
314(d) of the Trust Indenture Act to permit such release.
(l) Notwithstanding anything elsewhere contained in this Section 11.8,
at all times on or after November 30, 1998, the Company will be required to have
funds or Eligible Cash Equivalents in the Company Senior Note Escrow Account
and/or the Leasing Company Escrow Accounts in an aggregate amount not less than
an amount necessary to pay on the next succeeding Interest Payment Date the
interest, including Additional Interest, if any, and Special Interest, if any,
on the Senior Notes then outstanding.
(m) The Company and the Leasing Companies may utilize at the Company's
option any funds in the Company Senior Note Escrow Account or the Leasing
Company Escrow Accounts to pay when due the Accreted Value of, the premium, if
any, on, and interest (including Additional Amounts, if any, and Special
Interest, if any) on the Senior Notes; provided that after giving effect to any
such withdrawal there remains in the Company Senior Note Escrow Account and/or
the Leasing Company Escrow Account funds and/or Eligible Cash Equivalents
required by Section 11.8(l) to be so retained.
ARTICLE XII
SUBORDINATION OF NOTES
SECTION 12.1 Notes Subordinated to Senior Indebtedness. The Company and
the Guarantor covenant and agree, and each Holder of a Note, by acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth and except as otherwise set forth in this Article, the
Indebtedness represented by the Notes and this Indenture (including the
Guarantees) and the payment of the principal of and premium, if any, and
interest (including Additional Amounts, if any, and Special Interest, if any) on
each and all of the Notes and of any amounts due in respect of any Notes and
this Indenture (including the Guarantees) (and any payment thereon made or to be
made by a Guarantor under its Guarantee), are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior
Indebtedness; provided that the Notes will be secured by a first priority lien
on the Collateral and notwithstanding the foregoing, the Notes will rank as to
all assets of the Company or any Leasing Company or, if applicable, other
Guarantors constituting such Collateral, whether or not the Liens purporting to
secure such Collateral are valid and effective (hereinafter called "assets
constituting Collateral" even if there is no effective Lien thereon), and the
payment of any amounts due in respect of any Notes (and any payment thereon made
or to be made by a
-111-
<PAGE> 120
Guarantor under its Guarantee), are senior in right of payment to the Senior
Indebtedness as a result of the subordination provisions contained in the Senior
Note Indenture and the Convertible Note Collateral Documents.
SECTION 12.2 Payment Over of Proceeds Upon Dissolution, Etc. Except as
otherwise provided in Section 12.16, in the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or other Obligor or
to its creditors, as such, or to a substantial part of its assets, other than
assets constituting Collateral or (b) any proceeding for the liquidation,
dissolution or other winding up of the Company or any other Obligor, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company or any other Obligor, then and in any such
event the holders of Senior Indebtedness shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior
Indebtedness, or provision shall be made for such payment in money or money's
worth, before the Holders of the Notes are entitled to receive any payment or
distribution of any kind or character, whether in cash, property or securities,
on account of principal of or premium, if any, or interest (including Additional
Amounts, if any, and Special Interest, if any) on the Notes and on account of
any amounts due in respect of any Notes and any payment thereon made or to be
made by a Guarantor under its Guarantee, other than in respect of the assets
constituting Collateral, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company or
any other Obligor being subordinated to the payment of the Notes, which may be
payable or deliverable in respect of the Notes in any such case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Company other
than in respect of the assets constituting Collateral.
In the event that, notwithstanding the foregoing provisions of this
Section , other than in respect of the assets constituting Collateral, the
Trustee or the Holder of any Note shall have received any payment or
distribution of assets of the Company or any other Obligor of any kind or
character, whether in cash, property or securities, prohibited by the foregoing,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company or of a
Guarantor being subordinated to the payment of the Notes or a Guarantee, as
applicable, before all Senior Indebtedness is paid in full or payment thereof
provided for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to a Trust Officer of the Trustee in writing
or such Holder, as the case may be, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
person making payment or distribution of assets of the Company or any other
Guarantor for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
-112-
<PAGE> 121
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include securities of the Company as
reorganized or readjusted, or securities of the Company or any other Guarantor
or any other corporation provided for by a plan of reorganization or
readjustment which are subordinated in right of payment to all Senior
Indebtedness which may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Notes or the Guarantees are so
subordinated as provided in this Article. The consolidation or amalgamation of
the Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of its properties and assets substantially as an entirety to another person upon
the terms and conditions set forth in Article V shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company for the
purposes of this Section if the person formed by such consolidation or into
which the Company is merged or which acquires by conveyance or transfer such
properties and assets substantially as an entirety, as the case may be, shall,
as part of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article V. Similarly, the consolidation or amalgamation
of a Guarantor with, or the merger of a Guarantor into, another Person or the
liquidation or dissolution of a Guarantor to the extent permitted by this
Indenture shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of a Guarantor for the purposes of this Section.
SECTION 12.3 Prior Payment to Senior Indebtedness upon Acceleration of
Notes. In the event that any Notes are declared due and payable before their
Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Notes so become due and payable shall be entitled
to receive payment in full of all amounts due on or in respect of such Senior
Indebtedness before the Holders of the Notes are entitled to receive any payment
(including any payment which may be payable by reason of the payment of any
other indebtedness of the Company or any other Obligor being subordinated to the
payment of the Notes or the Guarantees, as applicable) by the Company or any
other Obligor on account of the principal of or premium, if any, or interest on
or other amounts due in respect of, the Notes or the Guarantees, as applicable,
or on account of the purchase or other acquisition of Notes, other than in
respect of the assets constituting Collateral.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Note prohibited by the
foregoing provisions of this Section , other than in respect of the assets
constituting Collateral, and if such fact shall, at or prior to the time of such
payment, have been made known to a Trust Officer of the Trustee in writing, or
such Holder, as the case may be, then and in such event such payment shall be
paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 12.2 would be applicable.
-113-
<PAGE> 122
SECTION 12.4 No Payment When Senior Indebtedness in Default.
(a) In the event (i) and during the continuation of any default in the
payment of principal of, premium, if any, on, interest, if any, (including
Additional Amounts if any, and Special Interest, if any) on, or other amounts
due in respect of, any Senior Indebtedness, whether at the date of a required
payment, maturity, upon mandatory prepayment redemption or otherwise, or (ii)
that any event of default with respect to any Senior Indebtedness shall have
occurred and be continuing and shall have resulted in such Senior Indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable unless and until such event of default
shall have been cured or waived in writing or shall have ceased to exist and
such acceleration shall have been rescinded or annulled or if any judicial
proceeding is pending with respect to such event of default with respect to the
Senior Indebtedness, then no payment (including any payment which may be payable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Notes) shall be made by the Company on
account of the principal of, premium, if any, on interest on, or other amounts
due in respect of, the Notes or on account of the purchase, redemption or other
acquisition of Notes, other than in respect of the Collateral.
(b) In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Note prohibited by the
foregoing provisions of this Section , other than in respect of the Collateral,
and if such fact shall, at or prior to the time of such payment, have been made
known to a Trust Officer of the Trustee in writing or to such Holder, as the
case may be, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 12.2 would be applicable.
SECTION 12.5 Payment Permitted If No Default. Nothing contained in this
Article or elsewhere in this Indenture or in any of the Notes shall prevent (a)
the Company or the Guarantors, at any time except during the pendency of any
case, proceeding, dissolution, liquidation, or other winding up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 12.2 or under the conditions described in Section
12.3 or 12.4, from making payments at any time of principal of and premium, if
any, or interest (including Additional Amounts, if any, and Special Interest, if
any) on the Notes, or other amount due in respect of the Notes, or the
Guarantees as applicable, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of the principal of,
premium, if any, on interest (including Additional Amounts, if any, and Special
Interest, if any) on, or other amounts due in respect of, the Notes or retention
of such payment by the Holders, if, at the time of such application by the
Trustee, it did not have knowledge that such payment would have been prohibited
by the provisions of this Article.
-114-
<PAGE> 123
SECTION 12.6 Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the prior payment in full of all amounts due on or in respect of
Senior Indebtedness, other than in respect of the assets constituting Collateral
with respect to which the Holders of the Notes are not subordinated, the Holders
of the Notes shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Indebtedness pursuant to the provisions of
this Article to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of, premium, if any, on, interest
(including Additional Amounts, if any, and Special Interest, if any) on, and any
other amounts due in respect of, the Notes shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Notes or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Notes or the Trustee, shall, as
among the Company and any Guarantor, as the case may be, its respective
creditors other than holders of Senior Indebtedness and the Holders of the
Notes, be deemed to be a payment or distribution by the Company or any
Guarantor, as applicable, to or on account of the Senior Indebtedness.
SECTION 12.7 Provisions Solely to Define Relative Rights. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as among the Company or any Guarantor, its respective creditors
other than holders of Senior Indebtedness and the Holders of the Notes, the
obligation of the Company or such Guarantor, which is absolute and
unconditional, to pay to the Holders of the Notes, the principal of, premium, if
any, on, interest (including Additional Amounts, if any, and Special Interest,
if any) on, and any other amounts due in respect of, the Notes or in respect of
the Guarantees, as applicable, as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Notes and creditors of the Company other than the
holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Notes from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
of the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 12.8 Trustee to Effectuate Subordination. Each Holder of a Note
by his acceptance thereof authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 12.9 No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or any Guarantor or by any act
or failure to act, in good faith, by any such holder,
-115-
<PAGE> 124
or by any noncompliance by the Company or any Guarantor with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with. No provision of the
subordination provisions contained in this Article may be amended without the
consent of a majority in principal amount of Stated Maturity of Senior
Indebtedness in the manner provided for in the Senior Note Indenture.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Notes to be holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment, of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company or any Guarantor and any other Person.
SECTION 12.10 Notice to Trustee. The Company and each Guarantor shall
give prompt written notice to the Trustee of any fact known to the Company or
such Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Notes or the Guarantees, as applicable.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Notes or the Guarantees unless and until a Trust Officer of the
Trustee shall have received written notice thereof from the Company, any
Guarantor or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 7.1, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if a Trust Officer of the Trustee
shall not have received the notice provided for in this Section at least three
Business Days prior to the date upon which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment of
the principal of, premium, if any, or interest (including Additional Amounts, if
any, and Special Interest, if any) on, and any other amounts due in respect of
any Note), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date.
Subject to the provisions of Section 7.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Indebtedness (or
a trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any person as a holder
of
-116-
<PAGE> 125
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such person to furnish evidence to the
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 12.11 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 7.1, and the
Holders of the Notes shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered in writing
to the Trustee or to the Holders of Notes, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article.
SECTION 12.12 Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Notes or to the
Company or to any other person cash, property or securities to which holders of
Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
SECTION 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payment to, the
Trustee under or pursuant to Section 7.7.
SECTION 12.14 Article Applicable to Paying Agents. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term "Trustee" as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee; provided, however, that Section 12.13 shall not
apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
-117-
<PAGE> 126
SECTION 12.15 Certain Conversions Deemed Payment. For the purposes of
this Article only, and subject to the prohibition against conversion of Notes
into property that is not a "prescribed security" for purposes of clause
212(1)(b)(vii)(E) of the Income Tax Act (Canada) set out in Section 13.12, (a)
the issuance and delivery of junior securities upon conversion of Notes in
accordance with Article XIII shall not be deemed to constitute a payment or
distribution on account of the principal of, premium, if any, on, interest
(including Additional Amounts, if any, and Special Interest, if any) on, or
other amounts due in respect of, Notes or on account of the purchase or other
acquisition of Notes and (b) the payment, issuance or delivery of cash, property
or securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section , the term "junior securities" means (i) shares of any
class of Capital Stock of the Company and (ii) securities of the Company or a
Guarantor which are subordinated in right of payment to all Senior Indebtedness
which may be outstanding at the time of issuance or delivery of such securities
to substantially the same extent as, or to a greater extent than, the Notes are
so subordinated as provided in this Article. Nothing contained in this Article
or elsewhere in this Indenture (other than in Section 13.12) or in the Notes or
the respective Guarantee is intended to or shall impair, as among the Company,
its respective creditors other than holders of Senior Indebtedness and the
Holders of the Notes, the right, which is absolute and unconditional, of the
Holder of any Note to convert such Security in accordance with and subject to
the provisions of Article XIII.
SECTION 12.16 Rights in Respect of Collateral. Notwithstanding any
other provision of this Article, the Notes are secured by, and are entitled to
receive free of the rights of the holders of Senior Indebtedness, payment of
principal of, premium, if any, on, interest (including Additional Amounts, if
any, and Special Interest, if any) on, and any other amounts due in respect to,
the Notes from the proceeds of the Collateral and the assets constituting
Collateral, and as to the Collateral and the assets constituting Collateral, the
Notes rank senior in right of payment to the Senior Indebtedness as a result of
the subordination provisions contained in the Senior Note Indenture and the
Convertible Note Collateral Documents.
ARTICLE XIII
CONVERSION OF NOTES
SECTION 13.1 Conversion Privilege and Conversion Price; Reset Penalty.
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Note or any portion of the principal amount
thereof which equals $1,000 or any integral multiple thereof may be converted at
any time on or after 9:00 a.m. New York City time on July 30, 1996 at the
principal amount thereof, or such portion thereof, into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock, at the Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. Such conversion right shall
expire at the close of business on the Business Day next preceding the Stated
Maturity of principal. In case a Note or portion thereof is called for
redemption, such
-118-
<PAGE> 127
conversion right in respect of the Note or portion so called shall expire at the
close of business on the Business Day next preceding the Redemption Date, unless
the Company defaults in making the payment due upon redemption.
The price at which Common Stock of the Company shall be delivered upon
conversion (herein called the "Conversion Price") shall be equal to $6.90 per
share.
On December 1, 1996 (the "Reset Date"), the Conversion Price will be
adjusted (the "Conversion Reset") to equal (x) the product of (i) the average of
the high and low prices on the Nasdaq National Market, or the consolidated
transaction reporting tape in the event that the Common Stock of the Company is
not then traded on the Nasdaq National Market, and (ii) the number of shares of
Common Stock of the Company reported as being traded on that day, for each
Trading Day of the 30 calendar days preceding the Reset Date (the "Conversion
Reset Period"), divided by the total number of shares of Common Stock of the
Company traded over the Conversion Reset Period, then multiplied by (y) 115%
(the "Conversion Reset Price"), if such Conversion Reset Price shall be lower
than the Conversion Price before such calculation, provided that the Conversion
Reset Price shall never be adjusted to less than $4.30 per share, but the
Company will be required to pay to Holders of Notes a quarterly reset penalty
("Reset Penalty") attributable to the Company's inability to adjust the
Conversion Reset Price below $4.30 per share. In the event that the Conversion
Price before such calculation shall be equal to or less than the Conversion
Reset Price, then no adjustment to the Conversion Price shall be made. The
quarterly Reset Penalty payable to each Holder of Notes shall be an amount equal
to $2.50 per Note held by such Holder (which for the purposes of this Section
13.1 will be determined to be Certificated Notes each in the denomination of
$1000) unless, but for the proviso in the preceding sentence, the Conversion
Reset Price would have been less than $3.80 per share, in which case such
quarterly Reset Penalty shall be an amount equal to $5.00 per Note held by such
Holder. The Reset Penalty shall be payable on each March 1, June 1, September 1
and December 1 (each such date being referred to herein as a "Reset Penalty
Payment Date"), commencing on March 1, 1997, the first such Reset Penalty
Payment Date occurring after the Reset Date, and shall be payable to Holders of
record of Notes on the February 15, May 15, August 15 and November 15
immediately preceding such Reset Penalty Payment Date. The Reset Penalty shall
not accrue and shall be payable only to holders of record on the dates provided
above. Notwithstanding any provision to the contrary, no amount shall be paid to
any Holder in respect of any Reset Penalty upon any redemption, offer to
purchase or other acquisition of the Note or Notes by the Company except in
respect of a record date which has passed. The Reset Penalty will not be payable
upon any conversion of a Note except in respect of a record date which has
passed. As used in this Indenture, the phrase "any other amounts due in respect
of any Note" shall include the Reset Penalty then due.
Notwithstanding anything to the contrary contained herein, no Holder
shall be entitled to convert any of its Notes into Common Stock of the Company
to the extent that any such conversion would constitute a violation of any
applicable securities laws of the United States, any province of Canada, or any
other applicable jurisdiction. Any certificates evidencing Common Stock of the
Company issued upon the conversion of Notes shall bear such legends,
-119-
<PAGE> 128
including legends reflecting restrictions on transfer required in order to
maintain compliance with the provisions of the Securities Act, as the Company
shall deem to be necessary or appropriate.
SECTION 13.2 Exercise of Conversion Privileges. In order to exercise
the conversion privilege, the Holder of any Note shall surrender such Note, duly
endorsed or assigned to the Company or in blank, at any office or agency of the
Company maintained pursuant to Section 4.2, accompanied by written notice to the
Company in the form provided in the Note (or such other notice as is acceptable
to the Company) at such office or agency that the Holder elects to convert such
Note or, if less than the entire principal amount thereof is to be converted,
the portion thereof to be converted. In the case of any Note which is
surrendered for conversion during the period from the close of business on any
Record Date through and including the next succeeding Interest Payment Date
(other than any Note whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
person in whose name that Note is registered at the close of business on such
Record Date. In the case of any Note which is surrendered for conversion during
the period from the close of business on any record date for the payment of any
Reset Penalty through and including the next succeeding Reset Penalty Payment
Date (other than any Note whose maturity is prior to such succeeding Reset
Penalty Payment Date), the Reset Penalty due on such succeeding Reset Penalty
Payment Date shall be payable on such date notwithstanding such conversion, and
such Reset Penalty (whether or not punctually paid or duly provided for) shall
be paid to the person in whose name that Note is registered at the close of
business on such record date. Notes surrendered for conversion subsequent to any
such Record Date or any record date for the payment of a Reset Penalty shall
(except in the case of Notes or portions thereof which have been called for
redemption on a Redemption Date within such period) be accompanied by payment in
New York Clearing House funds or other funds acceptable to the Company of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount being surrendered for conversion and/or any Reset Penalty due.
Except as provided in the immediately preceding sentence, in the case of any
Note which is converted (a) interest whose Stated Maturity is after the date of
conversion of such Note shall not be payable, (b) the Reset Penalty will cease
to be payable, and (c) no payment or adjustment shall be made upon conversion on
account of any dividends on the Common Stock of the Company issued upon
conversion.
Notes shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Notes for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Notes as Holders shall cease, and the person or persons entitled
to receive the Common Stock of the Company issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock as
and after such time. As promptly as practicable on or after conversion date, the
Company shall issue and shall deliver at any office or agency of the Company
maintained pursuant to Section 4.2 a certificate or certificates for the number
of full shares of Common Stock of the Company issuable upon conversion, together
with payment in lieu of any fraction of a share, as provided in Section 13.3.
-120-
<PAGE> 129
In the case of any Note which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Note or
Notes of authorized denominations in aggregate principal amount equal to the
unconverted portion of the principal amount of such Note.
SECTION 13.3 Fractions of Shares. No fractional share of Common Stock
of the Company shall be issued upon conversion of Notes. If more than one Note
shall be surrendered for conversion at one time by the same Holder, the number
of full shares of Common Stock which shall be issuable upon conversion thereof
shall be computed on the basis of the aggregate principal amount of the Notes
(or specified portions thereof) so surrendered. Instead of any fractional share
of such Common Stock which would otherwise be issuable upon conversion of any
Note or Notes (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fractional share in an amount equal to such
fraction multiplied by the Closing Price at the close of business on the day of
conversion (or, if such day is not a Trading Day, on the Trading Day immediately
preceding such day).
SECTION 13.4 Adjustment of Conversion Price.
(a) In case the Company shall make a dividend or other distribution on
the Common Stock of the Company exclusively in Common Stock of the Company
(other than a distribution referred to in paragraph (c) of this Section ), the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock of the Company outstanding at the close of business on the date
fixed for such determination and the denominator shall be the sum of such number
of shares of Common Stock and the total number of shares of Common Stock
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. In case the Company shall make a dividend or
other distribution on its Common Stock in shares of its Capital Stock other than
Common Stock, and such dividend or distribution would not otherwise require
reduction of the conversion price pursuant to paragraph (d) then subject to
Section 13.12 hereof, the conversion price and the number and kind of shares of
Capital Stock of the Company issuable upon the conversion of a Note (as in
effect immediately prior to such dividend or distribution) shall be
proportionately adjusted, so that the Holder of any Note thereafter converted
may, subject to Section 13.12 hereof, receive the aggregate number and kind of
shares of Capital Stock of the Company that such Holder would have owned
immediately following such dividend or distribution if such Note had been
converted immediately prior thereto. For the purpose of this paragraph (a), the
amount of Common Stock of the Company at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of such
Common Stock. The Company shall not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.
-121-
<PAGE> 130
(b) Subject to the last sentence of paragraph (g) of this Section , in
case the Company shall make a dividend or other distribution on its Common Stock
consisting exclusively of, or shall otherwise issue to all holders of its Common
Stock, rights, options or warrants entitling the holders thereof to subscribe
for or purchase such Common Stock or securities convertible into or exchangeable
for such Common Stock at a price per share (determined on an as-converted or as-
exercised basis if the rights, options or warrants pertain to securities
convertible into or exchangeable for such Common Stock) less than the Current
Market Price (determined as provided in paragraph (h) of this Section ) on the
date fixed for the determination of shareholders entitled to receive such
rights, options or warrants, the conversion price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of such Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of such Common Stock which the aggregate of the offering price (including
the minimum consideration payable upon conversion or exchange of securities
convertible into or exchangeable for Common Stock) of the total number of shares
of such Common Stock so offered for subscription or purchase would purchase at
such Current Market Price and the denominator shall be the number of shares of
such Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of such Common Stock. The
Company shall not issue any rights, options or warrants in respect of shares of
Common Stock held in the treasury of the Company.
(c) In case outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares of such Common Stock, the conversion
price in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately reduced, and,
conversely, in case outstanding shares of such Common Stock shall be combined
into a smaller number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which subdivision or
combination becomes effective.
(d) (i) Subject to the last sentence of this paragraph (d)(i) and the
last sentence of paragraph (g) of this Section , in case the Company shall, by
dividend or otherwise, distribute to all holders of its Common Stock evidences
of its indebtedness, shares of any class of its Capital Stock, cash or other
assets (including securities, but excluding any rights, options or warrants
referred to in paragraph (b) of this Section , excluding any dividend or
distribution paid exclusively in cash out of consolidated current or retained
earnings as shown on the books of the Company prepared in accordance with GAAP
(other than any Extraordinary Cash Dividend (as hereinafter defined)) and
excluding any dividend or distribution referred to in paragraph (a)
-122-
<PAGE> 131
or (c) of this Section), the conversion price shall be reduced by multiplying
the conversion price in effect immediately prior to the close of business on the
date fixed for the determination of shareholders entitled to such distribution
by a fraction of which the numerator shall be the Current Market Price
(determined as provided in paragraph (h) of this Section) on such date less the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors) on
such date of the portion of the evidences of indebtedness, shares of Capital
Stock, cash and other assets to be distributed applicable to one share of Common
Stock and the denominator shall be such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the day
following such date. If the Board of Directors determines the fair market value
of any distribution for purposes of this paragraph (d)(i) by reference to the
actual or when-issued trading market for any securities comprising part or all
of such distribution, it must in doing so consider those prices in such market
over the same period used in computing the Current Market Price pursuant to
paragraph (h) of this Section, to the extent possible. For purposes of this
paragraph (d)(i), an "Extraordinary Cash Dividend" shall be that portion, if
any, of the aggregate amount of all cash dividends paid in any fiscal year which
exceed $25,000,000. For purposes of this paragraph (d), any dividend or
distribution that includes shares of Common Stock of the Company, rights,
options or warrants to subscribe for or purchase shares of such Common Stock or
securities convertible into or exchangeable for shares of such Common Stock
shall be deemed to be (x) a dividend or distribution of the evidences of
indebtedness, cash, assets or shares of Capital Stock other than such shares of
such Common Stock, such rights, options or warrants or such convertible or
exchangeable securities (making any conversion price reduction required by this
paragraph (d)(i)) immediately followed by (y) in the case of shares of Common
Stock or such rights, options or warrants, a dividend or distribution thereof
(making any further conversion price reduction required by paragraph (a) and (b)
of this Section , except any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of paragraph (a) of this
Section), or (z) in the case of such convertible or exchangeable securities, a
dividend or distribution of the number of shares of such Common Stock as would
then be issuable upon the conversion or exchange thereof, whether or not the
conversion or exchange of such securities is subject to any conditions (making
any further conversion price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(ii) In case the Company shall issue its Common Stock for a
consideration per share less than the Current Market Price (determined as
provided in paragraph (h) of this Section), the conversion price shall be
reduced by multiplying the conversion price in effect immediately prior to the
close of business on the date on which the Company fixes the offering price of
such additional Common Stock by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus a fraction equal to the aggregate
consideration received by the Company from the issuance of such additional
shares of Common Stock over the Current Market Price on the date on which the
Company fixes the offering price of such additional shares of Common
-123-
<PAGE> 132
Stock (determined as provided in paragraph (h) of this Section ), and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after giving effect to such issuance. The reduction in the
conversion price provided for in the preceding sentence shall not apply to (i)
securities issued in transactions described in paragraphs (a), (b), (c), (d)(i),
d(ii) or (f) of this Section or pursuant to the conversion or exchange of any
such securities (to the extent applicable); (ii) the conversion or exchange of
securities (including options) convertible or exchangeable for Common Stock of
the Company outstanding on the Issue Date, or issuable pursuant to binding
agreements in effect on the Issue Date; (iii) Common Stock of the Company issued
and issuable upon the exercise of options issued to the Company's directors,
officers and employees under bona fide employee benefit plans adopted by the
Board of Directors and approved by the holders of such Common Stock when
required by law or otherwise where such issuances have been approved by the
Board of Directors (but only to the extent that the aggregate number of shares
excluded hereby and issued after the Issue Date shall not exceed 1% of the
Common Stock outstanding on the Issue Date); (iv) Common Stock of the Company
issued to shareholders of any person that merges into the Company in proportion
to their stock holdings of such person immediately prior to such merger, upon
such merger; (v) Common Stock of the Company issued in a bona fide underwritten
public offering; (vi) Common Stock of the Company issued in a bona fide private
placement through a placement agent that is a member firm of the NASD (except to
the extent that any discount from the Current Market Price (determined as
provided in paragraph (h) of this Section) attributable to restrictions on
transferability of such Common Stock, as determined in good faith by the Board
of Directors and described in a resolution thereof which shall be filed with the
Trustee, shall exceed 20%), or issuable pursuant to a binding agreement in
effect on the Issue Date; or (vii) Common Stock issued as a dividend on any
securities outstanding on the Issue Date required to be made pursuant to the
certificate of designation pertaining to such securities in effect at the time
such securities were issued.
(iii) In case the Company shall issue any securities
convertible into or exchangeable for its Common Stock for a consideration per
share (including the minimum consideration per share payable upon conversion or
exchange of any securities convertible into or exchangeable for Common Stock) of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the Current Market Price (determined as provided in
paragraph (h) of this Section ), the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the close of
business on the date on which the Company fixes the offering price of such
additional shares by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
securities plus a fraction equal to the aggregate consideration received for the
issuance of such securities (including the minimum consideration per share
payable upon conversion or exchange of any securities convertible into or
exchangeable for such Common Stock) over the Current Market Price on the date on
which the Company fixes the offering price of such additional shares (determined
as provided in paragraph (h) of this Section), and the denominator of which
shall be the number of shares outstanding immediately prior to the issuance of
such securities plus the maximum number of shares deliverable upon conversion of
or in exchange for such securities at the initial conversion or exchange rate.
The reduction in the conversion
-124-
<PAGE> 133
price provided for in the preceding sentence shall not apply to (i) securities
issued in transactions described in paragraphs (a), (b) or (d)(i) of this
Section ; (ii) convertible securities issued to shareholders of any person that
merges into the Company, or with a Restricted Subsidiary of the Company, in
proportion to their stock holdings of such person immediately prior to such
merger, upon such merger; (iii) convertible securities issued in a bona fide
underwritten public offering; (iv) convertible securities issued in a bona fide
private placement through a placement agent that is a member firm of the NASD
(except to the extent that any discount from the Current Market Price
(determined as provided in paragraph (h) of this Section) attributable to
restrictions on transferability of Common Stock of the Company issuable upon
conversion, as determined in good faith by the Board of Directors and described
in a resolution thereof which shall be filed with the Trustee, shall exceed 20%
of the then Current Market Price, or issuable pursuant to a binding agreement in
effect on the Issue Date; or (v) stock options issued to the Company's
directors, officers or employees.
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Stock of the Company cash (excluding any
cash that is distributed as part of a distribution referred to in paragraph
(d)(i) of this Section or in conjunction with a transaction to which Section
13.11 applies) in an aggregate amount that, together with (i) the aggregate
amount of any other distributions to all holders of such Common Stock made
exclusively in cash within the 12 months preceding the date fixed for the
determination of shareholders entitled to such distribution and in respect of
which no conversion price adjustment pursuant to paragraph (d)(i) or this
paragraph (e) has been made previously and (ii) the aggregate of any cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) as of such date of determination of consideration payable in respect
of any tender offer by the Company or a Restricted Subsidiary for all or any
portion of its Common Stock, and any purchase by the Company of its Common Stock
in the open market, consummated within the 12 months preceding such date of
determination and in respect of which no conversion price adjustment pursuant to
paragraph (f) of this Section has been made previously, exceeds 12.5% of the
product of the Current Market Price (determined as provided in paragraph (h) of
this Section) on such date of determination times the number of shares of Common
Stock of the Company outstanding on such date, the conversion price shall be
reduced by multiplying the conversion price in effect immediately prior to the
close of business on such date of determination by a fraction of which the
numerator shall be the Current Market Price (determined as provided in paragraph
(h) of this Section) on such date less the amount of cash to be distributed at
such time applicable to one share of such Common Stock and the denominator shall
be such Current Market Price, such reduction to become effective immediately
prior to the opening of business on the day after such date.
(f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock of the Company shall be
consummated, or in case the Company shall purchase shares of Common Stock in the
open market, the conversion price shall be reduced by multiplying the conversion
price in effect immediately prior to the Expiration Time by a fraction of which
the numerator shall be (x) the product of the Current Market Price
-125-
<PAGE> 134
(determined as provided in paragraph (h) of this Section) times the number of
shares of such Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time and the denominator shall be the sum of (A) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to shareholders upon consummation of such tender or exchange offer, or
upon such purchase, and (B) the product of such Current Market Price times such
number of outstanding shares at the Expiration Time minus the number of shares
accepted for payment in such tender or exchange offer, or so purchased (the
"Purchased Shares"). For the purpose of this paragraph, "Expiration Time" means
either the last time that tenders may be made pursuant to a tender offer or
exchanges may be made pursuant to an exchange offer, or the time of an agreement
to purchase shares in the open market, as the case may be. Any reduction in the
conversion price pursuant to this paragraph shall be made immediately following
the close of business on the last Trading Day used to compute Current Market
Price; provided, that, such reduction shall be deemed to have become effective
immediately prior to the opening of business on the day following the Expiration
Time. To the extent that a Holder converts Notes prior to the conclusion of the
period for which Current Market Price is to be calculated, any adjustment in the
amount of Common Stock of the Company issuable upon exercise of such Note shall
inure to the benefit of the holder of record of such Note at the close of
business on the first Trading Day following the Expiration Time.
(g) The reclassification of Common Stock of the Company into securities
which include securities other than such Common Stock (other than any
reclassification upon a consolidation or merger to which Section 13.11 applies)
shall be deemed to involve (i) a distribution of such securities other than such
Common Stock to all holders of such Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
shareholders entitled to such distribution" within the meaning of paragraph
(d)(i) of this Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock of the Company outstanding
immediately prior to such reclassification into the number of shares of Common
Stock outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (c) of this Section). Rights,
options or warrants issued by the Company to all holders of the Common Stock
entitling the holders thereof to subscribe for or purchase shares of such Common
Stock (either initially or under certain circumstances), which rights, options
or warrants (i) are deemed to be transferred with such Common Stock, (ii) are
not exercisable and (iii) are also issued in respect of future issuances of such
Common Stock, in each case in clauses (i) through (iii) until or upon the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 13.4 not be deemed issued until the occurrence of the earliest
Trigger Event.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d), and (e) of this Section, the current market price per share
of Common Stock (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 30 consecutive Trading Days
commencing 45 Trading Days before the date in question. For the
-126-
<PAGE> 135
purpose of any computation under paragraph (f) of this Section , the Current
Market Price on any date shall be deemed to be the average of the daily Closing
Prices for the five consecutive Trading Days commencing on the first Trading Day
immediately following the Expiration Time. Notwithstanding anything to the
contrary contained in this paragraph, (i) if the "ex" date for any event (other
than the issuance or distribution requiring such computation) that requires an
adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d) or
(e) above occurs on or after the 15th Trading Day prior to the date in question
and prior to the "ex" date for the issuance or distribution requiring such
computation, the Closing Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a result
of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f)
above occurs on or after the "ex" date for the issuance or distribution
requiring such computation and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the fraction
by which the conversion price is so required to be adjusted as a result of such
other event, and (iii) if the "ex" date for the issuance or distribution
requiring such computation is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (ii) of this proviso,
the Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market value on
the date in question (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraph (d) or
(e) of this Section , whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the evidences of indebtedness, shares
of Capital Stock or assets being distributed applicable to one share of Common
Stock of the Company as of the close of business on the day before such "ex"
date.
(i) (i) If any event shall occur as to which the other provisions of
this Section 13.4 are not strictly applicable but the failure to make any
adjustment would have the effect of depriving Holders of the benefit of all or a
portion of the conversion rights in respect of any Note in accordance with the
essential intent and principles of this Section 13.4, then, in each such case,
the Company shall appoint an Independent Financial Expert, which shall give its
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 13.4 necessary to preserve,
without dilution, such conversion rights; provided that such opinion shall take
into account the prohibition on conversion set out in Section 13.12. Upon
receipt of such opinion, the Company will promptly mail a copy thereof to the
Holders and shall, subject to Section 13.12, make the adjustments described
therein. As used herein, an "Independent Financial Expert" is a firm (A) which
does not, and whose directors, officers and employees or Affiliates do not, have
a direct or indirect financial interest in the Company and (B) which, in the
judgment of the Board of Directors, is otherwise independent and qualified to
perform the task for which it is to be engaged.
(ii) The Company will not, by amendment of its articles of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of
-127-
<PAGE> 136
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of the Notes, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holders thereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (i) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of its Common Stock on the conversion of the
Notes from time to time outstanding and (ii) will not take any action which
results in any adjustment of the conversion price if the total number of shares
of its Common Stock issuable after the action upon the conversion of all of the
Notes would exceed the total number of shares of such Common Stock then
authorized by the Company's certificate of incorporation and available for the
purposes of issue upon such exercise.
(j) The Company may, but shall not be obligated to, make such
reductions in the conversion price, in addition to those required by paragraphs
(a), (b), (c), (d), (e), (f) and (g) of this Section , as it considers to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients or, if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(k) No adjustment in the conversion price shall be required unless such
adjustment (plus any other adjustments not previously made by reason of this
paragraph (k)) would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this paragraph (k) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(l) Notwithstanding any other provision of this Section 13.4, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock of the Company, and any such
purported adjustment shall instead reduce the conversion price to such par
value. The Company hereby covenants not to take any action to increase the par
value per share of its Common Stock.
(m) In any case in which this Section 13.4 shall require that an
adjustment in the conversion price be made effective as of or immediately after
a record date for a specified event, the Company may elect to defer until the
occurrence of such event (i) issuing to the Holder of any Note exercised after
such record date the shares of Common Stock and other Capital Stock of the
Company, if any, issuable upon such exercise over and above the shares of Common
Stock and other Capital Stock of the Company, if any, issuable upon such
exercise on the basis of the conversion price prior to such adjustment and (ii)
paying to such Holder any amount in cash in lieu of a fractional share pursuant
to Section 13.3 hereof; provided that, subject to Section 13.12, the Company
shall deliver to such Holder a due bill or other appropriate instrument
evidencing such Holder's right to receive such additional shares of Common
Stock, other Capital Stock and cash upon the occurrence of the event requiring
such adjustment.
-128-
<PAGE> 137
(n) When No Adjustment Required.
(i) No adjustment need be made for a transaction referred to
in subsections (a), (b), (c), (d), (e) or (f) of this Section 13.4 if
Holders are to participate in the transaction on a basis and with
notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common
Stock of the Company participate in the transaction.
(ii) No adjustment need be made for (x) a transaction referred
to in subsections (b), (d)(ii) or (d)(iii) of this Section 13.4 if the
below market portion of such issuances, taken together with the below
market portion of all other below market issuances and with the above
market portion of all above market tender or exchange offers described
in clause (y) of this paragraph made on and after the Issue Date, is
less than 2.0% of the Total Market Capitalization of the Company
(determined by reference to the sum of the percentages of Total Market
Capitalization of the Company attributable to each such transaction on
the date thereof) and (y) a transaction referred to in subsection (f)
of this Section 13.4 if the above market portion of such tender or
exchange offers, taken together with the above market portion of all
other above market tender or exchange offers and with the below market
portion of all below market issuances described in clause (x) of this
paragraph made on or after the date of this Indenture, is less than
2.0% of the Total Market Capitalization of the Company (determined by
reference to the sum of the percentages of Total Market Capitalization
of the Company attributable to each such transaction on the date
thereof).
(iii) No adjustment need be made for a change in the par
value, or from par value to no par value, or from no par value to par
value, of the Common Stock of the Company.
(iv) No adjustment need be made in respect of any adjustment
in the warrant exercise price of the warrants being issued pursuant to
the Warrant Agreement dated May 31, 1996 made on the "Reset Date" as
contemplated by Section 2 of such Warrant Agreement.
SECTION 13.5 Notice of Adjustments of Conversion Price. Whenever the
conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 13.4 and shall prepare a certificate signed by the
Treasurer or Chief Financial Officer of the Company setting forth the adjusted
conversion price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed (with a copy
to the Trustee) at each office or agency maintained for the purpose of
conversion of Notes pursuant to Section 4.2; and
-129-
<PAGE> 138
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be prepared, and as
soon as practicable after it is prepared, such notice shall be furnished by the
Company to the Trustee and mailed by the Company at its expense to all Holders
at their last addresses as they shall appear in the Note Register.
SECTION 13.6 Notice of Certain Corporate Action. In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require a conversion price
adjustment pursuant to paragraph (e) of Section 13.4; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase any
shares of Capital Stock of any class or of any other rights (excluding shares of
Capital Stock or options for Capital Stock issued pursuant to a benefit plan for
employees, officers or directors of the Company); or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of the outstanding shares of such Common
Stock), or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company or any Subsidiary shall commence a tender or exchange
offer (other than an exchange offer contemplated by clause (c) above) for all or
a portion of the outstanding shares of Common Stock (or shall amend any such
tender or exchange offer to change the maximum number of shares being sought or
the amount or type of consideration being offered (including by exchange)
therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to Section 4.2, and shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Note Register, at least 21 days (or
11 days in any case specified in clause (a), (b) or (e) above) prior to the
applicable record, effective or expiration date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of its Common Stock
of record who will be entitled to such dividend, distribution, rights, options
or warrants are to be determined, (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of its Common Stock of record shall be entitled to
exchange their Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, share exchange, sale,
-130-
<PAGE> 139
transfer, dissolution, liquidation or winding up, or (z) the date on which such
tender or exchange offer (other than an exchange offer contemplated by clause
(y) above) commenced, the date on which such tender or exchange offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto). Neither
the failure to give any such notice nor any defect therein shall affect the
legality or validity of any action described in clauses (a) through (e) of this
Section 13.6.
SECTION 13.7 Company to Reserve Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock or out of its Common Stock held in
treasury, for the purpose of effecting the conversion of Notes, the full number
of shares of its Common Stock then issuable upon the conversion of all
outstanding Notes.
SECTION 13.8 Taxes on Conversions. The Company will pay any and all
original issuance, transfer, stamp and other similar taxes that may be payable
in respect of the issue or delivery of shares of its Common Stock on conversion
of Notes pursuant hereto. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of shares of its Common Stock in a name other than that of the Holder
of the Note or Notes to be converted, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Company
the amount of any such tax, or has established to the satisfaction of the
Company that such tax has been paid.
SECTION 13.9 Covenant as to Common Stock.
(a) The Company covenants that all shares of its Common Stock which may
be issued upon conversion of Notes will upon issue be validly issued, fully paid
and nonassessable.
(b) The Company shall from time to time take all action necessary so
that the Common Stock which may be issued upon conversion of Notes, immediately
upon their issuance (or, if such Common Stock is subject to restrictions on
transfer under the Securities Act, upon their resale pursuant to an effective
Convertible Note Shares Shelf Registration Statement), will be listed on the
principal securities exchanges, interdealer quotation systems and markets, if
any, on which other shares of Common Stock of the Company are then listed or
quoted.
SECTION 13.10 Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to the Trustee to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in Section
2.10.
SECTION 13.11 Provisions as to Consolidation, Merger or Sale of Assets.
In case of any consolidation or amalgamation of the Company with, or merger of
the Company into, any other person, any merger of another person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any sale or transfer of all or substantially all of the assets
of the Company, subject to Section 13.12 hereof, the Person formed by such
consolidation or
-131-
<PAGE> 140
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture providing that
the Holder of each Note then outstanding shall have the right thereafter, during
the period such Note shall be convertible as specified in Section 13.1, but
subject to Section 13.12 hereof, to convert such Note only into the kind and
amount of securities, cash and other Property, if any, receivable upon such
consolidation, amalgamation, merger, sale or transfer by a holder of the amount
of Common Stock of the Company into which such Note might have been converted
immediately prior to such consolidation, amalgamation, merger, sale or transfer,
assuming such holder of Common Stock (i) is not a person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, amalgamation, merger, sale or
transfer (provided that if the kind or amount of securities, cash and other
Property receivable upon such consolidation, amalgamation, merger, sale or
transfer is not the same for each share of Common Stock held immediately prior
to such consolidation, amalgamation, merger, sale or transfer by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("nonelecting share"), then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such consolidation, amalgamation, merger, sale or
transfer by each nonelecting share shall, subject to Section 13.12 hereof, be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares). Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above provisions of this Section
shall similarly apply to successive consolidations, amalgamations, mergers,
sales or transfers.
SECTION 13.12 Prohibition upon Conversion in Certain Circumstances. Any
provision in this Article XIII or elsewhere in this Indenture to the contrary
notwithstanding, if any amalgamation, consolidation, merger, sale or transfer,
or any other event which could give rise to a right on the part of any Holder to
convert all or a part of the Notes held by such Holder into any securities, cash
or other property other than the Common Stock of the Company into which the
Notes are convertible as of the Issue Date, should occur on or prior to the Five
Year Date, a Holder of a Note shall not be entitled in any such circumstances to
convert such Note into or exchange such Note for any securities, cash or other
property (collectively, "Substituted Properties") unless all such Substituted
Properties are "prescribed securities" with respect to the Notes for purposes of
clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada), as such Act may be
amended from time to time.
-132-
<PAGE> 141
ARTICLE XIV
SATISFACTION AND DISCHARGE
SECTION 14.1 Satisfaction and Discharge. This Indenture and the
Collateral Documents shall upon the request of the Company cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for, the Company's obligations under
Sections 4.13, 7.7 and 14.4 hereof, and the Company's, the Trustee's and the
Paying Agent's obligations under Section 12.3 hereof) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture and releasing all Liens in the
Collateral when
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (A) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7 and (B) Notes for
whose payment money has been deposited in trust with the Trustee or any
Paying Agent and thereafter paid to the Company or discharged from such
trust) have been delivered to the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the Trustee for
cancellation
(A) have become due and payable, or
(B) will become due and payable at their stated
maturity within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the
Company, or
(D) and delivered to the Trustee for conversion in
accordance with Article XIII,
and the Company, in the case of clause (A), (B) or (C) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
such purpose money or U.S. Government Obligations in an amount sufficient (as
certified by an independent public accountant designated by the Company) to pay
and discharge the entire indebtedness on such Notes not theretofore delivered to
the Trustee for cancellation, for principal (and premium, if any), interest and
Additional Amounts, if any, and Special Interest, if any, and any other amounts
due in respect of the Notes, to the date of such deposit (in the case of Notes
which have become due and payable) or the Stated Maturity or Redemption Date, as
the case may be;
-133-
<PAGE> 142
(b) the Company has paid or caused to be paid all other sums then due
and payable hereunder by the Company;
(c) no Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit and after giving effect
to such deposit; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
Company's obligations in Sections 2.3, 2.4, 2.6, 2.7, 4.22, 7.7, 7.8, 14.2, 14.3
and 14.4, and the conversion and Reset Penalty provisions in Article XIII of
this Indenture and the Trustee's and Paying Agent's obligations in Section 14.3
shall survive until the Notes are no longer outstanding. Thereafter, only the
Company's obligations in Sections 4.13, 7.7, 14.3 and 14.4 and the Trustee's and
Paying Agent's obligations in Section 14.3 shall survive.
In order to have money available on a payment date to pay principal or
interest on the Notes, the U.S. Government Obligations shall be payable as to
principal or interest at least one Business Day before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
SECTION 14.2 Application of Trust Money. All money deposited with the
Trustee pursuant to Section 14.1 shall be held in trust and, at the written
direction of the Company, be invested prior to maturity in U.S. Government
Obligations, and applied by the Trustee in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any Paying
Agent as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any), interest (including Additional Amounts, if any,
and Special Interest, if any), and any other amounts due in respect of the
Notes, for the payment of which money has been deposited with the Trustee; but
such money need not be segregated from other funds except to the extent required
by law.
SECTION 14.3 Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided that the Company shall have either caused notice of
such payment to be mailed to each Holder of Notes entitled thereto no less than
30 days prior to such repayment or within such period shall have published such
notice in a financial newspaper of widespread circulation published in The City
of New York, including, without limitation, The Wall Street Journal. After
payment to the
-134-
<PAGE> 143
Company, Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
SECTION 14.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 14.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and Guarantors' obligations under this Indenture, the Notes, the
Guarantees and the Collateral Documents shall be revived and reinstated as
through no deposit has occurred pursuant to Section 14.1 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 14.2; provided, however, that if the
Company or the Guarantors have made any payment of interest on or principal of
any Notes because of the reinstatement of their Obligations, the Company or such
Guarantors shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Trust Indenture Act Controls. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provisions (an "incorporated provision") included in
this Indenture by operation of, Section 310 to 318, inclusive, of the Trust
Indenture Act, such imposed duties or incorporated provision shall control.
SECTION 15.2 Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first class mail, postage prepaid,
addressed as follows or by facsimile transmission: if to the Company: Petersburg
Long Distance Inc.: 166 Pearl Street, Toronto, Ontario, Canada M5H 1L3; if to
NWE Cyprus: c/o Phoebus, Christos Clerides, N. Pirilides & Associates, Nicosia
Office, Stassinos Court, Corner of Stassinos Avenue & Ayias Elenis 2, 3rd Floor,
P. O. Box 1884, Nicosia, Cyprus, Tel. 02-443015, fax: 02-356065; if to the
Leasing Companies: c/o Phoebus, Christos Clerides, N. Pirilides & Associates,
Nicosia Office, Stassinos Avenue & Ayias Elenis 2, 3rd Floor, P. O. Box 1884,
Nicosia, Cyprus, Tel. 02-443015, fax: 02- 356065; if to BCL: Baltic
Communications Limited, c/o Morgan, Lewis & Bockius LLP, 2000 One Logan Square,
Philadelphia, Pennsylvania 19103-6993: Attn. E. Clive Anderson, Esquire, Tel.
215-963-5000, fax: 215-963-5299; if to WTC: Wireless Technology Corporations
Limited, c/o, Morgan, Lewis & Bockius LLP, 2000 One Logan Square, Philadelphia,
Pennsylvania 19103- 6993: Attn. E. Clive Anderson, Esquire, Tel. 215-963-5000,
fax: 215-963-
-135-
<PAGE> 144
5299; if to the Trustee: The Bank of New York, 101 Barclay Street, Floor 21
West, New York, New York 10286, Attn: Corporate Trust Department, Fax: (212)
815-5915 or 5917.
The Company, the Guarantors or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications. Any notice or communication mailed to a Holder shall be sent to
the Holder by first class mail, postage prepaid, at the Holder's address as it
appears in the Note Register and shall be given if so sent within the time
prescribed. Failure to mail a notice or communications 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 or faxed to the Company, the Guarantors, the
Trustee or a Holder in the manner provided above, it is duly given, whether or
not the addressee receives it but shall not be effective in the case of the
Company or the Guarantors unless actually received. In case by reason of the
suspension of regular mail service or by reason of any other cause it shall be
impracticable to give notice by mail to Holders, then such notification as shall
be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
SECTION 15.3 Communications by Holders with Other Holders. Holders may
communicate pursuant to Section 312(b) of the Trust Indenture Act with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of Section 312(c) of the Trust Indenture Act.
SECTION 15.4 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company or the Guarantors to the Trustee to
take or refrain from taking any action under this Indenture or the Collateral
Documents (other than any certificate pursuant to Section 3.14 (a) of the Trust
Indenture Act), the Trustee may require, and in such event the Company or the
Guarantors, as applicable, 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 15.5, if applicable) stating
that, in the opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture and the Collateral Documents relating to the
proposed action have been complied with; and (b) an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent and
covenants have been complied with.
SECTION 15.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture and the Collateral Documents (other than a
certificate provided pursuant to Section 314(a)(4) of the Trust Indenture Act)
shall include: (a) a statement that the individual 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 statement or
opinions contained in such certificate or opinion are based; (c) a statement
that, in the opinion of such individual, such person has made such examination
or investigation as is necessary to enable such person to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (d) a statement as to whether or not, in the opinion of such person, such
covenant or
-136-
<PAGE> 145
condition has been complied with; provided that with respect to matters of fact,
an Opinion of Counsel may rely upon Officers' Certificates or certificates of
public officials.
SECTION 15.6 Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Holders, and any
Registrar and Paying Agent may make reasonable rules for their functions;
provided that no such rule shall conflict with terms of this Indenture or the
Trust Indenture Act.
SECTION 15.7 Payments on Business Days. If a payment hereunder is
scheduled to be made on a date that is not a Business Day, payment shall be made
on the next succeeding day that is a Business Day, and no interest shall accrue
with respect to that payment during the intervening period. If a regular record
date is a date that is not a Business Day, such record date shall not be
affected.
SECTION 15.8 Governing Law; Submission to Jurisdiction. (a) THIS
INDENTURE, THE GUARANTEES, EACH NOTE AND EACH COLLATERAL DOCUMENT (EXCEPT TO THE
EXTENT EXPRESSLY PROVIDED FOR OTHERWISE) SHALL EACH BE DEEMED TO BE A CONTRACT
UNDER THE LAW OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF SAID STATE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS MAY
OTHERWISE BE REQUIRED BY MANDATORY PROVISIONS OF LAW AND WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 15.9 Legal Proceedings. Any suit, action or proceeding against
the Company or any Guarantor or their respective Properties, assets or revenues
with respect to this Indenture, the Guarantees, a Note or a Collateral Document
(a "Related Proceeding") may be brought in any federal or state court located in
the State of New York, County of New York. Each of the Company and the
Guarantors hereby irrevocably consents to the jurisdiction of each such court
for the purposes of any Related Proceeding, and irrevocably waives, to the
fullest extent it may effectively and lawfully do so, any objection to the
laying of venue of any Related Proceeding in any such court and the defense of
an inconvenient forum to the maintenance of any Related Proceeding in any such
court. Each of the Company and the Guarantors further submits to the
jurisdiction of the courts of its own corporate domicile in any Related
Proceeding.
SECTION 15.10 Service of Process. Each of the Company and the
Guarantors hereby agrees that service of all writs, process and summonses in any
Related Proceeding brought against it in the State of New York may be made upon
CT Corporation System in The City of New York, presently located at 1633
Broadway, New York, New York 10019 (the "Process Agent"), and each of the
Company and the Guarantors have irrevocably appointed the Process Agent 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. Each of
the Company and the Guarantors agrees that service of process on the Process
Agent in such instances shall be deemed in every respect effective service of
process upon it in any such Related Proceeding and further
-137-
<PAGE> 146
agrees that the failure of the Process Agent to give any notice to it of any
such service of process shall not impair or affect the validity of such service
or of any judgment based thereon. Each of the Company and the Guarantors agrees
to maintain at all times an agent with an office in New York to act as Process
Agent as aforesaid. Each of the Company and the Guarantors agrees to take any
and all actions as may be necessary to maintain such designation and appointment
of such Process Agent in full force and effect. Nothing herein shall in any way
be deemed to limit the ability to serve any such writs, process and summonses in
any other manner permitted by applicable law.
SECTION 15.11 Waiver of Immunities. To the extent that the Company, the
Guarantors or any of their respective revenues, assets or Properties shall be
entitled, with respect to any Related Proceeding at any time brought against the
Company, the Guarantor or any of their respective revenues, assets or Properties
in the courts identified above, to any immunity from suit, from attachment prior
to judgment, from attachment in aid of execution of judgment, or from any other
legal or judicial remedy, and to the extent that in any such jurisdiction there
shall be attributed such an immunity, each of the Company and the Guarantors
hereby irrevocably agrees not to claim and irrevocably waives such immunity, and
any defense based on such immunity, to the extent permitted by law in respect of
its obligations under (i) this Indenture, (ii) the Guarantees, (iii) any Note or
(iv) any Collateral Document. Without limiting the foregoing, each of the
Company and the Guarantors hereby, to the fullest extent permitted by applicable
law, expressly and irrevocably waives any defense of sovereign immunity from
jurisdiction, attachment in aid of execution and execution to which it might
otherwise be entitled in any Related Proceeding; provided that each of the
Company and the Guarantors here by expressly reserves its rights, if any, to
claim immunity from attachment prior to judgment to which it may now or
hereafter be entitled. Each of the Company and the Guarantors agrees that final
judgment in any such Related Proceeding brought in such a court will be
conclusive and binding on it and may be enforced in other jurisdictions by suit
on the judgment or in any other matter provided by law, provided that service of
process is effected upon the Company or any Guarantors, as the case may be, in
the manner specified in Section 15.9(c) above or as otherwise permitted by law.
SECTION 15.12 Judgment Currency; Currency Indemnity. If for the
purposes of obtaining judgment in any court it is necessary to convert a sum due
from the Company or any Guarantor hereunder or under any Guarantee, any of the
Notes or any of the Collateral Documents in U.S. Dollars into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Trustee could purchase U.S. Dollars with such other
currency at the Trustee's New York office on the Business Day preceding that on
which final judgment is given. Any amount received or recovered in a currency
other than U.S. Dollars (whether as a result of a judgment or order of a court
of any jurisdiction, or the enforcement thereof, in the winding up or
dissolution of the Company or any Guarantor or otherwise) by the Trustee or any
Holder in respect of any sum expressed to be due to it from the Company or such
Guarantor shall only constitute discharge of the Company or such Guarantor to
the extent of the U.S. Dollar amount which the recipient is able to purchase
with
-138-
<PAGE> 147
the amount so received or recovered in such other currency on the date of
such receipt or recovery; provided that if it is not practicable to make such
purchase on such date, such purchase shall be made on the first date on which is
practicable to do so. If the amount of U.S. Dollars so purchased is less than
the U.S. Dollar amount expressed to be due to such recipient hereunder or under
the Guarantees, any Note or any Collateral Document, to the extent permitted by
applicable law the Company or the Guarantors, as applicable, shall indemnify
such recipient against any loss sustained by it as a result and, in any event,
the Company or the Guarantors shall indemnify such recipient against the cost of
making any such purchase. For the purposes of this Section 15.12, it shall be
sufficient for any such recipient to certify that it would have suffered a loss
had an actual purchase of U.S. Dollars been made with the amount so received in
such other currency on the date of receipt or recovery (or, if a purchase of
Dollars on such date had not been practicable, on the first date on which it
would have been practicable). To the extent permitted by applicable law, the
indemnities granted by this Section 15.12 constitute a separate and independent
obligation from the other obligations of the Company hereunder and the
Guarantors hereunder and shall give rise to a separate and independent cause of
action in favor of the Trustee or any Holder, as the case may be.
SECTION 15.13 No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company or of any Guarantor, as
such, shall have any liability for any obligations of the Company or the
Guarantors under the Notes, the Guarantees or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation,
solely by reason of his or her status as a director, officer, employee,
incorporator or stockholder of the Company or of any Guarantor. By accepting a
Note, each Holder waives and releases all such liability (but only such
liability) as part of the consideration for issuance of such Note to such
Holder.
SECTION 15.14 Successors. All agreements of the Company and the
Guarantor in this Indenture, the Notes and the Collateral Documents shall bind
its successors and assigns whether so expressed or not, unless it is
specifically and expressly provided otherwise in this Indenture. All agreements
of the Trustee in this Indenture shall bind its successors and assigns whether
so expressed or not.
SECTION 15.15 Counterparts. This Indenture may be executed in any
number of counterparts and by the parties thereto 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.
SECTION 15.16 Table of Contents; Headings. 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 intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
-139-
<PAGE> 148
SECTION 15.17 Severability. In case any provision in this Indenture or
in the Notes 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 15.18 Further Instruments and Acts. Upon request of the
Trustee, the Company and the Guarantors will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.
SECTION 15.19 Independent Covenants. Each covenant contained in this
Indenture and the Collateral Documents is intended by the parties to be a
separate and independent covenant, the compliance or noncompliance with such is
to be determined independently and without regard to whether the Company, a
Guarantor or a Restricted Subsidiary is in compliance with another covenant
contained in this Indenture or the Collateral Documents.
SECTION 15.20 Final Expression. This Indenture, together with the
related Collateral Documents, is intended by the parties as a final, complete
and exclusive statement of the agreement of the parties on the subject hereof
and thereof.
-140-
<PAGE> 149
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
----------------------------------
Name: JAMES HATT
Title: CHAIRMAN
By: /s/ Simon Edwards
---------------------------------
Name: SIMON EDWARDS
Title: C.F.O.
[Corporate Seal]
NWE CAPITAL (CYPRUS) LIMITED
Guarantor
By: /s/ Clayton A. Waite
---------------------------------
Name: CLAYTON A. WAITE
Title: DIRECTOR
PLD ASSET LEASING LIMITED
Guarantor
By: /s/ Clayton A. Waite
---------------------------------
Name: CLAYTON A. WAITE
Title: DIRECTOR
<PAGE> 150
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came James Hatt,
to me known, who, being by me duly sworn, did depose and say that he is Chairman
of Petersburg Long Distance Inc., one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
----------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 151
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Simon Edwards,
to me known, who, being by me duly sworn, did depose and say that he is Chief
Financial Officer of Petersburg Long Distance Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Ellen Extract
-----------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 152
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Clayton A.
Waite, to me known, who, being by me duly sworn, did depose and say that he is
Director of NWE Capital (Cyprus) Limited, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
----------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 153
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Clayton A.
Waite, to me known, who, being by me duly sworn, did depose and say that he is
Director of PLD Asset Leasing Limited, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
---------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 154
PLD CAPITAL LIMITED
Guarantor
By: /s/ Clayton A. Waite
____________________________________
Name: CLAYTON A. WAITE
Title: DIRECTOR
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
Guarantor
By: /s/ James Hatt
_____________________________________
Name: JAMES HATT
Title:
BALTIC COMMUNICATIONS LIMITED
Guarantor
By: /s/ Simon Edwards
_____________________________________
Name: SIMON EDWARDS
Title:
<PAGE> 155
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Clayton A.
Waite, to me known, who, being by me duly sworn, did depose and say that he is
Director of PLD Capital Limited, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
----------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 156
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came James Hatt,
to me known, who, being by me duly sworn, did depose and say that he is
_______________ of Wireless Technology Corporations Limited, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Ellen Extract
---------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 157
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Simon Edwards,
to me known, who, being by me duly sworn, did depose and say that he is
_______________ of Baltic Communications Limited, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Ellen Extract
-----------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 158
THE BANK OF NEW YORK,
as Trustee
By: /s/ Steven D. Torgeson
_________________________________
Name: STEVEN D. TORGESON
Title: Assistant Treasurer
[Corporate Seal]
Attest: /s/ Kathleen Jones
-------------------
<PAGE> 159
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 12th day of June, 1996, before me personally came Steven D.
Torgeson, to me known, who, being by me duly sworn, did depose and say that he
is Assistant Treasurer of The Bank of New York, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Ellen Extract
----------------------------------------
Notary Public, State of New York
[Seal] My Commission Expires: March 30, 1997
/s/ Ellen Extract
----------------------------------------
ELLEN EXTRACT
NOTARY PUBLIC, State of New York
No. 31-4849429
Qualified in New York County
Commission Expires March 30, 1997
<PAGE> 160
EXHIBIT B
<PAGE> 161
FORM OF FACE OF CERTIFICATED NOTE
PETERSBURG LONG DISTANCE INC.
No. _____ CUSIP No. 71623PAC6
9% CONVERTIBLE SUBORDINATED NOTE DUE 2006
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND THE PROVINCES OF CANADA.
FOR THE PURPOSES OF THE INTEREST ACT (CANADA) AND DISCLOSURE THEREUNDER,
WHENEVER INTEREST, ADDITIONAL AMOUNTS, SPECIAL INTEREST, OR DEFAULTED INTEREST
OR INTEREST ON DEFAULTED INTEREST RELATING TO THIS NOTE, IS TO BE CALCULATED ON
THE BASIS OF A YEAR OF 360 DAYS OR ANY OTHER PERIOD OF TIME THAT IS LESS THAN A
CALENDAR YEAR, THE YEARLY RATE OF INTEREST TO WHICH THE RATE DETERMINED PURSUANT
TO SUCH CALCULATION IS EQUIVALENT IS THE RATE SO DETERMINED MULTIPLIED BY THE
ACTUAL NUMBER OF DAYS IN THE CALENDAR YEAR IN WHICH THE SAME IS TO BE
ASCERTAINED AND DIVIDED BY EITHER 360 OR SUCH OTHER PERIOD OF TIME, AS THE CASE
MAY BE. THE RATE ACCRUING ON THIS NOTE FOR PAYMENT PURPOSES SHALL BE DETERMINED
AS SET FORTH ON THE REVERSE HEREOF.
Petersburg Long Distance Inc., an Ontario corporation (the
"Company"), for value received, hereby promises to pay to _____________________,
or its registered assign, the principal sum of _____________________, on June 1,
2006.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
<PAGE> 162
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
PETERSBURG LONG DISTANCE INC.
By:_____________________________
Name:
Title:
[Corporate Seal]
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:____________________________________
Authorized Signatory
-2-
<PAGE> 163
FORM OF REVERSE SIDE OF CERTIFICATED NOTE
PETERSBURG LONG DISTANCE INC.
9% CONVERTIBLE SUBORDINATED NOTE DUE 2006
1. Indenture.
This Note is one of a duly authorized issue of debt securities
of Petersburg Long Distance Inc., an Ontario corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), designated as its "9% Convertible Subordinated
Notes due 2006" (herein called the "Notes") limited in aggregate principal
amount at Stated Maturity to $26,500,000, issued under an indenture dated as of
May 31, 1996 (as amended or supplemented from time to time, the "Indenture")
among the Company, the corporations acting as guarantors and named therein (the
"Guarantors") and The Bank of New York, as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder of Notes and of the terms upon which the Notes are, and
are to be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. All terms used in this Note which are not defined herein shall
have the meanings assigned to them in the Indenture.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries to make Asset Sales. The Indenture
also imposes limitations on the ability of the Company to consolidate or merge
with or into any other Person or permit any other Person to merge with or into
the Company, or sell, convey, assign, transfer, lease or otherwise dispose of
all or substantially all of the Property of the Company to any other Person. The
Indenture does not contain any restrictions on the incurrence of indebtedness,
the creation of liens or the payment of dividends or the making of
distributions, investments or certain other restricted payments or any financial
covenants.
2. Principal and Interest.
The Company promises to pay the principal amount set forth on
the face hereof to the Holder hereof on June 1, 2006.
This Note will commence to accrue interest from the Issue Date
computed as if this Note had been issued bearing interest at the rate of 9% per
annum on May 31, 1996 (being the rate of 9.5858% per annum for the period from
the Issue Date through November 30, 1996), and this Note will bear interest at
the rate of 9% per annum from December 1, 1996. The Company shall pay such
interest from the Issue Date, or from the most recent Interest Payment Date
thereafter to which interest has been paid or duly provided, for semi-annually
on June 1 and December 1 of each year, commencing on December 1, 1996, in cash,
to the Holder hereof until the principal amount hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record
-3-
<PAGE> 164
Date for any Interest Payment Date is the close of business on May 15 or
November 15, as the case may be, whether or not a Business Day, immediately
preceding the Interest Payment Date on which such interest is payable. Any such
interest not so punctually paid or duly provided for ("Defaulted Interest")
shall forthwith cease to be payable to the Holder on such Record Date and shall
be paid as provided in Section 2.11 of the Indenture. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
Each payment of interest in respect of an Interest Payment
Date will include interest (including Additional Amounts (as hereinafter
defined), if any, and Special Interest (as hereinafter defined), if any),
accrued through the day before such Interest Payment Date. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to
be made on such Interest Payment Date will be made on the next succeeding
Business Day with the same force and effect as if made on such Interest Payment
Date, and no additional interest will accrue as a result of such delayed
payment.
To the extent lawful, the Company shall pay interest on (i)
any overdue principal of (and premium, if any, on) this Note, at the interest
rate borne on this Note, plus 1% per annum, and (ii) Defaulted Interest (without
regard to any applicable grace period), at the same rate. The Company's
obligation pursuant to the previous sentence shall apply whether such overdue
amount is due at its Stated Maturity, as a result of the Company's obligations
pursuant to Section 3.6, Section 4.7, Section 4.8 or Section 4.14 of the
Indenture, or otherwise.
3. Additional Amounts.
Except to the extent required by law, any and all payments of,
or in respect of, this Note shall be made free and clear of and without
deduction for or on account of any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto imposed by Canada, the Russian Federation, Cyprus or any other
jurisdiction with which the Company or any Guarantor has some connection
(including any jurisdiction (other than the United States of America) from or
through which payments under the Notes are made) or any political subdivision of
or any taxing authority in any such jurisdiction ("Canadian Taxes," "Russian
Taxes," "Cypriot Taxes" or "Other Taxes," respectively). If the Company or any
Guarantor shall be required by law to withhold or deduct any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes from or in respect of any sum
payable under this Note or pursuant to a Guarantee, the sum payable by the
Company or such Guarantor, as the case may be, thereunder shall be increased by
the amount ("Additional Amounts") necessary so that after making all required
withholdings and deductions, the Holder of this Note shall receive an amount
equal to the sum that it would have received had no such withholdings and
deductions been made; provided that any such sum shall not be paid in respect of
any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes to the Holder of
this Note (an "Excluded Holder") (i) resulting from the beneficial owner of this
Note carrying on business or being deemed to carry on business in or through a
permanent establishment or fixed base in the relevant taxing jurisdiction or any
political subdivision thereof or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of this Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of this Note
or the Guarantees or the enforcement of this Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)), with the Holder of this Note at the
time of such payment or at the time the amount of such payment is deemed to have
been paid or credited or (iii) that would not have been imposed but for the
presentation (where presentation is required) of this Note for payment more than
180 days after the date such payment became due and payable or was duly provided
-4-
<PAGE> 165
for, whichever occurs later. The Company or the Guarantors, as applicable, will
also (i) make such withholding or deduction and (ii) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law, and, in any such case, the Company will furnish to each Holder on whose
behalf an amount was so remitted, within 30 calendar days after the date the
payment of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by the Company or the Guarantors, as applicable. The Company will, upon
written request of each Holder (other than an Excluded Holder), reimburse each
such Holder for the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Notes, and (ii) any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed with respect to
any reimbursement under the foregoing clause (i) so that the net amount received
by such Holder (net of payments made under or with respect to such Notes or the
Guarantees) after such reimbursement will not be less than the net amount the
Holder hereof would have received if Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes on such reimbursement had not been imposed.
In addition, the Company or the Guarantors will pay any stamp,
issue, registration, documentary or other similar taxes and duties, including
interest and penalties, in respect of the creation, issue and offering of the
Notes payable in Canada, the United States, the Russian Federation or Cyprus or
any political subdivision thereof or taxing authority of or in the foregoing.
The Company and the Guarantors will also pay and indemnify the Holders from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by Trustees or the Holders to create the Liens on
the Collateral and the Senior Note Collateral and to enforce the obligations of
the Company or the Guarantors under the Notes, the Indenture, the Guarantees,
the Collateral Documents or the Senior Note Collateral Documents.
4. Special Interest.
Special interest means such additional interest as is set
forth in subparagraphs (a) and (b) below.
(a) The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of May 31, 1996, between the Company and
the Initial Purchasers (the "Registration Agreement"), which agreement is
attached to the Indenture as Exhibit C thereto. In the event that either (a) the
Convertible Note Shelf Registration Statement (as such term is defined in the
Registration Agreement) is not filed with the Securities and Exchange Commission
(the "Commission") on or prior to the 45th day following the Issue Date, (b) the
Shelf Registration Statement is not declared effective by the Commission on or
prior to the 120th day following the Issue Date or (c) any such Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purposes, without
being succeeded by a post-effective amendment to such Shelf Registration
Statement that cures such failure and that is itself declared effective, for a
period of more than 30 consecutive days, interest shall accrue on this Note (in
addition to any accrual of stated interest on this Note) from and including the
next day following each of (i) such 45-day period in the case of clause (a)
above, (ii) such 120-day period in the case of clause (b) above, (iii) such
30-day period in the case of clause (c) above (each such event referred to in
clauses (i) through (iii), a "Registration Default"). In each case following the
occurrence of a Registration Default, such additional interest (the "Special
Interest") will be payable to the Holder hereof during the first 90-day period
immediately following the occurrence of such Registration Default in cash
semiannually in arrears on each Interest Payment Date, at a rate equal to $0.01
per week per $1,000 principal amount of this Note. The Special Interest payable
-5-
<PAGE> 166
to the Holder of this Note shall increase by an additional $0.01 per week per
$1,000 principal amount of this Note for each 90-day period up to a maximum of
$0.50 per week per $1,000 of this Note. Upon (w) the filing of the Shelf
Registration Statement after the 45-day period described in clause (a) above,
(x) the effectiveness of a Shelf Registration Statement after the 120-day period
described in clause (b) above, or (y) the effectiveness of an applicable
Registration Statement after the 30-day period described in clause (c) above,
the Special Interest payable on this Note, with respect to such clause (a), (b)
or (c), as the case may be, from the date of such filing, effectiveness or
consummation, as the case may be, shall cease to accrue and all accrued and
unpaid Special Interest as of the occurrence of (w), (x) or (y) shall be paid to
the Holder hereof on the next Interest Payment Date with respect thereto.
Following the occurrence of (w), (x) and (y) above, the interest terms of this
Note shall revert to the original terms set forth above subject to paragraph (b)
below.
(b) In the event of the failure of the Company to procure, on
or before July 12, 1996, a recognized financial institution with capital of not
less than $10,000,000 organized under the laws of the Republic of Ireland which
the Trustee may lawfully appoint as a Qualified Foreign Collateral Agent (as
defined in Section 7.3 of the Indenture) (the "Procurement") with respect to
Technocom Preferred Stock, any payments thereon and any property substituted
therefor (the "Subject Collateral") pursuant to an agreement under which such
Qualified Foreign Collateral Agent will agree not to resign without the
contemporaneous appointment of a successor Qualified Foreign Collateral Agent
(the "Prescribed Agreement"), then, commencing on July 12, 1996, the Company
shall pay to each Holder of the Notes additional Special Interest in an amount
equal to 1% per annum on the principal amount of such Holder's Notes, accruing
for each day until the Procurement is made or Technocom or a successor is
reorganized under the laws of Cyprus and a successor Qualified Foreign
Collateral Agent has been appointed in respect of the Subject Collateral (the
"Reorganization") under a Prescribed Agreement. Such Special Interest shall be
payable in cash semiannually in arrears at the times and in the manner provided
for in the Indenture. Such Special Interest shall cease to accrue upon the
Procurement or the Reorganization taking place and all accrued and unpaid
Special Interest shall be paid to each Holder of the Notes on the next Interest
Payment Date with respect thereto. Any Special Interest payable pursuant to this
paragraph 4(b) shall be in addition to any Special Interest that may be payable
pursuant to paragraph 4(a) above.
Except as expressly provided in this paragraph 4, Special
Interest shall be treated as interest and any date on which Special Interest is
due and payable shall be treated as Interest Payment Date, for all purposes
under this Note and the Indenture.
5. Method of Payment.
The Company, through the Paying Agent, shall pay interest on
this Note to the registered Holder of this Note, as provided above. The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States of America
that at the time of payment is legal tender for payment of all debts public and
private. Principal and interest will be payable at the office of the Paying
Agent but, at the option of the Company, interest may be paid by check mailed to
the registered Holders at their registered addresses.
-6-
<PAGE> 167
6. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar
under the Indenture. The Company may, upon written notice to the Trustee,
appoint and change any Paying Agent or Registrar. The Company or any of its
subsidiaries may act as Paying Agent or Registrar.
7. Optional Redemption.
Except as set forth in the following paragraph, the Notes may
not be redeemed prior to June 1, 2000. During the period from June 1, 2000 to
May 31, 2002, the Company may redeem all but not less than all of the Notes if
the Closing Price (as defined in the Indenture) of the Common Stock (as defined
in the Indenture) equals or exceeds 150% of the conversion price of the Notes
for a period of 30 consecutive days, at a redemption price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, if any, Additional
Amounts, if any, and Special Interest, if any, to the applicable Redemption
Date, and any other amounts due in respect thereof but not including any amount
on account of any Reset Penalty (as defined below). Thereafter, the Notes will
be subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 calendar days' nor more than 60 calendar days' notice, at a
redemption price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest thereon (if any), Additional Amounts (if any) and Special
Interest (if any) to the applicable Redemption Date, and any amounts due in
respect thereof. No amount shall be paid in respect of any Reset Penalty upon
any redemption, offer to purchase or other acquisition except in respect of a
record date for the Reset Penalty, which has passed.
The Notes may be redeemed, at the option of the Company, in
whole but not in part, upon not less than 30 or more than 60 calendar days'
notice to the Holders in accordance with the terms of the Indenture, at a
redemption price equal to the principal amount thereof, plus accrued and unpaid
interest, if any (including Additional Amounts, if any, and Special Interest, if
any), to the applicable Redemption Date (subject to the right of Holders of
record on the relevant Record Date to receive interest (including Additional
Amounts, if any, and Special Interest, if any), due on the Interest Payment Date
that is on or prior to the Redemption Date) and any other amounts due if, as a
result of any change in or amendment to the laws or the regulations or rulings
promulgated thereunder of Canada, Cyprus, the Russian Federation or any other
jurisdiction with which the Company or any Guarantor has any connection (other
than a connection arising as a result of a continuance or a merger or
consolidation of the Company with or into a newly formed corporation solely for
the purpose of moving the Company's domicile out of Canada) or any political
subdivision thereof or any authority thereof or having power to tax therein, or
any change in the application or official interpretation of such laws or
regulations, or any change in administrative policy or assessing practice of the
applicable taxing authority, which change or amendment becomes effective on or
after May 24, 1996, the Company or the Guarantors (if the Guarantees are called)
are or would be required on the next succeeding Interest Payment Date to pay
Additional Amounts with respect to the Notes or the Guarantees and the payment
of such Additional Amounts cannot be avoided by the use of any reasonable
measures available to the Company or the Guarantors, as the case may be. The
Company will also pay to holders on the Redemption Date any Additional Amounts
payable in respect of the period ending on the Redemption Date. Prior to the
publication of any notice of redemption pursuant to this provision, which in no
event will be given earlier than 90 days prior to the earliest date on which the
Company or the Guarantors, as the case may be, would be required to pay such
Additional Amounts were a payment in respect of the Notes then due, the Company
shall deliver to the Trustee (i) an Officers' Certificate stating that the
obligation to pay such Additional Amounts cannot be avoided by the Company or
the Guarantors, as the case may be, taking
-7-
<PAGE> 168
reasonable measures and (ii) an Opinion of Counsel, independent of the Company
and the Guarantors and approved by the Trustee, to the effect that the Company
or the Guarantors have or will become obligated to pay such Additional Amounts
as a result of such change or amendment. Such notice, once delivered by the
Company to the Trustee, will be irrevocable. The Trustee shall accept such
Officers' Certificate and Opinion of Counsel as sufficient evidence of the
satisfaction of the condition precedent set forth in clauses (i) and (ii) above,
in which event it shall be conclusive and binding on the Holders.
8. Notice of Redemption.
At least 30 calendar days but not more than 60 calendar days
before a Redemption Date, the Company will send a notice of redemption, first
class mail, postage prepaid, to Holders of Notes to be redeemed at the addresses
of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time,
the Notes to be redeemed will be chosen by the Trustee in accordance with the
Indenture. If any Note is redeemed subsequent to a Record Date with respect to
any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest (including Additional Amounts, if any,
and Special Interest, if any) will be paid on such Interest Payment Date to the
Holder of the Note on such Record Date. If money in an amount sufficient to pay
the Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest (including
Additional Amounts, if any, and Special Interest, if any) on the Notes to be
redeemed on the applicable Redemption Date will cease to accrue.
The Notes are not subject to any sinking fund.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to purchase such Holder's
Notes, in whole or in part in a principal amount that is an integral multiple of
$1,000, pursuant to a Change of Control Offer, at a purchase price in cash equal
to 101% of the principal amount thereof on any Change of Control Payment Date,
plus accrued and unpaid interest, if any, Additional Amounts, if any, and
Special Interest, if any, thereon to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder of Notes. The holder
of this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Require Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest and Additional Amounts, if any, and Special Interest, if any,
from and after the Change of Control Payment Date.
-8-
<PAGE> 169
10. Repurchase at the Option of Holders upon Asset Sale.
Subject to the limitations set forth in the following
paragraph and the Indenture, if at any time the Company or any Restricted
Subsidiary engages in any Asset Sale, as a result of which the aggregate amount
of Excess Proceeds exceeds $5,000,000, the Company shall, within 30 calendar
days of the date the amount of Excess Proceeds exceeds $5,000,000, use the
then-existing Excess Proceeds to make an offer to purchase from all Holders, on
a pro rata basis, Notes in an aggregate principal amount equal to the maximum
principal amount that may be purchased out of the then-existing Excess Proceeds,
at a purchase price in cash equal to 100% of the principal amount thereof on any
Asset Sale Payment Date, plus accrued and unpaid interest thereon, if any, and
Additional Amounts, if any, and Special Interest, if any, to the Asset Sale
Payment Date, provided that Excess Proceeds attributable to assets not
constituting Collateral (as defined in the Indenture) must be used first to make
an Asset Sale Offer pursuant to the Senior Note Indenture (as defined in the
Indenture) unless the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged, and then to make an Asset Sale
Offer pursuant to the Senior Note Indenture (as defined in the Indenture) the
Senior Notes are no longer outstanding and the Senior Not Indenture has been
satisfied and discharged, and then to make an Asset Sale Offer for the Notes if
there remain Excess Proceeds after the Asset Sale Offer for the Senior Notes has
been completed. Upon completion of an Asset Sale Offer (including payment of the
Offer Purchase Price for accepted Notes), any surplus Excess Proceeds that were
the subject of such offer shall cease to be Excess Proceeds, and the Company may
then use such amounts for general corporate purposes.
Notwithstanding the paragraph above, the Company will not be
obligated to repurchase Notes in connection with an Asset Sale Offer
representing in the aggregate more than 25% of the original aggregate principal
amount of the Notes (which original aggregate principal amount shall for these
purposes be $26,500,000, without any adjustment whatsoever) prior to the date
following the Five Year Date, and the original aggregate principal amount of
Notes repurchased in connection with any Asset Sale Offer having a purchase date
prior to the date following the Five Year Date shall represent no more than 25%
of the original aggregate principal amount of the Notes less the original
aggregate principal amount of Notes purchased pursuant to Asset Sale Offers
relating to all prior Asset Sales. To the extent that the amount of Excess
Proceeds exceeds the amount of Notes purchased because of the limitation imposed
by the immediately preceding sentence (the amount of such excess being the
"Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall constitute
Excess Proceeds for purposes of the first Asset Sale Offer that is made after
the Five Year Date and, in the event the amount of the Aggregate Unused Proceeds
exceeds $5,000,000, promptly after the Five Year Date, the Company shall
commence an Asset Sale Offer on a pro rata basis for an aggregate principal
amount of Notes equal to the Aggregate Unused Proceeds (and any other Excess
Proceeds that arise between the Five Year Date and such Asset Sale Offer) at a
purchase price equal to 100% of the principal amount of the Notes, plus accrued
interest, if any, Special Interest, if any, and Additional Amounts, if any, to
the date of purchase.
Within 30 calendar days of the date the amount of Excess
Proceeds exceeds $5,000,000, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder of Notes. The Holder of this Note may elect to have this Note or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Require Purchase" appearing below and tendering
this Note pursuant to the Asset Sale Offer. Unless the Company defaults in the
payment of the Offer Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest and Additional Amounts, if any, and Special Interest, if any,
from and after the Asset Sale Payment Date.
-9-
<PAGE> 170
11. Repurchase at the Option of Holders upon a Termination of
Trading.
In the event of any Termination of Trading (as defined in the
Indenture) occurring after the Issue Date and on or prior to Maturity, each
Holder of Notes will have the right commencing on the date following the Five
Year Date, at the Holder's option, to require the Company to repurchase all or
any part of such Holder's Notes on the date (the "Repurchase Date") that is 30
days after the date the Company gives notice of the Termination of Trading at a
price (the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest, if any, Additional Amounts, if any,
and Special Interest, if any, thereon to the Repurchase Date.
On or before the 15th day after the occurrence of a
Termination of Trading (unless such Termination of Trading occurs prior to the
Five Year Date, then on the 15th day following the Five Year Date), the Company
shall mail to all Holders of Notes a notice of the occurrence of such
Termination of Trading, the Repurchase Price and the procedures which the Holder
must follow to exercise the repurchase right. To exercise such right, the Holder
of this Note must deliver, on or before the close of business on the Repurchase
Date, irrevocable written notice to the Company (or an agent designated by the
Company for such purpose) and to the Trustee of the Holder's exercise of such
right, together with the certificates evidencing the Notes with respect to which
the right is being exercised, duly endorsed for transfer and with the form
entitled "Option of Holder to Require Purchase" appearing below completed. Such
written notice is irrevocable.
12. Mandatory Redemption.
Except as set forth in Sections 9, 10 and 11, the Company is
not required to make any mandatory redemption payments or sinking fund payments
with respect to the Notes.
13. Transfer and Exchange.
By its acceptance of any Note represented by a certificate
bearing the Private Placement Legend, each Holder of, and beneficial owner of an
interest in, such Note acknowledges the restrictions on transfer of such Note
set forth on the face hereof, and agrees that it will transfer such a Note only
in accordance with the restrictions set forth on the face hereof and the
restrictions set forth under the heading "Transfer Restrictions" in the Final
Memorandum.
In connection with any transfer of a Note bearing the Private
Placement Legend, each Holder agrees to deliver to the Company such satisfactory
evidence, which may include an opinion of independent counsel licensed to
practice law in the State of New York, as reasonably may be requested by the
Company to confirm that such transfer is being made in accordance with the
limitations set forth in the Private Placement Legend. In the event the Company
determines that any such transfer is not in accordance with the Private
Placement Legend, the Company shall so inform the Registrar which shall not
register such transfer; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such evidence.
Upon the registration of transfer, exchange or replacement of
a Note not bearing the Private Placement Legend, the Trustee shall deliver a
Note that does not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of a Note bearing the Private Placement Legend, the
Trustee shall deliver a Note bearing the Private Placement Legend, unless such
legend may be removed from such Note as provided in the next sentence. The
Private Placement Legend may be
-10-
<PAGE> 171
removed from a Note if there is delivered to the Company such satisfactory
evidence, which may include an opinion of independent counsel licensed to
practice law in the State of New York, as reasonably may be requested by the
Company to confirm that neither such legend nor the restrictions on transfer set
forth therein are required to ensure that transfers of such Note will not
violate the registration and prospectus delivery requirements of the Securities
Act and if the transferee is a resident of Canada, the securities laws of the
applicable province of Canada; provided that the Trustee shall not be required
to determine (but may rely on a determination made by the Company with respect
to) the sufficiency of any such evidence. Upon provision of such evidence, the
Trustee shall authenticate and deliver in exchange for such Note, a Note or
Notes (representing the same aggregate principal amount of the Note being
exchanged) without such legend. If the Private Placement Legend has been removed
from a Note, as provided above, no other Note issued in exchange for all or any
part of such Note shall bear such legend, unless the Company has reasonable
cause to believe that such other Note represents a "restricted security" within
the meaning of Rule 144 and instructs the Trustee to cause a legend to appear
thereon.
A holder may transfer a Note only upon the surrender of such
Note for registration of transfer. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of transfer in the Note register by the Registrar.
When Notes are presented to the registrar with a request to register the
transfer of, or to exchange such Notes, the Registrar shall register the
transfer or make such exchange as requested if its requirements for such
transactions and any applicable requirements hereunder are satisfied.
Prior to the effectiveness of a Shelf Registration Statement
or following the suspension or termination thereof, the Holder of this Note (or
holders of interests therein) and prospective purchasers designated by such
Holder (or such holders of interests therein) shall have the right to obtain
from the Company upon request by such Holder (or such holders of interests) or
prospective purchasers, during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to
12g3-2(b) under the Exchange Act, the information required by paragraph
(d)(4)(i) of Rule 144 in connection with any transfer or proposed transfer of
such Note or interest.
14. Denominations.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and integral multiples thereof of principal amount.
15. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment unless such abandoned property
law designates another Person.
-11-
<PAGE> 172
16. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its and the Guarantors' obligations under the Notes,
the Guarantees, the Indenture and the Collateral Documents and the Senior Note
Collateral Documents if the Company irrevocably deposits with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be.
17. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture, the Notes, the Collateral Documents and the Senior Note
Collateral Documents may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes and (ii) any
past Default and its consequences may be waived with the written consent of the
Holders of at least a majority in principal amount of the outstanding Notes.
Without the consent of any Holder of Notes, the Company, the Guarantors and the
Trustee may amend the Indenture, the Notes, the Collateral Documents and the
Senior Note Collateral Documents (i) to evidence the succession of another
Person to the Company or the Guarantors, as applicable, and the assumption by
such successor of the covenants of the Company or the Guarantors under the
Indenture, the Collateral Documents and the Senior Note Collateral Documents;
(ii) to add additional covenants or to surrender rights and powers conferred on
the Company or the Guarantors by the Indenture, the Collateral Documents and the
Senior Note Collateral Documents; (iii) to add any additional Events of Default;
(iv) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; (v) to evidence and provide for the acceptance of
appointment under the Indenture of a successor Trustee; (vi) to add additional
security for the Notes and the Guarantees; (vii) to cure any ambiguity in the
Indenture, the Collateral Documents or the Senior Note Collateral Documents, to
correct or supplement any provision in the Indenture, the Collateral Documents
or the Senior Note Collateral Documents which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, the Collateral Documents or the Senior
Note Collateral Documents, provided that such actions shall not adversely affect
the interests of the Holders in any material respect; (viii) to make provision
with respect to the conversion rights of the Holders of the Notes in the event
of a consolidation, merger or sale of assets involving the Company, as required
by the Indenture; or (ix) to comply with the requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.
18. Defaults and Remedies.
Events of Default under the Indenture include in summary form:
default in payment of interest, including Additional Amounts, if any, or Special
Interest, if any, on the Notes for 30 days; default in payment of principal on
the Notes; the occurrence and continuance of an Event of Default under the
Senior Note Indenture (as defined therein) for a period of 15 days after written
notice has been given to the Company by the Trustee or a Holder of the Notes;
failure to comply with certain of the covenants in the Indenture, including the
Change of Control covenant, the Asset Sale covenant and the Termination of
Trading covenant; failure by the Company to comply with certain of its other
agreements in the Indenture or the Notes or any Collateral Document or any
Senior Note Collateral Document or a breach of a representation or warranty in
any Collateral Document and the continuance of such default or breach for 45
days after notice; expropriation of assets of the Company or any of its
Restricted Subsidiaries having a book value, less the book value of the
expropriation proceeds, constituting more than 15% of the book value, on a
consolidated basis, of the Company's assets minus current assets;
-12-
<PAGE> 173
defaults in the payment of certain other Indebtedness, or defaults, other than
such payment defaults, which result in the acceleration prior to express
maturity of certain other Indebtedness or which consist of the failure to pay at
maturity; certain final judgments which remain undischarged, unwaived,
unappealed, unbonded, unstayed or unsatisfied; certain events of bankruptcy or
insolvency; failure of a Guarantee, a Collateral Document or a Senior Note
Collateral Document to be in effect, the denial of obligations under a
Guarantee, a Collateral Document or a Senior Note Collateral Document or the
Notes by the Company or the Guarantors party thereto or the failure of the Notes
and the Guarantees to be secured by the theretofore perfected Liens and security
interests in the Collateral or the Senior Note Collateral (except as permitted
by the Indenture, the Collateral Documents or the Senior Note Collateral
Documents), which in each circumstance continues for 30 days after notice. If an
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Notes, subject to certain limitations, may
declare all the Notes to be immediately due and payable. Certain events of
bankruptcy or insolvency are Events of Default and shall result in the Notes
being immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture, the Notes, the
Guarantees, the Collateral Documents or the Senior Note Collateral Documents
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture, the Notes, the Guarantees, the Collateral Documents or the Senior
Note Collateral Documents unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Notes may direct the Trustee in its exercise of any trust or power under the
Indenture, the Collateral Documents and the Senior Note Collateral Documents.
The Holders of a majority in principal amount of the outstanding Notes, by
written notice to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all Events of Default have been cured or waived
except nonpayment of principal and interest that has become due solely because
of the acceleration.
19. Collateral Documents.
As provided in the Indenture, the Collateral Documents and the
Senior Note Collateral Documents and subject to certain limitations set forth
therein, the obligations of the Company and the Guarantors under the Notes, the
Indenture, the Collateral Documents and the Senior Note Collateral as provided
in the Senior Note Collateral Documents are secured by the Collateral as
provided in the Collateral Documents and the Senior Note Collateral Documents.
Each Holder, by accepting a Note, agrees to be bound to all the terms and
provisions of the Collateral Documents and the Senior Note Collateral Documents,
as the same may be amended from time to time. The Liens created under the
Collateral Documents and the Senior Note Collateral Documents shall be released
upon the terms and subject to the conditions set forth in the Indenture, the
Collateral Documents and the Senior Note Collateral Documents.
20. Individual Rights of Trustee.
Subject to certain limitations imposed by the Trust Indenture
Act, the Trustee or any Paying Agent or Registrar, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with the Company, the Guarantors, its Restricted Subsidiaries or its Affiliates
with the same rights it would have if it were not Trustee, Paying Agent or
Registrar, as the case may be, under the Indenture.
-13-
<PAGE> 174
21. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Guarantees or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of his or her status as a
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
22. Governing Law.
THE INDENTURE, THE GUARANTEES AND THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
23. 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).
24. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and have directed the Trustee to 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 Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
25. Subordination.
The indebtedness evidenced by this Note is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
-14-
<PAGE> 175
26. Conversion Rights.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Note is entitled, at his, her or its option, at
any time on or after 9:00 a.m. New York City time on July 30, 1996 and before
the close of business on the Business Day next preceding the Redemption Date, or
in case this Note or a portion hereof is called for redemption, then in respect
of this Note or such portion hereof until and including, but (unless the Company
defaults in making the payment due upon redemption) not after, the close of
business on the Business Day next preceding the Redemption Date, to convert this
Note at the principal amount hereof, or of such portion, in to fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of Common Stock of the Company at a conversion price equal to $6.90
per share of such Common Stock (or in each case at the current adjusted
conversion price if an adjustment has been made as provided in the Indenture) by
surrender of this Note, duly endorsed or assigned to the Company or in blank, to
the Company at its office or agency maintained for that purpose pursuant to the
Indenture, accompanied by written notice to the Company in the form provided in
this Note (or such other notice as is acceptable to the Company) that the Holder
hereof elects to convert this Note and, in case such surrender shall be made
during the period from the close of business on any regular Record Date next
preceding any Interest Payment Date or the close of business on a record date
for the payment of a Reset Penalty to the close of business on such Interest
Payment Date or the Reset Penalty Payment Date, as applicable, (unless this Note
or the portion thereof being converted has been called for redemption on a
Redemption Date within such period), also accompanied by payment in New York
Clearing House funds, or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted and/or any Reset Penalty due.
Subject to the aforesaid requirement for payment and, in the case of a
conversion after the regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Note (or any Predecessor Security) of record at such regular record date to
receive an installment of interest (with certain exceptions provided in the
Indenture), no payment or adjustment is to be made upon conversion on account of
any interest accrued hereon or on account of any dividends on the Common Stock
issued upon conversion. No fractional shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional share the
Company shall pay a cash adjustment as provided in the Indenture.
On December 1, 1996 (the "Reset Date"), the conversion price will be
adjusted (the "Conversion Reset") to equal (x) the product of (i) the average of
the high and low prices on the Nasdaq National Market, or the consolidated
transaction reporting tape in the event that the Common Stock of the Company is
not then traded on the Nasdaq National Market, and (ii) the amount of Common
Stock of the Company reported as being traded on that day, for each Trading Day
of the 30 calendar days preceding the Reset Date (the "Conversion Reset
Period"), divided by the total number of shares of Common Stock of the Company
traded over the Conversion Reset Period, then multiplied by (y) 115% (the
"Conversion Reset Price"), if such Conversion Reset Price shall be lower than
the conversion price before such calculation, provided that the Conversion Reset
Price shall never be adjusted to less than $4.30 per share, but the Company will
be required to pay to holders of Notes a quarterly reset penalty ("Reset
Penalty") attributable to the Company's inability to adjust the Conversion Reset
Price below $4.30 per share. In the event that the conversion price before such
calculation shall be equal to or less than the Conversion Reset Price, then no
adjustment to the conversion price shall be made. The quarterly Reset Penalty
payable to each Holder of Notes shall be an amount equal to $2.50 per Note held
by such Holder (which for the purposes of this Paragraph 26 will be determined
to be Certificated Notes, each in the denomination of $1,000) unless, but for
the proviso in the preceding sentence, the Conversion
-15-
<PAGE> 176
Reset Price would have been less than $3.80 per share, in which case such
quarterly Reset Penalty shall be an amount equal to $5.00 per Note held by such
Holder. The Reset Penalty shall be payable on each March 1, June 1, September 1
and December 1 (each such date being referred to herein as a "Reset Penalty
Payment Date"), commencing on March 1, 1997, the first such Reset Penalty
Payment Date occurring after the Reset Date, and shall be payable to holders of
record of Notes on the February 15, May 15, August 15 and November 15
immediately preceding such Reset Penalty Payment Date and shall not accrue. The
Reset Penalty will cease to be payable upon a conversion of a Note.
The Company will furnish to any Holder of Notes upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Note. Requests may be made to:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the
Guarantors (as defined in the Indenture referred to in this Note and each
hereinafter referred to as a "Guarantor," which term includes any successor or
additional Guarantor under the Indenture) have, jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment of
the principal (and premium, if any) of and interest (including Additional
Amounts, if any, and Special Interest, if any) on the Notes, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, offer to purchase upon a Termination of Trading, purchase or
otherwise, (b) the due and punctual payment of interest on the overdue principal
of and interest (including Additional Amounts, if any, and Special Interest, if
any) on the Notes, if any, to the extent lawful, (c) the due and punctual
performance of all other obligations of the Company and the Guarantors to the
Holders under the Indenture, the Notes, the Collateral Documents and the Senior
Note Collateral Documents and (d) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration, call for redemption,
upon a Change of Control Offer, Asset Sale Offer, offer to purchase upon a
Termination of Trading, purchase or otherwise. Capitalized terms used herein
shall have the meanings assigned to them in the Indenture unless otherwise
indicated.
Payment on each Note is guaranteed, jointly and severally, by
the Guarantors pursuant to Article X of the Indenture on a senior subordinated
basis to the extent provided in the Indenture and reference is made to such
Indenture for the precise terms of the Guarantees and such subordination.
The obligations of each Guarantor are limited to the lesser of
(a) an amount equal to such Guarantor's Adjusted Net Assets as of the date of
the Guarantee and (b) the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
(including, if applicable, its obligation under the Senior Notes) and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to its contribution obligations under the
-16-
<PAGE> 177
Indenture, result in the obligations of such Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law or not otherwise being void, voidable or unenforceable under any
similar other bankruptcy, receivership,insolvency, liquidation or other similar
legislation or legal principles under applicable foreign law. Each Guarantor
that makes a payment or distribution under a Guarantee shall be entitled to a
contribution from each other Guarantor in a pro rata amount based on the
Adjusted Net Assets of each Guarantor.
Certain of the Guarantors may be released from their
Guarantees upon the terms and subject to the conditions provided in the
Indenture.
The Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and in the Indenture.
NWE CAPITAL (CYPRUS) LIMITED
By:_______________________________
PLD ASSET LEASING LIMITED
By:_______________________________
PLD CAPITAL LIMITED
By:_______________________________
BALTIC COMMUNICATIONS LIMITED
By:_______________________________
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
By:_______________________________
<PAGE> 178
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
----------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ----------------------------------
- ---------------------------------- ---------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint Attorney to
transfer this Note on the Security Register, with full power of substitution.
Dated:
-----------------
- --------------------------------- --------------------------------------------
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
<PAGE> 179
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
/ / In connection with the Change of Control Offer made pursuant to Section
4.7 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $ ($1,000 in principal amount or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or an
amount in cash equal to 101% of the principal amount indicated
in the preceding sentences, as the case may be, plus accrued
and unpaid interest thereon, if any, and Additional Amounts,
if any, and Special Interest, if any, to the Change of Control
Payment Date.
/ / In connection with the Asset Sale Offer made pursuant to Section 4.8 of
the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $ ($1,000 in principal amount or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or an
amount in cash equal to 100% of the principal amount indicated
in the preceding sentence, as the case may be, plus accrued
and unpaid interest thereon, if any, and Additional Amounts,
if any, and Special Interest, if any, to the Asset Sale
Payment Date.
/ / In connection with the option of the Holder to require the Company to
repurchase the Holder's Note upon a Termination of Trading pursuant to
Section 4.14 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $ ($1,000 in principal amount or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or an
amount in cash equal to 100% of the principal amount indicated
in the preceding sentences, as the case may be, plus accrued
and unpaid interest thereon, if any, and Additional Amounts,
if any, and Special Interest, if any, to the Repurchase Date.
Dated:
------------
- ----------------------------------- -----------------------------------
Signature of Holder Signature Guaranteed:
<PAGE> 180
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
FORM OF CONVERSION NOTICE
The undersigned registered owner of this Note hereby
irrevocably exercises the option to convert this Note, or the portion hereof
(which is $1,000 or a multiple thereof) designated below, into shares of Common
Stock in accordance with the terms of the Indenture referred to in this Note,
and directs that the shares issuable and deliverable upon the conversion,
together with any check in payment for a fractional share and any Note
representing any unconverted principal amount hereof, be issued and delivered to
the registered owner hereof unless a different name has been provided below. If
this Notice is being delivered on a date after the close of business on a
regular Record Date or a record date for the payment of a Reset Penalty and
prior to the close of business on the related Interest Payment Date or Reset
Penalty Payment Date, as the case may be, this Notice is accompanied by payment
in New York Clearing House funds, or other funds acceptable to the Company, of
an amount equal to the interest payable on such Interest Payment Date on the
principal of this Note to be converted and/or the Reset Penalty due on such
Note. If shares or any portion of this Note not converted are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
Dated:
------------ --------------------------------------------
NOTICE This signature must correspond with
the name as written upon the face of the
within- mentioned instrument in every
particular, without alteration or any change
whatsoever.
<PAGE> 181
Fill in for registration of shares of Common
Stock if they are to be delivered, or
Securities if they are to be issued, other
than to and in the name of the registered
owner:
- ---------------------------------
(Name)
- ---------------------------------
(Street Address)
- ---------------------------------
(City, State and zip code)
(Please print name and address)
Register: Common Stock
---------
Securities
---------
(Check appropriate line(s)).
Principal amount to be
converted (if less than all):
$ ,000
--------------
--------------------------------------
Social Security or other
Taxpayer Identification
Number of owner
<PAGE> 182
Disclosure Schedules to
Indenture
9% Convertible Subordinated Notes Due 2006
Dated as of May 31, 1996
Any item disclosed on one Schedule included herein shall also be deemed
to be disclosed on all other relevant Schedules on which such item should be
disclosed and qualifies all relevant representations set forth in the Indenture.
<PAGE> 183
SCHEDULE 1.1(b)
SPECIAL PURPOSES PROVISIONS FOR LEASING COMPANIES
"1. Notwithstanding any other provision of this Memorandum of
Association, the Articles of Association or any provision of law that otherwise
so empowers the company, the company shall not, (i) without the prior written
consent of the trustee from time to time ("the Trustee") under any indenture or
similar agreement among Petersburg Long Distance Inc., an Ontario corporation
(together with its successors and assigns, "PLD"), the company, certain other
guarantors and a financial institution acting as a trustee (the "Indenture") or
any related guarantee, collateral documents or similar agreements, if any,
pursuant to which PLD shall issue notes, debentures or bonds and (ii) without
each rating agency then rating the notes, debentures or bonds affirming in
writing that the rating of such notes, debentures or bonds will not be adversely
effective by such action, do any of the following:
(a) engage in any business or activity other than in connection
with or relating to facilitating the issuance of such notes, debentures or bonds
of PLD and other than acquiring Telecommunications Assets and leasing such
Telecommunications Assets to Restricted Subsidiaries or Qualified Joint Ventures
in Russia or Kazakstan pursuant to Telecommunications Asset Leases and making
Qualified Investments in entities primarily engaged in, or proposing to engage
in, the Telecommunications Business in Russia and Kazakstan;
(b) incur any Indebtedness, or assume or guaranty any
Indebtedness or any other entity, other than in connection with a guarantee (the
"Guarantee") of the notes issued by PLD pursuant to the Indenture and other than
indebtedness evidenced by Intercompany Notes owing to PLD or a special-purpose
corporation constituting a Restricted Subsidiary and a "Leasing Company" (as
such may be defined in the Indenture) which is also a guarantor of the notes
under such Indenture;
(c) commingle its assets with those of any other Person;
(d) dissolve or liquidate, in whole or in part;
(e) consolidate or merge with or into any other entity or convey
or transfer its properties and assets substantially as an entirety to any other
entity, unless:
(i) the entity (if other than the company) formed or
surviving the consolidation or merger or which acquires the
properties and assets of the company is organized and existing
under the laws of Cyprus, Canada or any province or any
subdivision thereof, the United States, any political subdivision
thereof, any state thereof or the District of Columbia, United
Kingdom or Bermuda, expressly assumes the due and punctual payment
of, and all obligations of the company in connection with
indebtedness of the company, and has Articles
<PAGE> 184
of incorporation, corporate charter or other organizational
documents containing provisions identical to the provisions of
this Paragraph 2 and Paragraph 3; and
(ii) immediately after giving effect to the transaction, no
default or event of default has occurred and is continuing under
any indebtedness of the company or any agreements relating to such
indebtedness; or
(f) without the affirmative vote of 100% of the members of the
Board of Directors of the company, institute proceedings to wind up, liquidate
or be adjudicated a bankrupt or insolvent, or Consent to the institution of
winding up, liquidation, bankruptcy or insolvency proceedings against it, or
file a petition seeking or consent to reorganization or relief under any
applicable law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the company or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due, or take any corporate action in
furtherance of any such action.
2. Notwithstanding any other provision of this Memorandum of
Association, the Articles of Association or any provision of law that otherwise
so empowers the company, the company shall, unless first (i) having received the
prior written consent of each Trustee under any Indenture or any related
guarantee, collateral documents or similar agreements, if any, pursuant to which
PLD shall issue notes, debentures or bonds and (ii) obtaining from each rating
agency then rating the notes, debentures or bonds affirmation in writing that
the rating of such notes, debentures or bonds will not be adversely effective by
such action, do each of the following:
(a) maintain its own bank accounts, payroll and separate books of
account; and
(b) identify itself in all dealings with the public under its own
name and as a separate and distinct entity and not identify itself as being a
division or part of any other Person.
3. At least one director of the company (an "Independent Director")
shall be none of (i) a Director, officer, employee or 10% beneficial owner of
the outstanding common stock, of any Affiliate or other person or entity owning
beneficially more than 10% of the outstanding shares of capital stock of the
company (an "Affiliated Entity") or (ii) a director, officer, employee or 5%
beneficial owner of the outstanding common stock, of any such Affiliated
Entity's subsidiaries or affiliates (other than the company).
4. The company shall not, without the prior written consent of each
Trustee under any Indenture and of each nationally recognized rating agency
which has rated the Certificates issued pursuant to an Agreement, amend, alter,
change or repeal Paragraphs 1, 2, 4 or this Paragraph 3 of this [Memorandum of
Association].
-2-
<PAGE> 185
4. For the purposes of this [Memorandum of Association], the
following terms are defined as follows:
"Affiliate means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling" "under common
control with", and "controlled by"), and as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise, provided,
further, that beneficial ownership of 10% or more of the Voting Stock of a
Person (on a fully diluted basis) shall be deemed to be control.
"Capital Lease Obligation" of any Person means the obligation to
pay rent or other payment amounts under a lease of (or other Indebtedness
arrangement conveying the right to use) real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles.
"Capital Stock" in any Person means any and all shares, interests,
participation or other equivalents in the equity interest (however designated)
in such Person and any rights (other than Indebtedness convertible into an
equity interest), warrants or options to acquire an equity interest in such
Person.
"Disqualified Stock' means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, or otherwise matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the date on which
the notes issued pursuant to the Indenture mature.
"Indebtedness" means at any time (without duplication), with
respect to any Person, whether recourse is to all or a portion of the assets of
such Person, and whether or not contingent, (i) any obligation of such Person
for money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with acquisition of
Property, assets or businesses, excluding trade accounts payable made in the,
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of Property of services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business, which in either case are not more than 60 days overdue or which are
being contested in good faith), (v) any Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person and (vii) any obligation of the type referred to in clauses (i)
through (vi) of this definition of another Person
-3-
<PAGE> 186
and all dividends and distributions of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise.
"Intercompany Notes" means a promissory note representing
Indebtedness of the company owing to PLD or a Restricted Subsidiary, which, if
representing a loan of net proceeds of the notes issued by PLD pursuant to the
Indenture to the company, shall have substantially the same Maturity as the
Notes and substantially same interest payments dates, the same interest rate and
substantially the same covenants as are contained in the Indenture and the
related collateral documents and shall be secured by the applicable
Telecommunications Asset Leases and by the applicable Qualified Investments.
"Investment" in any Person means any direct, indirect or continent
(i) advance or loan to, guarantee of any Indebtedness of, extension of credit or
capital contribution to such Person, (ii) the acquisition of any shares of
Capital Stock, bonds, notes, debentures or other securities of such Person, or
(iii) the acquisition, by purchase or otherwise, of all or substantially all of
the business, assets or stock or other evidence of beneficial ownership of such
Person; provided that Investments shall exclude accounts receivable and other
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices.
"Joint Venture" means a Telecommunications Company of which less
than 50% of the Voting Stock is held by PLD; provided that the
Telecommunications Business of such Person is principally conducted in Russia
and Kazakstan.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Qualified Investment" means an Investment in a Telecommunications
Company primarily engaged or proposing to engage in the Telecommunications
Business in Russia or Kazakstan.
"Qualified Joint Venture" means a Joint Venture in which PLD owns
directly or indirectly Voting Stock thereof an the Issue Date, which Joint
Ventures are disclosed in a schedule to the indenture, and any further joint
Venture in which PLD owns 20% or more of the Voting Stock thereof.
"Restricted Subsidiary" means any Subsidiary of PLD that has not
been classified as an "Unrestricted Subsidiary".
"Subsidiary" means, with respect to any Person, (i) any
corporation more than 50% of the outstanding shares of Voting Stock of which is
owned, directly or indirectly, by such Person, or by one or more other
Subsidiaries of such Person, or by such Person and one or more other
Subsidiaries of such Person, (ii) any general partnership, joint venture or
similar entity, more than 50% of the outstanding partnership or similar
interests of which are owned,
-4-
<PAGE> 187
directly or indirectly, by such Person, or by one or more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries of such
Person, (iii) any limited partnership of which such Person or any Subsidiary of
such Person is a general partner and (iv) BECET International, provided that PLD
owns directly or indirectly 50% of the then outstanding shares of Voting Stock
of BECET International.
"Telecommunications Asset Lease" means a lease by the company y of
Telecommunications Assets to Restricted Subsidiaries and Qualified Joint Venture
in Russian and Kazakstan.
"Telecommunications Assets" means, with respect to any Person,
assets (including, without limitation, rights of way, trademarks and licenses to
use copyrighted material), that are utilized by such Person, directly or
indirectly, in a Telecommunications Business. For purposes of determining a
Telecommunications Company but not for purposes of determining whether property
or assets may be subject to a Telecommunications Asset Lease, Telecommunications
Assets shall also include stock, joint venture or partnership interests in
another Person, provided that substantially all of the assets of such other
Person consist of Telecommunications Assets, and provided, further, that if such
stock, joint venture or partnership interests are held by PLD or a restricted
Subsidiary, such other Person either is, or immediately following the relevant
transaction shall become, a Restricted Subsidiary of PLD pursuant to the
Indenture.
"Telecommunications Business" means the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in (i) above or (iii) evaluating, participating or
pursuing any other activity or opportunity that is related to those specified in
(i) or (ii) above and includes, without limitation, any business which PLD and
its Restricted Subsidiaries are currently engaged on the Issue Date.
"Telecommunications Company" means any Person substantially all of
the assets of which consist of Telecommunications Assets. "Unrestricted
Subsidiary" means any Subsidiary of PLD that PLD has classified as an
"Unrestricted Subsidiary," and that has not been reclassified as a Restricted
Subsidiary, pursuant to the terms of the Indenture.
"Voting Stock" means, with respect to any Person, securities of
any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or it the times that such class of Capital Stock
has voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such
Person."
-5-
<PAGE> 188
SCHEDULE 1.1(d)
EXISTING LIENS
None.
<PAGE> 189
SCHEDULE A TO THE CONVERTIBLE NOTE INDENTURE
"Special Interest" shall include the amount of interest payable
pursuant to this paragraph in the event of the failure of the Company to
procure, on or before July 12, 1996, a recognized financial institution with
capital of not less than $10,000,000 organized under the laws of the Republic of
Ireland which the Trustee may lawfully appoint as a Qualified Foreign Collateral
Agent (as defined in Section 7.3 of the Indenture) (the "Procurement") with
respect to Technocom Preferred Stock, any payments thereon and any property
substituted therefor (the "Subject Collateral") pursuant to an agreement under
which such Qualified Foreign Collateral Agent will agree not to resign without
the contemporaneous appointment of a successor Qualified Foreign Collateral
Agent (the "Prescribed Agreement"). Commencing on July 12, 1996, if the Company
has failed to make the Procurement, the Company shall pay to each Holder of the
Notes additional interest in an amount equal to 1% per annum on the principal
amount at of such Holder's Notes, accruing for each day until the Procurement is
made or Technocom or a successor is reorganized under the laws of Cyprus and a
successor Qualified Foreign Collateral Agent has been appointed in respect of
the Subject Collateral (the "Reorganization") under a Prescribed Agreement. Such
Special Interest on the Notes shall be payable in cash semi-annually in arrears
at the times and in the manner provided for in the Indenture. Such interest
shall cease to accrue upon the Procurement or the Reorganization taking place
and all accrued and unpaid Special Interest shall be paid to each Holder of the
Notes on the next Interest Payment Date with respect thereto. Any Special
Interest payable pursuant to this Schedule shall be in addition to any Special
Interest that may be payable pursuant to paragraph (a) of the definition of
Special Interest contained in the Indenture.
<PAGE> 1
EXHIBIT 4.3
PETERSBURG LONG DISTANCE INC.
CUSIP NO. 71623PAB8
No. SG 1
______
14% SENIOR DISCOUNT NOTES DUE 2004
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND THE PROVINCES OF
CANADA.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO PETERSBURG LONG
DISTANCE INC. OR THE REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND
NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF INTERESTS IN THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.6 OF THE INDENTURE, DATED AS OF MAY
31, 1996, AMONG PETERSBURG LONG DISTANCE INC., CERTAIN CORPORATIONS ACTING
AS GUARANTORS AND NAMED THEREIN AND THE TRUSTEE NAMED THEREIN, PURSUANT TO
WHICH THIS NOTE WAS ISSUED.
<PAGE> 2
THE NOTES EVIDENCED HEREBY WERE INITIALLY ISSUED AS PART OF AN ISSUANCE OF
UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT STATED
MATURITY OF 14% SENIOR DISCOUNT NOTES DUE 2004 OF PETERSBURG LONG DISTANCE
INC. (THE "NOTES") AND ONE WARRANT (A "WARRANT") ENTITLING THE HOLDER
THEREOF TO PURCHASE 34 COMMON SHARES WITHOUT NOMINAL OR PAR VALUE OF
PETERSBURG LONG DISTANCE INC. PRIOR TO THE EARLIEST TO OCCUR OF (A) 180
DAYS AFTER THE DATE OF ORIGINAL ISSUANCE OF THE UNITS, (B) THE
COMMENCEMENT OF A REGISTERED EXCHANGE OFFER FOR THE NOTES, (C) SUCH DATE
AS THE INITIAL PURCHASER MAY DETERMINE AND (D) IN THE EVENT OF A CHANGE OF
CONTROL, THE DATE ON WHICH THE COMPANY MAILS NOTICE THEREOF TO THE HOLDERS
OF THE NOTES, THE NOTES EVIDENCED HEREBY MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE WARRANTS.
FOR THE PURPOSES OF THE INTEREST ACT (CANADA) AND DISCLOSURE THEREUNDER,
WHENEVER INTEREST, ADDITIONAL AMOUNTS, SPECIAL INTEREST, OR DEFAULTED
INTEREST OR INTEREST ON DEFAULTED INTEREST RELATING TO THIS NOTE, IS TO BE
CALCULATED ON THE BASIS OF A YEAR OF 360 DAYS OR ANY OTHER PERIOD OF TIME
THAT IS LESS THAN A CALENDAR YEAR, THE YEARLY RATE OF INTEREST TO WHICH
THE RATE DETERMINED PURSUANT TO SUCH CALCULATION IS EQUIVALENT IS THE RATE
SO DETERMINED MULTIPLIED BY THE ACTUAL NUMBER OF DAYS IN THE CALENDAR YEAR
IN WHICH THE SAME IS TO BE ASCERTAINED AND DIVIDED BY EITHER 360 OR SUCH
OTHER PERIOD OF TIME, AS THE CASE MAY BE. THE RATE ACCRUING ON THIS NOTE
FOR PAYMENT PURPOSES SHALL BE DETERMINED AS SET FORTH ON THE REVERSE
HEREOF.
Petersburg Long Distance Inc., an Ontario corporation (the
"Company"), for value received, hereby promises to pay to CEDE & CO., or its
registered assigns, the principal sum indicated on Schedule A hereof, on June 1,
2004.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth in this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed under its corporate seal.
Dated: June 12, 1996
-------------
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
__________________________
Name: James Hatt
Title: Chief Executive Officer
[Corporate Seal]
By: /s/ Simon Edwards
__________________________
Name: Simon Edwards
Title: Chief Financial Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By: /s/ Steven Torgeson
________________________________
Authorized Signatory
-3-
<PAGE> 4
PETERSBURG LONG DISTANCE INC.
GLOBAL NOTE
REPRESENTING 14% SENIOR DISCOUNT NOTES DUE 2004
1. Indenture.
This Note is one of a duly authorized issue of debt securities of
Petersburg Long Distance Inc., an Ontario corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), designated as its "14% Senior Discount Notes due 2004"
(herein called the "Notes") limited in aggregate principal amount at Stated
Maturity to $123,000,000, issued under an indenture dated as of May 31, 1996 (as
amended or supplemented from time to time, the "Indenture") among the Company,
the corporations acting as guarantors and named therein (the "Guarantors") and
The Bank of New York, as trustee (the "Trustee," which term includes any
successor Trustee under the Indenture), to which Indenture reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and each
Holder of Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The summary of the terms of this Note contained
herein does not purport to be complete and is qualified by reference to the
Indenture. All terms used in this Note which are not defined herein shall have
the meanings assigned to them in the Indenture.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into or permit certain transactions
with Affiliates, create Liens, enter into or permit certain Sale and Leaseback
Transactions, make Asset Sales and engage in businesses other than the
Telecommunications Business. The Indenture also imposes limitations on the
ability of the Company to consolidate or merge with or into any other Person or
permit any other Person to merge with or into the Company, or sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Property of the Company to any other Person. In addition, the Indenture imposes
limitations on the ability of Restricted Subsidiaries to issue guarantees and
Preferred Shares and to create consensual restrictions upon their ability to pay
dividends and make certain other payments to the Company.
2. Principal and Interest.
The Company promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2004.
This Note is issued at a discounted principal value of $87,697,300.
This Note will accrete interest from the Issue Date at a rate computed as if
this Note had been issued bearing interest at the rate of 14% per annum on May
31, 1996 (being a rate of 14.9445% per annum for the period from the Issue Date
through November 30, 1996), compounded semi-annually, to an aggregate principal
amount of $123,000,000 by December 1, 1998. Thereafter, interest on this Note
will accrue at the rate of 14% per annum and will be payable in cash
semi-annually on June 1 and December 1 of each year, commencing June 1, 1999,
until the principal amount hereof is paid or made available for payment. The
- 4 -
<PAGE> 5
effect of the foregoing is that this Note will bear interest at the rate of
14.9445% per annum from the Issue Date through November 30, 1996 and 14% per
annum thereafter. The payment of interest on this Note in respect of the period
from the Issue Date to December 1, 1998, however, will effectively be deferred
until Maturity and such deferred interest will be compounded semi-annually and
added to the outstanding principal amount of this Note. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months. If
the Company has not received, on or before May 31, 1998, $20,000,000 in Cash
Proceeds from a sale or sales of Qualified Stock of the Company occurring
subsequent to the Issue Date (other than Qualified Stock issued upon the
exercise of Warrants or upon conversion of the Convertible Notes), this Note
will bear interest at the rate of 14.5% per annum commencing on June 1, 1998
until any Interest Payment Date prior to which the Company shall have received
such $20,000,000 in Cash Proceeds from such a sale of Qualified Stock.
Commencing on any such Interest Payment Date, this Note will again bear interest
at the rate of 14% per annum. For purposes of this interest rate adjustment
provision, the Company will be deemed to have received such $20,000,000 in Cash
Proceeds if a Change of Control has occurred. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions provided in the Indenture, be paid to the Person in whose
name this Note (or the Note in exchange or substitution for which this Note was
issued) is registered at the close of business on the Record Date for interest
payable on such Interest Payment Date. The Record Date for any Interest Payment
Date is the close of business on May 15 or November 15, as the case may be,
whether or not a Business Day, immediately preceding the Interest Payment Date
on which such interest is payable. Any such interest not so punctually paid or
duly provided for ("Defaulted Interest") shall forthwith cease to be payable to
the Holder on such Record Date and shall be paid as provided in Section 2.11 of
the Indenture.
Each payment of interest in respect of an Interest Payment Date will
include interest (including Additional Amounts (as hereinafter defined), if any,
and Special Interest (as hereinafter defined), if any) accrued through the day
before such Interest Payment Date. If an Interest Payment Date falls on a day
that is not a Business Day, the interest payment to be made on such Interest
Payment Date will be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date, and no additional
interest will accrue as a result of such delayed payment.
If an Exchange Note is substituted for this Note in a Registered
Exchange Offer prior to the Record Date for the first Interest Payment Date
following such substitution, accrued and unpaid interest, if any, on this Note,
up to but not including the date of issuance of the Exchange Note or Exchange
Notes issued in substitution for this Note, shall be paid on the first Interest
Payment Date for such Exchange Note or Exchange Notes to the Holder or Holders
of such Exchange Note or Exchange Notes on the first Record Date with respect to
such Exchange Note or Exchange Notes. If an Exchange Note is substituted for
this Note in a Registered Exchange Offer subsequent to the Record Date for the
first Interest Payment Date following such substitution but on or prior to such
Interest Payment Date, then any such accrued and unpaid interest with respect to
this Note and any accrued and unpaid interest on the Exchange Note or Exchange
Notes issued in substitution for this Note, including Additional Amounts, if
any, and Special Interest, if any, through the day before such Interest Payment
Date, shall be paid on such Interest Payment Date to the Holder of this Note on
such Record Date. Any accretion of value with respect to this Note up to but not
including the date of issuance of the Exchange Note or Exchange Notes issued in
substitution for this Note shall be included as Accreted Value with respect to
such Exchange Note or Exchange Notes.
To the extent lawful, the Company shall pay interest on (i) if prior
to December 1, 1998, overdue Accreted Value of (and premium, if any, on) this
Note, or if on or after December 1, 1998, any
- 5 -
<PAGE> 6
overdue principal of (and premium, if any, on) this Note, at the interest rate
borne on this Note, plus 1% per annum, and (ii) Defaulted Interest (without
regard to any applicable grace period), including Additional Amounts, if any,
and Special Interest, if any, at the same rate. The Company's obligation
pursuant to the previous sentence shall apply whether such overdue amount is due
at its Stated Maturity, as a result of the Company's obligations pursuant to
Section 3.6, Section 4.7 or Section 4.8 of the Indenture, or otherwise.
3. Additional Amounts.
Except to the extent required by law, any and all payments of, or in
respect of, this Note shall be made free and clear of and without deduction for
or on account of any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto
imposed by Canada, the Russian Federation, Cyprus or any other jurisdiction with
which the Company or any Guarantor has some connection (including any
jurisdiction (other than the United States of America) from or through which
payments under the Notes are made) or any political subdivision of or any taxing
authority in any such jurisdiction ("Canadian Taxes," "Russian Taxes," "Cypriot
Taxes" or "Other Taxes," respectively). If the Company or any Guarantor shall be
required by law to withhold or deduct any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes from or in respect of any sum payable under this Note or
pursuant to a Guarantee, the sum payable by the Company or such Guarantor, as
the case may be, thereunder shall be increased by the amount ("Additional
Amounts") necessary so that after making all required withholdings and
deductions, the Holder of this Note shall receive an amount equal to the sum
that it would have received had no such withholdings and deductions been made;
provided that any such sum shall not be paid in respect of any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes to the Holder of this Note (an
"Excluded Holder") (i) resulting from the beneficial owner of this Note carrying
on business or being deemed to carry on business in or through a permanent
establishment or fixed base in the relevant taxing jurisdiction or any political
subdivision thereof or having any other connection with the relevant taxing
jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of this Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of this Note
or the Guarantees or the enforcement of this Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)) with the Holder of this Note at the
time of such payment or at the time the amount of such payment is deemed to have
been paid or credited or (iii) that would not have been imposed but for the
presentation (where presentation is required) of this Note for payment more than
180 days after the date such payment became due and payable or was duly provided
for, whichever occurs later. The Company or the Guarantors, as applicable, will
also (i) make such withholding or deduction and (ii) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law, and, in any such case, the Company will furnish to each Holder on whose
behalf an amount was so remitted, within 30 calendar days after the date the
payment of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by the Company or the Guarantors, as applicable. The Company will, upon
written request of each Holder (other than an Excluded Holder), reimburse each
such Holder for the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Notes, and (ii) any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed with respect to
any reimbursement under the foregoing clause (i) so that the net amount received
by such Holder (net of payments made under or with respect to such Notes or the
Guarantees) after such reimbursement will not be less than the net amount the
Holder hereof would have received if Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes on such reimbursement had not been imposed.
- 6 -
<PAGE> 7
In addition, the Company or the Guarantors will pay any stamp,
issue, registration, documentary or other similar taxes and duties, including
interest and penalties, in respect of the creation, issue and offering of the
Notes payable in Canada, the United States, the Russian Federation or Cyprus or
any political subdivision thereof or taxing authority of or in the foregoing.
The Company and the Guarantors will also pay and indemnify the Holders from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by the Trustee or the Holders to create the Liens
on the Collateral and the Convertible Note Collateral and to enforce the
obligations of the Company or the Guarantors under the Notes, the Indenture, the
Guarantees, the Collateral Documents or the Convertible Note Collateral
Documents.
4. Special Interest.
Special interest means such additional interest or is set forth in
subparagraphs (a) or (b) below.
(a) The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of May 31, 1996, between the Company and
the Initial Purchaser (the "Registration Agreement"), which agreement is
attached to the Indenture as Exhibit E thereto. In the event that (a) the
Exchange Offer Registration Statement (as such term is defined in the
Registration Agreement) is not filed with the Securities and Exchange Commission
(the "Commission") on or prior to the 45th day following the Issue Date, (b) the
Exchange Offer Registration Statement is not declared effective by the
Commission on or prior to the 120th day following the Issue Date, (c) the
Exchange Offer (as such term is defined in the Registration Agreement) is not
consummated on or prior to the 180th day following the Issue Date and in such a
case the Note Shelf Registration Statement (as such term is defined in the
Registration Agreement) is not filed with the Commission on or prior to 60 days
thereafter and such Note Shelf Registration Statement has not been declared
effective on or prior to 120 days thereafter or (d) any such Registration
Statement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose, without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective, for a period of more
than 30 consecutive days, interest shall accrue on this Note (in addition to any
accretion in value of, or accrual of stated interest on, this Note) from and
including the next day following each of (i) such 45-day period in the case of
clause (a) above, (ii) such 150-day period in the case of clause (b) above,
(iii) such 180-day period for the Exchange Offer Registration Statement, such
60-day period or 120-day period for the Note Shelf Registration Statement, as
applicable, in the case of clause (c) above and (iv) such 30-day period in the
case of clause (d) above (each such event referred to in clauses (i) through
(iv), a "Registration Default"). In each case following the occurrence of a
Registration Default, such additional interest (the "Special Interest") will be
payable to the Holder hereof during the first 90-day period immediately
following the occurrence of such Registration Default in cash semi-annually in
arrears on each Interest Record Date at a rate equal to $0.01 per week per
$1,000 of the Accreted Value of this Note (determined daily) to the Holder
hereof. The Special Interest payable to the Holder of this Note shall increase
by an additional $0.01 per week per $1,000 of the Accreted Value of this Note
for each 90-day period up to a maximum of $0.50 per week per $1,000 of the
Accreted Value of this Note (determined daily). Upon (w) the filing of the
Exchange Offer Registration Statement or a Note Shelf Registration Statement
after the 45-day period described in clause (a) above, (x) the effectiveness of
the Exchange Offer Registration Statement or a Note Shelf Registration Statement
after the 120-day period described in clause (b) above, (y) the consummation of
the Exchange Offer after the applicable time period described in clause (c)
above, or (z) the effectiveness of an applicable Registration Statement after
- 7 -
<PAGE> 8
the 30-day period described in clause (d) above, the Special Interest payable on
this Note, with respect to such clause (a), (b), (c) or (d), as the case may be,
from the date of such filing, effectiveness or consummation, as the case may be,
shall cease to accrue and all accrued and unpaid Special Interest as of the
occurrence of (w), (x), (y) or (z) shall be paid to the Holder hereof on the
next Interest Payment Date with respect thereto. Following the occurrence of
(w), (x), (y) and (z) above, the interest terms of this Note shall revert to the
original terms set forth above, subject to paragraph 4(b) below.
(b) In the event of the failure of the Company to procure, on or
before July 12, 1996, a recognized financial institution with capital of not
less than $10,000,000 organized under the laws of the Republic of Ireland which
the Convertible Note Trustee may lawfully appoint as a Qualified Foreign
Collateral Agent (as defined in Section 7.3 of the Indenture) (the
"Procurement") with respect to Technocom Preferred Stock, any payments thereon
and any property substituted therefor (the "Subject Collateral") pursuant to an
agreement under which such Qualified Foreign Collateral Agent will agree not to
resign without the contemporaneous appointment of a successor Qualified Foreign
Collateral Agent (the "Prescribed Agreement"), then, commencing on July 12,
1996, the Company shall pay to each Holder of the Notes additional Special
Interest in an amount equal to 1% per annum on the principal amount at Stated
Maturity of such Holder's Notes, accruing for each day until the Procurement is
made or Technocom or a successor is reorganized under the laws of Cyprus and a
successor Qualified Foreign Collateral agent has been appointed in respect of
the Subject Collateral (the "Reorganization") under a Prescribed Agreement. Such
Special Interest shall be payable in cash semi-annually in arrears at the times
and in the manner provided for in the Indenture, provided that for this purpose,
Section 2.11 of the Indenture shall be read to include as Interest Payment
Dates, as applicable, December 1, 1996 and June 1 and December 1 of each year
commencing December 1, 1996. Such Special Interest shall cease to accrue upon
the Procurement or the Reorganization taking place and all accrued and unpaid
Special Interest shall be paid to each Holder of the Notes on the next Interest
Payment Date with respect thereto. Any Special Interest payable pursuant to this
paragraph 4(b) shall be in addition to any Special Interest that may be payable
pursuant to paragraph 4(a) above.
Except as expressly provided in this paragraph 4, Special Interest
shall be treated as interest and any date on which Special Interest is due and
payable shall be treated as Interest Payment Date, for all purposes under this
Note and the Indenture.
5. Method of Payment.
The Company, through the Paying Agent, shall pay interest on this
Note to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States of America that at
the time of payment is legal tender for payment of all debts public and private.
Principal and interest will be payable at the office of the Paying Agent but, at
the option of the Company, interest may be paid by check mailed to the
registered Holders at their registered addresses.
6. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar under
the Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its subsidiaries may
act as Paying Agent or Registrar.
7. Optional Redemption.
- 8 -
<PAGE> 9
Except as set forth in the following paragraph, the Notes may not be
redeemed prior to June 13, 2001. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 calendar days' nor more than 60 calendar days' notice, at the prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon (if any), Additional Amounts (if any) and Special
Interest (if any) to the applicable Redemption Date, if redeemed during the
period from June 13, 2001 through May 31, 2002 at a percentage of 108.000% and
thereafter during the twelve-month period beginning June 1 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104.000%
2003 and thereafter 100.000%
</TABLE>
The Notes may be redeemed, at the option of the Company, in whole but not
in part, upon not less than 30 or more than 60 days' notice to the Holders in
accordance with the terms of the Indenture, at a redemption price equal to the
Accreted Value thereof, plus accrued and unpaid interest, if any (including
Additional Amounts, if any, and Special Interest, if any), to the applicable
Redemption Date (subject to the right of Holders of record on the relevant
Record Date to receive interest (including Additional Amounts, if any, and
Special Interest, if any) due on the Interest Payment Date that is on or prior
to the Redemption Date) if, as a result of any change in or amendment to the
laws or the regulations or rulings promulgated thereunder of Canada, Cyprus, the
Russian Federation or any other jurisdiction with which the Company or any
Guarantor has any connection (other than a connection arising as a result of a
continuance or a merger or consolidation of the Company with or into a newly
formed corporation solely for the purpose of moving the Company's domicile out
of Canada) or any political subdivision thereof or any authority thereof or
having power to tax therein, or any change in the application or official
interpretation of such laws or regulations, or any change in administrative
policy or assessing practice of the applicable taxing authority, which change or
amendment becomes effective on or after May 24, 1996, the Company or the
Guarantors (if the Guarantees are called) are or would be required on the next
succeeding Interest Payment Date to pay Additional Amounts with respect to the
Initial Notes, the Exchange Notes or the Guarantees and the payment of such
Additional Amounts cannot be avoided by the use of any reasonable measures
available to the Company or the Guarantors, as the case may be. The Company will
also pay to the Holders on the Redemption Date any Additional Amounts payable in
respect of the period ending on the Redemption Date. Prior to the publication of
any notice of redemption pursuant to this provision, which in no event will be
given earlier than 90 days prior to the earliest date on which the Company or
the Guarantors, as the case may be, would be required to pay such Additional
Amounts were a payment in respect of the Notes then due, the Company shall
deliver to the Trustee (i) an Officers' Certificate stating that the obligation
to pay such Additional Amounts cannot be avoided by the Company or the
Guarantors, as the case may be, taking reasonable measures and (ii) an Opinion
of Counsel, independent of the Company and the Guarantors and approved by the
Trustee, to the effect that the Company or the Guarantors have or will become
obligated to pay such Additional Amounts as a result of such change or
amendment. Such notice, once delivered by the Company to the Trustee, will be
irrevocable. The Trustee shall accept such Officers' Certificate and Opinion of
Counsel as sufficient evidence of the satisfaction of the condition precedent
set forth in clauses (i) and (ii) above, in which event it shall be conclusive
and binding on the Holders.
8. Notice of Redemption.
- 9 -
<PAGE> 10
At least 30 calendar days but not more than 60 calendar days before
a Redemption Date, the Company will send a notice of redemption, first class
mail, postage prepaid, to Holders of Notes to be redeemed at the addresses of
such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time, the
Notes to be redeemed will be chosen by the Trustee in accordance with the
Indenture. If any Note is redeemed subsequent to a Record Date with respect to
any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest (including Additional Amounts, if any,
and Special Interest, if any) will be paid on such Interest Payment Date to the
Holder of the Note at the close of business on such Record Date. If money in an
amount sufficient to pay the Redemption Price of all Notes (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent on or
before the applicable Redemption Date and certain other conditions are
satisfied, interest (including Additional Amounts, if any, and Special Interest,
if any) on the Notes to be redeemed on the applicable Redemption Date will cease
to accrue.
The Notes are not subject to any sinking fund.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to purchase such Holder's Notes, in
whole or in part in a principal amount that is an integral multiple of $1,000,
pursuant to a Change of Control Offer, at a purchase price in cash equal to 101%
of the Accreted Value thereof on any Change of Control Payment Date, plus
accrued and unpaid interest, if any, Additional Amounts, if any, and Special
Interest, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder of Notes. The Holder of
this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Require Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest, Additional Amounts, if any, and Special Interest, if any, from
and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
Subject to the limitations set forth in the next following
paragraph, if at any time the Company or any Restricted Subsidiary engages in
any Asset Sale, as a result of which the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company shall, within 30 calendar days of the date the
amount of Excess Proceeds exceeds $5,000,000, use the then-existing Excess
Proceeds to make an offer to purchase from all Holders, on a pro rata basis,
Notes in an aggregate principal amount equal to the maximum principal amount
that may be purchased out of the then-existing Excess Proceeds, at a purchase
price in cash equal to 100% of the Accreted Value thereof on any Asset Sale
Payment Date, plus accrued and unpaid interest thereon, if any, Additional
Amounts, if any, and Special Interest, if any, to the Asset Sale Payment Date,
provided that Excess Proceeds attributable to an Asset Sale of Convertible Note
Collateral (as defined in the Indenture) must be used first to make an "asset
sale offer"
- 10 -
<PAGE> 11
pursuant to the Convertible Note Indenture (as defined in the Indenture). Upon
completion of an Asset Sale Offer (including payment of the Asset Sale Purchase
Price for accepted Notes), any surplus Excess Proceeds that were the subject of
such offer shall cease to be Excess Proceeds, and the Company may then use such
amounts for general corporate purposes, including the making of an "asset sale
offer" pursuant to the Convertible Note Indenture.
Notwithstanding the paragraph above, the Company will not be
obligated to repurchase Notes in connection with an Asset Sale Offer
representing in aggregate more than 25% of the original aggregate principal
amount of the Notes (which original aggregate principal amount shall for these
purposes be the aggregate amount originally allocated to the Notes, net of any
amounts allocated to the Warrants, without any adjustment whatsoever) prior to
the date following the Five Year Date, and the original aggregate principal
amount of Notes repurchased in connection with any Asset Sale Offer having a
purchase date prior to the date following the Five Year Date shall represent no
more than 25% of the original aggregate principal amount of the Notes less the
original aggregate principal amount of Notes purchased pursuant to Asset Sale
Offers relating to all prior Asset Sales. To the extent that the amount of
Excess Proceeds exceeds the amount of Notes purchased because of the limitation
imposed by the immediately preceding sentence (the amount of such excess being
the "Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall
constitute Excess Proceeds for purposes of the first Asset Sale Offer that is
made after the Five Year Date and, in the event the amount of the Aggregate
Unused Proceeds exceeds $5,000,000, promptly after the Five Year Date, the
Company shall commence an Asset Sale Offer on a pro rata basis for an aggregate
principal amount of Notes equal to the Aggregate Unused Proceeds (and any other
Excess Proceeds that arise between the Five Year Date and such Asset Sale Offer)
at a purchase price equal to 100% of the Accreted Value of the Notes, plus
accrued interest, if any, Special Interest, if any, and Additional Amounts, if
any, to the date of purchase.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5,000,000, the Company shall send, or cause to be sent, by first class
mail, postage prepaid, a notice regarding the Asset Sale Offer to each Holder of
Notes. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Require Purchase" appearing below and tendering this Note pursuant
to the Asset Sale Offer. Unless the Company defaults in the payment of the Offer
Purchase Price with respect thereto, all Notes or portions thereof selected for
payment pursuant to the Asset Sale Offer will cease to accrue interest,
Additional Amounts, if any, and Special Interest, if any, from and after the
Asset Sale Payment Date.
11. The Global Note.
So long as this Global Note is registered in the name of the
Depositary or its nominee, members of, or participants in, the Depositary
("Agent Members") shall have no rights under the Indenture with respect to this
Global Note held on their behalf by the Depositary or the Trustee as its
custodian, and the Depositary may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of this Global Note for all purposes. Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (ii) impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of
Notes.
- 11 -
<PAGE> 12
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder of Notes is entitled to take under the Indenture or the Notes.
Whenever, as a result of an optional redemption of Notes by the
Company, a Change of Control Offer, an Asset Sale Offer, a Registered Exchange
Offer or an exchange for Certificated Notes, this Global Note is redeemed,
repurchased or exchanged or substituted in part, this Global Note shall be
surrendered by the Holder thereof to the Trustee who shall cause an adjustment
to be made to Schedule A hereof so that the principal amount of this Global Note
will be equal to the portion not redeemed, repurchased or exchanged and shall
thereafter return this Global Note to such Holder; provided that this Global
Note shall be in a principal amount at Stated Maturity of $1,000 or an integral
multiple of $1,000.
12. The Registered Exchange Offer.
Any Note represented by this Global Note which are presented to the
Registrar for replacement pursuant to the Registered Exchange Offer (as defined
in the Registration Agreement) shall be replaced by a Global Note representing
Exchange Notes of equal principal amount upon surrender of this Global Note to
the Registrar in accordance with the terms of the Registered Exchange Offer and
the Indenture.
13. Transfer and Exchange.
By its acceptance of any Note represented by a certificate bearing
the Private Placement Legend, each Holder of, and beneficial owner of an
interest in, such Note acknowledges the restrictions on transfer of such Note
set forth on the face hereof, and agrees that it will transfer such Note only in
accordance with the restrictions on the face hereof and the restrictions set
forth under the heading "Transfer Restrictions" in the Final Memorandum.
In connection with any transfer of a Note bearing the Private
Placement Legend, each Holder agrees to deliver to the Company such satisfactory
evidence, which may include an opinion of independent counsel licensed to
practice law in the State of New York, as reasonably may be requested by the
Company to confirm that such transfer is being made in accordance with the
limitations set forth in the Private Placement Legend. In the event the Company
determines that any such transfer is not in accordance with the Private
Placement Legend, the Company shall so inform the Registrar which shall not
register such transfer; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such evidence.
Upon the registration of transfer, exchange or replacement of a Note
not bearing the Private Placement Legend, the Trustee shall deliver a Note that
does not bear the Private Placement Legend. Upon the transfer, exchange or
replacement of a Note bearing the Private Placement Legend, the Trustee shall
deliver a Note bearing the Private Placement Legend, unless such legend may be
removed from such Note as provided in the next sentence. The Private Placement
Legend may be removed from a Note if there is delivered to the Company such
satisfactory evidence, which may include an opinion of independent counsel
licensed to practice law in the State of New York, as reasonably may be
requested by the Company to confirm that neither such legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
of such Note will not violate the registration and prospectus delivery
requirements of the Securities Act and, if the transferee is a resident of
Canada, the securities laws of the applicable province of Canada; provided that
the Trustee shall not be required to determine
- 12 -
<PAGE> 13
(but may rely on a determination made by the Company with respect to) the
sufficiency of any such evidence. Upon provision of such evidence, the Trustee
shall authenticate and deliver in exchange for such Note, a Note or Notes
(representing the same aggregate principal amount of the Note being exchanged)
without such legend. If the Private Placement Legend has been removed from a
Note, as provided above, no other Note issued in exchange for all or any part of
such Note shall bear such legend, unless the Company has reasonable cause to
believe that such other Note represents a "restricted security" within the
meaning of Rule 144 and instructs the Trustee to cause a legend to appear
thereon.
The Note represented hereby initially was issued as part of the
issuance of Units, each of which consists of $1,000 principal amount at Stated
Maturity of Notes and one Warrant. Prior to the date specified in the Final
Memorandum and the Unit Legend, Notes will not be transferable except as part of
a transfer of Units and prior to such date, the Registrar shall not register the
transfer of any Note unless the Company receives evidence reasonably
satisfactory to it that such transfer is part of a transfer of a Unit or Units;
provided that the Registrar shall not be required to determine (but may rely on
the determination made by the Company with respect to) the sufficiency of any
such evidence.
The Holder of this Global Note shall, by its acceptance of this
Global Note, agree that transfers of beneficial interests in this Global Note
may be effected only through a book entry system maintained by such Holder (or
its agent), and that ownership of a beneficial interest in the Notes represented
thereby shall be required to be reflected in book entry form.
Transfers of this Global Note shall be limited to transfers in
whole, and not in part, to the Depositary, its successors and their respective
nominees. Interests of beneficial owners in this Global Note may be transferred
in accordance with the rules and procedures of the Depositary (or its
successors).
This Global Note will be exchanged by the Company for one or more
Certificated Notes if (a) the Depositary (i) has notified the Company that it is
unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Exchange Act and (ii) a successor to the
Depositary registered as a "Clearing Agency" under Section 17A of the Exchange
Act is not appointed by the Company within 90 calendar days or (b) the
Depositary is at any time unwilling or unable to continue as Depositary and a
successor to the Depositary is not able to be appointed by the Company within 90
calendar days. If an Event of Default occurs and is continuing, the Company
shall, at the request of the Holder hereof, exchange all or part of this Global
Note for one or more Certificated Notes; provided that the principal amount at
Stated Maturity of each of such Certificated Notes and this Global Note, after
such exchange, shall be $1,000 or an integral multiple thereof. Whenever this
Global Note is exchanged as a whole for one or more Certificated Notes, it shall
be surrendered by the Holder to the Trustee for cancellation. Whenever this
Global Note is exchanged in part for one or more Certificated Notes, it shall be
surrendered by the Holder to the Trustee and the Trustee shall make the
appropriate notations thereon pursuant to Section 2.5(c) of the Indenture. All
Certificated Notes issued in exchange for this Global Note shall include (i) the
Private Placement Legend except as set forth in Section 2.6(a)(iii) of the
Indenture and (ii) the Unit Legend except as set forth in Section 2.6(j) of the
Indenture. Interests in this Global Note may not be exchanged for Certificated
Notes other than as provided in this paragraph.
Prior to the effectiveness of a Shelf Registration Statement or
following the suspension or termination thereof, the Holder of this Note (or
holders of interests therein) and prospective purchasers designated by such
Holder (or such holders of interests therein) shall have the right to obtain
from the Company upon request by such Holder (or such holders of interests) or
prospective purchasers, during
- 13 -
<PAGE> 14
any period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, or exempt from reporting pursuant to 12g3-2(b) under the Exchange
Act, the information required by paragraph (d)(4)(i) of Rule 144 in connection
with any transfer or proposed transfer of such Note or interest.
14. Denominations.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 of principal amount at Stated Maturity and integral
multiples thereof.
15. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment unless such abandoned property
law designates another Person.
16. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate
some or all of its and the Guarantors' obligations under the Notes, the
Guarantees, the Indenture, the Collateral Documents and the Convertible Note
Collateral Documents if the Company irrevocably deposits with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be.
17. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Notes, the Collateral Documents and the Convertible Note
Collateral Documents may be amended with the written consent of the Holders of
at least a majority in principal amount at Stated Maturity of the outstanding
Notes and (ii) any past Default and its consequences may be waived with the
written consent of the Holders of at least a majority in principal amount at
Stated Maturity of the outstanding Notes. Without the consent of any Holder of
Notes, the Company, the Guarantors and the Trustee may amend the Indenture, the
Notes, the Collateral Documents and the Convertible Note Collateral Documents
(i) to evidence the succession of another Person to the Company or the
Guarantors, as applicable, and the assumption by such successor of the covenants
of the Company or the Guarantors under the Notes, the Indenture, the Collateral
Documents and the Convertible Note Collateral Documents; (ii) to add additional
covenants or to surrender rights and powers conferred on the Company or the
Guarantors by the Indenture, the Collateral Documents and the Convertible Note
Collateral Documents; (iii) to add any additional Events of Default; (iv) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (v) to evidence and provide for the acceptance of appointment under the
Indenture of a successor Trustee; (vi) to add additional security for the Notes
and/or the Guarantees; (vii) to cure any ambiguity in the Indenture, the
Collateral Documents or the Convertible Note Collateral Documents to correct or
supplement any provision in the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, the Collateral Documents or the
Convertible Note Collateral Documents, provided that such actions shall not
adversely affect the
- 14 -
<PAGE> 15
interests of the Holders in any material respect; or (viii) to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
18. Defaults and Remedies.
Events of Default under the Indenture include in summary form:
default in payment of interest, including Additional Amounts, if any, or Special
Interest, if any, on the Notes for 30 days; default in payment of principal on
the Notes; failure to comply with certain of the covenants in the Indenture,
including the Change of Control covenant, the Asset Sale covenant or the
Restrictive Payments covenant; failure by the Company to comply with certain of
its other agreements in the Indenture or the Notes or any Collateral Document or
any Convertible Note Collateral Document or any breach of a representation or
warranty in any Collateral Document or any Convertible Note Collateral Document
and the continuance of such default or breach for 45 days after notice;
expropriation of the assets of the Company or any of its Restricted Subsidiaries
having a book value, less the book value of the expropriation proceeds,
constituting more than 15% of the book value, on a consolidated basis, of the
Company's assets minus current assets; defaults in the payment of certain other
Indebtedness, or defaults, other than such payment defaults, which result in the
acceleration prior to express maturity of certain other Indebtedness or which
consist of the failure to pay at maturity; certain final judgments which remain
undischarged, unwaived, unappealed, unbonded, unstayed or unsatisfied; certain
events of bankruptcy or insolvency; failure of a Guarantee, a Collateral
Document or a Convertible Note Collateral Document to be in effect, the denial
of obligations under a Guarantee, a Collateral Document, any Convertible Note
Collateral Document or the Notes by the Company or the Guarantors party thereto
or the failure of the Notes and the Guarantees to be secured by the theretofore
perfected Liens and security interests in the Collateral or the Convertible Note
Collateral (except as permitted by the Indenture, the Collateral Documents or
the Convertible Note Collateral Documents), which in each circumstance continues
for 30 days after notice. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount at Stated Maturity of
the Notes, subject to certain limitations, may declare all the Notes to be
immediately due and payable. Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Notes being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Notes may not enforce the Indenture, the Guarantees, the
Notes, the Collateral Documents or the Convertible Note Collateral Documents
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture, the Notes, the Guarantees, the Collateral Documents or the
Convertible Note Collateral Documents unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount at Stated Maturity of the Notes may direct the Trustee in its exercise of
any trust or power under the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents. The Holders of a majority in principal
amount at Stated Maturity of the outstanding Notes, by written notice to the
Company and the Trustee, may rescind any declaration of acceleration and its
consequences if the rescission would not conflict with any judgment or decree,
and if all Events of Default have been cured or waived except nonpayment of
principal and interest (including Additional Amounts, if any, and Special
Interest, if any) that has become due solely because of the acceleration.
19. Collateral Documents.
- 15 -
<PAGE> 16
As provided in the Indenture, the Collateral Documents and the
Convertible Note Collateral Documents and subject to certain limitations set
forth therein, the obligations of the Company and the Guarantors under the
Indenture, the Collateral Documents and the Convertible Note Collateral
Documents are secured by the Collateral and the Convertible Note Collateral as
provided in the Collateral Documents and the Convertible Note Collateral
Documents. Each Holder, by accepting a Note, agrees to be bound to all terms and
provisions of the Collateral Documents and the Convertible Note Collateral
Documents, as the same may be amended from time to time. The Liens created under
the Collateral Documents and the Convertible Note Collateral Documents shall be
released upon the terms and subject to the conditions set forth in the Indenture
and the Collateral Documents and the Convertible Note Collateral Documents.
20. Individual Rights of Trustee.
Subject to certain limitations imposed by the Trust Indenture Act,
the Trustee or any Paying Agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, the Guarantors, its Restricted Subsidiaries or its Affiliates with
the same rights it would have if it were not Trustee, Paying Agent or Registrar,
as the case may be, under the Indenture.
21. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or the Guarantors under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of his or her status as a
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
22. Governing Law.
THE INDENTURE, THE GUARANTEES AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
23. 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).
24. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No
- 16 -
<PAGE> 17
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
25. Subordination.
The indebtedness evidenced by this Note is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Indenture with respect thereto. Each Holder of this Note,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
The Company will furnish to any Holder of Notes upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Note. Requests may be made to:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
- 17 -
<PAGE> 18
SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the
Guarantors (as defined in the Indenture referred to in this Note and each
hereinafter referred to as a "Guarantor," which term includes any successor or
additional Guarantor under the Indenture) have jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment of
the principal (and premium, if any) of and interest (including Additional
Amounts, if any, and Special Interest, if any) on the Notes, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest (including Additional Amounts,
if any, and Special Interest, if any) on the Notes, if any, to the extent
lawful, (c) the due and punctual performance of all other obligations of the
Company and the Guarantors to the Holders under the Indenture, the Notes, the
Collateral Documents and the Convertible Note Collateral Documents and (d) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise. Capitalized terms used herein shall
have the same meanings assigned to them in the Indenture unless otherwise
indicated.
Payment on each Note is guaranteed jointly and severally, by the
Guarantors pursuant to Article X of the Indenture and reference is made to such
Indenture for the precise terms of the Guarantees.
The obligations of each Guarantor are limited to the lesser of (a)
an amount equal to such Guarantor's Adjusted Net Assets as of the date of the
Guarantee and (b) the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
(including, if applicable, its obligations under the Convertible Notes), and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
its Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent conveyance or fraudulent transfer under
federal or state law or not otherwise being void, voidable or unenforceable
under any similar other bankruptcy, receivership, insolvency, liquidation or
other similar legislation or legal principles under applicable foreign law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in a pro rata amount based
on the Adjusted Net Assets of each Guarantor.
Certain of the Guarantors may be released from their Guarantees upon
the terms and subject to the conditions provided in the Indenture.
-18-
<PAGE> 19
The Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof and in the Indenture.
NWE CAPITAL (CYPRUS) LIMITED
By: /s/ Clayton A. Waite
_____________________________________
PLD ASSET LEASING LIMITED
By: /s/ Clayton A. Waite
_____________________________________
PLD CAPITAL LIMITED
By: /s/ Clayton A. Waite
_____________________________________
BALTIC COMMUNICATIONS LIMITED
By: /s/ Clayton A. Waite
_____________________________________
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
By: /s/ James R.S. Hatt
_____________________________________
<PAGE> 20
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at Stated Maturity of this Note shall be
$123,000,000. This Note was issued for proceeds of $87,697,300. This Note will
accrete interest (as set forth in section 2) which will be compounded
semi-annually and added to principal to an aggregate principal amount of
$123,000,000 by December 1, 1998. The following decreases/increase in the
principal amount at Stated Maturity of this Note have been made:
<TABLE>
<CAPTION>
TOTAL PRINCIPAL
AMOUNT AT NOTATION
DECREASE IN INCREASE IN MATURITY MADE BY
DATE OF PRINCIPAL PRINCIPAL FOLLOWING SUCH OR ON
DECREASE/ AMOUNT AT AMOUNT AT DECREASE/ BEHALF OF
INCREASE MATURITY MATURITY INCREASE TRUSTEE
-------- ----------- ----------- --------------- ---------
<S> <C> <C> <C> <C>
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
</TABLE>
-20-
<PAGE> 21
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
_____________________________________
(Please print name and address of transferee)
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ____________________ Attorney to transfer
this Note on the Security Register, with full power of substitution.
Dated: __________
___________________ ___________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation
in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
-21-
<PAGE> 22
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
/ / In connection with the Change of Control Offer made pursuant to Section
4.7 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $ ___________________ ($1,000 in principal amount at Stated Maturity
or an integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or ____________an amount in cash
equal to 101% of the Accreted Value for the principal amount at
Stated Maturity indicated in the preceding sentence, plus accrued
and unpaid interest thereon, if any, Additional Amounts, if any,
and Special Interest, if any, to the Change of Control Payment Date.
/ / In connection with the Asset Sale Offer made pursuant to Section 4.8 of
the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $_____________________ ($1,000 in principal amount at Stated
Maturity or an integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or ____________an amount in cash
equal to 100% of the Accreted Value for the principal amount at
Stated Maturity indicated in the preceding sentence, as the case
may be, plus accrued and unpaid interest thereon, if any,
Additional Amounts, if any, and Special Interest, if any, to the
Asset Sale Payment Date.
Dated: __________
_____________________ ________________________________________________________
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation
in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
-22-
<PAGE> 1
EXHIBIT 4.4
PETERSBURG LONG DISTANCE INC.
No. CG 1
_____ CUSIP No. 71623PAC6
9% CONVERTIBLE SUBORDINATED NOTE DUE 2006
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND THE PROVINCES OF CANADA.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION, TO PETERSBURG LONG DISTANCE INC. OR THE
REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS HAS BEEN
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS HAS BEEN
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN
PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.6 OF THE INDENTURE, DATED AS OF MAY 31, 1996, AMONG PETERSBURG LONG
DISTANCE INC., CERTAIN CORPORATIONS ACTING AS
<PAGE> 2
GUARANTORS AND NAMED THEREIN AND THE TRUSTEE NAMED THEREIN, PURSUANT TO WHICH
THIS NOTE WAS ISSUED.
FOR THE PURPOSES OF THE INTEREST ACT (CANADA) AND DISCLOSURE THEREUNDER,
WHENEVER INTEREST, ADDITIONAL AMOUNTS, SPECIAL INTEREST, OR DEFAULTED INTEREST
OR INTEREST ON DEFAULTED INTEREST RELATING TO THE NOTES, IS TO BE CALCULATED ON
THE BASIS OF A YEAR OF 360 DAYS OR ANY OTHER PERIOD OF TIME THAT IS LESS THAN A
CALENDAR YEAR, THE YEARLY RATE OF INTEREST TO WHICH THE RATE DETERMINED PURSUANT
TO SUCH CALCULATION IS EQUIVALENT IS THE RATE SO DETERMINED MULTIPLIED BY THE
ACTUAL NUMBER OF DAYS IN THE CALENDAR YEAR IN WHICH THE SAME IS TO BE
ASCERTAINED AND DIVIDED BY EITHER 360 OR SUCH OTHER PERIOD OF TIME, AS THE CASE
MAY BE. THE RATE ACCRUING ON THE NOTES FOR PAYMENT PURPOSES SHALL BE DETERMINED
AS SET FORTH ON THE REVERSE HEREOF.
Petersburg Long Distance Inc., an Ontario corporation, for
value received, hereby promises to pay to CEDE & Co., or its registered assigns,
the principal sum indicated on Schedule A hereof, on June 1, 2006.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated: June 12, 1996
_______________
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
_____________________________________
Name: James Hatt
Title: Chief Executive Officer
By: /s/ Simon Edwards
_____________________________________
Name: Simon Edwards
Title: Chief Financial Officer
-2-
<PAGE> 3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By: /s/ Steven Torgeson
__________________________________
Authorized Signatory
June 12, 1996
-3-
<PAGE> 4
PETERSBURG LONG DISTANCE INC.
9% CONVERTIBLE SUBORDINATED NOTE DUE 2006
1. Indenture.
This Note is one of a duly authorized issue of debt securities
of Petersburg Long Distance Inc., an Ontario corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), designated as its "9% Convertible Subordinated
Notes due 2006" (herein called the "Notes") limited in aggregate principal
amount at Stated Maturity to $26,500,000, issued under an indenture dated as of
May 31, 1996 (as amended or supplemented from time to time, the "Indenture")
among the Company, the corporations acting as guarantors and named therein (the
"Guarantors") and The Bank of New York, as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder of Notes and of the terms upon which the Notes are, and
are to be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. All terms used in this Note which are not defined herein shall
have the meanings assigned to them in the Indenture.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries to make Asset Sales. The Indenture
also imposes limitations on the ability of the Company to consolidate or merge
with or into any other Person or permit any other Person to merge with or into
the Company, or sell, convey, assign, transfer, lease or otherwise dispose of
all or substantially all of the Property of the Company to any other Person. The
Indenture does not contain any restrictions on the incurrence of indebtedness,
the creation of liens or the payment of dividends or the making of
distributions, investments or certain other restricted payments or any financial
covenants.
2. Principal and Interest.
The Company promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2006.
This Note will commence to accrue interest from the Issue Date
at a rate computed as if this Note had been issued bearing interest at the rate
of 9% per annum on May 31, 1996 (being the rate of 9.5858% per annum for the
period from the Issue Date through November 30, 1996), and this Note will bear
interest at the rate of 9% per annum from December 1, 1996. The Company shall
pay such interest from the Issue Date or from the most recent Interest Payment
Date thereafter to which interest has been paid or duly provided for
semi-annually on June 1 and December 1 of each year, commencing on December 1,
1996, in cash, to the Holder hereof until the principal amount hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
provided in the Indenture, be paid to the Person in whose name this Note (or the
Note in exchange or substitution for which this Note was issued) is registered
at the close of business on the Record Date for interest payable on such
Interest Date. The Record Date
-4-
<PAGE> 5
for any Interest Payment Date is the close of business on May 15 or November 15,
as the case may be, whether or not a Business Day, immediately preceding the
Interest Payment Date on which such interest is payable. Any such interest not
so punctually paid or duly provided for ("Defaulted Interest") shall forthwith
cease to be payable to the Holder on such Record Date and shall be paid as
provided in Section 2.11 of the Indenture. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
Each payment of interest in respect of an Interest Payment
Date will include interest (including Additional Amounts (as hereinafter
defined), if any, and Special Interest (as hereinafter defined), if any),
accrued through the day before such Interest Payment Date. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to
be made on such Interest Payment Date will be made on the next succeeding
Business Day with the same force and effect as if made on such Interest Payment
Date, and no additional interest will accrue as a result of such delayed
payment.
To the extent lawful, the Company shall pay interest on (i)
any overdue principal of (and premium, if any, on) this Note, at the interest
rate borne on this Note, plus 1% per annum, and (ii) Defaulted Interest (without
regard to any applicable grace period), at the same rate. The Company's
obligation pursuant to the previous sentence shall apply whether such overdue
amount is due at its Stated Maturity, as a result of the Company's obligations
pursuant to Section 3.6, Section 4.7, Section 4.8 or Section 4.14 of the
Indenture, or otherwise.
3. Additional Amounts.
Except to the extent required by law, any and all payments of,
or in respect of, this Note shall be made free and clear of and without
deduction for or on account of any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto imposed by Canada, the Russian Federation, Cyprus or any other
jurisdiction with which the Company or any Guarantor has some connection
(including any jurisdiction (other than the United States of America) from or
through which payments under the Notes are made) or any political subdivision of
or any taxing authority in any such jurisdiction ("Canadian Taxes," "Russian
Taxes," "Cypriot Taxes" or "Other Taxes," respectively). If the Company or any
Guarantor shall be required by law to withhold or deduct any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes from or in respect of any sum
payable under this Note or pursuant to a Guarantee, the sum payable by the
Company or such Guarantor, as the case may be, thereunder shall be increased by
the amount ("Additional Amounts") necessary so that after making all required
withholdings and deductions, the Holder of this Note shall receive an amount
equal to the sum that it would have received had no such withholdings and
deductions been made; provided that any such sum shall not be paid in respect of
any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes to the Holder of
this Note (an "Excluded Holder") (i) resulting from the beneficial owner of this
Note carrying on business or being deemed to carry on business in or through a
permanent establishment or fixed base in the relevant taxing jurisdiction or any
political subdivision thereof or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing authority
therein other than the mere holding or owning of this Note, being a beneficiary
of the Guarantees, the receipt of any income or payments in respect of this Note
or the Guarantees or the enforcement of this Note or the Guarantees, (ii)
resulting from the Company or any Guarantor not dealing at arm's length (within
the meaning of the Income Tax Act (Canada)), with the Holder of this Note at the
time of such payment or at the time the amount of such payment is deemed to have
been paid or credited or (iii) that would not have been imposed but for the
presentation (where presentation is required) of this Note for payment more than
180 days after the date such payment became due and payable or was duly provided
-5-
<PAGE> 6
for, whichever occurs later. The Company or the Guarantors, as applicable, will
also (i) make such withholding or deduction and (ii) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law, and, in any such case, the Company will furnish to each Holder on whose
behalf an amount was so remitted, within 30 calendar days after the date the
payment of any Canadian Taxes, Russian Taxes, Cypriot Taxes or Other Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by the Company or the Guarantors, as applicable. The Company will, upon
written request of each Holder (other than an Excluded Holder), reimburse each
such Holder for the amount of (i) any Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Notes, and (ii) any Canadian Taxes,
Russian Taxes, Cypriot Taxes or Other Taxes so levied or imposed with respect to
any reimbursement under the foregoing clause (i) so that the net amount received
by such Holder (net of payments made under or with respect to such Notes or the
Guarantees) after such reimbursement will not be less than the net amount the
Holder hereof would have received if Canadian Taxes, Russian Taxes, Cypriot
Taxes or Other Taxes on such reimbursement had not been imposed.
In addition, the Company or the Guarantors will pay any stamp,
issue, registration, documentary or other similar taxes and duties, including
interest and penalties, in respect of the creation, issue and offering of the
Notes payable in Canada, the United States, the Russian Federation or Cyprus or
any political subdivision thereof or taxing authority of or in the foregoing.
The Company and the Guarantors will also pay and indemnify the Holders from and
against all court fees and taxes or other taxes and duties, including interest
and penalties, paid by any of them in any jurisdiction in connection with any
action permitted to be taken by the Trustee or the Holders to create the Liens
on the Collateral and to enforce the obligations of the Company or the
Guarantors under the Notes, the Indenture, the Guarantees, the Collateral
Documents or the Senior Note Collateral Documents.
4. Special Interest.
Special interest means such additional interest as is set
forth in subparagraphs (a) and (b) below.
(a) The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of May 31, 1996, between the Company and
the Initial Purchasers (the "Registration Agreement"), which agreement is
attached to the Indenture as Exhibit C thereto. In the event that either (a) the
Convertible Note Shelf Registration Statement (as such term is defined in the
Registration Agreement) is not filed with the Securities and Exchange Commission
(the "Commission") on or prior to the 45th day following the Issue Date, (b) the
Shelf Registration Statement is not declared effective by the Commission on or
prior to the 120th day following the Issue Date or (c) any such Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purposes, without
being succeeded by a post-effective amendment to such Shelf Registration
Statement that cures such failure and that is itself declared effective, for a
period of more than 30 consecutive days, interest shall accrue on this Note (in
addition to any accrual of stated interest on this Note) from and including the
next day following each of (i) such 45-day period in the case of clause (a)
above, (ii) such 120-day period in the case of clause (b) above, (iii) such
30-day period in the case of clause (c) above (each such event referred to in
clauses (i) through (iii), a "Registration Default"). In each case following the
occurrence of a Registration Default, such additional interest (the "Special
Interest") will be payable to the Holder hereof during the first 90-day period
immediately following the occurrence of such Registration Default in cash
semiannually in arrears on each Interest Payment Date, at a rate equal to $0.01
per week per $1,000 principal amount of this Note. The Special Interest payable
-6-
<PAGE> 7
to the Holder of this Note shall increase by an additional $0.01 per week per
$1,000 principal amount of this Note for each 90-day period up to a maximum of
$0.50 per week per $1,000 of this Note. Upon (w) the filing of the Shelf
Registration Statement after the 45-day period described in clause (a) above,
(x) the effectiveness of a Shelf Registration Statement after the 120-day period
described in clause (b) above, or (y) the effectiveness of an applicable
Registration Statement after the 30-day period described in clause (c) above,
the Special Interest payable on this Note, with respect to such clause (a), (b)
or (c), as the case may be, from the date of such filing, effectiveness or
consummation, as the case may be, shall cease to accrue and all accrued and
unpaid Special Interest as of the occurrence of (w), (x) or (y) shall be paid to
the Holder hereof on the next Interest Payment Date with respect thereto.
Following the occurrence of (w), (x) and (y) above, the interest terms of this
Note shall revert to the original terms set forth above subject to paragraph (b)
below.
(b) In the event of the failure of the Company to procure, on
or before July 12, 1996, a recognized financial institution with capital of not
less than $10,000,000 organized under the laws of the Republic of Ireland which
the Trustee may lawfully appoint as a Qualified Foreign Collateral Agent (as
defined in Section 7.3 of the Indenture) (the "Procurement") with respect to
Technocom Preferred Stock, any payments thereon and any property substituted
therefor (the "Subject Collateral") pursuant to an agreement under which such
Qualified Foreign Collateral Agent will agree not to resign without the
contemporaneous appointment of a successor Qualified Foreign Collateral Agent
(the "Prescribed Agreement"), then, commencing on July 12, 1996, the Company
shall pay to each Holder of the Notes additional Special Interest in an amount
equal to 1% per annum on the principal amount of such Holder's Notes, accruing
for each day until the Procurement is made or Technocom or a successor is
reorganized under the laws of Cyprus and a successor Qualified Foreign
Collateral Agent has been appointed in respect of the Subject Collateral (the
"Reorganization") under a Prescribed Agreement. Such Special Interest shall be
payable in cash semi-annually in arrears at the times and in the manner provided
for in the Indenture. Such Special Interest shall cease to accrue upon the
Procurement or the Reorganization taking place and all accrued and unpaid
Special Interest shall be paid to each Holder of the Notes on the next Interest
Payment Date with respect thereto. Any Special Interest payable pursuant to this
paragraph 4(b) shall be in addition to any Special Interest that may be payable
pursuant to paragraph 4(a) above.
Except as expressly provided in this paragraph 4, Special
Interest shall be treated as interest and any date on which Special Interest is
due and payable shall be treated as Interest Payment Date, for all purposes
under this Note and the Indenture.
5. Method of Payment.
The Company, through the Paying Agent, shall pay interest on
this Note to the registered Holder of this Note, as provided above. The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States of America
that at the time of payment is legal tender for payment of all debts public and
private. Principal and interest will be payable at the office of the Paying
Agent but, at the option of the Company, interest may be paid by check mailed to
the registered Holders at their registered addresses.
-7-
<PAGE> 8
6. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar
under the Indenture. The Company may, upon written notice to the Trustee,
appoint and change any Paying Agent or Registrar. The Company or any of its
subsidiaries may act as Paying Agent or Registrar.
7. Optional Redemption.
Except as set forth in the following paragraph, the Notes may
not be redeemed prior to June 1, 2000. During the period from June 1, 2000 to
May 31, 2002, the Company may redeem all but not less than all of the Notes if
the Closing Price (as defined in the Indenture) of the Common Stock (as defined
in the Indenture) equals or exceeds 150% of the conversion price of the Notes
for a period of 30 consecutive days, at a redemption price equal to 100% of the
principal thereof, plus accrued and unpaid interest, if any, Additional Amounts,
if any, and Special Interest, if any, to the applicable Redemption Date, and any
other amount due in respect thereof (but not including any amount on any Reset
Penalty (as defined below)). Thereafter, the Notes will be subject to redemption
at the option of the Company, in whole or in part, upon not less than 30
calendar days' nor more than 60 calendar days' notice, at a redemption price
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
thereon (if any), Additional Amounts (if any) and Special Interest (if any) to
the applicable Redemption Date, and any other amounts due in respect thereof. No
amount shall be paid in respect of any Reset Penalty upon any redemption, offer
to purchase or other acquisition except in respect of a record date for the
Reset Penalty which has passed.
The Notes may be redeemed, at the option of the Company, in
whole but not in part, upon not less than 30 or more than 60 calendar days'
notice to the Holders in accordance with the terms of the Indenture, at a
redemption price equal to the principal amount thereof, plus accrued and unpaid
interest, if any (including Additional Amounts, if any, and Special Interest, if
any), to the applicable Redemption Date (subject to the right of Holders of
record on the relevant Record Date to receive interest (including Additional
Amounts, if any, and Special Interest, if any) due on the Interest Payment Date
that is on or prior to the Redemption Date) and any other amounts due if, as a
result of any change in or amendment to the laws or the regulations or rulings
promulgated thereunder of Canada, Cyprus, the Russian Federation or any other
jurisdiction with which the Company or any Guarantor has any connection (other
than a connection arising as a result of a continuance or a merger or
consolidation of the Company with or into a newly formed corporation solely for
the purpose of moving the Company's domicile out of Canada) or any political
subdivision thereof or any authority thereof or having power to tax therein, or
any change in the application or official interpretation of such laws or
regulations, or any change in administrative policy or assessing practice of the
applicable taxing authority, which change or amendment becomes effective on or
after May 24, 1996, the Company or the Guarantors (if the Guarantees are called)
are or would be required on the next succeeding Interest Payment Date to pay
Additional Amounts with respect to the Notes or the Guarantees and the payment
of such Additional Amounts cannot be avoided by the use of any reasonable
measures available to the Company or the Guarantors, as the case may be. The
Company will also pay to holders on the Redemption Date any Additional Amounts
payable in respect of the period ending on the Redemption Date. Prior to the
publication of any notice of redemption pursuant to this provision, which in no
event will be given earlier than 90 days prior to the earliest date on which the
Company or the Guarantors, as the case may be, would be required to pay such
Additional Amounts were a payment in respect of the Notes then due, the Company
shall deliver to the Trustee (i) an Officers' Certificate stating that the
obligation to pay such Additional Amounts cannot be avoided by the Company or
the Guarantors, as the case may be, taking
-8-
<PAGE> 9
reasonable measures and (ii) an Opinion of Counsel, independent of the Company
and the Guarantors and approved by the Trustee, to the effect that the Company
or the Guarantors have or will become obligated to pay such Additional Amounts
as a result of such change or amendment. Such notice, once delivered by the
Company to the Trustee, will be irrevocable. The Trustee shall accept such
Officers' Certificate and Opinion of Counsel as sufficient evidence of the
satisfaction of the condition precedent set forth in clauses (i) and (ii) above,
in which event it shall be conclusive and binding on the Holders.
8. Notice of Redemption.
At least 30 calendar days but not more than 60 calendar days
before a Redemption Date, the Company will send a notice of redemption, first
class mail, postage prepaid, to Holders of Notes to be redeemed at the addresses
of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time,
the Notes to be redeemed will be chosen by the Trustee in accordance with the
Indenture. If any Note is redeemed subsequent to a Record Date with respect to
any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest (including Additional Amounts, if any,
and Special Interest, if any) will be paid on such Interest Payment Date to the
Holder of the Note on such Record Date. If money in an amount sufficient to pay
the Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest (including
Additional Amounts, if any, and Special Interest, if any) on the Notes to be
redeemed on the applicable Redemption Date will cease to accrue.
The Notes are not subject to any sinking fund.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to purchase such Holder's
Notes, in whole or in part in a principal amount that is an integral multiple of
$1,000, pursuant to a Change of Control Offer, at a purchase price in cash equal
to 101% of the principal amount thereof on any Change of Control Payment Date,
plus accrued and unpaid interest, if any, Additional Amounts, if any, and
Special Interest, if any, thereon to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder of Notes. The holder
of this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Require Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest and Additional Amounts, if any, and Special Interest, if any,
from and after the Change of Control Payment Date.
-9-
<PAGE> 10
10. Repurchase at the Option of Holders upon Asset Sale.
Subject to the limitations set forth in the following
paragraph and the Indenture, if at any time the Company or any Restricted
Subsidiary engages in any Asset Sale, as a result of which the aggregate amount
of Excess Proceeds exceeds $5,000,000, the Company shall, within 30 calendar
days of the date the amount of Excess Proceeds exceeds $5,000,000, use the
then-existing Excess Proceeds to make an offer to purchase from all Holders, on
a pro rata basis, Notes in an aggregate principal amount equal to the maximum
principal amount that may be purchased out of the then-existing Excess Proceeds,
at a purchase price in cash equal to 100% of the principal amount thereof on any
Asset Sale Payment Date, plus accrued and unpaid interest thereon, if any, and
Additional Amounts, if any, and Special Interest, if any, to the Asset Sale
Payment Date, provided that Excess Proceeds attributable to assets not
constituting Collateral (as defined in the Indenture) must be used first to make
an Asset Sale Offer pursuant to the Senior Note Indenture (as defined in the
Indenture) unless the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged, and then to make an Asset Sale
Offer for the Notes, if there remain Excess Proceeds after the Asset Sale Offer
for the Senior Notes has been completed. Upon completion of an Asset Sale Offer
(including payment of the Offer Purchase Price for accepted Notes), any surplus
Excess Proceeds that were the subject of such offer shall cease to be Excess
Proceeds, and the Company may then use such amounts for general corporate
purposes.
Notwithstanding the paragraph above, the Company will not be
obligated to repurchase Notes in connection with an Asset Sale Offer
representing in the aggregate more than 25% of the original aggregate principal
amount of the Notes (which original aggregate principal amount shall for these
purposes be $26,500,000, without any adjustment whatsoever) prior to the date
following the Five Year Date, and the original aggregate principal amount of
Notes repurchased in connection with any Asset Sale Offer having a purchase date
prior to the date following the Five Year Date shall represent no more than 25%
of the original aggregate principal amount of the Notes less the original
aggregate principal amount of Notes purchased pursuant to Asset Sale Offers
relating to all prior Asset Sales. To the extent that the amount of Excess
Proceeds exceeds the amount of Notes purchased because of the limitation imposed
by the immediately preceding sentence (the amount of such excess being the
"Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall constitute
Excess Proceeds for purposes of the first Asset Sale Offer that is made after
the Five Year Date and, in the event the amount of the Aggregate Unused Proceeds
exceeds $5,000,000, promptly after the Five Year Date, the Company shall
commence an Asset Sale Offer on a pro rata basis for an aggregate principal
amount of Notes equal to the Aggregate Unused Proceeds (and any other Excess
Proceeds that arise between the Five Year Date and such Asset Sale Offer) at a
purchase price equal to 100% of the principal amount of the Notes, plus accrued
interest, if any, Special Interest, if any, and Additional Amounts, if any, to
the date of purchase.
Within 30 calendar days of the date the amount of Excess
Proceeds exceeds $5,000,000, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder of Notes. The Holder of this Note may elect to have this Note or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Require Purchase" appearing below and tendering
this Note pursuant to the Asset Sale Offer. Unless the Company defaults in the
payment of the Offer Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest and Additional Amounts, if any, and Special Interest, if any,
from and after the Asset Sale Payment Date.
11. Repurchase at the Option of Holders upon a Termination of
Trading.
-10-
<PAGE> 11
In the event of any Termination of Trading (as defined in the
Indenture) occurring after the Issue Date and on or prior to Maturity, each
Holder of Notes will have the right commencing on the date following the Five
Year Date, at the Holder's option, to require the Company to repurchase all or
any part of such Holder's Notes on the date (the "Repurchase Date") that is 30
days after the date the Company gives notice of the Termination of Trading at a
price (the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest, if any, Additional Amounts, if any,
and Special Interest, if any, thereon to the Repurchase Date.
On or before the 15th day after the occurrence of a
Termination of Trading (unless such Termination of Trading occurs prior to the
Five Year Date, then on the 15th day following the Five Year Date), the Company
shall mail to all Holders of Notes a notice of the occurrence of such
Termination of Trading, the Repurchase Price and the procedures which the Holder
must follow to exercise the repurchase right. To exercise such right, the Holder
of this Note must deliver, on or before the close of business on the Repurchase
Date, irrevocable written notice to the Company (or an agent designated by the
Company for such purpose) and to the Trustee of the Holder's exercise of such
right, together with the certificates evidencing the Notes with respect to which
the right is being exercised, duly endorsed for transfer and with the form
entitled "Option of Holder to Require Purchase" appearing below completed. Such
written notice is irrevocable.
12. Mandatory Redemption.
Except as set forth in Sections 9, 10 and 11, the Company is
not required to make any mandatory redemption payments or sinking fund payments
with respect to the Notes.
13. The Global Note.
So long as this Global Note is registered in the name of the
Depositary or its nominee, members of, or participants in, the Depositary
("Agent Members") shall have no rights under the Indenture with respect to this
Global Note held on their behalf by the Depositary or the Trustee as its
custodian, and the Depositary may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of this Global Note for all purposes. Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (ii) impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of
Notes.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder of Notes is entitled to take under the Indenture or the Notes.
Whenever, as a result of an optional redemption of Notes by
the Company, a Change of Control Offer, an Asset Sale Offer, an offer to
purchase upon a Termination of Trading or an exchange for Certificated Notes,
this Global Note is redeemed, repurchased or exchanged in part, this Global Note
shall be surrendered by the Holder thereof to the Trustee who shall cause an
adjustment to be made to Schedule A hereof so that the principal amount of this
Global Note will be equal to the portion not redeemed, repurchased or exchanged
and shall thereafter return this Global Note to such Holder; provided that this
Global Note shall be in a principal amount of $1,000 or an integral multiple of
$1,000.
-11-
<PAGE> 12
14. Transfer and Exchange.
By its acceptance of any Note represented by a certificate
bearing the Private Placement Legend, each Holder of, and beneficial owner of an
interest in, such Note acknowledges the restrictions on transfer of such Note
set forth on the face hereof, and agrees that it will transfer such a Note only
in accordance with the restrictions set forth on the face hereof and the
restrictions set forth under the heading "Transfer Restrictions" in the Final
Memorandum.
In connection with any transfer of a Note bearing the Private
Placement Legend, each Holder agrees to deliver to the Company such satisfactory
evidence, which may include an opinion of independent counsel licensed to
practice law in the State of New York, as reasonably may be requested by the
Company to confirm that such transfer is being made in accordance with the
limitations set forth in the Private Placement Legend. In the event the Company
determines that any such transfer is not in accordance with the Private
Placement Legend, the Company shall so inform the Registrar which shall not
register such transfer; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such evidence.
Upon the registration of transfer, exchange or replacement of
a Note not bearing the Private Placement Legend, the Trustee shall deliver a
Note that does not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of a Note bearing the Private Placement Legend, the
Trustee shall deliver a Note bearing the Private Placement Legend, unless such
legend may be removed from such Note as provided in the next sentence. The
Private Placement Legend may be removed from a Note if there is delivered to the
Company such satisfactory evidence, which may include an opinion of independent
counsel licensed to practice law in the State of New York, as reasonably may be
requested by the Company to confirm that neither such legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
of such Note will not violate the registration and prospectus delivery
requirements of the Securities Act and if the transferee is a resident of
Canada, the securities laws of the applicable province of Canada; provided that
the Trustee shall not be required to determine (but may rely on a determination
made by the Company with respect to) the sufficiency of any such evidence. Upon
provision of such evidence, the Trustee shall authenticate and deliver in
exchange for such Note, a Note or Notes (representing the same aggregate
principal amount of the Note being exchanged) without such legend. If the
Private Placement Legend has been removed from a Note, as provided above, no
other Note issued in exchange for all or any part of such Note shall bear such
legend, unless the Company has reasonable cause to believe that such other Note
represents a "restricted security" within the meaning of Rule 144 and instructs
the Trustee to cause a legend to appear thereon.
The Holder of this Global Note shall, by its acceptance of
this Global Note, agree that transfers of beneficial interests in this Global
Note may be effected only through a book entry system maintained by such Holder
(or its agent), and that ownership of a beneficial interest in the Notes
represented thereby shall be required to be reflected in book entry form.
Transfers of this Global Note shall be limited to transfers in
whole, and not in part, to the Depositary, its successors and their respective
nominees. Interests of beneficial owners in this Global Note may be transferred
in accordance with the rules and procedures of the Depositary (or its
successors).
This Global Note will be exchanged by the Company for one or
more Certificated Notes if (a) the Depositary (i) has notified the Company that
it is unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Exchange Act and (ii) a successor to the
-12-
<PAGE> 13
Depositary registered as a "Clearing Agency" under Section 17A of the Exchange
Act is not appointed by the Company within 90 calendar days or (b) the
Depositary is at any time unwilling or unable to continue as Depositary and a
successor to the Depositary is not able to be appointed by the Company within 90
calendar days. If an Event of Default occurs and is continuing, the Company
shall, at the request of the Holder hereof, exchange all or part of this Global
Note for one or more Certificated Notes; provided that the principal amount of
each of such Certificated Notes and this Global Note, after such exchange, shall
be $1,000 or an integral multiple thereof. Whenever this Global Note is
exchanged as a whole for one or more Certificated Notes, it shall be surrendered
by the Holder to the Trustee for cancellation. Whenever this Global Note is
exchanged in part for one or more Certificated Notes, it shall be surrendered by
the Holder to the Trustee and the Trustee shall make the appropriate notations
thereon pursuant to Section 2.5(c) of the Indenture. All Certificated Notes
issued in exchange for this Global Note shall include the Private Placement
Legend except as set forth in Section 2.6(a)(iii) of the Indenture. Interests in
this Global Note may not be exchanged for Certificated Notes other than as
provided in this paragraph.
Prior to the effectiveness of a Shelf Registration Statement
or following the suspension or termination thereof, the Holder of this Note (or
holders of interests therein) and prospective purchasers designated by such
Holder (or such holders of interests therein) shall have the right to obtain
from the Company upon request by such Holder (or such holders of interests) or
prospective purchasers, during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to
12g3-2(b) under the Exchange Act, the information required by paragraph
(d)(4)(i) of Rule 144 in connection with any transfer or proposed transfer of
such Note or interest.
15. Denominations.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and integral multiples thereof of principal amount.
16. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment unless such abandoned property
law designates another Person.
17. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its and the Guarantors' obligations under the Notes,
the Guarantees, the Indenture and the Collateral Documents if the Company
irrevocably deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Notes to redemption or maturity, as
the case may be.
-13-
<PAGE> 14
18. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture, the Notes, the Collateral Documents and the Senior Note
Collateral Documents may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes and (ii) any
past Default and its consequences may be waived with the written consent of the
Holders of at least a majority in principal amount of the outstanding Notes.
Without the consent of any Holder of Notes, the Company, the Guarantors and the
Trustee may amend the Indenture, the Notes, the Collateral Documents and the
Senior Note Collateral Documents (i) to evidence the succession of another
Person to the Company or the Guarantors, as applicable, and the assumption by
such successor of the covenants of the Company or the Guarantors under the
Indenture, Collateral Documents and the Senior Note Collateral Documents; (ii)
to add additional covenants or to surrender rights and powers conferred on the
Company or the Guarantors by the Indenture, the Collateral Documents and the
Senior Note Collateral Documents; (iii) to add any additional Events of Default;
(iv) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; (v) to evidence and provide for the acceptance of
appointment under the Indenture of a successor Trustee; (vi) to add additional
security for the Notes and the Guarantees; (vii) to cure any ambiguity in the
Indenture, the Collateral Documents or the Senior Note Collateral Documents, to
correct or supplement any provision in the Indenture, the Collateral Documents
or the Senior Note Collateral Documents which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, the Collateral Documents or the Senior
Note Collateral Documents, provided that such actions shall not adversely affect
the interests of the Holders in any material respect; (viii) to make provision
with respect to the conversion rights of the Holders of the Notes in the event
of a consolidation, merger or sale of assets involving the Company, as required
by the Indenture; or (ix) to comply with the requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.
19. Defaults and Remedies.
Events of Default under the Indenture include in summary form:
default in payment of interest, including Additional Amounts, if any, or Special
Interest, if any, on the Notes for 30 days; default in payment of principal on
the Notes; the occurrence and continuance of an Event of Default under the
Senior Note Indenture (as defined therein) for a period of 15 days after written
notice has been given to the Company by the Trustee or a Holder of the Notes;
failure to comply with certain of the covenants in the Indenture, including the
Change of Control covenant, the Asset Sale covenant and the Termination of
Trading covenant; failure by the Company to comply with certain of its other
agreements in the Indenture or the Notes or any Collateral Document or any
Senior Note Collateral Document or a breach of a representation or warranty in
any Collateral Document or any Senior Note Collateral Document and the
continuance of such default or breach for 45 days after notice; expropriation of
assets of the Company or any of its Restricted Subsidiaries having a book value,
less the book value of the expropriation proceeds, constituting more than 15% of
the book value, on a consolidated basis, of the Company's assets minus current
assets; defaults in the payment of certain other Indebtedness; or defaults,
other than such payment defaults, which result in the acceleration prior to
express maturity of certain other Indebtedness or which consist of the failure
to pay at maturity; certain final judgments which remain undischarged, unwaived,
if applicable, unbonded, unstayed or unsatisfied; certain events of bankruptcy
or insolvency; failure of a Guarantee, a Collateral Document or a Senior Note
Collateral Document to be in effect, the denial of obligations under a Guaranty,
a Collateral Document or a Senior Note Collateral Document or the Notes by the
Company or the Guarantors party thereto or the failure of the Notes and the
Guarantees to be secured by the theretofore perfected security interests in the
Collateral
-14-
<PAGE> 15
or the Senior Note Collateral (except as permitted by the Indenture, the
Collateral Documents or the Senior Note Collateral Documents), which in each
circumstance continues for 30 days after notice. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the Notes, subject to certain limitations, may declare all the Notes
to be immediately due and payable. Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Notes being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Notes may not enforce the Indenture, the Notes, the
Guarantees, the Collateral Documents or the Senior Note Collateral Documents
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture, the Notes, the Guarantees, the Collateral Documents or the Senior
Note Collateral Documents unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Notes may direct the Trustee in its exercise of any trust or power under the
Indenture, the Collateral Documents and the Senior Note Collateral Documents.
The Holders of a majority in principal amount of the outstanding Notes, by
written notice to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all Events of Default have been cured or waived
except nonpayment of principal and interest that has become due solely because
of the acceleration.
20. Collateral Documents.
As provided in the Indenture, the Collateral Documents and the
Senior Note Collateral Documents, and subject to certain limitations set forth
therein, the obligations of the Company and the Guarantors under the Notes, the
Indenture and the Collateral Documents are secured by the Collateral as provided
in the Collateral Documents and the Senior Note Collateral as provided in the
Senior Note Collateral Documents. Each Holder, by accepting a Note, agrees to be
bound to all the terms and provisions of the Collateral Documents and the Senior
Note Collateral Documents, as the same may be amended from time to time. The
Liens created under the Collateral Documents and the Senior Note Collateral
Documents shall be released upon the terms and subject to the conditions set
forth in the Indenture, the Collateral Documents and the Senior Note Collateral
Documents.
21. Individual Rights of Trustee.
Subject to certain limitations imposed by the Trust Indenture
Act, the Trustee or any Paying Agent or Registrar, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with the Company, the Guarantors, its Restricted Subsidiaries or its Affiliates
with the same rights it would have if it were not Trustee, Paying Agent or
Registrar, as the case may be, under the Indenture.
22. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of
the Company or the Guarantors, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Guarantees or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of his or her status as a
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor. By accepting a Note, each Holder waives
-15-
<PAGE> 16
and releases all such liability (but only such liability) as part of the
consideration for issuance of such Note to such Holder.
23. Governing Law.
THE INDENTURE, THE GUARANTEES AND THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
24. 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).
25. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and have directed the Trustee to 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 Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
26. Subordination.
The indebtedness evidenced by this Note is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
27. Conversion Rights.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Note is entitled, at his, her or its option, at
any time on or after 9:00 a.m. New York City time on July 30, 1996 and before
the close of business on the Business Day next preceding the Redemption Date, or
in case this Note or a portion hereof is called for redemption, then in respect
of this Note or such portion hereof until and including, but (unless the Company
defaults in making the payment due upon redemption) not after, the close of
business on the Business Day next preceding the Redemption Date, to convert this
Note at the principal amount hereof, or of such portion, in to fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of Common Stock of the Company at a conversion price equal to $6.90
per share of such Common Stock (or in each case at the current adjusted
conversion price if an adjustment has been made as provided in the Indenture) by
-16-
<PAGE> 17
surrender of this Note, duly endorsed or assigned to the Company or in blank, to
the Company at its office or agency maintained for that purpose pursuant to the
Indenture, accompanied by written notice to the Company in the form provided in
this Note (or such other notice as is acceptable to the Company) that the Holder
hereof elects to convert this Note and, in case such surrender shall be made
during the period from the close of business on any regular Record Date next
preceding any Interest Payment Date or the close of business on a record date
for the payment of a Reset Penalty to the close of business on such Interest
Payment Date or the Reset Penalty Payment Date, as applicable, (unless this Note
or the portion thereof being converted has been called for redemption on a
Redemption Date within such period), also accompanied by payment in New York
Clearing House funds, or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted and/or any Reset Penalty due.
Subject to the aforesaid requirement for payment and, in the case of a
conversion after the regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Note (or any Predecessor Security) of record at such regular record date to
receive an installment of interest (with certain exceptions provided in the
Indenture), no payment or adjustment is to be made upon conversion on account of
any interest accrued hereon or on account of any dividends on the Common Stock
issued upon conversion. No fractional shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional share the
Company shall pay a cash adjustment as provided in the Indenture.
On December 1, 1996 (the "Reset Date"), the conversion price will be
adjusted (the "Conversion Reset") to equal (x) the product of (i) the average of
the high and low prices on the Nasdaq National Market, or the consolidated
transaction reporting tape in the event that the Common Stock of the Company is
not then traded on the Nasdaq National Market, and (ii) the amount of Common
Stock of the Company reported as being traded on that day, for each Trading Day
of the 30 calendar days preceding the Reset Date (the "Conversion Reset
Period"), divided by the total number of shares of Common Stock of the Company
traded over the Conversion Reset Period, then multiplied by (y) 115% (the
"Conversion Reset Price"), if such Conversion Reset Price shall be lower than
the conversion price before such calculation, provided that the Conversion Reset
Price shall never be adjusted to less than $4.30 per share, but the Company will
be required to pay to holders of Notes a quarterly reset penalty ("Reset
Penalty") attributable to the Company's inability to adjust the Conversion Reset
Price below $4.30 per share. In the event that the conversion price before such
calculation shall be equal to or less than the Conversion Reset Price, then no
adjustment to the conversion price shall be made. The quarterly Reset Penalty
payable to each Holder of Notes shall be an amount equal to $2.50 per Note held
by such Holder (which for the purposes of this Paragraph 27 will be determined
to be Certificated Notes, each in the denomination of $1,000) unless, but for
the proviso in the preceding sentence, the Conversion Reset Price would have
been less than $3.80 per share, in which case such quarterly Reset Penalty shall
be an amount equal to $5.00 per Note held by such Holder. The Reset Penalty
shall be payable on each March 1, June 1, September 1 and December 1 (each such
date being referred to herein as a "Reset Penalty Payment Date"), commencing on
March 1, 1997, the first such Reset Penalty Payment Date occurring after the
Reset Date, and shall be payable to holders of record of Notes on the February
15, May 15, August 15 and November 15 immediately preceding such Reset Penalty
Payment Date and shall not accrue. The Reset Penalty will cease to be payable
upon an conversion of a Note.
-17-
<PAGE> 18
The Company will furnish to any Holder of Notes upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Note. Requests may be made to:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
-18-
<PAGE> 19
SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the
Guarantors (as defined in the Indenture referred to in this Note and each
hereinafter referred to as a "Guarantor," which term includes any successor or
additional Guarantor under the Indenture) have, jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment of
the principal (and premium, if any) of and interest (including Additional
Amounts, if any and Special Interest, if any) on the Notes, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, offer to purchase upon a Termination of Trading, purchase or
otherwise, (b) the due and punctual payment of interest on the overdue principal
of and interest (including Additional Amounts, if any, and Special Interest, if
any) on the Notes, if any, to the extent lawful, (c) the due and punctual
performance of all other obligations of the Company and the Guarantors to the
Holders under the Indenture, the Notes, the Collateral Documents and the Senior
Note Collateral Documents and (d) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration, call for redemption,
upon a Change of Control Offer, Asset Sale Offer, offer to purchase upon a
Termination of Trading, purchase or otherwise. Capitalized terms used herein
shall have the meanings assigned to them in the Indenture unless otherwise
indicated.
Payment on each Note is guaranteed, jointly and severally, by
the Guarantors pursuant to Article X of the Indenture on a senior subordinated
basis to the extent provided in the Indenture and reference is made to such
Indenture for the precise terms of the Guarantees and such subordination.
The obligations of each Guarantor are limited to the lesser of
(a) an amount equal to such Guarantor's Adjusted Net Assets as of the date of
the Guarantee and (b) the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
(including, if applicable, its obligations under the Senior Notes) and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under federal or state law or not
otherwise being void, voidable or unenforceable under any similar other
bankruptcy, receivership, insolvency, liquidation or other similar legislation
or legal principles under applicable foreign law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Guarantor.
Certain of the Guarantors may be released from their
Guarantees upon the terms and subject to the conditions provided in the
Indenture.
-19-
<PAGE> 20
The Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and in the Indenture.
NWE CAPITAL (CYPRUS) LIMITED
By: /s/ Clayton A. Waite
_____________________________________
PLD ASSET LEASING LIMITED
By: /s/ Clayton A. Waite
_____________________________________
PLD CAPITAL LIMITED
By: /s/ Clayton A. Waite
_____________________________________
BALTIC COMMUNICATIONS LIMITED
By: /s/ Clayton A. Waite
_____________________________________
WIRELESS TECHNOLOGY CORPORATIONS LIMITED
By: /s/ James R.S. Hatt
_____________________________________
<PAGE> 21
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be $26,500,000. The
following decreases/increase in the principal amount at maturity of this Note
have been made:
<TABLE>
<CAPTION>
TOTAL PRINCIPAL
AMOUNT AT NOTATION
DECREASE IN INCREASE IN MATURITY MADE BY
DATE OF PRINCIPAL PRINCIPAL FOLLOWING SUCH OR ON
DECREASE/ AMOUNT AT AMOUNT AT DECREASE/ BEHALF OF
INCREASE MATURITY MATURITY INCREASE TRUSTEE
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
- ---------------------- ------------------------ ----------------- -------------------- ------------------
</TABLE>
-21-
<PAGE> 22
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
----------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ---------------------------------
- --------------------------------- --------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint Attorney to transfer
this Note on the Security Register, with full power of substitution.
Dated:
-----------------------
- ------------------------------- --------------------------------------------
Signature of Holder Signature Guaranteed:
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
-22-
<PAGE> 23
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
/ / In connection with the Change of Control Offer made pursuant to Section
4.7 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $___________________($1,000 in principal amount or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or___________________ an
amount in cash equal to 101% of the principal amount indicated
in the preceding sentences, as the case may be, plus accrued
and unpaid interest thereon, if any, and Additional Amounts,
if any, and Special Interest, if any, to the Change of Control
Payment Date.
/ / In connection with the Asset Sale Offer made pursuant to Section 4.8
of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $___________________ ($1,000 in principal amount or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or___________________
an amount in cash equal to 100% of the principal amount
indicated in the preceding sentence, as the case may be, plus
accrued and unpaid interest thereon, if any, and Additional
Amounts, if any, and Special Interest, if any, to the Asset
Sale Payment Date.
/ / In connection with the option of the Holder to require the Company to
repurchase the Holder's Note upon a Termination of Trading pursuant to
Section 4.14 of the Indenture, the undersigned hereby elects to have
/ / the entire principal amount
/ / $___________________ ($1,000 in principal amount or an
integral multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the
Trustee or Paying Agent to pay it or___________________ an
amount in cash equal to 100% of the principal amount indicated
in the preceding sentences, as the case may be, plus accrued
and unpaid interest thereon, if any, and Additional Amounts,
if any, and Special Interest, if any, to the Repurchase Date.
Dated:
-------------
- ------------------------------- ---------------------------------------------
Signature of Holder Signature Guaranteed:
-23-
<PAGE> 24
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
FORM OF CONVERSION NOTICE
The undersigned registered owner of this Note hereby
irrevocably exercises the option to convert this Note, or the portion hereof
(which is $1,000 or a multiple thereof) designated below, into shares of Common
Stock in accordance with the terms of the Indenture referred to in this Note,
and directs that the shares issuable and deliverable upon the conversion,
together with any check in payment for a fractional share and any Note
representing any unconverted principal amount hereof, be issued and delivered to
the registered owner hereof unless a different name has been provided below. If
this Notice is being delivered on a date after the close of business on a
regular Record Date or a record date for the payment of a Reset Penalty and
prior to the close of business on the related Interest Payment Date or Reset
Penalty Payment Date, as the case may be, this Notice is accompanied by payment
in New York Clearing House funds, or other funds acceptable to the Company, of
an amount equal to the interest payable on such Interest Payment Date on the
principal of this Note to be converted and/or the Reset Penalty due on such
Note. If shares or any portion of this Note not converted are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
Dated:
-------------- --------------------------------------------
NOTICE This signature must correspond with
the name as written upon the face of the
within- mentioned instrument in every
particular, without alteration or any change
whatsoever.
-24-
<PAGE> 25
Fill in for registration of shares of Common
Stock if they are to be delivered, or
Securities if they are to be issued, other
than to and in the name of the registered
owner:
- ---------------------------------
(Name)
- ---------------------------------
(Street Address)
- ---------------------------------
(City, State and zip code)
(Please print name and address)
Register: Common Stock
-----
Securities
-----
(Check appropriate line(s)).
Principal amount to be
converted (if less than all):
$ ,000
--------------
-----------------------------
Social Security or other
Taxpayer Identification
Number of owner
-25-
<PAGE> 1
EXHIBIT 4.5
EXERCISABLE ON OR AFTER DECEMBER 10, 1996
AND ON OR BEFORE JUNE 12, 2006
No. W-1
CUSIP 71623P110
Warrant Certificate
PETERSBURG LONG DISTANCE INC.
This Warrant Certificate certifies that CEDE & CO., or
registered assigns, is the registered holder of 123,000 warrants expiring June
12, 2006 (the "Warrants") to purchase Common Shares (the "Common Shares"), of
Petersburg Long Distance Inc. ("the Company"). Each Warrant entitles the holder
upon exercise to receive from the Company, at any time on or after 9:00 a.m.,
New York, New York time on December 10, 1996 and on or prior to the close of
business on a date ten years following the issue date 34 fully paid and
nonassessable Common Shares (each a "Warrant Share") at the initial exercise
price (the "Exercise Price") of $6.60 per share payable in the form of cash or
certified check, official bank check or bank cashier's check payable to the
order of the Company, upon surrender of this Warrant Certificate and payment of
the aggregate Exercise Price at the office or agency of the Warrant Agent, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to herein. The Exercise Price and, in some cases, the number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement. All capitalized
terms not defined herein shall have the meaning assigned to such terms in the
Warrant Agreement.
No Warrant may be exercised after 5:00 pm., New York, New York
time on June 12, 2006 and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
<PAGE> 2
IN WITNESS WHEREOF, Petersburg Long Distance Inc. has caused
this Warrant Certificate to be signed by its Chief Executive Officer and by its
Secretary, each by a facsimile of his signature, and has caused a facsimile of
its corporate seal to be affixed hereunto or imprinted hereon.
Dated: June 12, 1996
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
--------------------------
James Hatt
Chief Executive Officer
By: /s/ Alan Brown
--------------------------
Alan Brown
Secretary
(seal)
Countersigned:
The Bank of New York as Warrant Agent
By: /s/ Steven Torgeson
-------------------------
Authorized Signatory
<PAGE> 3
THE WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS WARRANT
CERTIFICATE WAS ORIGINALLY ISSUED, THE COMMON SHARES PURCHASABLE UPON
THEIR EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE
144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
(B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND THE PROVINCES OF CANADA.
THE COMMON SHARES (THE "COMMON SHARES") FOR WHICH THIS WARRANT IS
EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER
SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME
UNLESS, AT THE TIME OF EXERCISE, (I) A REGISTRATION STATEMENT UNDER THE
ACT COVERING THE OFFER AND SALE OF THE COMMON SHARES ISSUABLE UPON THE
EXERCISE OF THIS WARRANT (THE "WARRANT SHARES") HAS BEEN FILED WITH,
AND DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH
REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC OR (II) THE OFFER AND
SALE OF THE WARRANT SHARES TO THE WARRANT HOLDERS ARE EXEMPT FROM
REGISTRATION UNDER THE ACT AND THE WARRANT HOLDER, IF SO REQUESTED BY
THE COMPANY, HAS DELIVERED TO THE COMPANY AN OPINION OF COUNSEL TO SUCH
EFFECT.
UNTIL THE CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) A DATE
180 DAYS AFTER THE ISSUE OF THE WARRANTS, (ii) SUCH DATE AS SMITH
BARNEY INC. MAY DETERMINE, (iii) THE COMMENCEMENT OF AN EXCHANGE OFFER
RELATING TO THE 14% SENIOR DISCOUNT NOTES DUE 2004 (THE "SENIOR NOTES")
OF PETERSBURG LONG DISTANCE INC. (THE "COMPANY"), (iv) IN THE EVENT OF
CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE RELATING TO THE SENIOR
NOTES), THE DATE THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF THE
NOTES, THE WARRANTS EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH SUCH
TRANSFER, THE HOLDER HEREOF TRANSFERS TO SUCH TRANSFEREE $1,000
PRINCIPAL AMOUNT AT MATURITY OF SENIOR NOTES AND A WARRANT TO PURCHASE
34 COMMON SHARES OF THE COMPANY (SUBJECT TO ADJUSTMENT UNDER SECTION 2A
AND SECTION 15 OF THE WARRANT AGREEMENT, DATED AS OF MAY 31, 1996,
BETWEEN THE COMPANY AND THE BANK OF NEW YORK, AS WARRANT AGENT) SO
TRANSFERRED.
UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY OR SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY
<PAGE> 4
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN THE WARRANT AGREEMENT.
By accepting a Warrant Certificate bearing the legend above,
each holder shall be bound by all of the terms and provisions of the Warrant
Agreement (a copy of which is available on request to the Company or the Warrant
Agent) as fully and effectively as if such holder had signed the same.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring June 12, 2006, entitling the holder
upon exercise to receive Common Shares of the Company (the "Common Shares"), and
are issued or to be issued pursuant to a Warrant Agreement, dated as of May 31,
1996 (the "Warrant Agreement"), duly executed and delivered by the Company to
The Bank of New York, as Warrant Agent (the "Warrant Agent"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
Warrants may be exercised at any time on or after 9:00 a.m.,
New York, New York time on December 10, 1996 and on or prior to the close of
business on June 12, 2006. The holder of Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in the form of cash or certified or
official bank check or official bank cashier's check payable to the order of the
Company, at the office of the Warrant Agent. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement generally provides that the number of Common Shares issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a Common Share will
be issued upon the exercise of any Warrant, but the Company will pay the cash
value thereof determined as provided in the Warrant Agreement.
The Holder of this Warrant is entitled to the benefits of the
Registration Rights Agreement, dated as of May 31, 1996, between the Company and
Smith Barney Inc., relating to registration of the Warrants and registration of
the Common Shares issuable upon exercise of the Warrant.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by a legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
<PAGE> 5
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
<PAGE> 6
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ Common
Shares and herewith tenders payment for such shares to the order of Petersburg
Long Distance, Inc. in the amount of $____ in accordance with the terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of _____________________, whose address is
______________________ and that such shares be delivered to ________________
whose address is ___________.
If said number of shares is less than all of the Common Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_________________, whose address is ______________, and that such Warrant
Certificate be delivered to _______________, whose address is
___________________.
Date: ____________
Your Signature:___________________
(Sign exactly as your name appears on the face of this Warrant)
Signature Guarantee:
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- -----------------------------------
- -----------------------------------
Please print or typewrite name and address including zip code of assignee the
within Warrant Certificate and all rights there under, hereby irrevocably
constituting and appointing
- ---------------------------------------
attorney to transfer the Warrants evidenced by said Warrant Certificate (the
"Warrants") on the books of the Company with full power of substitution in the
premises.
In connection with any transfer of the Warrants occurring
prior to the date which is the earlier of (i) the date of an effective
Registration or (ii) three years after the later of the original issuance of the
Warrants or the last date on which the Warrants were held by an affiliate of the
Company, the undersigned confirms, that without utilizing any general
solicitation or general advertising:
Check One
(a) the Warrants are being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
(b) the Warrants are being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Warrant Certificate and the
Warrant Agreement.
<PAGE> 7
If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Warrants in the name of any Person other than the
holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 7(c) of the Warrant Agreement shall
have been satisfied.
Date: NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of the
within-mentioned instrument
in every particular, without
alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Warrant for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
Dated:
NOTICE: To be executed by an executive officer
<PAGE> 1
EXHIBIT 4.6
EXERCISABLE AS TO 50,000 COMMON SHARES ON OR AFTER JUNE 12, 1996
AND AS TO 50,000 COMMON SHARES ON OR AFTER OCTOBER 30, 1996
AND ON OR BEFORE APRIL 30, 2001
No. SB-1 CUSIP No. 71623P128
Smith Barney Warrant Certificate
PETERSBURG LONG DISTANCE INC.
This Certificate certifies that SMITH BARNEY INC., or
registered assigns, is the registered holder of 100,000 warrants expiring April
30, 2001 (the "Smith Barney Warrants") to purchase the Common Shares (the
"Common Shares"), of Petersburg Long Distance Inc. ("the Company"). Each Smith
Barney Warrant entitles the holder upon exercise to receive from the Company, at
any time on or after 9:00 a.m., New York, New York time on the date of issuance
thereof and on or prior to the close of business on April 30, 2001 fully paid
and nonassessable Common Shares (each a "Smith Barney Warrant Share") at the
initial exercise price (the "Exercise Price") of $4.70 payable in the form of
cash or certified or official bank check payable to the order of the Company,
upon surrender of this Smith Barney Warrant Certificate and payment of the
aggregate Exercise Price at the office or agency of the Warrant Agent, but only
subject to the conditions set forth herein and in the Smith Barney Warrant
Agreement referred to herein. The Exercise Price and number of Smith Barney
Warrant Shares issuable upon exercise of the Smith Barney Warrants are subject
to adjustment upon the occurrence of certain events set forth in the Smith
Barney Warrant Agreement. All capitalized terms not defined herein shall have
the meaning assigned to such terms in the Smith Barney Warrant Agreement.
No Smith Barney Warrant may be exercised after 5:00 p.m., New
York, New York on April 30, 2001 and to the extent not exercised by such time
such Smith Barney Warrants shall become void.
Reference is hereby made to the further provisions of this
Smith Barney Warrant Certificate set forth on the reverse hereof and such
further provisions shall far all purposes have the same effect as though fully
set forth at this place.
This Smith Barney Warrant Certificate shall not be valid
unless countersigned by the Warrant Agent, as such term is used in the Smith
Barney Warrant Agreement.
This Smith Barney Warrant Certificate shall be governed and
construed in accordance with the internal laws of the State of New York.
<PAGE> 2
IN WITNESS WHEREOF, Petersburg Long Distance Inc. has caused
this Smith Barney Warrant Certificate to be signed by its Chief Executive
Officer and by its Secretary, each by a facsimile of his signature, and has
caused a facsimile of its corporate seal to be affixed here unto or imprinted
here on
Dated: June 12, 1996
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
-------------------------
Chief Executive Officer
By: /s/ Alan Brown
-------------------------
Secretary
(seal)
Countersigned:
The Bank of New York as Warrant Agent
By: /s/ Steven D. Torgeson
----------------------
Steven D. Torgeson
Assistant Treasurer
Authorized Signatory
<PAGE> 3
THE SMITH BARNEY WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS
SMITH BARNEY WARRANT CERTIFICATE WAS ORIGINALLY ISSUED, THE COMMON
SHARES PURCHASABLE UPON THEIR EXERCISE, HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND THE PROVINCES OF CANADA.
THE COMMON SHARES OF THE COMPANY (THE "COMMON SHARES") FOR WHICH THIS
SMITH BARNEY WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT, AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS OR IN CANADA EXCEPT PURSUANT TO AN APPLICABLE
EXEMPTION. ACCORDINGLY, NO SMITH BARNEY WARRANT HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S SMITH BARNEY WARRANTS AT ANY TIME
UNLESS, AT THE TIME OF EXERCISE, (I) A REGISTRATION STATEMENT UNDER THE
ACT COVERING THE OFFER AND SALE OF THE COMMON SHARES ISSUABLE UPON THE
EXERCISE OF THIS SMITH BARNEY WARRANT (THE "SMITH BARNEY WARRANT
SHARES") HAS BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC
OR (II) THE OFFER AND SALE OF THE SMITH BARNEY WARRANT SHARES TO THE
SMITH BARNEY WARRANT HOLDERS ARE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT (AND APPLICABLE CANADIAN PROVINCIAL SECURITIES
LEGISLATION) AND THE SMITH BARNEY WARRANT HOLDER, IF SO REQUESTED BY
THE COMPANY, HAS DELIVERED TO THE COMPANY AN OPINION OF COUNSEL TO SUCH
EFFECT.
By accepting a Smith Barney Warrant Certificate bearing the legend above, each
holder shall be bound by all of the terms and provisions of the Smith Barney
Warrant Agreement (a copy of which is available on request to the Company or the
Warrant Agent) as fully and effectively as if such holder had signed the same.
The Smith Barney Warrants evidenced by this Smith Barney
Warrant Certificate are part of a duly authorized issue of Smith Barney Warrants
expiring April 30, 2001, entitling the holder upon exercise to receive Common
Shares of the Company (the "Common Shares"), and are issued or to be issued
pursuant to a Smith Barney Warrant Agreement, dated as of May 31, 1996 (the
"Smith Barney Warrant Agreement"), duly executed and delivered by the Company to
the Bank of New York, as Warrant Agent (the "Warrant Agent"), which Smith Barney
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Smith Barney Warrants.
Smith Barney Warrants may be exercised at any time on or after
9:00 a.m., New York, New York time on the date of issuance thereof and on or
prior to the close of business on April 30, 2001. The holder of Smith Barney
Warrants evidenced by this Smith Barney Warrant Certificate may exercise them by
surrendering this Smith Barney Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in the form of cash or certified or official bank check or
official bank cashier's check payable to the order of the Company, at the office
of the Warrant Agent. In the event that upon any exercise of Smith Barney
Warrants evidenced hereby the number of Smith Barney Warrants exercised shall be
less than the total number of Smith Barney Warrants evidenced
<PAGE> 4
hereby, there shall be issued to the holder hereof or his assignee a new Smith
Barney Warrant Certificate evidencing the number of Smith Barney Warrants not
exercised.
The Smith Barney Warrant Agreement provides that upon the
occurrence of certain events the Exercise Price set forth on the face hereof
may, subject to certain conditions, be adjusted. If the Exercise Price is
adjusted, the Smith Barney Warrant Agreement provides that the number of Common
Shares issuable upon the exercise of each Smith Barney Warrant shall be
adjusted. No fractions of a Common Share will be issued upon the exercise of any
Smith Barney Warrant, but the Company will pay the cash value thereof determined
as provided in the Smith Barney Warrant Agreement.
Smith Barney Warrant Certificates, when surrendered at the
office of the Warrant Agent by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged,
in the manner and subject to the limitations provided in the Smith Barney
Warrant Agreement, but without payment of any service charge, for another Smith
Barney Warrant Certificate or Smith Barney Warrant Certificates of like tenor
evidencing in the aggregate a like number of Smith Barney Warrants.
Upon due presentation for registration of transfer of this
Smith Barney Warrant Certificate at the office of the Warrant Agent a new Smith
Barney Warrant Certificate or Smith Barney Warrant Certificates of like tenor
and evidencing in the aggregate a like number of Smith Barney Warrants shall be
issued to the transferee(s) in exchange for this Smith Barney Warrant
Certificate, subject to the limitations provided in the Smith Barney Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Smith Barney
Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the holder(s) hereof, and for all other purposes, and neither
the Company nor the Warrant Agent shall be affected by any notice to the
contrary. Neither the Smith Barney Warrants nor this Smith Barney Warrant
Certificate entitles any holder hereof to any rights of a stockholder of the
Company.
<PAGE> 5
Form of Election to Purchase
(To Be Executed Upon Exercise Of Smith Barney Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Smith Barney Warrant Certificate, to receive
__________ Common Shares and herewith tenders payment for such shares to the
order of Petersburg Long Distance, Inc. in the amount of $____ in accordance
with the terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of _____________________, whose address is
______________________ and that such shares be delivered to ________________
whose address is ___________.
If said number of shares is less than all of the Common Shares
purchasable hereunder, the undersigned requests that a new Smith Barney Warrant
Certificate representing the remaining balance of such shares be registered in
the name of _________________, whose address is ______________, and that such
Smith Barney Warrant Certificate be delivered to _______________, whose address
is ___________________.
Date: ____________
Your Signature:___________________
(Sign exactly as your name appears on the face of this Smith Barney Warrant)
Signature Guarantee:
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_______________________________________
_______________________________________
Please print or typewrite name and address including zip code of assignee the
within Smith Barney Warrant Certificate and all rights there under, hereby
irrevocably constituting and appointing
_______________________________________
attorney to transfer the Smith Barney Warrants evidenced by said Smith Barney
Warrant Certificate (the "Smith Barney Warrants") on the books of the Company
with full power of substitution in the premises.
In connection with any transfer of the Smith Barney Warrants
occurring prior to the date which is the earlier of (i) the date of an effective
Registration or (ii) three years after the later of the original issuance of the
Smith Barney Warrants or the last date on which the Smith Barney Warrants were
held by an affiliate of the Company, the undersigned confirms, that without
utilizing any general solicitation or general advertising:
Check One
(a) the Smith Barney Warrants are being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
(b) the Smith Barney Warrants are being transferred other than in
accordance with (a) above and documents are being furnished which
comply with the conditions of transfer set forth in this Smith Barney
Warrant Certificate and the Smith Barney Warrant Agreement.
<PAGE> 6
If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Smith Barney Warrants in the name of any Person other
than the holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 7(c) of the Smith Barney Warrant
Agreement shall have been satisfied.
Date: NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of the
within-mentioned instrument
in every particular, without
alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Smith Barney Warrant for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such account
is a "qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
Dated:
NOTICE: To be executed by an executive officer
<PAGE> 1
EXHIBIT 4.7
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of May 31, 1996
between
PETERSBURG LONG DISTANCE INC.
and
SMITH BARNEY INC.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made
and entered into as of May 31, 1996 by and between Petersburg Long Distance Inc.
(the "Company"), and Smith Barney Inc. (the "Initial Purchaser"), who has agreed
to purchase (i) 123,000 Units (the "Units") consisting of US$123 million
principal amount at maturity of the Company's 14% Senior Discount Notes due 2004
(the "Senior Notes") and Warrants (the "Warrants") to purchase 4,182,000 Common
Shares of the Company without par value (the "Warrant Shares") and (ii) US$26.5
million principal amount of the Company's 9% Convertible Subordinated Notes due
2006 (the "Convertible Notes", and together with the Senior Notes, the "Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement,
dated May 24, 1996 (the "Purchase Agreement"), by and between the Company and
the Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Units and the Convertible Notes (together, the "Securities"), the Company has
agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the obligations of
the Initial Purchaser set forth in Section 7 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day
in the City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Broker-Dealer Transfer Restricted Senior Notes: Exchange Notes
that are acquired by a Broker-Dealer in the Exchange Offer in substitution for
Senior Notes that such Broker-Dealer acquired for its own account as a result of
market making activities or other trading activities (other than Senior Notes
acquired directly from the Company or any of its affiliates).
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Exchange Notes in the same aggregate
principal amount upon maturity as the aggregate principal amount upon maturity,
if any, of Senior Notes properly tendered by Holders thereof pursuant to the
Exchange Offer.
<PAGE> 3
Convertible Note Indenture: The Indenture, dated as of the
Closing Date, between the Company and the Bank of New York, as trustee (the
"Convertible Note Trustee"), pursuant to which the Convertible Notes are to be
issued, as such Indenture is amended or supplemented from time to time in
accordance with the terms thereof.
Convertible Note Shares: The Common Shares of the Company
issuable upon the conversion of the Convertible Notes.
Convertible Note Shares Shelf Registration Statement: As
defined in Section 4(e) hereof.
Convertible Note Shelf Registration Statement: As defined in
Section 4(d) hereof.
Convertible Notes: As defined in the first paragraph of this
Agreement.
Effectiveness Target Date: As defined in Section 5 and
specified in Sections 3 and 4.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: The Company's 14% Senior Discount Notes Due
2004 to be issued pursuant to the Senior Note Indenture in the Exchange Offer.
Exchange Offer: The registration by the Company under the Act
of the Exchange Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Senior Notes the opportunity to exchange all such
outstanding Transfer Restricted Senior Notes, being the original evidence of
indebtedness, for Exchange Notes, as evidence of the same indebtedness in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Senior Notes properly tendered in such exchange offer by
such Holders.
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial
Purchaser proposes to sell the Securities to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and pursuant to an
exemption from registration under the Act provided by Rule 144 thereunder.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indentures: Together, the Senior Note Indenture and the
Convertible Note Indenture.
Interest Payment Date: As defined in the Indentures and the
Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: As defined in the first paragraph of this Agreement.
2
<PAGE> 4
Offering Memorandum: The Offering Memorandum, dated May 24,
1996, and all amendment and supplements thereto, relating to the Securities and
prepared by the Company pursuant to the Purchase Agreement.
Person: An individual, partnership, corporation, limited
liability company, trust, unincorporated organization, or a government or agency
or political subdivision thereof.
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement, term sheet, abbreviated
term sheet, supplement with pricing related information and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Record Holder: With respect to any Special Interest Payment
Date, each Person who is a Holder of Senior Notes on the record date with
respect to the Interest Payment Date on which such Special Interest Payment Date
shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the
Company relating to (a) an offering of Exchange Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities or
Smith Barney Warrants pursuant to a Shelf Registration Statement, in any case,
(i) which is filed pursuant to the provisions of this Agreement and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer that holds
Broker-Dealer Transfer Restricted Senior Notes.
Securities: As defined in the second paragraph of this
Agreement.
Senior Note Indenture: The Indenture, dated as of the Closing
Date, between the Company and the Bank of New York, as trustee (the "Senior Note
Trustee"), pursuant to which the Notes and the Exchange Notes are to be issued,
as such Indenture is amended or supplemented from time to time in accordance
with the terms thereof.
Senior Note Shelf Registration Statement: As defined in
Section 4(a) hereof.
Shelf Registration Statement: The Senior Note Shelf
Registration Statement, the Warrant Shelf Registration Statement, the Warrant
Shares Shelf Registration Statement, the Convertible Note Shelf Registration
Statement, the Convertible Note Shares Shelf Registration Statement, the Smith
Barney Warrant Shelf Registration Statement, the Smith Barney Warrant Shares
Shelf Registration Statement, as applicable.
Special Interest Payment Date: With respect to the Notes, each
Interest Payment Date.
Smith Barney Warrant Shelf Registration Statement: As defined
in Section 4(f) hereof.
Smith Barney Warrants: Warrants to purchase 100,000 common
shares of the Company issued to Smith Barney Inc. pursuant to an agreement dated
March 28, 1996 to provide certain advisory
3
<PAGE> 5
services.
Smith Barney Warrant Shares: The common shares of the Company
issuable upon the exercise of the Smith Barney Warrants.
Smith Barney Warrant Shares Shelf Registration Statement: As
defined in 4(g) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Convertible Note Share: Each Convertible
Note Share, until the earlier to occur of (a) the date on which such Convertible
Note Share has been effectively registered under the Act and disposed of in
accordance with a Convertible Note Share Shelf Registration Statement and (b)
the date on which such Convertible Note Share is distributed to the public
pursuant to Rule 144 under the Act.
Transfer Restricted Convertible Notes: Each Convertible Note,
until the earlier to occur of (a) the date on which such Convertible Note has
been effectively registered under the Act and disposed of in accordance with a
Convertible Note Shelf Registration Statement and (b) the date on which such
Convertible Note is distributed to the public pursuant to Rule 144 under the
Act.
Transfer Restricted Senior Notes: Each Senior Note, until the
earliest to occur of (a) the date on which such Senior Note is replaced in the
Exchange Offer, (b) the date on which such Note has been effectively registered
under the Act and disposed of in accordance with the Senior Note Shelf
Registration Statement and (c) the date on which such Senior Note is distributed
to the public pursuant to Rule 144 under the Act.
Transfer Restricted Securities: Together, Transfer Restricted
Senior Notes, Transfer Restricted Convertible Notes, Transfer Restricted
Convertible Note Shares, Transfer Restricted Warrants and Transfer Restricted
Warrant Shares.
Transfer Restricted Warrants: Each Warrant, until the earliest
to occur of (a) the date on which such Warrant has been effectively registered
under the Act and disposed of in accordance with a Warrant Shelf Registration
Statement and (b) the date on which such Warrant is distributed to the public
pursuant to Rule 144 under the Act.
Transfer Restricted Warrant Share: Each Warrant Share, until
the earliest to occur of (a) the date on which such Warrant Share has been
effectively registered under the Act and disposed of in accordance with a
Warrant Share Shelf Registration Statement and (b) the date on which such
Warrant Share is distributed to the public pursuant to Rule 144 under the Act.
Underwriter: Any underwriter, placement agent, selling broker,
dealer manager, qualified independent underwriter or similar securities industry
professional.
Underwritten Offering: An offering in which securities of the
Company are sold by the applicable Holders to an underwriter for reoffering to
the public.
Units: As defined in the first paragraph of this Agreement.
Warrant Shelf Registration Statement: As defined in Section
4(b) hereof.
4
<PAGE> 6
Warrants: Warrants to purchase up to an aggregate of 4,182,000
shares of common stock of the Company pursuant to the Warrant Agreement dated
May 31, 1996.
Warrant Shares: The common shares of the Company issuable upon
the exercise of the Warrants.
Warrant Shares Shelf Registration Statement: As defined in
Section 4(c) hereof.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "Holder") whenever such Person owns of record Transfer
Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section 6(a)(i) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 45 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use its best efforts to cause such Exchange Offer Registration Statement to
become effective under the Act on or prior to 120 days after the Closing Date,
(iii) in connection with the foregoing, cause all necessary filings, if any, in
connection with the registration and qualification of the Exchange Notes to be
made under the Act and the Blue Sky laws of such jurisdictions as are necessary
to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of
such Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer and cause the Exchange Offer Registration Statement to be effective
continuously, and keep the Exchange Offer open, for a period of at least 30 days
and use its best efforts to Consummate the Exchange Offer within 60 days (or
longer if required by applicable law). The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Notes to be offered in
substitution for the Senior Notes that are Transfer Restricted Senior Notes and
to permit sales of Broker-Dealer Transfer Restricted Senior Notes by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Transfer Restricted Senior Notes shall be included in the Exchange Offer
Registration Statement. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 180 days after the Closing Date.
(c) The Company shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Affiliate of the Company who holds Senior Notes or
Restricted Broker-Dealer who holds Senior Notes that are Transfer Restricted
Senior Notes and that were acquired for the account of such Broker-Dealer as a
result of market-making activities or other trading activities, and may acquire
Exchange Notes in substition for such Senior Notes (other than Transfer
Restricted Senior Notes acquired directly from the Company) pursuant to the
Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter"
within the meaning of the Act and must, therefore, deliver a prospectus meeting
the requirements of the Act in connection with its initial sale of each Exchange
Note received by such Broker-Dealer in the Exchange Offer, which prospectus
delivery requirement may be satisfied by the delivery by such Broker-
5
<PAGE> 7
Dealer of the Prospectus contained in the Exchange Offer Registration Statement.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales of Broker-Dealer Transfer Restricted Senior Notes by
Restricted Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker-Dealer or disclose the amount of Senior Notes held by any such
Broker-Dealer except to the extent required by the Commission.
Each holder of the Senior Notes (other than certain specified
holders) who wishes to acquire Exchange Notes, as substitute evidence of the
indebtedness originally evidenced by the Senior Notes, pursuant to the Exchange
Offer will be required to represent that (i) it is not an affiliate of the
Company, (ii) any Exchange Notes to be received by it were acquired in the
ordinary course of its business and (iii) at the time of commencement of the
Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Act) of the Exchange Notes.
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(b) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Senior Notes by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 60 days from the date on which the Exchange Offer is
Consummated.
The Company shall promptly provide a reasonable number of
copies of the latest version of the Prospectus included in the Exchange Offer
Registration Statement to such Restricted Broker-Dealers promptly upon request,
and in no event later than two days after such request, at any time during such
120-day period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Senior Note Shelf Registration. In the event that either
(a) any changes in law or applicable interpretation of the staff of the
Commission do not permit the Company to effect the Exchange Offer, (b) the
Exchange Offer Registration Statement is not declared effective on or prior to
the 120th day following the date of original issuance of the Senior Notes or (c)
the Exchange Offer is not consummated on or prior to the 180th day following the
date of original issuance of the indebtedness evidenced by the Senior Notes,
then the Company shall cause to be filed on or prior to 60 days thereafter, a
shelf registration statement under the Act (which may be an amendment to the
Exchange Offer Registration Statement (the "Senior Note Shelf Registration
Statement")), relating to all Transfer Restricted Senior Notes, the Holders of
which shall have provided the information required pursuant to Section 4(h)
hereof, and shall use its reasonable best efforts to cause such Senior Note
Shelf Registration Statement to become effective on or prior to 120 days
thereafter. The Company shall use its best efforts to keep the Senior Note Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted Senior
Notes by the Holders thereof entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of at least two years following the date on which such Senior
Note Shelf Registration Statement becomes effective under the Act; provided,
however, that if the Initial Purchaser informs the Company at any time after the
first anniversary of the date on which such Senior Note Shelf Registration
Statement first became effective under the Act that less than $5 million in
aggregate principal amount of Senior Notes continue
6
<PAGE> 8
to be Transfer Restricted Senior Notes, then the Company shall have no further
obligation under this Section 4(a) to maintain such Senior Note Shelf
Registration Statement effective, supplemented or amended; and provided,
further, that the Initial Purchaser shall give such notice promptly to the
Company when the conditions specified in the previous proviso have been met.
(b) Warrant Shelf Registration: The Company shall cause to be
filed on or prior to 45 days after the Closing Date a shelf registration
statement under the Act (the "Warrant Shelf Registration Statement"), relating
to all Transfer Restricted Warrants, the Holders of which shall have provided
the information required pursuant to Section 4(h) hereof, and shall use its
reasonable best efforts to cause such Warrant Shelf Registration Statement to
become effective under the Act on or prior to 120 days after the Closing Date.
The Company shall use its best efforts to keep the Warrant Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for sales of Transfer Restricted Warrants by the Holders
thereof entitled to the benefit of this Section 4(b), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time until the
earlier of (A) such time as all Warrants have been sold thereunder or exercised
and (B) ten years after its effective date.
(c) Warrant Shares Shelf Registration. The Company shall cause
to be filed on or prior to 270 days after the Closing Date a shelf registration
statement under the Act (the "Warrant Shares Shelf Registration Statement"),
relating to all Transfer Restricted Warrant Shares, the Holders of which shall
have provided the information required pursuant to Section 4(h) hereof, and
shall use its reasonable best efforts to cause such Warrant Shares Shelf
Registration Statement to become effective under the Act on or prior to 365 days
after the Closing Date. The Company shall use its best efforts to keep the
Warrant Shares Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for sales of Transfer Restricted
Warrant Shares by the Holders thereof entitled to the benefit of this Section
4(c), and to ensure that it conforms with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, until the earlier of (A) three years after all Warrants have
been exercised and (B) ten years following the date on which such Warrant Shares
Shelf Registration Statement becomes effective under the Act.
(d) Convertible Note Shelf Registration: The Company shall
cause to be filed on or prior to 45 days after the Closing Date a shelf
registration statement under the Act (the "Convertible Note Shelf Registration
Statement"), relating to all Transfer Restricted Convertible Notes, the Holders
of which shall have provided the information required pursuant to Section 4(h)
hereof, and shall use its reasonable best efforts to cause such Convertible Note
Shelf Registration Statement to become effective under the Act on or prior to
120 days after the Closing Date. The Company shall use its best efforts to keep
the Convertible Note Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Convertible Notes by the Holders thereof entitled to the
benefit of this Section 4(d), and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time until the earlier of (A) such
time as all Convertible Notes have been sold thereunder or converted and (B) ten
years after its effective date.
(e) Convertible Note Shares Shelf Registration: The Company
shall cause to be filed on or prior to 45 days after the Closing Date a shelf
registration statement under the Act (the "Convertible Note Shares Shelf
Registration Statement"), relating to all Transfer Restricted Convertible Note
Shares, the Holders of which shall have provided the information required
pursuant to Section 4(h)
7
<PAGE> 9
hereof, and shall use its reasonable best efforts to cause such Convertible Note
Shares Shelf Registration Statement to become effective under the Act on or
prior to 120 days after the Closing Date. The Company shall use its best efforts
to keep the Convertible Note Shares Shelf Registration Statement continuously
effective, supplemented and amended as required by the provisions of Sections
6(b) and (c) hereof to the extent necessary to ensure that it is available for
sales of Transfer Restricted Convertible Note Shares by the Holders thereof
entitled to the benefit of this Section 4(e), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, until the earlier
of (A) three years after all the Convertible Notes have been converted and (B)
ten years following the date on which such Convertible Note Shares Shelf
Registration becomes effective.
(f) Smith Barney Warrant Shelf Registration: The Company shall
cause to be filed on or prior to 45 days after the Closing Date a shelf
registration statement under the Act (the "Smith Barney Warrant Shelf
Registration Statement"), relating to all Smith Barney Warrants, the Holders of
which shall have provided the information required pursuant to Section 4(h)
hereof, and shall use its reasonable best efforts to cause such Smith Barney
Warrant Shelf Registration Statement to become effective on or prior to 120 days
after the Closing Date. The Company shall use its best efforts to keep the Smith
Barney Warrant Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for sales of Smith Barney
Warrants by the Holders thereof entitled to the benefit of this Section 4(f),
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of at least three years following the date on which such
Smith Barney Warrant Shelf Registration Statement becomes effective under the
Act; provided, however, that at such time that all Smith Barney Warrants
registered under such Smith Barney Warrant Shelf Registration Statement have
been sold thereunder or exercised, or, if earlier, the Company ceases to have
any further obligation to keep the Warrant Shelf Registration Statement,
effective, then the Company shall have no further obligation under this Section
4(f) to maintain such Smith Barney Warrant Shelf Registration Statement
effective, supplemented or amended.
(g) Smith Barney Warrant Shares Shelf Registration. The
Company shall cause to be filed on or prior to 270 days after the Closing Date a
shelf registration statement under the Act (the "Smith Barney Warrant Shares
Shelf Registration Statement"), relating to all Smith Barney Warrant Shares, the
Holders of which shall have provided the information required pursuant to
Section 4(h) hereof, and shall use its reasonable best efforts to cause such
Smith Barney Warrant Shares Shelf Registration Statement to become effective on
or prior to 365 days after the Closing Date. The Company shall use its best
efforts to keep the Smith Barney Warrant Shares Shelf Registration Statement
discussed in this Section 4(g) continuously effective, supplemented and amended
as required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Smith Barney Warrant
Shares by the Holders thereof entitled to the benefit of this Section 4(g), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, until the earlier of (A) three years after all Smith Barney Warrants have
been exercised and (B) ten years following the date on which such Smith Barney
Warrant Shares Shelf Registration Statement becomes effective under the Act;
provided, however, at such time all Smith Barney Warrants have been exercised,
or, if earlier the Company ceases to have any further obligation to keep the
Warrant Shelf Registration Statement, effective, then the Company shall have no
further obligation under this Section 4(g) to maintain such Smith Barney Warrant
Shares Shelf Registration Statement effective, supplemented or amended.
(h) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. A Holder of Transfer Restricted
Securities or Smith Barney Warrants may not
8
<PAGE> 10
include any of its Transfer Restricted Securities or Smith Barney Warrants in
any Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 10 Business Days after
receipt of a request therefor, such information specified in Item 507 of
Regulation S-K under the Act, and any other similar information reasonably
requested by the Company, for use in connection with any Shelf Registration
Statement, Prospectus or preliminary Prospectus included therein. 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. A Holder of Notes shall not be entitled to receive
Special Interest pursuant to Section 5 to the extent that such Holder fails to
comply with any obligation under this subsection and the failure by such Holder
to comply with any obligation under this subsection and the failure by such
Holder to comply with such obligation is the sole reason for the accrual of
Special Interest pursuant to Section 5 hereof.
SECTION 5. SPECIAL INTEREST
(a) Senior Notes:
If (i) any Exchange Offer or Senior Note Shelf Registration
Statement required to be filed pursuant to this Agreement is not filed with the
Commission on or prior to the date specified for such filing in this Agreement,
(ii) any such Exchange Offer or Senior Note Shelf Registration Statement has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "Effectiveness Target Date"), (iii)
the Exchange Offer has not been Consummated on or prior to the date specified in
this Agreement, or (iv) any Exchange Offer or Senior Note Shelf Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded immediately by a post-effective amendment to such
Exchange Offer or Senior Note Shelf Registration Statement that cures such
failure and that is itself declared effective for a period of more than 30
consecutive days (each such event referred to in clauses (i) through (iv), a
"Senior Note Registration Default"), then commencing on the day following the
date on which such Senior Note Registration Default occurs, the Company agrees
to pay to each Holder of Transfer Restricted Senior Notes, during the first
90-day period immediately following the occurrence of such Senior Note
Registration Default, additional interest ("Special Interest") in an amount
equal to $0.01 per week per $1,000 principal amount of the Transfer Restricted
Senior Notes held by such Holder for so long as the Senior Note Registration
Default continues. The amount of Special Interest payable to each Holder shall
increase by an additional $0.01 per week per $1,000 accreted value of Transfer
Restricted Senior Notes held by such Holder for each subsequent 90-day period up
to a maximum of $0.5 per week per $1,000 accreted value of Transfer Restricted
Senior Notes held by such Holder. A Senior Note Registration Default shall
cease, and Special Interest shall cease to be payable with respect to such
Senior Note Registration Default (1) upon the filing of the applicable Exchange
Offer or Senior Note Shelf Registration Statement, in the case of clause (i)
above, (2) upon the effectiveness of the Exchange Offer or Senior Note Shelf
Registration Statement, in the case of clause (ii) above, (3) upon the
Consummation of the Exchange Offer, in the case of (iii) above, and (4) when the
Exchange Offer or Senior Note Shelf Registration Statement becomes effective or
usable in the case of clause (iv) above. Notwithstanding the foregoing to the
contrary, (I) the amount of Special Interest payable shall not increase because
more than one Senior Note Registration Defaults have occurred and are pending,
(II) a Holder of Transfer Restricted Senior Notes who is not entitled to the
benefits of a Senior Note Shelf Registration (i.e., such Holder has not elected
to include Transfer Restricted Senior Notes in such Senior Notes Shelf
Registration or has failed to provide all the information required pursuant to
Section 4(h) hereof) shall not be entitled to Special Interest with respect to a
Senior Note Registration Default that pertains to a Senior Note Shelf
Registration Statement and (III) a Holder of
9
<PAGE> 11
Senior Notes constituting an unsold allotment from the original sale of the
Senior Notes shall not be entitled to Special Interest by reason of a Senior
Note Registration Default that pertains to an Exchange Offer.
All accrued Special Interest shall be paid to Record Holders
on each Special Interest Payment Date in the same manner in which payments of
interest are made pursuant to the Senior Note Indenture. All obligations of the
Company set forth in the preceding paragraph that are outstanding with respect
to any Transfer Restricted Senior Note at the time such security ceases to be a
Transfer Restricted Senior Note shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
(b) Convertible Notes:
If (i) any Convertible Note Shelf Registration Statement
required to be filed pursuant to this Agreement is not filed with the Commission
on or prior to the date specified for such filing in this Agreement, (ii) any
such Convertible Note Shelf Registration Statement has not been declared
effective by the Commission on or prior to the Effectiveness Target Date, or
(iii) any Convertible Note Shelf Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Convertible Note Shelf
Registration Statement that cures such failure and that is itself declared
effective for a period of more than 30 consecutive days (each such event
referred to in clauses (i) through (iii), a "Convertible Note Registration
Default"), then commencing on the day following the date on which such
Convertible Note Registration Default occurs, the Company agrees to pay to each
Holder of Transfer Restricted Convertible Notes, during the first 90-day period
immediately following the occurrence of such Convertible Note Registration
Default, Special Interest in an amount equal to $0.01 per week per $1,000
principal amount of the Transfer Restricted Convertible Notes held by such
Holder for so long as the Convertible Note Registration Default continues. The
amount of Special Interest payable to each Holder shall increase by an
additional $0.01 per week per $1,000 principal amount of Transfer Restricted
Convertible Notes held by such Holder for each subsequent 90-day period up to a
maximum of $0.5 per week per $1,000 principal amount of Transfer Restricted
Convertible Notes held by such Holder. A Convertible Note Registration Default
shall cease, and Special Interest shall cease to be payable with respect to such
Convertible Note Registration Default (1) upon the filing of the Convertible
Note Shelf Registration Statement, in the case of clause (i) above, (2) upon the
effectiveness of the Convertible Note Shelf Registration Statement, in the case
of clause (ii) above, and (3) when the Convertible Note Shelf Registration
Statement becomes effective or usable in the case of clause (iii) above.
Notwithstanding the foregoing to the contrary, (I) the amount of Special
Interest payable shall not increase because more than one Convertible Note
Registration Defaults have occurred and are pending and (II) a Holder of
Transfer Restricted Convertible Notes who is not entitled to the benefits of a
Convertible Note Shelf Registration (i.e., such Holder has not elected to
include Transfer Restricted Convertible Notes in such Convertible Notes Shelf
Registration or has failed to provide all the information required pursuant to
Section 4(f) hereof) shall not be entitled to Special Interest with respect to a
Convertible Note Registration Default that pertains to a Convertible Note Shelf
Registration Statement.
All accrued Special Interest shall be paid to Record Holders
on each Special Interest Payment Date in the same manner in which payments of
interest are made pursuant to the Convertible Note Indenture. All obligations of
the Company set forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Convertible Note at the time such security
ceases to be a Transfer Restricted Convertible Note shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
10
<PAGE> 12
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement.
(i) If there is a substantial question as to whether
the Exchange Offer is permitted by applicable federal law, the Company
hereby agrees to seek oral interpretive advice, a no-action letter or
other interpretive advice from the Commission staff allowing the
Company to Consummate an Exchange Offer for such Senior Notes and in
connection with the foregoing (A) to participate in telephonic
conferences with the Commission staff, (B) to deliver to the Commission
staff an analysis prepared by counsel to the Company setting forth the
legal basis, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) to pursue diligently a
resolution by the Commission staff of such submission; provided,
however that the Company may alternatively determine to file a Senior
Note Shelf Registration Statement.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each Holder of
Transfer Restricted Senior Notes shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal furnished in connection with the Exchange Offer) to the
effect that such Holder (A) is not an affiliate of the Company, (B) is
not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes to be issued in the Exchange Offer
and (C) is acquiring the Exchange Notes in its ordinary course of
business. The Initial Purchaser shall ensure that each Holder and
Broker-Dealer acknowledges and agrees that any such Broker-Dealer and
any such Holder using the Exchange Offer to participate in a
distribution of the securities to be acquired in the Exchange Offer (1)
could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Exchange Notes obtained by such Holder in
substitution for Senior Notes acquired by such Holder directly from the
Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental letter
to the Commission (A) stating that the Company is registering the
Exchange Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B)
representing that the Company has not entered into any arrangement or
understanding with any Person to distribute the Exchange Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer
is acquiring the Exchange Notes in its ordinary course of business and
has no arrangement or understanding with any Person to participate in
the distribution of the Exchange Notes received in the Exchange Offer
and (C) including any other undertaking or representation reasonably
required by the Commission as set forth in any no-action letter
obtained pursuant to clause (i)
11
<PAGE> 13
above.
(b) General Provisions. In connection with any
Registration Statement and any related Prospectus provided for by this
Agreement, the Company shall:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the periods specified in Section 3 or 4 of
this Agreement, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted
Securities, Smith Barney Warrants or Smith Barney Warrant Shares during
the period required by this Agreement, the Company shall take
appropriate action to correct any such misstatement or omission and
such Registration Statement and the related Prospectus to become usable
for their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement
as may be necessary to keep the Registration Statement effective for
the periods set forth in Section 3 or 4 hereof as applicable and
otherwise to comply with the applicable provisions of the Act and the
rules and regulations promulgated thereunder in respect of such
amendments; and comply with the provisions of the Act directly
applicable to and required to be complied with by the Company with
respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(iii) in the case of a Shelf Registration Statement,
advise the Underwriter(s) with respect to such Registration Statement
(the "Managing Underwriter(s)"), if any, and selling holders named in
any Registration Statement (the "Selling Holders") promptly and, if
requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Shelf Registration Statement or
any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to a
Shelf Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of a Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities, Smith Barney Warrants or Smith
Barney Warrant Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement in order
to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading or (E) of the Company's reasonable
determination that a post-effective amendment to the Registration
Statement would be appropriate. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities,
Smith Barney Warrants or Smith Barney Warrant Shares under state
securities or Blue Sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of
12
<PAGE> 14
such order at the earliest possible time;
(iv) to the extent reasonably practicable, furnish to
the Initial Purchaser, each Selling Holder and each of the Managing
Underwriter(s) in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus which documents will be subject to
the review and comment of such Holders and Managing Underwriter(s) in
connection with such sale, if any, for a period of three Business Days,
and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus to which the Selling Holders or the Managing
Underwriter(s), if any, shall reasonably object within three Business
Days after the receipt thereof; provided, however, that any document
incorporated by reference in any such Registration Statement or
Prospectus shall be provided to the Initial Purchaser, such Selling
Holders and such Managing Underwriter(s) at the time that such
amendment or supplement is filed with the Commission;
(v) to the extent reasonably practicable, prior to
the filing of any document that is to be incorporated by reference into
a Registration Statement or Prospectus, provide copies of such document
to the Selling Holders and to the Managing Underwriter(s) in connection
with such sale, if any, for a period of three Business Days, make the
Company's representatives available for discussion of such document and
other customary due diligence matters during such period, and include
such information in such document prior to the filing thereof as such
Selling Holders or Managing Underwriter(s), if any, reasonably may
request within three Business Days;
(vi) in the case of a Shelf Registration Statement,
make available at reasonable times for inspection by the Selling
Holders, any Managing Underwriter(s) and any attorney or accountant
retained by such Selling Holders or any of such Managing
Underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Selling Holder, underwriter, attorney or
accountant in connection with such Shelf Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness; provided, however, that such Selling
Holders, Managing Underwriter(s), attorneys or accountants agree to
keep confidential any records, information or documents that are
designated by the Company in writing as confidential and to use such
information obtained pursuant to this provision only in connection with
the transaction for which such information was obtained, and not for
any other purpose, unless (i) such records, information or documents
(x) are available to the public,(y) were already in such Selling
Holders', Managing Underwriter(s)', attorneys' or accountants'
possession prior to its receipt from the Company and they do not
otherwise have any obligation to keep such records, information or
documents confidential or (z) are obtained by such Selling Holders,
Managing Underwriters, attorneys or accountants from a third person
who, insofar as is known to such Selling Holders, Managing
Underwriters, attorneys or accountants, is not prohibited from
transmitting the information to such Selling Holders, Managing
Underwriter(s), attorneys or accountants by a contractual, legal or
fiduciary obligation to the Company or a third party, or (ii)
disclosure of such records, information or documents is required by
court or administrative order after the exhaustion of appeals
therefrom.
(vii) if requested by any Selling Holders or the
Managing Underwriter(s) in connection with such sale, if any, promptly
include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information
as such
13
<PAGE> 15
Selling Holders and Managing Underwriter(s), if any, may reasonably
request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, information with respect to the principal amount and/or number
of Transfer Restricted Securities being sold to such Managing
Underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as legally required
after the Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(viii) in the case of a Shelf Registration Statement,
furnish to each Selling Holder and each of the Managing Underwriter(s)
in connection with such sale, if any, without charge, at least one copy
of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated therein
by reference (in each case, without exhibits thereto, unless
requested);
(ix) in the case of a Shelf Registration Statement,
deliver to each Selling Holder and each of the Managing Underwriter(s),
if any, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as
such Persons reasonably may request; the Company hereby consents to the
use of the Prospectus and any amendment or supplement thereto by each
of the Selling Holders and each of the Managing Underwriter(s), if any,
in connection with the offering and the sale of the Transfer Restricted
Securities, Smith Barney Warrants or Smith Barney Warrant Shares
covered by the Prospectus or any amendment or supplement thereto;
(x) in the case of a Shelf Registration Statement,
use its best efforts to enter into such underwriting agreements and
other selling agreements as are customary in underwritten offerings and
take all such other reasonable actions in connection therewith
(including those reasonably requested by the Managing Underwriter(s) or
the Selling Holders who hold a majority of the Transfer Restricted
Securities, Smith Barney Warrants or Smith Barney Warrant Shares
included in such registration) in order to expedite or facilitate the
disposition of the Transfer Restricted Securities, Smith Barney
Warrants or Smith Barney Warrant Shares pursuant to the Registration
Statement, provided that the Company shall have no liability for any
compensation or reimbursement of expenses due to any Underwriter or
other party assisting in the disposition of such Transfer Restricted
Securities or other expenses incurred by the Holder thereof in
connection with such disposition other than agreed upon expenses, and
in such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an Underwritten Offering,
the Company shall: (i) to the extent possible, make such
representations and warranties to the Selling Holders and the Managing
Underwriter(s), if any, with respect to the business of the Company and
its subsidiaries, 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
customarily made by issuers to underwriters in underwritten offerings,
and confirm the same if and when reasonably requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriter(s), if any, and the Selling
Holders of a majority in principal amount of the Transfer Restricted
Securities, Smith Barney Warrants or Smith Barney Warrant Shares
included in such Registration Statement), addressed to each Selling
Holder and each of the Managing Underwriter(s), if any, covering the
matters customarily covered in opinions requested in underwritten
offerings; (iii) to the extent permitted by the professional standards
governing the accounting profession at the time,
14
<PAGE> 16
obtain "cold comfort" letters and updates thereof (which letters and
updates (in form, scope and substance) shall be reasonably satisfactory
to the Managing Underwriter(s), if any) 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 are, or are requested to be, included in
the Registration Statement), addressed to each of the Managing
Underwriter(s), if any, and each Selling Holder, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings; and
(iv) deliver such other documents and certificates as may be reasonably
requested by the Selling Holders of a majority in principal amount of
the Transfer Restricted Securities, Smith Barney Warrants or Smith
Barney Warrant Shares included in such Registration Statement or the
Managing Underwriter(s), if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company pursuant to
this clause (x).
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent required
thereunder, and if at any time the representations and warranties of
the Company contemplated in (A)(1) above cease to be true and correct,
the Company shall so advise the Managing Underwriter(s), if any, and
Selling Holders promptly and if requested by such Persons, shall
confirm such advice in writing;
(xi) cooperate with the Selling Holders, the Managing
Underwriter(s), if any, and their respective counsel in connection with
the registration and qualification of the Transfer Restricted
Securities, Smith Barney Warrants or Smith Barney Warrant Shares under
the Blue Sky law of such jurisdictions as the Selling Holders or
Managing Underwriter(s) may request and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Transfer Restricted Securities, Smith Barney
Warrants or Smith Barney Warrant Shares covered by the applicable
Registration Statement; provided, however, that the Company shall not
be required to 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 to taxation in any jurisdiction where it
is not now so subject;
(xii) in connection with any sale of Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares that will result in such securities no longer being Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, cooperate with the Selling Holders and the Managing
Underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities,
Smith Barney Warrants or Smith Barney Warrant Shares to be sold and not
bearing any restrictive legends; and to register such Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, in such denominations and such names as the Holders or the
Managing Underwriter(s), if any, may request at least two Business Days
prior to such sale of Transfer Restricted Securities, Smith Barney
Warrants or Smith Barney Warrant Shares;
(xiii) use its reasonable best efforts to cause the
Transfer Restricted Securities, Smith Barney Warrants or Smith Barney
Warrant Shares, covered by the Registration Statement to be registered
with or approved by such other regulatory agencies or authorities as
are necessary to enable the seller or sellers thereof or the Managing
Underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, subject to the proviso contained in clause (xi) above;
15
<PAGE> 17
(xiv) in the case of a Shelf Registration Statement,
if any fact or event contemplated by Section 6(b)(iii)(D) or (E) above
shall exist or have occurred, use its reasonable best efforts to
prepare a supplement or post-effective amendment to a Shelf
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, such Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(xv) provide CUSIP number(s) for all Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee
under the Indenture with printed certificates for the Transfer
Restricted Securities, Smith Barney Warrants or Smith Barney Warrant
Shares, which are in a form eligible for deposit with the Depository
Trust Company;
(xvi) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its best efforts to cause
such Registration Statement to become effective and approved by such
regulatory agencies or authorities as are necessary to enable the
Holders selling Transfer Restricted Securities, Smith Barney Warrants
or Smith Barney Warrant Shares to consummate the disposition of such
Transfer Restricted Securities, Smith Barney Warrants or Smith Barney
Warrant Shares;
(xvii) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Act);
(xviii) cause the Indenture to be qualified under the
TIA not later than the effective date of the first Registration
Statement required by this Agreement, and, in connection therewith,
cooperate with the Trustee and the Holders of Notes 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 reasonable best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner; and
(xix) provide promptly to each Holder upon request
each document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(c) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security, Smith Barney Warrants or Smith Barney Warrant
Shares that, upon receipt of any notice from the Company of the existence of any
fact of the kind described in Section 6(b)(iii)(C), (D) or (E) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted Securities,
Smith Barney Warrants or Smith Barney Warrant Shares pursuant to the applicable
Registration Statement until such
16
<PAGE> 18
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(b)(xiv) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus currently being used may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus. If so directed by the
Company, each Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities, Smith Barney
Warrants or Smith Barney Warrant Shares that was current at the time of receipt
of such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of such Registration Statement set forth in
Section 3 or 4 hereof, as applicable, shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 6(b)(iii)(C), (D) or (E) hereof to and including the date
when each Selling Holder covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 6(b)(xiv) hereof or (y) the Advice.
Each Holder further agrees that, upon receipt of notice from
the Company that the Company intends to make an offering to the public of its
securities, whether or not through an Underwriter, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities, Smith Barney Warrants
and Smith Barney Warrant Shares for such period (not to exceed 120 days) as is
required to complete such offering and for a further period of 120 days after
the completion of such offering.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel, as may be required by the
rules and regulations of the NASD)); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
printing expenses of printing (including printing certificates for the Exchange
Notes and printing of Prospectuses); (iv) all fees and disbursements of counsel
for the Company and, in accordance with Section 7(b) below, the Holders of
Transfer Restricted Senior Notes; and (v) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance). Notwithstanding anything in this Section 7 to the contrary, the
Company shall not be required to pay the fees and expenses of any underwriter or
of legal counsel for any underwriter, other than a "qualified independent
underwriter" (acting solely in such capacity) as provided in clause (i) of the
preceding sentence.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with the Exchange Offer, the Company will
reimburse the Holders of Transfer Restricted Senior Notes for the reasonable
fees and disbursements of not more than one counsel chosen by the Holders of a
majority of the principal amount of such Transfer Restricted Senior Notes;
provided, however, that such counsel must be reasonably satisfactory to the
Company.
17
<PAGE> 19
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each
Holder and each person, if any, who controls such Holder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act (any person referred
to above being sometimes hereinafter referred to as an "Indemnified Holder"),
against any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or in any supplement thereto or amendment thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (as amended or
supplemented, if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading; provided, however, that
the Company will not be liable in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Indemnified Holder
expressly for use therein; provided, further, however, that the indemnification
provided for in this subsection shall not inure to the benefit of any
indemnified party with respect to any sale or disposition of Transfer Restricted
Securities by such Holder in violation of the provisions of Section 6(c) hereof.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have, including, under this Agreement.
(b) Each Holder agrees to indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever (including but not limited
to attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented, if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, in each case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by such Holder (or its related Indemnified Holder)
expressly for use therein. This indemnity will be in addition to any liability
which such Holder may otherwise have, including, under this Agreement.
18
<PAGE> 20
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8, except to the extent that it
has been prejudiced in any material respect by such failure, or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded, based upon
written advice of counsel, that representation by the same counsel of both the
indemnifying party and the indemnified parties could result in a conflict of
interest (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties. The indemnifying party under subsection (a)
or (b) above shall only be liable for the legal expenses of one separate firm of
attorneys for all indemnified parties in each jurisdiction in which any claim or
action is brought; provided, however, that the indemnifying party shall be
liable for separate counsel for any indemnified party in a jurisdiction, if
counsel to the indemnified parties shall have concluded in writing that
representation by one counsel of both such indemnified party and the other
indemnified parties could result in a conflict of interest. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section 8 is for any reason held
to be unavailable from the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company and each Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from persons,
other than any Indemnified Holders, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) to which the Company and any
Holder may be subject, in such proportion as is appropriate to reflect the
relative benefits received by (i) the Company from the offering of the Notes and
(ii) any such Holder (and its related Indemnified Holder) from its sale of Notes
or, if such allocation is not permitted by applicable law or indemnification is
not available as a result of the indemnifying party not having received notice
as provided in this Section 8, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and any Holder shall be deemed to be in the same proportion as (x)
the total proceeds from the offering of Notes (net of discounts but before
deducting expenses) received by the Company and (y) the total proceeds received
by such Holder upon
19
<PAGE> 21
its sale of Notes which otherwise would give rise to the indemnification
obligation, respectively. The relative fault of the Company and of any Holder
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 or such
Holder or its related Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) no Holder or its related Indemnified Holders
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the total received by such Holder with respect to the sale of
its Notes exceeds the sum of (A) the amount paid by such Holder for such Notes
plus (B) the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission and (ii) 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. For purposes of this Section 8, each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act shall have the same rights to contribution as such Holder,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties under this Section 8, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8, except to the extent
that it has been prejudiced in any material respect by such failure, or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its written consent; provided, however, that such
written consent was not unreasonably withheld.
(e) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or 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 action, suit or proceeding.
SECTION 9. RULE 144 AND 144A
The Company covenants that it will file the reports required
to be filed by it (if so required) under the Exchange Act and the rules and
regulations thereunder in a timely manner and, if at any time the Company is not
required to file such reports, it will upon the request of any Holder of
Transfer Restricted Securities, use its best efforts to make publicly available
other information so long as necessary to permit sales pursuant to Rule 144 and
Rule 144A. The Company further covenants that it will take such further action
as any Holder of Transfer Restricted Securities may reasonably request, all to
the extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act pursuant to
the exemptions provided by Rule 144 and Rule 144A. Upon the request of any
Holder of Transfer Restricted Securities, the Company will deliver to such
Holder a written statement as to whether the Company has complied with such
information and requirements.
20
<PAGE> 22
SECTION 10. UNDERWRITTEN OFFERINGS
The Holders of Transfer Restricted Securities may elect to
sell their Transfer Restricted Securities pursuant to up to three Underwritten
Offerings; provided, however, that in no event shall any Holder commence any
such Underwritten Offering if (A) a period of less than 180 days has elapsed (i)
since the consummation of the most recent Underwritten Offering hereunder or
(ii) since the consummation of any offering of securities by the Company to the
public, whether or not through an Underwriter, or (B) the Company notifies
such Holder that it intends to make such an offering within the next 120 days.
No Holder may participate in any Underwritten Offering hereunder unless such
Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the
basis provided in customary underwriting arrangements entered into in connection
therewith and (b) completes and executes all reasonable questionnaires, powers
of attorney, lock-up letters and other documents required under the terms of
such underwriting arrangements. Nothing in this Agreement shall give any Holder
any right to join in any offering by the Company of its securities to the
public.
SECTION 11. SELECTION OF UNDERWRITERS
In any Underwritten Offering, the Underwriters for the
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering;
provided, that such investment bankers and managers must be reasonably
satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement or
granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or
after the date of this Agreement 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, provided that
nothing herein shall be deemed to prevent the Company from entering into
arrangements for the sale of its securities pursuant to normal and customary
arrangements therefor.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Senior Notes subject to such Exchange Offer.
(d) Notices. All notices and other communications provided for
or permitted
21
<PAGE> 23
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture;
(ii) if to the Company:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
Canada M5H IL3
Facsimile No.: (416) 597-1776
Attention: Vice President, Administration
Telephone No.: (416) 593-4989
With copies to: Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103
USA
Facsimile No.: (215) 963-5299
Attention: E. Clive Anderson, Esq.
Telephone No.: (215) 963-5219
(iii) if to the Initial Purchaser:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Facsimile No.: (212) 816-7092
Attention: Michael S. Klein, Managing
Director
Telephone No.: (212) 816-7092
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, Holders and subsequent Holders of Transfer Restricted Securities;
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign acquired Transfer Restricted Securities directly from such
Holder.
22
<PAGE> 24
(f) 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.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
23
<PAGE> 25
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
-------------------------------
Name: James Hatt
Title: Chairman
SMITH BARNEY INC.
By: /s/ George Alex
------------------------------------
Name:
Title:
23
<PAGE> 1
EXHIBIT 4.8
123,000 UNITS
(EACH UNIT CONSISTING OF US$1,000
AGGREGATE PRINCIPAL AMOUNT OF 14%
SENIOR NOTES DUE 2004 AND WARRANTS
TO PURCHASE COMMON SHARES OF THE
COMPANY WITHOUT PAR VALUE)
AND
US$26,500,000 PRINCIPAL AMOUNT OF 9%
CONVERTIBLE SUBORDINATED NOTES DUE 2006
PETERSBURG LONG DISTANCE INC.
PURCHASE AGREEMENT
May 24, 1996
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Petersburg Long Distance Inc., a corporation incorporated under the
laws of the Province of Ontario, Canada (the "Company"), proposes, upon the
terms and conditions set forth herein, to issue and sell to you, as the initial
purchaser (the "Initial Purchaser"), (i) US$26,500,000 principal amount of 9%
Convertible Subordinated Notes due 2006 (the "Convertible Notes") and (ii)
123,000 Units, each unit being hereinafter referred to as a Unit and consisting
of US$1,000 principal amount at maturity of its 14% Senior Notes due 2004 (the
"Senior Notes") and 4,182,000 Warrants (the "Warrants") to purchase 4,182,000
Common Shares of the Company without par value (the "Common Stock"). The
Convertible Notes and the Senior Notes are collectively referred to as the
"Notes". The Notes and the Warrants are collectively referred to as the
"Securities". The Senior Notes will be issued pursuant to the provisions of an
Indenture, to be dated as of May 31, 1996 (the "Senior Note Indenture"), between
the Company and the Bank of New York, as Trustee (the "Senior Note Trustee").
The Convertible Notes will be issued pursuant to the provisions of an Indenture,
to be dated as of May 31, 1996 (the "Convertible Note Indenture"), between the
Company and the Bank of New York, as Trustee (the "Convertible Note Trustee").
The Senior Note Indenture and the Convertible Note Indenture are collectively
referred to as the "Indentures." The Senior Note Trustee and the Convertible
Note Trustee are collectively referred to as the "Trustees". The Warrants will
be issued pursuant to the provisions of a Warrant Agreement, to be dated as of
May 31, 1996 (the "Warrant Agreement"), between the Company and the Bank of New
York, as Warrant Agent.
<PAGE> 2
The Company wishes to confirm as follows its agreement with the Initial
Purchaser in connection with the purchase and resale of the Securities.
1. Preliminary Offering Memorandum and Offering Memorandum.
The Securities will be offered and sold to the Initial Purchaser without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company has
prepared a preliminary offering memorandum, dated April 25, 1996 (the
"Preliminary Offering Memorandum"), a supplemental memorandum, dated May 23,
1996 (the "Supplement") and an offering memorandum, dated May 24, 1996 (the
"Offering Memorandum"), setting forth information regarding the Company and the
Securities. Any references herein to the Preliminary Offering Memorandum, the
Supplement and the Offering Memorandum shall be deemed to include all amendments
and supplements thereto and any documents filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (collectively, the "Exchange
Act") which are incorporated by reference therein. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the Preliminary Offering Memorandum, the Supplement, the
Offering Memorandum or any amendment or supplement thereto. The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum,
the Supplement and the Offering Memorandum in connection with the offering and
resale of the Securities by the Initial Purchaser.
The Company understands that the Initial Purchaser proposes to
make offers and sales (the "Exempt Resales") of the Securities purchased by the
Initial Purchaser hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchaser deems
advisable after this Agreement has been executed and delivered, to persons in
the United States whom the Initial Purchaser reasonably believes to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A.
It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A
PERSON WHOM
-2-
<PAGE> 3
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE LAWS OF THE STATES OF THE UNITED STATES
AND THE PROVINCES OF CANADA."
It is further understood and acknowledged that upon original
issuance thereof, and until such time as the same is no longer required under
the applicable requirements of the Act, the Warrants (and all securities issued
in exchange therefor, in substitution thereof or upon exercise thereof) shall
bear the following legend:
"THE WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE OF THIS
WARRANT CERTIFICATE WAS ORIGINALLY ISSUED, THE COMMON SHARES
PURCHASABLE UPON THEIR EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND THE PROVINCES OF CANADA."
It is further understood and acknowledged that upon original
issuance thereof, and until such time as the same is no longer required under
the applicable requirements of the Act, the Common Shares issuable upon the
exercise of the Warrants (the "Warrant Shares") and the Common Shares issuable
upon the exercise of the Convertible Notes (the "Convertible Note Shares") (and
all securities issued in exchange therefor or in substitution thereof) shall
bear the following legend:
"THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE LAWS OF THE STATES OF THE UNITED STATES
AND THE PROVINCES OF CANADA."
-3-
<PAGE> 4
It is also understood and acknowledged that holders (including
subsequent transferees) of the Notes, Warrants, Convertible Note Shares and
Warrant Shares will have the registration rights set forth in the registration
rights agreement (the "Registration Rights Agreement"), to be dated May 31, 1996
in substantially the form of Exhibit A hereto, for the respective time periods
set forth in the Registration Rights Agreement. Pursuant to the Registration
Rights Agreement, the Company will agree (i) to file with the Commission under
the circumstances set forth therein, a registration statement on the appropriate
form under the Act permitting registration of the "Exchange Notes" (as defined
in the Registration Rights Agreement) to be offered in exchange for Senior Notes
that are "Transfer Restricted Securities" (as defined in the Registration Rights
Agreement) and to permit sales of "Broker-Dealer Transfer Restricted Senior
Notes" (as defined in the Registration Rights Agreement) as contemplated in the
Registration Rights Agreement (the "Exchange Offer Registration Statement") and
(ii) to file with the Commission under the circumstances set forth therein,
registration statement(s) on the appropriate form under the Act relating to the
resale of the Notes, Warrants, Warrant Shares and Convertible Note Shares by
certain holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement and Rule 415 under the Act
(the "Shelf Registration Statements") and (iii) to use its reasonable best
efforts to cause such Exchange Offer Registration Statement and such Shelf
Registration Statements to be declared effective. This Agreement, the
Indentures, the Registration Rights Agreement and the Warrant Agreement are
hereinafter referred to collectively as the "Operative Documents".
Capitalized terms used herein without definition have the
respective meanings specified therefor in the Indentures or the Offering
Memorandum.
2. Agreements to Sell, Purchase and Resell.
a. The Company hereby agrees, subject to all the
terms and conditions set forth herein, to issue and sell to the Initial
Purchaser and, upon the basis of the representations, warranties and agreements
of the Company herein contained and subject to all the terms and conditions set
forth herein, the Initial Purchaser agrees to purchase from the Company the
Units and the Convertible Notes at the respective purchase prices of US $841.89
per Unit and US $960 per $1,000 Convertible Note.
b. The Initial Purchaser has advised the Company
that it proposes to offer the Securities for sale upon the terms and conditions
set forth in this Agreement and in the Offering Memorandum. The Initial
Purchaser hereby represents and warrants to, and agrees with, the Company that
the Initial Purchaser (i) is purchasing the Securities pursuant to a private
sale exemption from
-4-
<PAGE> 5
registration under the Act, (ii) will not solicit offers for, offer or sell, the
Securities by means of any form of general solicitation or general advertising
or in any manner involving a public offering within the meaning of Section 4(2)
of the Act, (iii) will solicit offers for the Securities only from, and will
offer, sell or deliver the Units as part of its initial offering, only to (A)
persons in the United States whom the Initial Purchaser reasonably believes to
be Accredited Investors (as defined in Rule 501 under the Act) or (B) Qualified
Institutional Buyers, or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchaser that each such
account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, in each case, in
transactions under Rule 144A, and (iv) will not solicit offers for, or offer to
sell the Securities in Canada or to Canadian residents. The Initial Purchaser
has advised the Company that it will offer the Securities to Qualified
Institutional Buyers at a price initially equal to the purchase prices set forth
on the cover page of the Offering Memorandum, plus accrued interest, if any,
from the date of issuance of the Notes. Such price may be changed by the Initial
Purchaser at any time thereafter without notice.
c. The Initial Purchaser represents and warrants that
it has offered and sold the Securities and agrees that it will offer and sell
the Securities (i) as part of its distribution at any time, and (ii) as
otherwise permitted pursuant to paragraph (b) above. Accordingly, the Initial
Purchaser represents and agrees that neither such Initial Purchaser, its
affiliates nor any persons acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities.
The Initial Purchaser understands that the Company
and, for purposes of the opinions to be delivered to the Initial Purchaser
pursuant to Sections 7(c) through 7(k) hereof, counsel to the Company and
counsel to the Initial Purchaser, will rely upon the accuracy and truth of the
foregoing representations, warranties and agreements and the Initial Purchaser
hereby consents to such reliance.
3. Delivery of the Securities and Payment Therefor. Delivery
to the Initial Purchaser of and payment for the Securities shall be made at the
office of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178
at 10:00 A.M., New York City time, on May 31, 1996 (the "Closing Date"). The
place of closing for the Securities and the Closing Date may be varied by
agreement between the Initial Purchaser and the Company.
The Securities will be delivered to the Initial Purchaser
against payment of the purchase price therefor by wire transfer of
-5-
<PAGE> 6
same day funds to the Company. The Securities will be evidenced by global
securities in definitive form and/or by additional definitive securities, and
will be registered, in the case of the Global Senior Note, the Global
Convertible Note and the Global Warrant, in the name of Cede & Co. as nominee of
The Depository Trust Company ("DTC"), and in the other cases, in such names and
in such denominations as the Initial Purchaser shall request prior to 1:00 p.m.,
New York City time, on the third business day preceding the Closing Date. The
Securities to be delivered to the Initial Purchaser shall be made available to
the Initial Purchaser in New York City for inspection and packaging not later
than 9:30 a.m., New York City time, on the business day next preceding the
Closing Date.
4. Agreements of the Company. The Company agrees with the
Initial Purchaser as follows:
a. The Company will advise the Initial Purchaser
promptly and, if requested by it, will confirm such advice in writing, within
the period of time referred to in paragraph (e) below, of any change in the
Company's condition (financial or other), business, prospects, properties, net
worth or results of operations, or of the happening of any event which makes any
statement made in the Offering Memorandum (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as then amended or supplemented) in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Offering Memorandum (as then amended or supplemented) to comply with any
law.
b. The Company will furnish to the Initial Purchaser,
without charge, as of the date of the Offering Memorandum, such number of copies
of the Offering Memorandum as may then be amended or supplemented as it may
reasonably request.
c. The Company will not make any amendment or
supplement to the Preliminary Offering Memorandum or to the Offering Memorandum
of which the Initial Purchaser shall not previously have been advised or to
which it shall reasonably object after being so advised or file any document
which upon filing becomes an Incorporated Document, without delivering a copy of
such document to the Initial Purchaser, prior to or concurrently with such
filing.
d. Prior to the execution and delivery of this
Agreement, the Company has delivered to the Initial Purchaser, without charge,
in such quantities as the Initial Purchaser shall have requested copies of the
Preliminary Offering Memorandum and the Supplement. The Company consents to the
use, in accordance with the securities or Blue Sky laws of the jurisdictions in
which
-6-
<PAGE> 7
the Securities are offered by the Initial Purchaser and by dealers, prior to the
date of the Offering Memorandum, of each Preliminary Offering Memorandum and
Supplement so furnished by the Company. The Company consents to the use of the
Offering Memorandum (and of any amendment or supplement thereto) in accordance
with the securities or Blue Sky laws of the jurisdictions in which the
Securities are offered by the Initial Purchaser and by all dealers to whom
Securities may be sold, in connection with the offering and sale of the
Securities.
e. If, at any time prior to completion of the
distribution of the Securities by the Initial Purchaser to Accredited Investors
or Qualified Institutional Buyers, any event shall occur that in the judgment of
the Company or in the opinion of counsel for the Initial Purchaser should be set
forth in the Offering Memorandum (as then amended or supplemented) in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary to supplement or amend the
Offering Memorandum, or to file under the Exchange Act any document which upon
filing becomes an Incorporated Document, to comply with any law, the Company
will forthwith prepare an appropriate supplement or amendment thereto or such
document, and will expeditiously furnish to the Initial Purchaser and dealers a
reasonable number of copies thereof. In the event that the Company and the
Initial Purchaser agree that the Offering Memorandum should be amended or
supplemented, or that a document should be filed under the Exchange Act which
upon filing becomes an Incorporated Document, the Company, if requested by the
Initial Purchaser, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement or such
document.
f. The Company will cooperate with the Initial
Purchaser and with its counsel in connection with the qualification of the
Units, the Notes, the Warrants, the Warrant Shares and the Convertible Note
Shares for offering and sale by the Initial Purchaser and by dealers under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchaser may
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such qualification; provided that
compliance with such state securities or Blue Sky law in connection with the
offering of the Securities contemplated by this Agreement shall be the
responsibility of the Initial Purchaser and provided further that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Securities, in any jurisdiction where it is not now so subject.
-7-
<PAGE> 8
g. So long as any of the Units, the Notes or the
Warrants are outstanding, the Company will furnish to the Initial Purchaser (i)
as soon as available, a copy of each report of the Company mailed to
stockholders or filed with the Commission, and (ii) from time to time such other
information concerning the Company as the Initial Purchaser may request.
h. If this Agreement shall terminate or shall be
terminated after execution and delivery pursuant to any provisions hereof
(otherwise than by notice given by the Initial Purchaser terminating this
Agreement pursuant to Section 9 or Section 10 hereof) or if this Agreement shall
be terminated by the Initial Purchaser 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 the Initial Purchaser for all
out-of-pocket expenses (including fees and expenses of its counsel) reasonably
incurred by it in connection herewith, but without any further obligation on the
part of the Company for loss of profits or otherwise and subject to the overall
limitation on the Company's responsibility to reimburse such expenses set forth
in Paragraph 4 of the Letter Agreement dated March 28, 1996 between the Company
and the Initial Purchaser (the "Engagement Letter").
i. The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder substantially in accordance
with the description set forth in the Offering Memorandum.
j. Without the prior consent of the Initial
Purchaser, prior to the expiration of 180 days after the date of the Offering
Memorandum the Company will not offer, sell, contract to sell or otherwise
dispose of any Common Shares (or any securities convertible into or exercisable
or exchangeable for Common Shares) or grant any options or warrants to purchase
Common Shares, except for (i) the sale of the Warrants and the Convertible Notes
to the Initial Purchaser pursuant to this Agreement and issuances of Common
Shares upon the conversion of the Convertible Note and exercise of the Warrants,
(ii) grants of options pursuant to the Company's Stock Option Plan, and (iii)
issuances of Common Shares upon exercise of options and warrants outstanding at
the date hereof or issued in accordance with the foregoing clause (ii). The
Company has caused or will cause each of its current directors and executive
officers to furnish a letter or letters, in form and substance satisfactory to
the Initial Purchaser, pursuant to which each such person shall agree not to
offer, sell, contract to sell or otherwise dispose of any Common Shares (or any
securities convertible into or exercisable or exchangeable for Common Shares)
for a period of 180 days after the date of the Offering Memorandum without the
prior written consent of the Initial Purchaser.
-8-
<PAGE> 9
k. Except as stated in this Agreement and in the
Preliminary Offering Memorandum, the Supplement and the Offering Memorandum, the
Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Units to facilitate the sale
or resale of the Securities. Except as permitted by the Act, the Company will
not distribute any offering material in connection with the Exempt Resales.
l. The Company will use its best efforts to cause the
Units, Notes and Warrants to be eligible for trading on The PORTAL Market.
m. From and after the Closing Date, so long as any of
the Units, Notes, Warrants, Warrant Shares and Convertible Note Shares are
outstanding and are "Restricted Securities" within the meaning of the Rule
144(a)(3) under the Act or, if earlier, until three years after the Closing
Date, and during any period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company will furnish to holders of the Units,
Notes and Warrants and prospective purchasers of Units, Notes and Warrants
designated by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act to permit compliance with Rule 144A in connection with resale of
the Units, Notes and Warrants.
n. The Company has complied and will comply with all
provisions of Florida Statutes Section 517.075 relating to issuers doing
business with Cuba.
o. The Company agrees not to sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) that would be integrated with the sale of the Securities in
a manner that would require the registration under the Act of the sale to the
Initial Purchaser or the Qualified Institutional Buyers of the Securities.
p. The Company agrees to comply with all of the terms
and conditions of the Registration Rights Agreement, the Warrant Agreement and
all agreements set forth in the representation letters of the Company to DTC
relating to the approval of the Units, Notes and Warrants by DTC for "book
entry" transfer.
q. The Company agrees that prior to any registration
of the Notes pursuant to the Registration Rights Agreement, or at such earlier
time as may be so required, the Indenture shall be qualified under the Trust
Indenture Act of 1939
-9-
<PAGE> 10
(the "1939 Act") and will cause to be entered into any necessary supplemental
indentures in connection therewith.
r. The Company agrees that prior to the Closing it
will cause PMT to transfer all of PMT's interest in PeterStar to NWE Cyprus.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchaser that:
a. The Preliminary Offering Memorandum, the
Supplement and the Offering Memorandum with respect to the Securities have been
prepared by the Company for use by the Initial Purchaser in connection with the
Exempt Resales. No order or decree preventing the use of the Preliminary
Offering Memorandum, the Supplement or the Offering Memorandum or any amendment
or supplement thereto, or any order asserting that the transactions contemplated
by this Agreement are subject to the registration requirements of the Act has
been issued and no proceeding for that purpose has commenced or is pending or,
to the knowledge of the Company, is contemplated.
b. The Preliminary Offering Memorandum, the
Supplement and the Offering Memorandum as of their respective dates and the
Offering Memorandum as of the Closing Date, did not or will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except that this representation and warranty does not apply to statements in or
omissions from the Preliminary Offering Memorandum, the Supplement and the
Offering Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in writing by or on
behalf of the Initial Purchaser expressly for use therein.
c. The Incorporated Documents heretofore filed were
filed in a timely manner and, when they were filed (or, if any amendment with
respect to any such document was filed, when such document was filed), conformed
in all material respects to the requirements of the Exchange Act and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and any further Incorporated Documents will, when so filed, be filed
in a timely manner and conform in all material respects to the requirements of
the Exchange Act and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
d. Each Indenture has been duly and validly
authorized by the Company and, upon its execution, delivery and
-10-
<PAGE> 11
performance by the Company and assuming due authorization, execution, delivery
and performance by the Trustee thereof, will be a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and conforms in all material respects to the
description thereof in the Offering Memorandum; no qualification of the
Indenture under the 1939 Act is required in connection with the offer and sale
of the Securities contemplated hereby or in connection with the Exempt Resales.
e. The Senior Notes and the Convertible Notes have
been duly authorized by the Company and, when executed by the Company and
authenticated by the respective Trustee in accordance with the respective
Indenture and delivered to the Initial Purchaser against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the respective Indenture and enforceable in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally, and
the Notes will conform in all material respects to the description thereof in
the Offering Memorandum.
f. The Securities have been duly authorized by the
Company and, when executed by the Company and delivered to the Initial Purchaser
against payment therefor in accordance with the terms hereof, will have been
validly issued and delivered, and will constitute valid and binding obligations
of the Company enforceable in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally, and the Securities will conform
in all material respects to the description thereof in the Offering Memorandum.
g. 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, except as set forth in the
Offering Memorandum, similar rights and were issued and sold in compliance with
all applicable Federal and state securities laws; the Common Shares to be issued
upon exercise of the Warrants and conversion of the Convertible Notes will be,
prior to their issuance, duly authorized and reserved for issuance and, when
delivered upon exercise of the Warrants or the conversion of the Convertible
Notes, will be validly issued, fully paid and nonassessable and free of any
preemptive or similar rights; and the authorized capital stock of the Company
conforms to the description thereof in the Offering Memorandum.
-11-
<PAGE> 12
h. The Company is a corporation incorporated and
existing under the laws of the Province of Ontario. NWE Capital (Cyprus) Ltd.
("NWE Capital") is a corporation duly organized, validly existing and in good
standing under the laws of the Republic of Cyprus. PeterStar Company Limited
("PeterStar") is a corporation duly organized, validly existing and in good
standing under the laws of the Russian Federation. Wireless Technology
Corporations Limited ("WTC") is a corporation duly organized, validly existing
and in good standing under the laws of the British Virgin Islands. BECET
International ("BECET") is a corporation duly organized, validly existing and in
good standing under the laws of the Republic of Kazakstan. Technocom is a
corporation duly organized, validly existing and in good standing under the laws
of the Republic of Ireland. Teleport-TP is a corporation duly organized, validly
existing and in good standing under the laws of the Russian Federation. PLD
Capital Ltd. ("PLD Capital") is a corporation duly organized, validly existing
and in good standing under the laws of Cyprus. PLD Asset Leasing Ltd. ("PLD
Asset Leasing") is a corporation duly organized, validly existing and in good
standing under the laws of Cyprus. PMT is a corporation duly organized, validly
existing and in good standing under the laws of the Russian Federation. PMT's
only asset is its 10% equity interest in PeterStar. Collectively, NWE Capital,
PeterStar, WTC, BECET, PLD Capital, and PLD Asset Leasing, are hereafter
referred to as the "Subsidiaries" and each as a "Subsidiary". Each of the
Company, its Subsidiaries, Technocom and Teleport-TP has full corporate power
and authority to own its properties and conduct its business as described in the
Offering Memorandum, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction which
requires such qualification wherein it owns or leases material properties or
conducts material business.
i. All the outstanding share capital of each
Subsidiary, Technocom and Teleport-TP has been duly and validly authorized and
issued and is fully paid and nonassessable, and, except as otherwise set forth
in the Offering Memorandum, all (or, in the case of PeterStar 60%) of the
outstanding shares of capital stock of the Subsidiaries are, and will be on the
Closing Date (as defined in Section 3 hereof), owned by the Company either
directly or through wholly owned subsidiaries free and clear of any perfected
security interests and any other security interests, claims, liens or
encumbrances. Except as otherwise set forth in the Offering Memorandum,
Technocom owns 50.75% of outstanding shares of capital stock of Teleport-TP
either directly or through subsidiaries free and clear of any perfected security
interests and any other security interests, claims, liens or encumbrances. The
Company beneficially owns 10.4% of the shares of (representing 13.8% of the
voting rights) of St. Petersburg Intercity and International Telephone either
directly or through wholly-owned
-12-
<PAGE> 13
subsidiaries free and clear of any perfected security interests and any other
security interests, claims, liens and encumbrances.
j. There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries or Technocom or Teleport-TP, or to which the Company or
any of the Subsidiaries or Technocom or Teleport-TP, or to which any of their
respective properties, is subject, that are not disclosed in the Offering
Memorandum and which, if adversely decided, are reasonably likely to cause a
material adverse effect or materially affect the issuance of the Securities or
the consummation of the transactions contemplated by the Operative Documents.
There are no material agreements, contracts, indentures, leases or other
instruments that are not described in the Offering Memorandum or that are
required to be filed as an exhibit to any Incorporated Document that are not so
filed. The description of each such agreement, contract, indenture, lease or
other instrument in the Offering Memorandum is a fair and accurate description
in all material respects.
k. Neither the Company nor any of its Subsidiaries
nor Technocom nor Teleport-TP is in violation of its charter, by-laws or other
constitutive documents, and neither the Company nor any of its Subsidiaries nor
Technocom nor Teleport-TP is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease, permit, license, franchise or
other agreement or instrument to which the Company or any of its Subsidiaries or
Technocom or Teleport-TP is a party or by which it may be bound or to which any
of its properties may be subject, or any judgment, order or decree applicable to
the Company or any of its Subsidiaries or Technocom or Teleport-TP of any court,
regulatory body (including any self-regulatory body), administrative agency,
governmental body or arbitrator having jurisdiction over the Company or any of
its Subsidiaries or Technocom or Teleport-TP, and no event has occurred which,
with notice or lapse of time or both, would constitute such a violation or
default. Each of the Company and its Subsidiaries and Technocom and Teleport-TP
is in compliance with all applicable laws, rules and regulations (including the
applicable rules and regulations of self-regulatory bodies), except where the
failure to so be in compliance could not have a material adverse effect on the
condition (financial or other), earnings, business or properties of the Company,
its Subsidiaries, Technocom and Teleport-TP, taken as a whole.
l. Neither the issuance, offer, sale or delivery of
the Units, Notes, Warrants, Warrant Shares and Convertible Note Shares, the
execution, delivery or performance of this Agreement, the Indentures, the
Warrant Agreement or the Registration Rights Agreement by the Company nor the
consummation by the Company of the
-13-
<PAGE> 14
transactions contemplated hereby or 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 may be required in connection with the registration
under the Act of the Units, Notes, Warrants, Warrant Shares and Convertible Note
Shares in accordance with the Registration Rights Agreement and the Warrant
Agreement, the qualification of the Indentures under the 1939 Act and except for
compliance with the securities or Blue Sky laws of various jurisdictions) or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the charter, bylaws, or other constitutive documents, of the
Company or any of the Subsidiaries or Technocom or Teleport-TP or (ii) conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under, in any material respect, any material agreement, indenture, lease
or other instrument to which the Company or any of the Subsidiaries or Technocom
or Teleport-TP is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate in any material respect any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or Technocom or Teleport-TP
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 or any of the Subsidiaries or Technocom or Teleport-TP 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.
m. The accountants, KPMG Peat Marwick Thorne ("KPMG")
who have certified or shall certify the financial statements included as part of
the Offering Memorandum (or any amendment or supplement thereto), are
independent public accountants under Rule 101 of the AICPA's Code of
Professional Conduct, and its interpretation and rulings and within the meaning
of the Act and the Rules and Regulations promulgated thereunder.
n. The financial statements, together with related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement thereto), present fairly in all material respects the consolidated
financial position, results of operations and changes in stockholders' equity
and cash flows of the Company and the Subsidiaries and Technocom and Teleport-TP
on the basis stated in the Offering Memorandum at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles in Canada consistently applied throughout the periods
involved; the assumptions used in preparing the pro forma financial information
and related notes and schedules included in the Offering Memorandum
-14-
<PAGE> 15
are reasonable; and the other financial and statistical information and data set
forth in the Offering Memorandum (and any amendment or supplement thereto) is
accurately presented and, to the extent such information and data is derived
from the financial books and records of the Company, is prepared on a basis
consistent with such financial statements and the books and records of the
Company.
o. The Company has all requisite power and authority
to execute, deliver and perform its obligations under this Agreement, the
Warrant Agreement and the Registration Rights Agreement; the execution and
delivery of, and the performance by the Company of its obligations under, this
Agreement, the Warrant Agreement and the Registration Rights Agreement have been
duly and validly authorized by the Company, and this Agreement, the Indentures,
Company Senior Note Escrow Account Agreement, Company Convertible Note Escrow
Account Agreement, Company Security and Pledge Agreement, Leasing Company Escrow
Account Agreements, Warrant Agreement and the Registration Rights Agreement have
been duly executed and delivered by the Company and constitute the valid and
legally binding agreements of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement hereof and thereof may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and subject to the applicability of
general principles of equity, and except as rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities laws or
principles of public policy.
p. Except as disclosed in the Offering Memorandum (or
any amendment or supplement thereto), subsequent to the date as of which such
information is given in the Offering Memorandum (or any amendment or supplement
thereto), neither the Company nor any of the Subsidiaries nor Technocom nor
Teleport-TP 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, the Subsidiaries and Technocom and Teleport-TP taken as
a whole, and there has not been any material change in the capital stock, or
material increase in the short-term or long-term debt, of the Company or any of
the Subsidiaries or Technocom or Teleport-TP, or any material adverse change, or
any development involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company, the
Subsidiaries and Technocom and Teleport-TP taken as a whole.
q. Each of the Company, the Subsidiaries and
Technocom and Teleport-TP has good and marketable title to all property (real
and personal) described in the Offering Memorandum as being owned by it, free
and clear of all liens, claims, security interests or other encumbrances except
such as are described in the
-15-
<PAGE> 16
Offering Memorandum or in an Incorporated Document or exhibit thereto, and all
the property described in the Offering Memorandum as being held under lease by
each of the Company, the Subsidiaries and Technocom and Teleport-TP is held by
it under valid, subsisting and enforceable leases, with only such exceptions as
in the aggregate are not materially burdensome and do not interfere in any
material respect with the conduct of the business of the Company, the
Subsidiaries and Technocom and Teleport-TP taken as a whole.
r. Except as permitted by the Act, the Company has
not distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Securities, will not distribute any
offering material in connection with the offering and sale of the Securities
other than the Preliminary Offering Memorandum, the Supplement and Offering
Memorandum.
s. Each of the Company, its Subsidiaries, Technocom
and Teleport-TP owns, holds, possesses or has obtained all such governmental
agreements, licenses, permits, certificates, consents, orders, approvals,
waivers, and other authorizations, necessary to own, hold or lease its
properties and to conduct its business as currently conducted, including all
federal or local licenses needed to operate the telecommunications networks and
systems in the Russian Federation or the Republic of Kazakstan, as the case may
be, as described in the Offering Memorandum; each of such agreements, licenses,
permits, certificates, consents, orders, approvals, waivers and other
authorizations is in full force and effect and is fairly described in the
Offering Memorandum in all material respects; no such agreement, license,
permit, certificate, consent, order, approval, waiver or other authorization
contains a material restriction not fairly and accurately described in the
Offering Memorandum in all material respects; and neither the Company nor any of
its Subsidiaries nor Technocom nor Teleport-TP has received any notice of
proceedings relating to the revocation or modification of any such agreement,
license, permit, certificate, consent, order, approval, waiver or other
authorization other than as described in the Offering Memorandum, and the
Company has no reason to believe that the relevant authorities are considering
any such proceeding.
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 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.
-16-
<PAGE> 17
u. No payments or inducements were made or given,
directly or indirectly, to any federal or local officials in the Russian
Federation or the Republic of Kazakstan by the Company, by any of its
Subsidiaries, by Technocom or by Teleport-TP, by any of their officers,
directors, employees or agents or, to the best knowledge of the Company, by any
other person in connection with any opportunity, agreement, license, permit,
certificate, consent, order, approval, waiver or other authorization relating to
the business of the Company or any of its Subsidiaries or Technocom or
Teleport-TP, including without limitation any Telecommunications License, except
for such payments or inducements as were lawful under the written laws, rules
and regulations of the Russian Federation and the Republic of Kazakstan.
v. Except as described in the Offering Memorandum,
each of the Company, its Subsidiaries, Technocom and Teleport-TP has duly filed
with the appropriate taxing authorities (or has received an extension for filing
with respect to) all tax returns, reports and other information required to be
filed by it, and each such tax return, report or other information was, when
filed, accurate and complete; and, except as described in the Offering
Memorandum, each of the Company, its Subsidiaries, Technocom and Teleport-TP has
duly paid, or has made adequate reserves for, all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, and no tax
deficiency has been asserted against the Company or any of its Subsidiaries or
Technocom or Teleport-TP.
w. No holder of any security of the Company (other
than holders of the Warrants, holders of Warrant Shares, holders of the
Convertible Notes and holders of the Convertible Note Shares) has any right to
request or demand registration of Common Shares or any other security of the
Company because of the consummation of the transactions contemplated by this
Agreement or the Registration Rights Agreement, except as described in the
Offering Memorandum under the caption "Description of Capital Stock --
Registration Rights". Except as described in or contemplated by the Operative
Documents or the Offering Memorandum, there are no outstanding options, warrants
or other rights calling for the issuance of, and there are no commitments, plans
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.
x. The Company, the Subsidiaries and Technocom and
Teleport-TP own or possess all patents, trademarks, trademark registration,
service marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Offering Memorandum as
being owned by 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
-17-
<PAGE> 18
challenge by any other person to the rights of the Company, the Subsidiaries and
Technocom and Teleport-TP with respect to the foregoing.
y. The Company, upon sale of the Securities to be
issued and sold in accordance herewith, will make use of the net proceeds as
described in the Offering Memorandum under the caption "Use of Proceeds."
z. When the Units, Notes and Warrants are issued and
delivered pursuant to this Agreement, such Units, Notes and Warrants will not be
of the same class (within the meaning of Rule 144A(d)(3) under the Act) as any
security of the Company that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is quoted in a United
States automated interdealer quotation system.
aa. Neither the Company nor any affiliate (as defined
in Rule 501(b) of Regulation D ("Regulation D") under the Act) of the Company
has directly, or through any agent (provided that no representation is made as
to the Initial Purchaser or any person acting on its behalf), (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Act) which is or will be integrated with the
offering and sale of the Securities in a manner that would require the
registration of the Securities under the Act or (ii) engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D)
in connection with the offering of the Securities.
ab. The Company is not required to deliver the
information specified in Rule 144A(d)(4) in connection with the offering and
resale of the Units by the Initial Purchaser.
ac. Assuming (i) that the representations and
warranties in Section 2 hereof are true, (ii) the Initial Purchaser complies
with the covenants set forth in Section 2 hereof and (iii) that each person to
whom the Initial Purchaser offers, sells or delivers the Securities is an
Accredited Investor or a Qualified Institutional Buyer, the purchase and sale of
the Securities pursuant hereto (including the Initial Purchaser's proposed
offering of the Units on the terms and in the manner set forth in the Offering
Memorandum and Section 2 hereof) is exempt from the registration requirements of
the Act.
ad. The Company is not required to obtain stockholder
consent or approval pursuant to the rules of the Nasdaq National Market in
connection with the offering and sale of the Securities.
-18-
<PAGE> 19
ae. No labor strike, dispute, disturbance, lockout,
slowdown or stoppage by employees of the Company or any of its Subsidiaries or
Technocom or Teleport-TP currently exists and, to the best knowledge of the
Company, no such action is imminent.
af. Any dividends and other distributions declared or
to be declared and payable on the Company's directly or indirectly held
interests in its Subsidiaries, Technocom and Teleport-TP are permitted under
current applicable law to be converted into foreign currency that may be freely
transferred outside Canada, Ireland, Russia, Kazakstan, Cyprus, and the British
Virgin Islands, as the case may be, without any governmental authorization or
consent and free of withholding tax, in each case except as described in the
Offering Memorandum.
ag. Each of the Company, its Subsidiaries, Technocom
and Teleport-TP is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary
in the businesses in which it is engaged; neither the Company nor any such
Subsidiary nor Technocom nor Teleport-TP has been refused any insurance coverage
sought or applied for; and the Company has no reason to believe that any of such
companies will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not adversely affect
the condition (financial or other), earnings, business or properties of the
Company, its Subsidiaries, Technocom and Teleport-TP taken as a whole.
ah. Except as described in the Offering Memorandum,
no indebtedness (actual or contingent) and no contract or arrangement is
outstanding between (i) any director or officer or any person connected with any
such director (including his spouse, infant children or any company or
undertaking which he holds a controlling interest) of the Company or any
Subsidiary or Technocom or Teleport-TP and (ii) the Company or any Subsidiary or
Technocom or Teleport-TP.
ai. To the best of the Company's knowledge, the
Company was not, for any prior tax year, a passive foreign investment company (a
"PFIC") as defined in Section 1296 of the Internal Revenue Code of 1986 of the
United States (the "Code"). The Company will use its best efforts with respect
to 1996 and thereafter not to be a PFIC. If, despite such best efforts, the
Company should at any time become a PFIC, it will use its best efforts to
promptly notify its shareholders thereof.
aj. The Company is not now and will not be,
immediately following its receipt of the proceeds of the offering contemplated
hereby, an investment company (an "Investment
-19-
<PAGE> 20
Company") as defined in the Investment Company Act of 1940 (the "Investment
Company Act"). The Company will use its best efforts not to become an Investment
Company thereafter. If, despite such best efforts, the Company should at any
time become an Investment Company, it will comply with all applicable provisions
of the Investment Company Act and the rules and regulations thereunder.
ak. Annex A sets forth all material agreements to
which the Company and any of its subsidiaries and/or joint venture companies are
parties. Each such agreement is a legal, valid and binding obligation of the
parties thereto, enforceable against such parties in accordance with its terms,
and is in full force and effect, except as the enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and subject to the applicability of
general principles of equity, and except as rights to indemnity and contribution
thereunder may be limited by Federal or state securities laws or principles of
public policy.
al. Except as described in the Offering Memorandum,
there are no acquisitions of businesses or assets by the Company or any of its
Subsidiaries or Technocom or Teleport-TP that are pending, currently being
negotiated or (except such acquisitions that would not be material to the
Company) currently being contemplated.
am. An application has been made for the Units, Notes
and Warrants to be listed on the PORTAL of the Nasdaq Stock Market.
an. The Company has available free from pre-emptive
rights, and reserved for issuance upon conversion of the Convertible Notes and
upon exercise of the Warrants, a number of authorized but unissued shares of
Common Shares which, when added to the number of shares of Common Shares held in
its treasury, will be sufficient to honor the conversion in full of all
outstanding Convertible Notes and the exercise in full of all outstanding
Warrants.
6. Indemnification and Contribution.
a. The Company agrees to indemnify and hold harmless
the Initial Purchaser and each person, if any, who controls the Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, 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 Preliminary Offering Memorandum, the Supplement or the Offering
Memorandum or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to
-20-
<PAGE> 21
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 the
information relating to the Initial Purchaser furnished in writing to the
Company by or on behalf of the Initial Purchaser expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to the Preliminary Offering Memorandum or the
Supplement shall not inure to the benefit of the Initial Purchaser (or to the
benefit of any person controlling the Initial Purchaser) on account of any such
loss, claim, damage, liability or expense arising from the sale of the
Securities by the Initial Purchaser to any person if the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in the Preliminary Offering Memorandum or the Supplement was corrected
in the Offering Memorandum and the Initial Purchaser sold Securities to that
person without sending or giving at or prior to the written confirmation of such
sale, a copy of the Offering Memorandum (as then amended or supplemented) if the
Company has previously furnished sufficient copies thereof to the Initial
Purchaser on a timely basis. The foregoing indemnity agreement shall be in
addition to any liability which the Company may otherwise have.
b. If any action, suit or proceeding shall be brought
against the Initial Purchaser or any person controlling the Initial Purchaser in
respect of which indemnity may be sought against the Company, the Initial
Purchaser or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Initial Purchaser or any
such controlling 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 the Initial
Purchaser or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have 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 the Initial Purchaser or such controlling person and the indemnifying
parties and the Initial Purchaser or such controlling person shall have been
advised by its counsel that representation of such indemnified party and any
indemnifying party 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
-21-
<PAGE> 22
indemnifying party shall not have the right to assume the defense of such
action, suit or proceeding on behalf of the Initial Purchaser or such
controlling person). It is understood, however, that the indemnifying parties
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 counsel) at any time for the Initial
Purchaser and controlling persons not having actual or potential differing
interests with the Initial Purchaser or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such fees and expenses
shall be reimbursed on a monthly basis as provided in paragraph (a) hereof. The
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their 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 indemnifying parties agree to indemnify and
hold harmless the Initial Purchaser, to the extent provided in paragraph (a),
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
c. The Initial Purchaser agrees to indemnify and hold
harmless the Company, and its directors and 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 indemnity from the Company to the
Initial Purchaser set forth in paragraph (a) hereof, but only with respect to
information relating to the Initial Purchaser furnished in writing by or on
behalf of the Initial Purchaser expressly for use in the Preliminary Offering
Memorandum, Supplement or Offering Memorandum or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the Company,
any of its directors or officers, or any such controlling person based on the
Preliminary Offering Memorandum, Supplement or the Offering Memorandum, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against the Initial Purchaser pursuant to this paragraph (c), the Initial
Purchaser 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 the
Initial Purchaser 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 Initial Purchaser's expense), and the
Company, its directors and officers, and any such controlling person shall have
the rights and duties given to the Initial Purchaser by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Initial Purchaser may otherwise have.
-22-
<PAGE> 23
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, 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 the Initial Purchaser on
the other hand from the offering of the Units, 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 the Initial Purchaser on the other 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 the Initial Purchaser on
the other 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 underwriting discounts and commissions received by the Initial
Purchaser, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Company on the one hand and the
Initial Purchaser 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 the Initial Purchaser
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 and the Initial Purchaser 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, the
Initial Purchaser shall not be required to contribute any amount in excess of
the amount by which the total price of the Units underwritten by it and
distributed to the public exceeds the amount of any damages which the Initial
Purchaser 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
-23-
<PAGE> 24
(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 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 the Initial Purchaser or any person
controlling the Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Securities and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
the Initial Purchaser or any person controlling the Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
g. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or 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 action, suit or proceeding.
7. Conditions of the Initial Purchaser's Obligations.
The obligations of the Initial Purchaser to purchase the Securities
hereunder are subject to the following conditions:
a. At the time of execution of this Agreement and
on the Closing Date, no order or decree preventing the use of the Offering
Memorandum or any amendment or supplement thereto, or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the knowledge of
the Company, be contemplated. No stop order suspending the sale of the Units in
any jurisdiction designated by the Initial Purchaser shall have been issued and
no proceedings for that purpose shall have been commenced or shall be pending
or, to the knowledge of the Company, shall be contemplated.
b. Subsequent to the effective date of this
Agreement, there shall not have occurred (i) any change, or any
-24-
<PAGE> 25
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 or Technocom or Teleport-TP not contemplated
by the Offering Memorandum, which in the opinion of the Initial Purchaser, would
materially adversely affect the market for the Securities, 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 Offering Memorandum untrue or
which, in the opinion of the Company and its counsel or the Initial Purchaser
and its counsel, requires the making of any addition to or change in the
Offering Memorandum in order to state a material fact required by any law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Offering Memorandum to reflect such
event or development would, in the opinion of the Initial Purchaser, materially
adversely affect the market for the Units.
c. The Company shall have furnished to you the
opinion of Morgan, Lewis and Bockius LLP, special U.S. counsel to the Company,
dated the Closing Date, in form and substance satisfactory to you.
d. The Company shall have furnished to you the
opinion of Blake, Cassels & Graydon, special Canadian counsel to the Company,
dated the Closing Date, in form and substance satisfactory to you.
e. The Company shall have furnished to you the
opinions of J.P. Galmond Law Office and Lex International, special Russian
counsel to the Company, dated the Closing Date, in form and substance
satisfactory to you.
f. The Company shall have furnished to you the
opinion of KPMG Janat, special Kazak counsel to the Company, dated the Closing
Date, in form and substance satisfactory to you.
g. The Company shall have furnished to you the
opinion of S.J. Berwin & Co., special U.K. counsel to the Company, dated the
Closing Date, in form and substance satisfactory to you.
h. The Company shall have furnished to you the
opinion of Phoebis, Christos Clerides, N. Pirilides & Associates, special Cyprus
counsel for the Company, dated the Closing Date, in form and substance
satisfactory to you.
i. The Company shall have furnished to you the
opinion of A & L Goodbody, special Irish counsel for the Company, dated the
Closing Date, in form and substance satisfactory to you.
-25-
<PAGE> 26
j. The Company shall have furnished to you the
opinion of Smith-Hughes, Raworth & McKenzie, special British Virgin Islands
counsel for the Company, dated the Closing Date, in form and substance
satisfactory to you.
k. You shall have received the opinions of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., for the Initial Purchaser, dated the
Closing Date, in form and substance satisfactory to you.
l. The Initial Purchaser shall have received letters
addressed to the Initial Purchaser, and dated the date hereof and the Closing
Date from KPMG, independent certified public accountants, substantially in the
forms heretofore approved by the Initial Purchaser.
m.(i) There shall not have been any change in the
capital stock of the Company 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 Offering Memorandum (or any amendment
or supplement thereto); (ii) there shall not have been, since the respective
dates as of which information is given in the Offering Memorandum (or any
amendment or supplement thereto), except as may otherwise be stated in the
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 and Technocom and Teleport-TP taken as a whole; (iii) the Company
and the Subsidiaries and Technocom and Teleport-TP 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 and
Technocom and Teleport-TP, taken as a whole, other than those reflected in the
Offering Memorandum (or any amendment or supplement thereto); and (iv) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the date hereof and on
and as of the Closing Date as if made on and as of the Closing Date, and the
Initial Purchaser shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief accounting officer of the
Company (or such other officers as are acceptable to the Initial Purchaser), to
the effect set forth in this Section 7(m) and in Section 7(n) hereof.
n. The Company shall not have failed at or prior to
the Closing Date 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.
o. There shall not have been any announcement by any
"nationally recognized statistical rating organization," as
-26-
<PAGE> 27
defined for purposes of Rule 436(g) under the Act, that (i) it is downgrading
its rating assigned to any class of securities of the Company, or (ii) it is
reviewing its ratings assigned to any class of securities of the Company with a
view to possible downgrading, or with negative implications, or direction not
determined.
p. The Units, Notes and Warrants shall have been
approved for trading on PORTAL.
q. The Company shall have entered into the
Registration Rights Agreement and the Warrant Agreement in substantially the
form attached hereto as Exhibit A and Exhibit B.
r. The Company shall have obtained the required
approvals of The Toronto Stock Exchange with respect to the offering and sale of
the Units.
s. The Company shall have received the advance income
tax rulings described in the Offering Memorandum in form and content acceptable
to the Initial Purchaser.
t. The Company shall have furnished or caused to be
furnished to the Initial Purchaser such further certificates and documents as
the Initial Purchaser shall have reasonably requested.
u. The Company shall deliver an Amended Subscription
Agreement, satisfactory in form and content to the Initial Purchaser, with
respect to the purchase of preferred shares of Technocom that provides that the
payment of $20 million must be made by June 30, 1996, such amendment to have
been authorized, approved, executed and delivered by all the parties thereto and
enforceable against each of them.
v. The Company shall deliver certified copies of
amendments to the Articles of Association and the Memorandum of Association of
Technocom, satisfactory in form and content to the Initial Purchaser, to the
effect that the presence of Mr. Klabin is unnecessary for there to be a quorum
for any meeting of the Board of Directors which is called to approve the
transfer of shares following a foreclosure and to the effect that the Board may
not refuse to register a transfer of shares following a foreclosure.
w. The Company shall deliver a duly authorized and
executed Senior Note Indenture.
x. The Company shall deliver a duly authorized and
executed Convertible Note Indenture.
y. The Company shall deliver a duly authorized and
executed Warrant Agreement.
-27-
<PAGE> 28
z. The Company shall deliver a duly authorized and
executed Company Senior Note Escrow Account Agreement.
aa. The Company shall deliver a duly authorized and
executed Company Convertible Note Escrow Account Agreement.
ab. The Company shall deliver a duly authorized and
executed Company Security and Pledge Agreement.
ac. The Company shall deliver a duly authorized and
executed Leasing Company Escrow Account Agreement with respect to PLD Asset
Leasing.
ad. The Company shall deliver a duly authorized and
executed Leasing Company Escrow Account Agreement with respect to PLD Capital.
ae. The Company shall deliver duly authorized and
executed Stock Pledge Agreements with respect to PLD Asset Leasing, PLD Capital,
BCL and the preferred shares of Technocom and any other Qualified Investments
(as defined in the Indenture) entered into prior to the Closing Date.
af. The Company shall deliver copies of all duly
authorized and executed leases between PLD Asset Leasing or PLD Capital and
PeterStar, BCL or BECET entered into prior to the Closing Date.
ag. The Company shall deliver copies of all duly
authorized and executed lease assignments relating to the leases specified in
(ae) above entered into prior to the Closing Date.
ah. The Company shall deliver duly authorized and
executed pledge agreements of all Intercompany Notes (as defined in the
Indenture) entered into prior to the Closing.
ai. The Company shall deliver copies of all duly
authorized and executed Licenses (as defined in the Indentures) in effect at the
time of the Closing and held by the Company, PeterStar, BCL or BECET.
aj. The Company shall deliver copies of all duly
authorized and executed instruments or filings necessary or advisable in order
to perfect the pledges or security interests specified above.
ak. The Company shall deliver evidence, satisfactory
in form and substance to the Initial Purchaser as to the liabilities and
obligations of the Company and its Subsidiaries in connection with the
termination of Mr. Afanasyev's employment at PeterStar.
-28-
<PAGE> 29
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 the Initial Purchaser and
counsel for the Initial Purchaser.
Any certificate or document signed by any officer of
the Company and delivered to the Initial Purchaser, or to counsel for the
Initial Purchaser, shall be deemed a representation and warranty by the Company
to the Initial Purchaser as to the statements made therein.
8. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by them of
their obligations hereunder: (i) the preparation, printing or reproduction of
the Offering Memorandum (including financial statements thereto), and each
amendment or supplement to any of them, this Agreement and the Indenture; (ii)
the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the Offering
Memorandum, the Supplement, the Preliminary Offering Memorandum, the
Incorporated Documents, and all amendments or supplements to any of them as may
be reasonably requested for use in connection with the offering and sale of the
Securities; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities, including any stamp taxes in
connection with the original issuance and sale of the Securities; (iv) the
reproduction and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents reproduced and
delivered in connection with the offering of the Securities; (v) the application
for quotation of the Units, Notes and Warrants on PORTAL; (vi) the qualification
of the Units, Notes and Warrants and the Warrant Shares for offer and sale under
the securities or Blue Sky laws of the several states as provided in Section
4(f) hereof (including, subject to Paragraph 4 of the Engagement Letter, the
reasonable fees, expenses and disbursements of counsel for the Initial Purchaser
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such qualification); (vii)
the performance by the Company of its obligations under the Registration Rights
Agreement; (viii) the performance by the Company of its obligations under the
Warrant Agreement; and (ix) the fees and expenses of the Company's accountants
and the fees and expenses of counsel (including local and special counsel) for
the Company. The Company hereby agrees that it will pay in full on the Closing
Date the fees and expenses referred to in clause (vi) of this Section 8 by
delivering to counsel for the Initial Purchaser on such date a check payable to
such counsel in the requisite amount.
9. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the
-29-
<PAGE> 30
parties hereto. Until such time as this Agreement shall have become effective,
it may be terminated by the Company, by notifying the Initial Purchaser, or by
the Initial Purchaser, by notifying the Company.
Any notice under this Section 9 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
10. Termination of Agreement. This Agreement shall be subject
to termination in the absolute discretion of the Initial Purchaser, without
liability on the part of the Initial Purchaser to the Company, by notice to the
Company, if prior to the Closing Date (i) trading in securities generally on the
New York Stock Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the initial purchaser, impracticable or inadvisable to commence or
continue the offering of the Securities on the terms set forth on the cover page
of the Offering Memorandum or to enforce contracts for the resale of the
Securities by the Initial Purchaser. Notice of such termination may be given to
the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
11. Information Furnished by the Initial Purchaser. The
statements set forth in the stabilization legend on the inside front cover, the
last paragraph on the cover page and in the sixth, eighth and ninth (as to
statements about the Initial Purchaser) paragraphs under the caption "Private
Placement" in the Preliminary Offering Memorandum, the Supplement and the
Offering Memorandum, constitute the only information furnished by or on behalf
of the Initial Purchaser as such information is referred to in Sections 5(b) and
6 hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4,
9 and 10 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of the
Company at 166 Pearl Street, Toronto, Ontario, Canada M5H IL3, Attention: James
R.S. Hatt, Chief Executive Officer, or (ii) if to the Initial Purchaser, to
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, Attention: Manager,
Investment Banking Division.
-30-
<PAGE> 31
This Agreement has been and is made solely for the benefit of
the Initial Purchaser, the Company, its directors, its officers and the
controlling persons referred to in Section 6 hereof and their 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
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchaser of any of the Securities in
his status as such purchaser.
13. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
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.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Initial Purchaser.
Very truly yours,
PETERSBURG LONG DISTANCE, INC.
By /s/Simon Edwards
-------------------
Chief Financial Officer
Confirmed as of the date first above mentioned.
SMITH BARNEY INC.
By /s/George Alex
--------------------------
Managing Director
-31-
<PAGE> 32
ANNEX A
Agreement, dated March 25, 1994, by and between the Company
and Navona Communications Corporation Ltd. ("Navona");
Agreement, dated March 29, 1994, by and between the Company
and Navona;
Further Variation Agreement, dated June 3, 1994, by and
between the Company and Navona;
Agreement, dated June 3, 1994, by and between the Company and
Monogram Telecommunications Limited;
Agreement, dated March 7, 1994, by and among Tiller
International Limited ("Tiller"), Diane AO ("Diane") and the
Company;
Agreement for Lease, dated April 27, 1994, by and among the
Company and the Scottish Life Assurance Company;
Put and Call Option Agreement, dated June 28, 1994, by and
between the Company and Mizzen Corporation ("Mizzen");
Variation Agreement, dated November 16, 1994, by and between
the Company and Mizzen;
Further Variation Agreement, dated November 16, 1994, by and
between the Company and Navona;
Share Transfer Agreement, dated July 7, 1994, by and between
the Company and OFI Group Ltd.;
Share Sale and Purchase Agreement relating to the Issued
Share Capital of Technocom Limited, dated November 2,
1994, by and between the Company and Plicom Limited
("Plicom");
-32-
<PAGE> 33
Subscription and Shareholder Agreement relating to
Technocom Limited, dated December 28, 1994, by and among
the Company, Plicom, Elite International Limited
("Elite") and Technocom;
Deed of Covenant, dated December 28, 1994, by and between
Plicom and the Company;
Put and Call Option Agreement, dated December 28, 1994,
by and between the Company and Elite;
Put and Call Option Agreement, dated December 28, 1994,
by and between the Company and Plicom;
Agreement dated June 3, 1994, by and between the Company
and Monogram Telecommunications Limited;
Share Transfer Mandate, dated July 7, 1994, by and
between the Company and OFI;
Purchase Agreement, dated August 12, 1992, by and between
Dominion Capital and NWE Capital Corp.;
Consultancy Agreement, dated June 6, 1994 by and between
Robert Smith and the Company;
Agreement, dated 1993 by and between the Company and PTN;
Addendum to Agreement, by and between the Company and
LGTS;
Sales Agreement re Sales of Shares of Baltic
Communications to the Company, dated November 11, 1995,
by and among Lensvyaz, Rostelecom, St. Petersburg
Telegraph and the Company;
Further Variation and Extension Agreement, dated November
16, 1994, by and between the Company and Navona;
Subscription Agreement, dated December 23, 1994, by
between the Company and Brawley Cathers Limited;
Credit Agreement, dated November 3, 1993, by and between
the Company and Dominion Capital;
Share Purchase Warrant, dated October 2, 1992, issued to
Dominion Capital to Purchase 200,000 shares of the Company;
-33-
<PAGE> 34
Company Guarantee of IBM Loan to Leningrad City Telephone
Network, dated December 1, 1992;
Letter Agreement, dated December 19, 1994, by and between
Cable and Wireless and the Company;
Credit Agreement, dated April 3, 1996, by and between the
Company and Canadian Imperial Bank of Commerce;
Agreement between the Company and Cable and Wireless plc,
dated July 28, 1994 with respect to the Guarantee by Cable and
Wireless plc dated April 3, 1996, in favor of Canadian
Imperial Bank of Commerce;
AO Majak Option Agreement, dated May 15, 1995, by and between
the Company and Somatel, SA of Air Center;
Letter Agreement, dated September 14, 1995, by and between the
Company and Somatel SA relating to the Majak Option Agreement;
Sale and Purchase Agreement, dated April 10, 1996, by and
among the Company, Bradenhorn Holdings Limited, Worth
West Estates (Holdings) Limited and North West Estates
PLC;
Foundation Agreement of PeterStar;
Foundation Agreement of PMT;
Foundation Agreement of BCL;
Amendments to Foundation Agreement of PeterStar (dated
October 20, 1994), PMT and BCL;
Shareholders Agreement, dated October 20, 1994, by and
among PTS, PMT, NWE Cyprus and Complus;
International Communications Services Agreement, dated
May 20, 1994, by and between St. Petersburg International
and PeterStar;
Agreement, dated 1994, by and between PeterStar and St.
Petersburg Inter-City and International Telephone
("SPMMTS");
-34-
<PAGE> 35
Interconnect Agreement, dated June 22, 1994, by and between
PeterStar and St. Petersburg Telecom;
Agreement, dated January 1, 1994, for Transmitting Telephone
Traffic from PeterStar Company Limited Network Subscribers
through SPMMTS;
Agreement relating to installing telephones and subscribers
percentage, dated March 15, 1994, by and between PTS and
PeterStar;
Interconnect Agreement, dated November 15, 1994, by and
between PeterStar and NorthWest GSM;
Agreement on Cooperation, dated January 4, 1995, by and
between PTS and PeterStar;
Agreement 32/90 of September 20, 1995, by and between
PeterStar and Delta Telecom;
Agreement relating to the use of SPMMTS of communication lines
of PeterStar, dated January 10, 1994, by and between PeterStar
and SPMMTS;
Agreement relating to supplying services on long-distance and
international services, dated August 21, 1995, by and between
PeterStar and SPMMTS;
Service Agreement, dated January 1, 1995, by and between
PeterStar and NWE Cyprus;
Joint Cooperative Agreement, dated March 15, 1994, by and
between PeterStar and PTS;
Agreement on Establishing of Teleport-TP, dated
February 28, 1992;
Share Subscription Agreement, dated July 3, 1994, by and
between Teleport-TP and VVC;
Loan Agreement, dated December 9, 1992, by and between
Teleport-TP and AT&T Credit Corporation;
Supply Agreement, dated July 30, 1992, by and between
Teleport-TP and AT&T Network Systems Nederland B.V.;
-35-
<PAGE> 36
Second Amendment to the Supply Agreement, dated
December 10, 1992, by and between Teleport-TP and AT&T;
Security Agreement, dated December 9, 1992, by and
between Teleport-TP and AT&T Credit Corporation;
Amendment 1 to the Loan Agreement and the Security Agreement,
dated February 15, 1993, by and between Teleport-TP and AT&T
Credit Corporation;
Amendment 2 to the Loan Agreement and the Security Agreement,
dated October 1, 1993, by and between Teleport-TP and AT&T
Credit Corporation;
Amendment 3 to the Loan Agreement and the Security Agreement,
dated April 12, 1994, by and between Teleport-TP and AT&T
Credit Corporation;
Contract 3-92/10, dated December 1, 1992, by and between
Teleport-TP and Intertelecom;
Supplementary Agreement to Contract 3-92/10 Specifying
Payment Procedures, dated December 14, 1992, by and
between the Parties;
Contract 2-93/3 providing International Television
Transmission via Intelsat Channels for Russian and
International Television Stations, dated October 1, 1993, by
and between Teleport-TP and Rostelcom;
Contract 3-94/25, dated April 20, 1994, by and between
Teleport-TP and Sprint;
Supplement to Contract 3-94/25, dated July 1994 by and
between Teleport-TP and Sprint;
Agreement on Establishment of MTR-SVIAZ, by and among
Mosenergo, Rosh and Technocom;
Agreement, dated July 19, 1995, by and between Mosenergo
and MTR-SVIAZ;
Joint Venture Agreement, dated December 13, 1993, by and
between Wireless Technology Corporations Limited ("WTC") and
BECET (the "Joint Venture Agreement");
Interconnection Agreement, dated February 4, 1994, by and
between Ministry of Communications/Kazakstan and BECET;
-36-
<PAGE> 37
Agreement on Consulting and Information Services by and
between WTC and BECET;
The Interconnection Agreement, dated May 4, 1994, by and
between Motorola Inc. and BECET;
The Cellular System Equipment Purchase Agreement (the
"Equipment Purchase Agreement"), dated May 4, 1994, by
and between Motorola Inc. and BECET dated May 4, 1994;
The Cellular System Installation & Optimization Services
Agreement (the "Optimization Agreement"), dated May 4,
1994, by and between Motorola Inc. and BECET;
Agreement on Establishing the Closed Joint Stock Company
Teleport-TP (the "Teleport Establishment Agreement"),
dated February 20, 1992, by and among Technocom,
Technopark and Intertelecom;
Debt Settlement Agreement (the "Roscomm Debt Settlement
Agreement"), dated December 14, 1994, by and between the
Company and Roscomm Limited;
Contract for Debt Settlement (the "Debt Settlement
Agreement"), dated December 14, 1994, by and between Technocom
and Technopark;
Guarantee, dated December 19, 1994, from Cable & Wireless to
Technocom, Plicom and Elite;
Equipment Purchase and Installation Agreement, dated
August 25, 1995, by and between Technocom Limited and
Hughes Network System;
EUTELSAT TDMA Earth Station Loan Agreement, dated September
12, 1995, by and between EUTELSAT and Teleport-TP;
Agreement for Purchase and Installation of Certain Equipment,
dated November 16, 1995, by and between Technocom and
Scientific Atlantic;
Contract 3-93/25, dated October 4, 1993, by and between
Teleport-TP and Technocom;
Contract 3-94/26, dated January 1, 1994, by and between
Telecom and Technocom;
Credit Agreement Term Sheet by and between Teleport-TP
and Technocom (1993);
-37-
<PAGE> 38
Equipment Certificate No. OC/1-C[pi]-6, issued September 22,
1993;
Deed of Waiver, dated December 18, 1994, by and between ROSH
Credit International SAH and (Technocom);
Letter Agreement re Subscription and Shareholder Agreement,
dated December 28, 1994, dated December 29, 1994, by and
between S J Berwin & Co and Charles Russell;
Consultancy Agreement, dated December 28, 1994, by and
among Elite International Limited, Technocom and Boris
Antoniuk;
Consultancy Agreement, dated December 28, 1994, of
Plicom, Technocom and Mark Klobin;
Sale Contract N 38, dated October 4, 1993, by and between
Technocom and Oil House;
Distribution Agreement, dated July 1, 1994, by and
between ECI Telecom and Technocom;
Non-exclusive representative agreement, dated March 5,
1993, by and between Technocom and AT&T); and
Lease Agreement, dated June 1, 1995, by and between Technocom
and MTR-SVIAZ.
-38-
<PAGE> 1
EXHIBIT 4.9
================================================================================
Dated as of May 31, 1996
by and between
PETERSBURG LONG DISTANCE INC.
and
THE BANK OF NEW YORK
as Warrant Agent
================================================================================
<PAGE> 2
WARRANT AGREEMENT
TABLE OF CONTENTS*
PAGE
SECTION 1. Appointment of Warrant Agent .................................. 2
SECTION 2. Issuance of Warrants .......................................... 2
SECTION 2A. Reset of Exercise Price ...................................... 2
SECTION 3. Warrant Certificates .......................................... 2
SECTION 4. Execution of Warrant Certificates ............................. 3
SECTION 5. Transfers of Warrants ......................................... 4
(a) Prior to the Separation of Warrants and
Senior Notes; Separation of Warrants and
Senior Notes ............................................. 4
(b) Private Placement Legend ................................. 5
(c) Global Warrant Legend .................................... 5
SECTION 6. Registration and Countersignature ............................. 6
SECTION 7. (a) Registration of Transfers and Exchanges ................... 6
(b) Book-Entry Provisions for the Global Warrants ............. 7
(c) Special Transfer Provisions ............................... 8
SECTION 8. Terms of Warrants; Exercise of Warrants ....................... 10
SECTION 9. Reports ....................................................... 12
SECTION 10. Payment of Taxes ............................................. 12
SECTION 11. Mutilated or Missing Warrant Certificates .................... 13
SECTION 12. Reservation of Warrant Shares ................................ 13
SECTION 13. Obtaining Stock Exchange Listings ............................ 14
SECTION 14. Consolidation ................................................ 14
SECTION 15. Adjustment of Exercise Price ................................. 15
SECTION 16. [Intentionally Omitted] ...................................... 25
SECTION 17. Fractional Interests ......................................... 25
SECTION 18. Notices to Warrant Holders ................................... 26
SECTION 19. Warrant Agent ................................................ 27
SECTION 20. Merger, Consolidation or Change of Name
of Warrant Agent ........................................... 29
SECTION 21. Change of Warrant Agent ...................................... 30
SECTION 22. Notices to the Company and Warrant Agent ..................... 31
SECTION 23. Supplements and Amendments ................................... 32
SECTION 24. Successors ................................................... 32
SECTION 25. Termination .................................................. 32
SECTION 26. Governing Law; Jurisdiction .................................. 32
SECTION 27. Indemnity .................................................... 33
SECTION 28. Benefits of This Agreement ................................... 34
SECTION 29. Counterparts ................................................. 34
SECTION 30. Further Assurances ........................................... 35
EXHIBIT A Form of Warrant Certificate .................................. 38
EXHIBIT B Form of Warrant Shares Legend ................................ 42
- ----------
* This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
<PAGE> 3
Page 1
WARRANT AGREEMENT (this "Agreement") dated as of May 31, 1996
between Petersburg Long Distance Inc., (the "Company"), and The Bank of New
York, a New York banking corporation, as Warrant Agent (the "Warrant Agent")
WHEREAS, the Company has entered into a purchase agreement, dated
May 24, 1996, with Smith Barney Inc. (the "Initial Purchaser") pursuant to which
the Company has agreed to sell to the Initial Purchaser (i) 123,000 Units (the
"Units") consisting of $123,000,000 aggregate principal amount at maturity of
14% Senior Discount Notes due 2004 (the "Senior Notes") and warrants (the
"Warrants") to purchase up to an aggregate of 4,182,000 common shares without
par value of the Company (the "Common Shares") and (ii) $26,500,000 principal
amount of 9% Convertible Subordinated Notes due 2006 (the "Convertible Notes").
Each Warrant entitles the holder thereof, upon exercise, to purchase thirty
four fully paid and nonassessable Common Share at an exercise price of $6.60 per
share (the "Exercise Price"). The Exercise Price and the number of shares are
both subject to adjustment under certain circumstances as provided in Section 2A
and Section 15 hereof. The Common Shares issuable upon exercise of the Warrants
are referred to herein as "Warrant Shares." The Senior Notes will be issued
under an indenture to be dated as of May 31, 1996 (the "Senior Note Indenture")
among the Company, the guarantors named therein and The Bank of New York, as
trustee (the "Senior Note Trustee"); and
WHEREAS, the Warrants shall bear the legend (the "Warrant Legend")
set forth on the form of Warrant Certificate set forth in Exhibit A attached
hereto and the Senior Notes shall bear the legend set forth in Exhibit A
attached to the Senior Note Indenture, in each case subject to the terms of this
Agreement and the Indenture, as the case may be. Unless registered under the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws, the Warrant Shares shall bear the legend set forth in
Exhibit B (the "Warrant Shares Legend"); and
WHEREAS, the Warrants and the Senior Notes shall not be separately
transferable until the close of business upon the earliest to occur of (i) a
date 180 days after the issue of the Warrants, (ii) such date as the Initial
Purchaser may determine and specify to the Warrant Agent, (iii) the commencement
of the offer by the Company to the holders of Senior Notes of the opportunity to
acquire Exchange Notes in substitution for the Senior Notes (the "Exchange
Offer") and (iv) in the event of Change of Control, the date the Company mails
notice thereof to the holders of the Senior Notes (the "Separation Date"); and
<PAGE> 4
Page 2
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates and other matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Issuance of Warrants. Warrants shall be originally issued
in connection with the issuance of the Senior Notes and shall not be separately
transferable from the Senior Notes until on or after the Separation Date as
provided in Section 5 hereof.
SECTION 2A. Reset of Exercise Price. On December 1, 1996 (the "Reset
Date"), the Exercise Price will be adjusted (the "Reset") to equal (x) the
product of (i) the average of the high and low prices on the Nasdaq National
Market or the consolidated transaction reporting tape in the event that the
Common Shares are not then traded on the Nasdaq National Market, and (ii) the
number of Common Shares reported as being traded on that day for each trading
day of the 30 calendar days preceding the Reset Date (the "Reset Period")
divided by the total number of Common Shares traded over the Reset Period
multiplied by (y) 110% (the "Reset Price"), if such Reset Price shall be lower
than the Exercise Price before such calculation. In the event that the Exercise
Price before such calculation shall be equal to or less than the Reset Price
calculated in accordance with this Section 2A, then no adjustment to the
Exercise Price shall be made pursuant to this Section 2A. The Exercise Price as
of the date hereof and as adjusted to the Reset Price are subject to the further
adjustments of Section 15. In no event shall the effect of this Section 2A be to
increase the number of Common Shares issuable upon exercise of the Warrants.
SECTION 3. Warrant Certificates. The certificates evidencing the
Warrants ("Warrant Certificates") shall be substantially in the form annexed
hereto as Exhibit A.
Warrants were offered and sold in reliance on Rule 144A and shall be
evidenced initially in the form of a single permanent global Warrant (the
"Global Warrant") evidenced by a single Warrant Certificate in definitive, fully
registered form, substantially in the form set forth in Exhibit A (the "Global
<PAGE> 5
Page 3
Warrant Certificate"), deposited with the Warrant Agent, as custodian for the
Depositary and registered in the name of a nominee of the Depositary, duly
executed by the Company and countersigned by the Warrant Agent as hereinafter
provided. The aggregate amount of the Global Warrant may from time to time be
increased or decreased by adjustments made on the records of the Warrant Agent,
as custodian for the Depositary or its nominee, as hereinafter provided.
SECTION 4. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by any two of the following officers:
its Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President, any Vice President, Secretary or an Assistant Secretary, under its
corporate seal. Each such signature upon the Warrant Certificates may be in the
form of a facsimile signature of the present or any future Chairman of the
Board, Chief Executive Officer, Chief Financial Officer, President or any Vice
President and Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been Chairman
of the Board, Chief Executive Officer, Chief Financial Officer, President, any
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be countersigned and delivered or
disposed of he or she shall have ceased to hold such office. The seal of the
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Agreement
any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
In the event that the Exercise Price is adjusted pursuant to Section
2A, the Company may instruct the Warrant Agent to issue new Warrant Certificates
with the new Exercise
<PAGE> 6
Page 4
Price to replace the Warrant Certificates issued prior to the Reset Date.
SECTION 5. Transfers of Warrants.
(a) Prior to the Separation of Warrants and Senior Notes; Separation
of Warrants and Senior Notes. Notwithstanding the provisions of Section 7
hereof, on or after the Separation Date, the registered holder of a Warrant
Certificate containing a Warrant Legend may surrender such Warrant Certificate
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney to the Warrant Agent, at its address specified in
Section 22 hereof (the "Warrant Agent Office") for the exchange of such Warrant
Certificate containing a Warrant Legend, in whole or in part, for a new Warrant
Certificate or certificates.
Until the Separation Date, no Warrant may be sold, assigned or
otherwise transferred to any person unless simultaneously with such transfer,
the Warrant Agent receives confirmation from the Senior Note Trustee that the
holder thereof has requested a transfer to such transferee of $1,000 principal
amount at maturity of Senior Notes for each Warrant to purchase 34 Common Shares
of the Company (subject to adjustment under Section 2A and Section 15 hereof) so
transferred. In connection with the foregoing, upon original issuance (if prior
to the Separation Date) and, thereafter (until Separation with respect to the
first paragraph only), each Warrant Certificate will bear the following legend:
UNTIL THE CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) A DATE 180
DAYS AFTER THE ISSUE OF THE WARRANTS, (ii) SUCH DATE AS SMITH BARNEY INC.
MAY DETERMINE, (iii) THE COMMENCEMENT OF AN EXCHANGE OFFER RELATING TO THE
14% SENIOR DISCOUNT NOTES DUE 2004 (THE "SENIOR NOTES") OF PETERSBURG LONG
DISTANCE INC. (THE "COMPANY"), (iv) IN THE EVENT OF CHANGE OF CONTROL (AS
DEFINED IN THE INDENTURE RELATING TO THE SENIOR NOTES), THE DATE THE
COMPANY MAILS NOTICE THEREOF TO HOLDERS OF THE NOTES, THE WARRANTS
EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED TO ANY
PERSON UNLESS, SIMULTANEOUSLY WITH SUCH TRANSFER, THE HOLDER HEREOF
TRANSFERS TO SUCH TRANSFEREE $1,000 PRINCIPAL AMOUNT AT MATURITY OF SENIOR
NOTES AND A WARRANT TO PURCHASE 34 COMMON SHARES OF THE COMPANY (SUBJECT
TO ADJUSTMENT UNDER SECTION 2A AND SECTION 15 OF THE WARRANT AGREEMENT,
DATED AS OF JUNE 7, 1996, BETWEEN THE COMPANY AND THE BANK OF NEW YORK, AS
WARRANT AGENT) SO TRANSFERRED.
<PAGE> 7
Page 5
THE COMMON SHARES (THE "COMMON SHARES") FOR WHICH THIS WARRANT IS
EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE
TIME OF EXERCISE, (I) A REGISTRATION STATEMENT UNDER THE ACT COVERING THE
OFFER AND SALE OF THE COMMON SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT (THE "WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED EFFECTIVE
BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER
SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN
ISSUED BY THE SEC OR (II) THE OFFER AND SALE OF THE WARRANT SHARES TO THE
WARRANT HOLDERS ARE EXEMPT FROM REGISTRATION UNDER THE ACT AND THE WARRANT
HOLDER, IF SO REQUESTED BY THE COMPANY, HAS DELIVERED TO THE COMPANY AN
OPINION OF COUNSEL TO SUCH EFFECT.
(b) Private Placement Legend. Except as otherwise provided in
Section 7(c)(ii) hereof, the Global Warrant Certificate shall bear the following
legend (the "Private Placement Legend"):
THE WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS WARRANT CERTIFICATE WAS
ORIGINALLY ISSUED, THE COMMON SHARES PURCHASABLE UPON THEIR EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND THE PROVINCES OF CANADA.
(c) Global Warrant Legend. The Global Warrant Certificate shall also
bear the following legend:
UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO
<PAGE> 8
Page 6
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 7 OF THE WARRANT AGREEMENT.
SECTION 6. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board,
Chief Executive Officer, Chief Financial Officer, President, a Senior Vice
President or Secretary of the Company, initially countersign and deliver Warrant
Certificates entitling the holders thereof to purchase not more than the number
of Warrant Shares referred to above in the first recital hereof and shall
countersign and deliver Warrant Certificates as otherwise provided in this
Agreement. Such written instructions shall specify the amount of the Warrants to
be countersigned and the date of countersignature.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. The Company agrees to arrange for the
Trustee under the Indenture (or any other Registrar thereunder) to act as
registrar hereunder with respect to Warrants that are not Separated.
SECTION 7. (a) Registration of Transfers and Exchanges. In
accordance with this Section 7, the Warrant Agent shall from time to time
register the transfer of any outstanding Warrant Certificates upon the records
to be maintained by it for that purpose, upon surrender thereof accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, duly executed by the registered holder or holders
<PAGE> 9
Page 7
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled by the Warrant Agent. Canceled Warrant
Certificates shall thereafter be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure and in accordance with
applicable law.
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Warrant Agent at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled by the Warrant Agent. Such canceled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure and in accordance with
applicable law.
No service charge shall be made for any transfer or exchange of
Warrant Certificates or any issuance of Warrant Certificates, but the Company
may require payment of a sum sufficient to cover any stamp or other governmental
charge or tax that may be imposed in connection with any such transfer or
exchange.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 7 and Section 5, the new Warrant
Certificates required pursuant to the provisions of this Section 7.
(b) Book-Entry Provisions for the Global Warrants.
(i) The Global Warrant Certificate initially shall (x) be
registered in the name of the Depositary or the nominee of such Depositary, (y)
be delivered to the Warrant Agent as custodian for the Depositary and (z) bear
the legend as set forth in Section 5(b).
(ii) Transfers of the Global Warrant Certificates shall be
limited to transfers of such Global Warrant Certificates in whole, but not in
part, to the Depositary, its successors or their respective nominees. Beneficial
interests in the Global Warrant may be transferred in accordance with the
applicable rules and procedures of the Depositary. Physical Warrant Certificates
in substantially the form set forth in Exhibit A ("Physical Warrant
Certificates"), evidencing physical warrants ("Physical Warrants"), shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the Global Warrant if the Depositary notifies the Company that it
<PAGE> 10
Page 8
is unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and a successor depositary registered as a "Clearing
Agency" under Section 17 of the Exchange Act is not appointed by the Company
within 90 days of such notice.
(iii) In connection with the transfer of the Global Warrant to
beneficial owners pursuant to paragraph (b) (ii) of this Section 7, the Global
Warrant shall be deemed to be surrendered to the Warrant Agent for cancellation,
and the Company shall execute, and the Warrant Agent shall countersign and
deliver, to each beneficial owner identified by the Depositary in exchange for
its beneficial interest in the Global Warrant, an equal aggregate amount of
Physical Warrant Certificates of authorized denominations.
(iv) Any Physical Warrant Certificate delivered in exchange
for an interest in the Global Warrant pursuant to paragraph (b) (ii) of this
Section 7 shall, except as otherwise provided by paragraph (c) (ii) of this
Section 7, bear the legend regarding transfer restrictions set forth in Section
5(b).
(v) The registered holder of the Global Warrant may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a
Warrant holder is entitled to take under this Warrant Agreement or the Warrants.
(c) Special Transfer Provisions.
(i) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Warrant to a QIB:
(x) If the Warrant to be transferred consists of Physical
Warrants, the Warrant Agent shall register the transfer if
such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Warrant stating,
or has otherwise advised the Company and the Warrant Agent in
writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Warrant stating, or
has otherwise advised the Company and the Warrant Agent in
writing, that it is purchasing the Warrant for its own account
or an account with respect to which it exercises sole
investment discretion and that it and any such
<PAGE> 11
Page 9
account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is
aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from
registration provided by Rule 144A.
(y) If the proposed transferee is an Agent Member and the Warrant
to be transferred consists of Physical Warrants, upon receipt
by the Warrant Agent of the documents referred to in clause
(x) and instructions given in accordance with the Depositary's
and the Warrant Agent's procedures, the Warrant Agent shall
reflect on its books and records the date and an increase in
the aggregate amount of the Global Warrant in an amount equal
to the aggregate amount of the Physical Warrants, as the case
may be, to be transferred, and the Warrant Agent shall cancel
the Physical Warrants so transferred.
(ii) Private Placement Legend. Upon the transfer, exchange or
replacement of Warrant Certificates not bearing the Private Placement Legend,
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of Warrant
Certificates bearing the Private Placement Legend, the Warrant Agent shall
deliver only Warrant Certificates that bear the Private Placement Legend unless
there is delivered to the Warrant Agent an opinion of counsel reasonably
satisfactory to the Company and the Warrant Agent to the effect that neither
such legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act and the provisions
of applicable Canadian provincial securities legislation.
(iii) General. The provisions hereof shall be qualified in
their entirety by any applicable securities laws of the United States, the
Province of Ontario, and any other applicable jurisdiction and by the procedures
of any applicable clearing agency, in each case as in effect from time to time,
and all such laws and clearing procedures shall be deemed to be incorporated
herein by reference. By its acceptance of any Warrant Certificate bearing the
Private Placement Legend, each holder of such a Warrant Certificate shall be
deemed to acknowledge the restrictions on transfer of such Warrant
<PAGE> 12
Page 10
Certificate set forth in this Warrant Agreement and in the Private Placement
Legend and agrees that it will transfer such Warrant Certificate only as
provided in this Warrant Agreement. The Warrant Agent shall not register a
transfer of any Warrant Certificate unless such transfer complies with the
restrictions on transfer of such Warrant Certificate set forth in this Warrant
Agreement. In connection with any transfer of Warrant Certificates, each Warrant
holder agrees by its acceptance of the Warrant Certificates to furnish the
Warrant Agent or the Company such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act and the
provisions of applicable Canadian provincial securities legislation; provided
that the Warrant Agent shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
SECTION 8. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Warrant holder shall have the right, which may be
exercised at any time beginning 180 days from the date of original issuance
thereof and on or prior to the close of business on a date ten years following
the issue date (the "Expiration Date") to exercise each Warrant and receive from
the Company the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price (as herein defined) then in effect for such
Warrant Shares; provided that no Warrant holder shall be entitled to exercise
such holder's Warrants at any time unless, at the time of exercise, (i) a
registration statement under the Securities Act covering the offer and sale of
the Warrant Shares has been filed with, and declared effective by, the
Securities and Exchange Commission (the "SEC"), and no stop order suspending the
effectiveness of such registration statement has been issued by the SEC or (ii)
the offer and sale of the Warrant Shares to the Warrant holder are exempt from
registration under the Securities Act and the holder of the Warrants, if so
requested by the Company, has delivered to the Company an opinion of counsel to
such effect. Each Warrant, when exercised, will entitle the holder thereof to
purchase 34 fully paid and nonassessable Common Shares at the Exercise Price.
The Exercise Price and the number of shares are both subject to adjustment under
certain circumstances as provided herein by Sections 2A and 15. Each Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time.
<PAGE> 13
Page 11
A Warrant may be exercised at any time on or after 180 days from the
date of original issuance thereof upon surrender to the Company at the principal
office of the Warrant Agent of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by an "eligible
guarantor" as defined in the regulations promulgated under the Exchange Act and
upon payment to the Warrant Agent for the account of the Company of the Exercise
Price, as adjusted as herein provided, for each Warrant then exercised. Payment
of the aggregate Exercise Price shall be made in the form of cash or a certified
or official bank or bank cashier's check payable to the order of the Company.
Subject to the provisions of Section 9 hereof, upon such surrender
of Warrants and payment of the Exercise Price, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Warrant holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of whole Warrant Shares issuable upon
the exercise of such Warrants together with any cash which may be payable as
provided in Section 17 hereof; provided that if any consolidation, merger or
lease or sale of assets is proposed to be effected by the Company as described
in Section 14 hereof, or a tender offer or an exchange offer for Common Shares
of the Company shall be made, upon such surrender of Warrants and payment of the
Exercise Price as aforesaid, the Company shall, as soon as possible, but in any
event not later than two Business Days thereafter, issue and cause to be
delivered to the registered holder thereof or any person so designated to be
named therein the full number of Warrant Shares issuable upon the exercise of
such Warrants in the manner described in this sentence together with any cash
which may be payable as provided in Section 17 hereof. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the aggregate Exercise Price. No fractional shares shall be issued upon exercise
of any Warrants in accordance with Section 17 hereof.
The Warrants shall be exercisable at any time on or after 180 days
from the date of original issuance thereof at the election of the holders
thereof, either in full or from time to time in part (in whole shares) and, in
the event that a Warrant Certificate is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the
Expiration Date, a new Warrant Certificate evidencing the remaining Warrant or
Warrants will be issued, and the Warrant Agent is hereby irrevocably authorized
to countersign and to
<PAGE> 14
Page 12
deliver the required new Warrant Certificate or Certificates pursuant to the
provisions of this Section and of Section 4 hereof, and the Company, whenever
required by the Warrant Agent, will supply the Warrant Agent with Warrant
Certificates duly executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled by the Warrant Agent. Such canceled Warrant Certificates shall then
be disposed of by the Company in accordance with applicable law. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies received by the Warrant Agent for
the purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Warrant
holders during normal business hours at its office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may request.
SECTION 9. Reports. So long as any of the Warrants remain
outstanding, the Company shall cause copies of all quarterly and annual
financial reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant
Agent and mailed to the holders of Warrants, in each case, within 15 days after
filing with the SEC. If the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall nevertheless continue
to cause reports, comparable to those that it would be required to file pursuant
to Section 13 or 15(d) of the Exchange Act if it were then subject to the
requirements of either such Section, to be so filed with the SEC for public
availability (unless the SEC will not accept such a filing) and with the Warrant
Agent and mailed to the holders of Warrants, in each case, within the same time
periods as would have applied (including under the preceding sentence) had the
Company then been subject to the requirements of Section 13 or 15(d) of the
Exchange Act. The Company shall make available to investors and prospective
investors of the Warrants information that satisfies the requirements of Rule
144A(d)(4) under the Securities Act.
SECTION 10. Payment of Taxes. No service charge shall be made to any
holder of a Warrant for any exercise, exchange or registration of transfer of
Warrant Certificates, and the Company will pay all documentary stamp taxes
attributable to the initial
<PAGE> 15
Page 13
issuance of Warrant Shares upon the exercise of Warrants or to any Separation;
provided that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 11. Mutilated or Missing Warrant Certificates. If any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity and security there for, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 12. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issuance
thereof, out of the aggregate of its authorized but unissued Common Shares, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of Common Shares which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or the transfer agent for the Common Shares (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates
<PAGE> 16
Page 14
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available to the Warrant Agent any cash which may be payable as provided in
Section 17 hereof. The Company will furnish such Transfer Agent a copy of all
notices of adjustments and certificates related thereto transmitted to each
holder pursuant to Section 18 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 15 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take all corporate action necessary, in
the opinion of its counsel (which may be counsel employed by the Company), in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares will be, upon payment
of the Exercise Price and issuance thereof, duly and validly issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issuance thereof.
SECTION 13. Obtaining Stock Exchange Listings. The Company shall
from time to time take all action necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges, interdealer quotation systems and markets,
if any, on which any Common Shares are then listed or quoted.
SECTION 14. Consolidation. In the event the Company consolidates
with, merges with or into, or sells all or substantially all of its property and
assets to another Person, each Warrant thereafter shall entitle the holder
thereof to receive upon exercise thereof the number of shares of capital stock
or other securities or property which the holder of a Common Share is entitled
to receive upon completion of such consolidation, merger or sale of assets. If
the Company merges or consolidates with, or sells all or substantially all of
its property and assets to, another Person and, in connection therewith,
consideration to the holders of Common Shares in exchange for their shares is
payable solely in cash, or in the event of the dissolution, liquidation or
winding-up of the Company, then the holders of the Warrants will be entitled to
receive distributions on an equal basis with the holders of Common Shares or
other securities issuable upon exercise of the warrants, as if the Warrants had
been exercised immediately prior to such event, less the Exercise Price. Upon
receipt of such
<PAGE> 17
Page 15
payment, if any, the Warrants will expire and the rights of the holders thereof
will cease.
In case of any such merger, consolidation or sale of assets, the
surviving or acquiring Person, and in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with the
Warrant Agent the funds or other consideration, if any, necessary to pay the
holders of the Warrants. After such funds and the surrendered Warrant
Certificate are received, the Warrant Agent shall make payment by delivering a
check in such amount as is appropriate (or, in the case of consideration other
than cash, shall transfer such other consideration as is appropriate) to such
Person or Persons as it may be directed in writing by the holders surrendering
such Warrants.
SECTION 15. Adjustment of Exercise Price.
(a) In case the Company shall make a dividend or other distribution
on the Common Shares exclusively in Common Shares (other than a distribution
referred to in paragraph (c) of this Section), the Exercise Price in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Exercise Price by a fraction
of which the numerator shall be the number of shares of Common Shares
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. In case the Company shall
make a dividend or other distribution on the Common Shares in shares of its
capital stock other than Common Shares, and such dividend or distribution would
not otherwise require reduction of the Exercise Price pursuant to paragraph (d),
then, the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of a Warrant (as in effect immediately
prior to such dividend or distribution) shall be proportionately adjusted so
that the holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of the Company that such holder would
have owned immediately following such dividend or distribution if such Warrant
had been exercised immediately prior thereto. For the purpose of this paragraph
(a), the number of Common Shares at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of Common Shares. The
Company shall not pay any dividend or make
<PAGE> 18
Page 16
any distribution on Common Shares held in the treasury of the Company.
(b) Subject to the last sentence of paragraph (g) of this Section,
in case the Company shall make a dividend or other distribution on the Common
Shares consisting exclusively of, or shall otherwise issue to all holders of the
Common Shares, rights, options or warrants entitling the holders thereof to
subscribe for or purchase Common Shares or securities convertible into or
exchangeable for Common Shares at a price per share (determined on an
as-converted or as-exercised basis if the rights, options or warrants pertain to
securities convertible into or exchangeable for Common Shares) less than the
Current Market Price (determined as provided in paragraph (h) of this Section)
on the date fixed for the determination of shareholders entitled to receive such
rights, options or warrants, the Exercise Price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such Exercise Price by a fraction of which the numerator
shall be the number of Common Shares outstanding at the close of business on the
date fixed for such determination plus the number of Common Shares which the
aggregate of the offering price (including the minimum consideration payable
upon exercise or exchange of securities convertible into or exchangeable for
Common Shares) of the total number of Common Shares so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of Common Shares outstanding at the close of business on the
date fixed for such determination plus the number of Common Shares so offered
for subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of Common
Shares at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of Common Shares. The Company shall not issue any
rights, options or warrants in respect of Common Shares held in the treasury of
the Company.
(c) In case outstanding Common Shares shall be subdivided into a
greater number of Common Shares, the Exercise Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case outstanding
Common Shares shall be combined into a smaller number of Common Shares, the
Exercise Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately
<PAGE> 19
Page 17
after the opening of business on the day following the day upon which
subdivision or combination becomes effective.
(d) (i) Subject to the last sentence of this paragraph (d)(i) and
the last sentence of paragraph (g) of this Section, in case the Company shall,
by dividend or otherwise, distribute to all holders of the Common Shares
evidences of its indebtedness, shares of any class of its capital stock, cash or
other assets (including securities, but excluding any rights, options or
warrants referred to in paragraph (b) of this Section, excluding any dividend or
distribution paid exclusively in cash out of consolidated current or retained
earnings as shown on the books of the Company prepared in accordance with GAAP
(other than any Extraordinary Cash Dividend (as hereinafter defined)) and
excluding any dividend or distribution referred to in paragraph (a) or (c) of
this Section), the Exercise Price shall be reduced by multiplying the Exercise
Price in effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as provided in
paragraph (h) of this Section) on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) on such date of the
portion of the evidences of indebtedness, shares of capital stock, cash and
other assets to be distributed applicable to one Common Share and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d)(i) by reference to the actual or
when-issued trading market for any securities comprising part or all of such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price pursuant to paragraph (h)
of this Section, to the extent possible. For purposes of this paragraph (d)(i),
an "Extraordinary Cash Dividend" shall be that portion, if any, of the aggregate
amount of all cash dividends paid in any fiscal year which exceed $25,000,000.
For purposes of this paragraph (d), any dividend or distribution that includes
Common Shares, rights, options or warrants to subscribe for or purchase Common
Shares or securities convertible into or exchangeable for Common Shares shall be
deemed to be (x) a dividend or distribution of the evidences of indebtedness,
cash, assets or shares of capital stock other than such Common Shares, such
rights, options or warrants or such convertible or exchangeable securities
(making any Exercise Price reduction required by this paragraph (d)(i)
immediately followed by (y) in the case of such Common Shares or such rights,
options or warrants, a dividend or distribution thereof (making any further
Exercise Price reduction required by
<PAGE> 20
Page 18
paragraph (a) and(b) of this Section, except any Common Shares included in such
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of
paragraph (a) of this Section), or (z) in the case of such convertible or
exchangeable securities, a dividend or distribution of the number of Common
Shares as would then be issuable upon the exercise or exchange thereof, whether
or not the exercise or exchange of such securities is subject to any conditions
(making any further Exercise Price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(ii) In case the Company shall issue Common Shares for a
consideration per share less than the Current Market Price (determined as
provided in paragraph (h) of this Section), the Exercise Price shall be reduced
by multiplying the Exercise Price in effect immediately prior to the close of
business on the date on which the Company fixes the offering price of such
additional shares by a fraction of which the numerator shall be the number of
Common Shares outstanding at the close of business on the date fixed for such
determination plus a fraction equal to the aggregate consideration received by
the Company from the issuance of such additional Common Shares over the Current
Market Price on the date on which the Company fixes the offering price of such
additional shares (determined as provided in paragraph (h) of this Section), and
the denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such issuance. The reduction in the Exercise
Price provided for in the preceding sentence shall not apply to (i) securities
issued in transactions described in paragraphs (a), (b), (c), (d)(i), (d)(ii) or
(f) of this Section or pursuant to the exercise or exchange of any such
securities (to the extent applicable); (ii) the exercise or exchange of
securities (including options) convertible or exchangeable for Common Shares
outstanding on the date of this Warrant Agreement, or issuable pursuant to
binding agreements in effect on the date of this Warrant Agreement; (iii) Common
Shares issued and issuable upon the exercise of options issued to the Company's
directors, officers and employees under bona fide employee benefit plans adopted
by the Board of Directors and approved by the holders of Common Shares when
required by law or otherwise where such issuances have been approved by the
Board of Directors (but only to the extent that the aggregate number of shares
excluded hereby and issued after the date of this Warrant Agreement shall not
exceed 1% of the Common Shares outstanding at the time of issuance); (iv) Common
Shares issued to shareholders of any person that merges into the Company in
proportion to their stock
<PAGE> 21
Page 19
holdings of such person immediately prior to such merger, upon such merger; (v)
Common Shares issued in a bona fide underwritten public offering; (vi) Common
Shares issued in a bona fide private placement through a placement agent that is
a member firm of the National Association of Securities Dealers, Inc. (except to
the extent that any discount from the Current Market Price (determined as
provided in paragraph (h) of this Section) attributable to restrictions on
transferability of the Common Shares, as determined in good faith by the Board
of Directors and described in a resolution thereof which shall be filed with the
Warrant Agent, shall exceed 20%), or issuable pursuant to a binding agreement in
effect on the date of this Warrant Agreement; or (vii) Common Shares issued as a
dividend on any securities outstanding on the date of this Warrant Agreement
required to be made pursuant to the certificate of designation pertaining to
such securities in effect at the time such securities were issued.
(iii) In case the Company shall issue any securities
convertible into or exchangeable for Common Shares for a consideration per
Common Share (including the minimum consideration per share payable upon
exercise or exchange of any securities convertible into or exchangeable for
Common Shares) of Common Shares initially deliverable upon exercise or exchange
of such securities less than the Current Market Price (determined as provided in
paragraph (h) of this Section), the Exercise Price shall be reduced by
multiplying the Exercise Price in effect immediately prior to the close of
business on the date on which the Company fixes the offering price of such
additional shares by a fraction of which the numerator shall be the number of
Common Shares outstanding immediately prior to the issuance of such securities
plus a fraction equal to the aggregate consideration received for the issuance
of such securities (including the minimum consideration per share payable upon
exercise or exchange of any securities convertible into or exchangeable for
Common Shares) over the Current Market Price on the date on which the Company
fixes the offering price of such additional shares (determined as provided in
paragraph (h) of this Section) and the denominator of which shall be the number
of shares outstanding immediately prior to the issuance of such securities plus
the maximum number of shares deliverable upon exercise of or in exchange for
such securities at the initial exercise or exchange rate. The reduction in the
Exercise Price provided for in the preceding sentence shall not apply to (i)
securities issued in transactions described in paragraphs (a), (b) or (d) (i) of
this Section; (ii) convertible securities issued to shareholders of any person
that merges into the Company, or with a Subsidiary of the Company, in proportion
to their stock holdings of such person immediately prior to such merger, upon
such merger; (iii) convertible securities issued in a bona fide underwritten
public
<PAGE> 22
Page 20
offering; (iv) convertible securities issued in a bona fide private placement
through a placement agent that is a member firm of the National Association of
Securities Dealers, Inc. (except to the extent that any discount from the
Current Market Price (determined as provided in paragraph (h) of this Section)
attributable to restrictions on transferability of Common Shares issuable upon
exercise, as determined in good faith by the Board of Directors and described in
a resolution thereof which shall be filed with the Warrant Agent, shall exceed
20% of the then Current Market Price, or issuable pursuant to a binding
agreement in effect on the date of this Warrant Agreement; or (v) stock options
issued to the Company's directors, officers or employees.
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Shares cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) (i) of this
Section or in connection with a transaction to which Section 14 applies) in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of the Common Shares made exclusively in cash
within the 12 months preceding the date fixed for the determination of
shareholders entitled to such distribution and in respect of which no Exercise
Price adjustment pursuant to paragraph (d) (i) or this paragraph (e) has been
made previously and (ii) the aggregate of any cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) as of such
date of determination of consideration payable in respect of any tender offer by
the Company or a Subsidiary for all or any portion of the Common Shares, and any
purchase by the Company of Common Shares in the open market, consummated within
the 12 months preceding such date of determination and in respect of which no
Exercise Price adjustment pursuant to paragraph (f) of this Section has been
made previously, exceeds 12.5% of the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) on such date of
determination times the number of Common Shares outstanding on such date, the
Exercise Price shall be reduced by multiplying the Exercise Price in effect
immediately prior to the close of business on such date of determination by a
fraction of which the numerator shall be the Current Market Price (determined as
provided in paragraph (h) of this Section) on such date less the amount of cash
to be distributed at such time applicable to one Common Share and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day after such
date.
(f) In case a tender of exchange offer made by the Company or any
subsidiary for all or any portion of the Common
<PAGE> 23
Page 21
Shares shall be consummated, or in case the Company shall purchase Common Shares
in the open market, the Exercise Price shall be reduced by multiplying the
Exercise Price in effect immediately prior to the Expiration Time by a fraction
of which the numerator shall be (x) the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) times the number of
Common Shares outstanding (including any tendered or exchanged shares) at the
Expiration Time and the denominator shall be the sum of (A) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
shareholders upon consummation of such tender or exchange offer, or upon such
purchase, and (B) the product of such Current Market Price times such number of
outstanding shares at the Expiration Time minus the number of shares accepted
for payment in such tender or exchange offer, or so purchased (the "Purchased
Shares"). For the purpose of this paragraph, "Expiration Time" means either the
last time that tenders may be made pursuant to a tender offer or exchanges may
be made pursuant to an exchange offer, or the time of an agreement to purchase
shares in the open market, as the case may be. Any reduction in the Exercise
Price pursuant to this paragraph shall be made immediately following the close
of business on the last trading day used to compute Current Market Price;
provided, that, such reduction shall be deemed to have become effective
immediately prior to the opening of business on the day following the Expiration
Time. To the extent that a Holder exercises Warrants prior to the conclusion of
the period for which Current Market Price is to be calculated, any adjustment in
the number of Common Shares issuable upon exercise of such Warrant shall inure
to the benefit of the holder of record of such Warrant at the close of business
on the first Trading Day following the Expiration Time.
(g) The reclassification of Common Shares into securities which
include securities other than Common Shares (other than any reclassification
upon a consolidation or merger to which Section 14 applies) shall be deemed to
involve (i) a distribution of such securities other than Common Shares to all
holders of Common Shares (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of shareholders entitled
to such distribution" within the meaning of paragraph (d) (i) of this Section),
and (ii) a subdivision or combination, as the case may be, of the number of
Common Shares outstanding prior to such reclassification into the number of
Common Shares outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (c) of this Section). Rights,
<PAGE> 24
Page 22
options or warrants issued by the Company to all holders of the Common Shares
entitling the holders thereof to subscribe for or purchase Common Shares (either
initially or under certain circumstances), which rights, options or warrants (i)
are deemed to be transferred with such Common Shares, (ii) are not exercisable
and (iii) are also issued in respect of future issuances of Common Shares, in
each case in clauses (i) through (iii) until or upon the occurrence of a
specified event or events ("Trigger Event"), shall for purposes of this Section
15 not be deemed issued until the occurrence of the earliest Trigger Event.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Share (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 30 consecutive trading days
commencing 45 trading days before the date in question. For the purpose of any
computation under paragraph (f) of this Section, the Current Market Price on any
date shall be deemed to be the average of the daily closing prices for the five
consecutive trading days commencing on the first trading day immediately
following the expiration time. Notwithstanding anything to the contrary
contained in this paragraph, (i) the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d) or (e) above
occurs on or after the 15th trading day prior to the date in question and prior
to the "ex" date for the issuance or distribution requiring such computation,
the closing price for each trading day prior to the "ex" date for such other
event shall be adjusted by multiplying such closing price by the same fraction
by which the conversion price is so required to be adjusted as a result of such
other event, (ii) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
conversion price pursuant to paragraph (a),(b), (c), (d), (e) or (f) above
occurs on or after the "ex" date for the issuance or distribution requiring such
computation and on or prior to the date in question, the closing price for each
trading day on and after the "ex" date for such other event shall be adjusted by
multiplying such closing price by the reciprocal of the fraction by which the
conversion price is so required to be adjusted as a result of such other event,
and (iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (ii) of this proviso, the closing
price for each trading day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value on the date in
question (as determined by the Board of Directors in a manner consistent with
any determination of such value for
<PAGE> 25
Page 23
the purposes of paragraph (d) or (e) of this Section, whose determination shall
be conclusive and described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of Capital Stock or assets being distributed
applicable to one share of Common Stock of the Company as of the close of
business on the day before such "ex" date.
(i) (i) If any event shall occur as to which the other provisions
of this Section 15 are not strictly applicable but the failure to make any
adjustment would have the effect of depriving holders of the benefit of all or a
portion of the exercise rights in respect of any Warrant in accordance with the
essential intent and principles of this Section 15, then, in each such case, the
Company shall appoint an Independent Financial Expert, which shall give its
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 15 necessary to preserve,
without dilution, such exercise rights. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the holders and shall make the
adjustments described therein. As used herein, an "Independent Financial Expert"
is a firm (a) which does not, and whose directors, officers and employees or
affiliates do not have a direct or indirect financial interest in the Company
and (b) which, in the judgment of the Board of Directors, is otherwise
independent and qualified to perform the task for which it is to be engaged.
(ii) The Company will not, by amendment of its articles of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holders thereof against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (i) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Common Shares on the exercise of the Warrants from time to time
outstanding and (ii) will not take any action which results in any adjustment of
the Exercise Price if the total number of Common Shares issuable after the
action upon the exercise of all of the Warrants would exceed the total number of
Common Shares then authorized by the Company's certificate of incorporation and
available for the purposes of issue upon such exercise.
(j) The Company may, but shall not be obligated to, make such
reductions in the Exercise Price, in addition to those
<PAGE> 26
Page 24
required by paragraphs (a), (b), (c), (d), (e), (f) and (g) of this Section, as
it considers to be advisable in order that any event treated for United States
federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients or if that is not possible, to diminish any income
taxes that are otherwise payable because of such event. No adjustment shall be
made in respect of any change in the conversion price at which the Company's 9%
Convertible Subordinated Note due 2006 may be converted into Common Shares of
the Company on the "Reset Date", as contemplated by Section 13.1 of the
Indenture dated May 31, 1996 relating to such Notes.
(k) No adjustment in the Exercise Price shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (k)) would require an increase or decrease of at least 1% in the
Exercise Price; provided, however, that any adjustments which by reason of this
paragraph (k) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment shall be made in the
Exercise Price in respect of any change in the conversion price at which the
Convertible Notes may be converted into Common Shares of the Company on the
"Reset Date," as contemplated by Section 2A of this Warrant Agreement relating
to such Convertible Notes.
(l) [Intentionally Deleted]
(m) In any case in which this Section 15 shall require that an
adjustment in the Exercise Price be made effective as of or immediately after a
record date for a specified event, the Company may elect to defer until the
occurrence of such event (i) issuing to the holder of any Warrant exercised
after such record date the Common Shares and other capital stock of the Company,
if any, issuable upon such exercise over and above the Common Shares and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Exercise Price prior to such adjustment and (ii) paying to such holder
any amount in cash in lieu of a fractional share pursuant to Section 17 hereof;
provided that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
Common Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
(n) (i) No adjustment need be made for a transaction referred to
in subsections (a), (b), (c), (e) or (f) of this Section 15 if holders are to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which
<PAGE> 27
Page 25
holders of Common Shares of the Company participate in the transaction.
(ii) No adjustment need be made for (x) a transaction referred
to in subsections (b), (d)(ii) or (d)(iii) of this Section 15 if the below
market portion of such issuances, taken together with the below market portion
of all other below market issuances and with the above market portion of all
above market tender or exchange offers described in clause (y) of this paragraph
made on and after the date of this Warrant Agreement, is less than 2.0% of the
Total Market Capitalization (as defined in the Senior Note Indenture) of the
Company (determined by reference to the sum of the percentages of Total Market
Capitalization of the Company attributable to each such transaction on the date
thereof) and (y) a transaction referred to in subsection (f) of this Section 15
if the above market portion of such tender or exchange offers, taken together
with the above market portion of all other above market tender or exchange
offers and with the below market portion of all below market issuances described
in clause (x) of this paragraph made on or after the date of this Warrant
Agreement, is less than 2.0% of the Total Market Capitalization of the Company
(determined by reference to the sum of the percentages of Total Market
Capitalization of the Company attributable to each such transaction on the date
thereof).
(iii) No adjustment need be made for a change in the par
value, or from par value to no par value, or from no par value to par value, of
the Common Shares.
SECTION 16. [Intentionally Omitted.]
SECTION 17. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 17,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall notify the Warrant Agent in writing of the amount to be paid in
lieu of the fraction of a Warrant Share and concurrently pay or provide to the
Warrant Agent for payment to the Warrant holder an amount in cash equal to the
product of (i) such fraction of a Warrant Share multiplied by (ii) the
difference of the current market price of a Common Share on the trading day
immediately preceding the date the Warrant is
<PAGE> 28
Page 26
presented for exercise over the Exercise Price, computed to the nearest whole
cent.
SECTION 18. Notices to Warrant Holders.
(i) Whenever the Exercise Price is adjusted as herein provided:
(a) The Company shall compute the adjusted Exercise Price in
accordance with Section 15 and shall prepare a certificate signed by the
Treasurer or Chief Financial Officer of the Company setting forth the adjusted
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based,and such certificate shall forthwith be filed (with a copy
to the Trustee) at each office or agency maintained for the purpose of exercise
of Warrants pursuant to this Agreement; and
(b) a notice stating that the Exercise Price has been adjusted and
setting forth the adjusted Exercise Price shall forthwith be prepared, and as
soon as practicable after it is prepared, such notice shall be furnished by the
Company to the Trustee and mailed by the Company at its expense to all
registered holders at their last addresses as they shall appear in the Warrant
register.
(ii) In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Shares payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require an Exercise Price adjustment
pursuant to paragraph (e) of Section 15; or
(b) the Company shall authorize the granting to the holders of its
Common Shares of rights, options or warrants to subscribe for or purchase any
shares of Capital Shares of any class or of any other rights (excluding shares
of Capital Shares or options for Capital Shares issued pursuant to a benefit
plan for employees, officers or directors of the Company; or
(c) of any reclassification of the Common Shares of the Company
(other than a subdivision or combination of the outstanding shares of such
Common Shares), or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
<PAGE> 29
Page 27
(e) the Company or any subsidiary shall commence a tender or
exchange offer (other than an exchange offer contemplated by clause (c) above)
for all or a portion of the outstanding shares of Common Shares (or shall amend
any such tender or exchange offer to change the maximum number of shares being
sought or the amount or type of consideration being offered (including by
exchange) therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to this Agreement, and shall cause to be mailed to all registered
holders at their last addresses as they shall appear in the Warrant register, at
least 21 days (or 11 days in any case specified in clause (a), (b) or (e) above)
prior to the applicable record, effective or expiration date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of its Common Shares of record who will be entitled to such dividend,
distribution, rights, options or warrants are to be determined, (y) the date on
which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of its Common
Shares of record shall be entitled to exchange their Common Shares, for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up, or (z) the date on which such tender or exchange offer (other
than an exchange offer contemplated by clause (y) above) commenced, the date on
which such tender or exchange offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Neither the failure to give any such notice nor
any defect therein shall affect the legality or validity of any action described
in clauses (a) through (e) of this Section 18.
SECTION 19. Warrant Agent. The Warrant Agent under takes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound.
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company. The Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no
<PAGE> 30
Page 28
responsibility with respect to the distribution of the Warrant Certificates
except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it here under in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties. The Warrant Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or revision of this Agreement
or any of the terms hereof, unless evidenced by a writing between the Company
and the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent such compensation
from time to time as agreed between the Company and the Warrant Agent for all
services rendered by the Warrant Agent hereunder and in connection with the
execution of this Agreement, to reimburse the Warrant Agent for all expenses,
taxes (including withholding taxes and the reasonable fees and expenses of its
counsel and agents) and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution, delivery and performance
of its responsibilities under this Agreement and to indemnify the Warrant Agent
and its directors, officers and agents and save them harmless against any and
all liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent and its directors, officers and agents in the
execution, delivery and performance of its responsibilities under this Agreement
except as a result of its gross negligence or bad faith. The provisions of this
Section 19(e) shall survive termination of this Agreement and the resignation or
removal of the Warrant Agent.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one
<PAGE> 31
Page 29
or more registered holders of Warrant Certificates shall furnish the Warrant
Agent with reasonable security and indemnity for any costs and expenses which
may be incurred, but this provision shall not affect the power of the Warrant
Agent to take such action as it may consider proper, whether with or without any
such security or indemnity. All rights of action under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrant Certificates or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrants, as their respective rights or interests may appear.
(g) Except as required by law, the Warrant Agent, and any
stockholder, director, officer or employee of the Warrant Agent, may buy, sell
or deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own gross negligence or
bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
SECTION 20. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may
<PAGE> 32
Page 30
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Warrant Agent shall be a party, or
any corporation succeeding to the business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. To the extent practicable, the
Warrant Agent shall provide prior written notice to the Company of any such
merger, consolidation, succession or similar change with respect to the Warrant
Agent; provided, however, that the failure to deliver such notice will not
affect the rights of any of the parties hereto. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 21. Change of Warrant Agent. If the Warrant Agent shall
become incapable of acting as Warrant Agent or shall resign as provided below,
the Company shall appoint a successor to such Warrant Agent. If the Company
shall fail to make such appointment within a period of 30 days after it has been
notified in writing of such incapacity by the Warrant Agent or by the registered
holders of a majority of Warrant Certificates, then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company.
<PAGE> 33
Page 31
The holders of a majority of the unexercised Warrants shall be entitled at any
time to remove the Warrant Agent and appoint a successor to such Warrant Agent.
Such successor to the Warrant Agent need not be approved by the Company or the
former Warrant Agent. After appointment the successor to the Warrant Agent shall
be vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor to the Warrant
Agent any property at the time held by it here under and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in Section 21, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
The Warrant Agent may resign at any time and be discharged from the
obligations hereby created by so notifying the Company in writing at least 30
days in advance of the proposed effective date of its resignation. If no
successor Warrant Agent accepts the engagement hereunder by such time, the
Company shall act as Warrant Agent.
SECTION 22. Notices to the Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant Certificate to or on the Company shall
be sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Petersburg Long Distance Inc.,
166 Pearl Street,
Toronto, Ontario
Canada M5H 1L3
Attention: Vice President, Administration
with a copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103, U.S.A.
Attention: E.C. Anderson
Any notice pursuant to this Agreement to be given by the Company or
by the registered holder(s) of any Warrant Certificate to the Warrant Agent
shall be sufficiently given when and if deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is filed in
writing by
<PAGE> 34
Page 32
the Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Corporate Trust Department
Fax: (212) 815-5915
Notice may also be given by facsimile transmission (effective when
receipt is acknowledged) (effective at the time of delivery) or by overnight
delivery service (effective the next business day).
SECTION 23. Supplements and Amendments. The Company and the Warrant
Agent may from time to time, with the consent of The Toronto Stock Exchange,
supplement or amend this Agreement without the consent of any holders of Warrant
Certificates in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not in any way materially adversely
affect the interests of the holders of Warrant Certificates. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of holders shall require the written consent of registered holders of a majority
of the then outstanding Warrants. The consent of each holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (other than in accordance with Section
15 or 17 hereof). In executing any amendment or supplement, the Warrant Agent
shall be entitled to receive an opinion of counsel to the effect that such
amendment or supplement is authorized and permitted by this Agreement.
SECTION 24. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 25. Termination. This Agreement shall terminate at 5:00
p.m., New York, New York time on June 1, 2006. Notwithstanding the foregoing,
this Agreement will terminate on such earlier date on which all outstanding
Warrants have been exercised. The provisions of Section 19 hereof shall survive
such termination.
<PAGE> 35
Page 33
SECTION 26. Governing Law; Jurisdiction. This Agreement and each
Warrant Certificate shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York. The Company irrevocably consents to the jurisdiction
of any United States or State Court located in the State of New York in any suit
or proceeding based on or arising under this Agreement or the Warrant
Certificates and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in any such court. The Company irrevocably waives
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company hereby agrees to designate and appoint CT Corporation
System, 1633 Broadway, New York, NY 10019 as an agent upon whom process may be
served in any suit or proceeding based on or arising under this Agreement. The
Company further agrees that service of process upon the Company, or upon an
agent appointed pursuant to the preceding sentence accompanied with written
notice of said service to the Company, as the case may be, mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the Warrant
Agent's or any Warrant holder's right to serve process in any other manner
permitted by law. The Company agrees that a final non-appealable judgment in any
such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
SECTION 27. Indemnity. The Company shall indemnify the Warrant Agent for,
and hold it harmless against, any and all loss, liability or expense (including
reasonable attorneys' fees) arising out of or incurred by it in connection with
the performance of its duties hereunder, except as set forth in the next
paragraph. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Warrant Agent to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend any such claim and the Warrant Agent shall cooperate in the defense
of such claim. The Warrant Agent 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 Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Warrant Agent through the Warrant Agent's
own willful misconduct, negligence or bad faith.
<PAGE> 36
Page 34
The Company's payment obligations pursuant to this Section 27 shall
survive the resignation or removal of the Warrant Agent and termination of this
Warrant Agreement.
SECTION 28. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 29. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
<PAGE> 37
Page 35
SECTION 30. Further Assurances. From time to time on and after the
date hereof, the Company shall deliver or cause to be delivered to the Warrant
Agent such further documents and instruments and shall do and cause to be done
such further acts as the Warrant Agent shall reasonably request (it being under
stood that the Warrant Agent shall have no obligation to make such request) to
carry out more effectively the provisions and purposes of this Agreement, to
evidence compliance herewith or to assure itself that it is protected hereunder.
IN WITNESS WHEREOF, the parties here to have caused this Agreement to be
duly executed, as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ JAMES HATT
-----------------------------
Name: James Hatt
Title: Chairman
THE BANK OF NEW YORK
By: /s/ STEVEN D. TORGESON
-----------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
<PAGE> 38
Page 36
EXHIBIT A
EXERCISABLE ON OR AFTER DECEMBER 9, 1996
AND ON OR BEFORE JUNE 12, 2006
Form of Warrant Certificate
Face
No.______ CUSIP 71623P110
Warrant Certificate
PETERSBURG LONG DISTANCE INC.
This Warrant Certificate certifies that _________, or its registered
assigns, is the registered holder of ________ warrants expiring June 12, 2006
(the "Warrants") to purchase Common Shares (the "Common Shares") of Petersburg
Long Distance Inc. ("the Company"). Each Warrant entitles the holder upon
exercise to receive from the Company, at any time on or after 9:00 a.m., New
York, New York time on December 9, 1996 and on or prior to the close of business
on a date ten years following the issue date fully paid and nonassessable Common
Shares (each a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $6.60 per share payable in the form of cash or certified check,
official bank check or bank cashier's check payable to the order of the Company,
upon surrender of this Warrant Certificate and payment of the aggregate Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to herein. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement. All capitalized terms not defined herein shall
have the meaning assigned to such terms in the Warrant Agreement.
No Warrant may be exercised after 5:00 pm., New York, New York time
on June 12, 2006 and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
far all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
<PAGE> 39
Page 37
IN WITNESS WHEREOF, Petersburg Long Distance Inc. has caused this
Warrant Certificate to be signed by its Chief Executive Officer and by its
Secretary, each by a facsimile of his signature, and has caused a facsimile of
its corporate seal to be affixed here unto or imprinted here on
Dated:
PETERSBURG LONG DISTANCE INC.
By:___________________________
Chief Executive Officer
By:___________________________
Secretary
(seal)
Countersigned:
as Warrant Agent
By: __________________________
Authorized Signatory
<PAGE> 40
Page 38
Form of Warrant Certificate
Reverse
THE WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS WARRANT
CERTIFICATE WAS ORIGINALLY ISSUED, THE COMMON SHARES PURCHASABLE UPON
THEIR EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
THE PROVINCES OF CANADA.
THE COMMON SHARES (THE "COMMON SHARES") FOR WHICH THIS WARRANT IS
EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
ACCORDINGLY, NO WARRANT HOLDER SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S
WARRANTS AT ANY TIME UNLESS, AT THE TIME OF EXERCISE, (I) A REGISTRATION
STATEMENT UNDER THE ACT COVERING THE OFFER AND SALE OF THE COMMON SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT (THE "WARRANT SHARES") HAS BEEN
FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF
SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC OR (II) THE OFFER
AND SALE OF THE WARRANT SHARES TO THE WARRANT HOLDERS ARE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND THE WARRANT HOLDER, IF SO
REQUESTED BY THE COMPANY, HAS DELIVERED TO THE COMPANY AN OPINION OF
COUNSEL TO SUCH EFFECT.
UNTIL THE CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) A DATE 180
DAYS AFTER THE ISSUE OF THE WARRANTS, (ii) SUCH DATE AS SMITH BARNEY INC.
MAY DETERMINE, (iii) THE COMMENCEMENT OF AN EXCHANGE OFFER RELATING TO THE
14% SENIOR DISCOUNT NOTES DUE 2004 (THE "SENIOR NOTES") OF PETERSBURG LONG
DISTANCE INC. (THE "COMPANY"), (iv) IN THE EVENT OF CHANGE OF CONTROL (AS
DEFINED IN THE INDENTURE RELATING TO THE SENIOR NOTES), THE DATE THE
COMPANY MAILS NOTICE THEREOF TO HOLDERS OF THE NOTES, THE WARRANTS
EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED TO ANY
PERSON UNLESS, SIMULTANEOUSLY WITH SUCH TRANSFER, THE HOLDER HEREOF
TRANSFERS TO SUCH TRANSFEREE $1,000 PRINCIPAL AMOUNT AT MATURITY OF SENIOR
NOTES AND A WARRANT TO PURCHASE 34 COMMON SHARES OF THE COMPANY (SUBJECT
TO ADJUSTMENT UNDER SECTION 2A AND SECTION 15 OF THE WARRANT AGREEMENT,
DATED AS OF MAY 31, 1996, BETWEEN THE COMPANY AND THE BANK OF NEW YORK, AS
WARRANT AGENT) SO TRANSFERRED.
By accepting a Warrant Certificate bearing the legend above, each holder shall
be bound by all of the terms and provisions of the Warrant Agreement (a copy of
which is available on request to the Company or the Warrant Agent) as fully and
effectively as if such holder had signed the same.
<PAGE> 41
Page 39
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring June 12, 2006, entitling the holder
upon exercise to receive Common Shares of the Company (the "Common Shares"), and
are issued or to be issued pursuant to a Warrant Agreement, dated as of May 31,
1996 (the "Warrant Agreement"), duly executed and delivered by the Company to
The Bank of New York, as Warrant Agent (the "Warrant Agent"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
Warrants may be exercised at any time on or after 9:00 a.m., New
York, New York time on December 9, 1996 and on or prior to the close of business
on June 12, 2006. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in the form of cash or certified or official
bank check or official bank cashier's check payable to the order of the Company,
at the office of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of Common Shares issuable upon the exercise
of each Warrant shall be adjusted. No fractions of a Common Share will be issued
upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by a legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
<PAGE> 42
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ Common Shares and
herewith tenders payment for such shares to the order of Petersburg Long
Distance, Inc. in the amount of $____ in accordance with the terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of _____________________, whose address is
______________________ and that such shares be delivered to ________________
whose address is ___________.
If said number of shares is less than all of the Common Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_________________, whose address is ______________, and that such Warrant
Certificate be delivered to _______________, whose address is
___________________.
Date: ____________
Your Signature:___________________
(Sign exactly as your name appears on the face of this Warrant) Signature
Guarantee:
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto Insert Taxpayer Identification No.
_______________________________________
_______________________________________
Please print or typewrite name and address including zip code of assignee the
within Warrant Certificate and all rights there under, hereby irrevocably
constituting and appointing
_______________________________________
attorney to transfer the Warrants evidenced by said Warrant Certificate (the
"Warrants") on the books of the Company with full power of substitution in the
premises.
In connection with any transfer of the Warrants occurring prior to
the date which is the earlier of (i) the date of an effective Registration or
(ii) three years after the later of the original issuance of the Warrants or the
last date on which the Warrants were held by an affiliate of the Company, the
undersigned confirms, that without utilizing any general solicitation or general
advertising:
Check One
(a) the Warrants are being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
(b) the Warrants are being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Warrant Certificate and the Warrant Agreement.
<PAGE> 43
If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Warrants in the name of any Person other than the
holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 7(c) of the Warrant Agreement shall
have been satisfied.
Date: NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of the
within-mentioned instrument
in every particular, without
alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Warrant for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned ' s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
NOTICE: To be executed by an executive officer
<PAGE> 44
EXHIBIT B
FORM OF WARRANT SHARES LEGEND
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B)
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND THE PROVINCES OF CANADA."
<PAGE> 1
EXHIBIT 4.10
===============================================================
Dated as of May 31, 1996
by and between
PETERSBURG LONG DISTANCE INC.
and
THE BANK OF NEW YORK
as Warrant Agent
=================================================================
<PAGE> 2
SMITH BARNEY WARRANT AGREEMENT
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. Appointment of Warrant Agent................................... 2
SECTION 2. [Intentionally Omitted......................................... 2
SECTION 3. Smith Barney Warrant Certificates.............................. 2
SECTION 4. Execution of Smith Barney Warrant Certificates................. 2
SECTION 5. Transfers of Smith Barney Warrants............................. 3
(a) ............................................................... 3
(b) Private Placement Legend....................................... 3
(c) Global Smith Barney Warrant Legend............................. 4
SECTION 6. Registration and Countersignature.............................. 4
SECTION 7. (a) Registration of Transfers and Exchanges................... 5
(b) Book-Entry Provisions for the Global Smith Barney
Warrants....................................................... 6
(c) Special Transfer Provisions.................................... 7
SECTION 8. Terms of Smith Barney Warrants; Exercise of Smith
Barney Warrants................................................ 9
SECTION 9. Reports........................................................ 11
SECTION 10. Payment of Taxes............................................... 11
SECTION 11. Mutilated or Missing Smith Barney Warrant
Certificates................................................... 12
SECTION 12. Reservation of Smith Barney Warrant Shares..................... 12
SECTION 13. Obtaining Stock Exchange Listings.............................. 13
SECTION 14. Consolidation.................................................. 13
SECTION 15. Adjustment of Exercise Price................................... 14
SECTION 16. ............................................................... 24
SECTION 17. Fractional Interests........................................... 24
SECTION 18. Notices to Smith Barney Warrant holders........................ 25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 19. Warrant Agent.................................................. 27
SECTION 20. Merger, Consolidation or Change of Name of
Warrant Agent.................................................. 29
SECTION 21. Change of Warrant Agent........................................ 30
SECTION 22. Notices to the Company and Warrant Agent....................... 30
SECTION 23. Supplements and Amendments..................................... 31
SECTION 24. Successors..................................................... 32
SECTION 25. Termination.................................................... 32
SECTION 26. Governing Law; Jurisdiction.................................... 32
SECTION 27. Indemnity...................................................... 33
SECTION 28. Benefits of This Agreement..................................... 33
SECTION 29. Counterparts................................................... 33
SECTION 30. Further Assurances............................................. 33
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
EXHIBIT A Form of Warrant Certificate.................................... 35
EXHIBIT B Form of Warrant Shares Legend.................................. 41
</TABLE>
- --------------------
* This Table of Contents does not constitute a part of this Agreement
or have any bearing upon the interpretation of any of its terms or
provisions.
ii
<PAGE> 4
Page 1
SMITH BARNEY WARRANT AGREEMENT (this "Agreement") dated as of May 31,
1996 between Petersburg Long Distance Inc., (the "Company"), and The Bank of New
York, a New York banking corporation, as Warrant Agent (the "Warrant Agent")
WHEREAS, the Company has entered into an agreement, dated March 28,
1996, (the "Engagement Letter") with Smith Barney Inc. ("Smith Barney") pursuant
to which Smith Barney will provide certain advisory services to the Company,
including those involving the Company's offering and sale of its (i) 123,000
Units (the "Units") consisting of $123,000,000 aggregate principal amount at
maturity of 14% Senior Discount Notes due 2004 (the "Senior Notes") and warrants
(the "Warrants") to purchase up to an aggregate of 4,182,000 common shares
without par value of the Company (the "Common Shares"); and (ii) $26,500,000
principal amount of 9% Convertible Subordinated Notes due 2006; and
WHEREAS, as partial consideration for its services under the Engagement
Letter, on April 30, 1996 (the "Issue Date") the Company issued to Smith Barney
Warrants to purchase 100,000 Common Shares exercisable at $4.70 per share, as to
50,000 Common Shares immediately and as to 50,000 shares on or after 9:00 a.m.
New York time on October 30, 1996 (the "Smith Barney Warrants");
WHEREAS, the Smith Barney Warrants are exercisable at any time during
the five year period commencing on the Issue Date;
WHEREAS, each Smith Barney Warrant entitles the holder thereof, upon
exercise, to purchase one fully paid and nonassessable Common Shares at an
exercise price of US $4.70 per share (the "Exercise Price"). The Exercise Price
and the number of shares are both subject to adjustment under certain
circumstances as provided herein. The Common Shares issuable upon exercise of
the Smith Barney Warrants are referred to herein as "Smith Barney Warrant
Shares");
WHEREAS, the Smith Barney Warrants shall bear the legend (the "Smith
Barney Warrant Legend") set forth on the form of Smith Barney Warrant
Certificate set forth in Exhibit A attached hereto subject to the terms of this
Agreement. Unless registered under the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities laws, the Smith Barney
Warrant Shares shall bear the legend set forth in Exhibit B (the "Smith Barney
Warrant Shares Legend");
WHEREAS, the Company and the Warrant Agent desire to set forth their
respective rights and obligations with respect to the Smith Barney Warrants; and
<PAGE> 5
Page 2
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Smith Barney Warrant Certificates and other matters as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. [Intentionally Omitted.]
SECTION 3. Smith Barney Warrant Certificates. The certificates
evidencing the Smith Barney Warrants ("Smith Barney Warrant Certificates") shall
be substantially in the form annexed hereto as Exhibit A.
Smith Barney Warrants were offered and sold in reliance on Rule 144A
and shall be evidenced initially by a Smith Barney Warrant Certificate. In the
future, the Smith Barney Warrants may be evidenced duly executed by the Company
and countersigned by the Warrant Agent as hereinafter provided. The aggregate
amount of the Smith Barney Warrant may from time to time be increased or
decreased by adjustments made on the records of the Warrant Agent, as custodian
for the Depositary or its nominee, as hereinafter provided.
SECTION 4. Execution of Smith Barney Warrant Certificates. Smith Barney
Warrant Certificates shall be signed on behalf of the Company by any two of the
following officers: its Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, President, any Vice President, Secretary or an Assistant
Secretary, under its Corporate Seal. Each such signature upon the Smith Barney
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, President or any Vice President and Secretary or Assistant Secretary
and may be imprinted or otherwise reproduced on the Smith Barney Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, Chief
Executive Officer, Chief Financial Officer, President, any Vice President,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Smith Barney Warrant Certificates shall be countersigned and delivered or
disposed of he or she shall have ceased to hold such office. The seal of the
Company may be in
<PAGE> 6
Page 3
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Smith Barney Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Smith Barney Warrant Certificates shall cease to be such officer before the
Smith Barney Warrant Certificates so signed shall have been countersigned by the
Warrant Agent, or disposed of by the Company, such Smith Barney Warrant
Certificates nevertheless may be countersigned and delivered or disposed of as
though such person had not ceased to be such officer of the Company; and any
Smith Barney Warrant Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Smith Barney Warrant
Certificate, shall be a proper officer of the Company to sign such Smith Barney
Warrant Certificate, although at the date of the execution of this Agreement any
such person was not such officer.
Smith Barney Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 5. Transfers of Smith Barney Warrants.
(a) The registered holder of a Smith Barney Warrant Certificate
containing a Smith Barney Warrant Legend may surrender such Smith Barney Warrant
Certificate accompanied by a written instrument or instruments of transfer in
form satisfactory to the Warrant Agent, duly executed by the registered holder
or holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney to the Warrant Agent, at its address specified in
Section 22 hereof (the Warrant Agent Office") for the exchange of such Smith
Barney Warrant Certificate containing a Smith Barney Warrant Legend, in whole or
in part, for a new Smith Barney Warrant Certificate or certificates.
(b) Private Placement Legend. Except as otherwise provided in Section
7(c)(ii) hereof, the Global Smith Barney Warrant Certificate shall bear the
following legend (the "Private Placement Legend"):
THE SMITH BARNEY WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS
SMITH BARNEY WARRANT CERTIFICATE WAS ORIGINALLY ISSUED, THE COMMON
SHARES PURCHASABLE UPON THEIR EXERCISE, HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT
<PAGE> 7
Page 4
(A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND THE PROVINCES OF CANADA.
(c) Global Smith Barney Warrant Legend. The Global Smith Barney Warrant
Certificate shall also bear the following legend:
UNLESS THIS SMITH BARNEY WARRANT IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SMITH
BARNEY WARRANT ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE
DEPOSITORY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 7 OF THE SMITH BARNEY WARRANT
AGREEMENT.
SECTION 6. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Smith Barney Warrant
Certificates in a register as they are issued by the Company.
Smith Barney Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Warrant Agent shall, upon written instructions of the
Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President, a Senior
<PAGE> 8
Page 5
Vice President or Secretary of the Company, initially countersign and deliver
Smith Barney Warrant Certificates entitling the holders thereof to purchase not
more than the number of Smith Barney Warrant Shares referred to above in the
first recital hereof and shall countersign and deliver Smith Barney Warrant
Certificates as otherwise provided in this Agreement. Such written instructions
shall specify the amount of the Smith Barney Warrants to be Countersigned and
the date of Countersignature.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Smith Barney Warrant Certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone), for all purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary. The Company agrees to arrange
for the Trustee under the Indenture (or any other Registrar thereunder) to act
as registrar hereunder with respect to Smith Barney Warrants that are not
Separated.
SECTION 7. (a) Registration of Transfers and Exchanges. In accordance
with this Section 7, the Warrant Agent shall from time to time register the
transfer of any outstanding Smith Barney Warrant Certificates upon the records
to be maintained by it for that purpose, upon surrender thereof accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, duly executed by the registered holder or holders thereof or by
the duly appointed legal representative thereof or by a duly authorized
attorney. Upon any such registration of transfer, a new Smith Barney Warrant
Certificate shall be issued to the transferee(s) and the surrendered Smith
Barney Warrant Certificate shall be canceled by the Warrant Agent. Canceled
Smith Barney Warrant Certificates shall thereafter be disposed of by the Warrant
Agent in a manner consistent with the Warrant Agent's customary procedure and in
accordance with applicable law.
Smith Barney Warrant Certificates may be exchanged at the option of the
holder(s) thereof, when surrendered to the Warrant Agent at its office for
another Smith Barney Warrant Certificate or other Smith Barney Warrant
Certificates of like tenor and representing in the aggregate a like number of
Smith Barney Warrants. Smith Barney Warrant Certificates surrendered for
exchange shall be canceled by the Warrant Agent. Such canceled Smith Barney
Warrant Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure and in accordance with
applicable law.
No service charge shall be made for any transfer or exchange of Smith
Barney Warrant Certificates or any issuance of
<PAGE> 9
Page 6
Smith Barney Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other governmental charge or tax that may be
imposed in connection with any such transfer or exchange.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 7 and Section 5, the new Smith Barney
Warrant Certificates required pursuant to the provisions of this Section 7.
(b) Book-Entry Provisions for the Global Smith Barney Warrants. (i) The
Global Smith Barney Warrant Certificate initially shall (x) be registered in the
name of the Depositary or the nominee of such Depositary, (y) be delivered to
the Warrant Agent as custodian for the Depositary and (z) bear the legend as set
forth in Section 5(b).
(ii)Transfers of the Global Smith Barney Warrant Certificates
shall be limited to transfers of such Global Smith Barney Warrant Certificates
in whole, but not in part, to the Depositary, its successors or their respective
nominees. Beneficial interests in the Global Smith Barney Warrant may be
transferred in accordance with the applicable rules and procedures of the
Depositary. Physical Smith Barney Warrant Certificates in substantially the form
set forth in Exhibit A ("Physical Smith Barney Warrant Certificates") evidencing
physical warrants ("Physical Smith Barney Warrants"), shall be transferred to
all beneficial owners in exchange for their beneficial interests in the Global
Smith Barney Warrant if the Depositary notifies the Company that it is unwilling
or unable to continue as, or ceases to be, a "Clearing Agency" registered under
Section 17A of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and a successor depositary registered as a "Clearing Agency" under
Section 17 of the Exchange Act is not appointed by the Company within 90 days of
such notice.
(iii)In connection with the transfer of the Global Smith Barney
Warrant to beneficial owners pursuant to paragraph (b) (ii) of this Section 7,
the Global Smith Barney Warrant shall be deemed to be surrendered to the Warrant
Agent for cancellation, and the Company shall execute, and the Warrant Agent
shall countersign and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in the Global Smith Barney
Warrant, an equal aggregate amount of Physical Smith Barney Warrant Certificates
of authorized denominations.
(iv)Any Physical Smith Barney Warrant Certificate delivered in
exchange for an interest in the Global Smith Barney
<PAGE> 10
Page 7
Warrant pursuant to paragraph (b) (ii) of this Section 7 shall, except as
otherwise provided by paragraph (c) (ii) of this Section 7, bear the legend
regarding transfer restrictions set forth in Section 5(b).
(v) The registered holder of the Global Smith Barney Warrant may
grant proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action which
a Smith Barney Warrant holder is entitled to take under this Smith Barney
Warrant Agreement or the Smith Barney Warrants.
(c) Special Transfer Provisions.
(i) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Smith Barney Warrant
to a QIB:
(x) If the Smith Barney Warrant to be transferred consists of
Physical Smith Barney Warrants, the Warrant Agent shall
register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the
form of Smith Barney Warrant stating, or has otherwise advised
the Company and the Warrant Agent in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the
form of Smith Barney Warrant stating, or has otherwise advised
the Company and the Warrant Agent in writing, that it is
purchasing the Smith Barney Warrant for its own account or an
account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the
transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule
144A.
(y)If the proposed transferee is an Agent Member and the Smith
Barney Warrant to be
<PAGE> 11
Page 8
transferred consists of Physical Smith Barney Warrants, upon
receipt by the Warrant Agent of the documents referred to in
clause (x) and instructions given in accordance with the
Depositary's and the Warrant Agent's procedures, the Warrant
Agent shall reflect on its books and records the date and an
increase in the aggregate amount of the Global Smith Barney
Warrant in an amount equal to the aggregate amount of the
Physical Smith Barney Warrants, as the case may be, to be
transferred, and the Warrant Agent shall cancel the Physical
Smith Barney Warrants so transferred.
(ii) Private Placement Legend. Upon the transfer, exchange or
replacement of Smith Barney Warrant Certificates not bearing the Private
Placement Legend, the Warrant Agent shall deliver Smith Barney Warrant
Certificates that do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Smith Barney Warrant Certificates bearing the Private
Placement Legend, the Warrant Agent shall deliver only Smith Barney Warrant
Certificates that bear the Private Placement Legend unless there is delivered to
the Warrant Agent an opinion of counsel reasonably satisfactory to the Company
and the Warrant Agent to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act and the provisions of applicable Canadian
provincial securities legislation.
(iii) General. The provisions hereof shall be qualified in their
entirety by any applicable securities laws of the United States, the Province of
Ontario, and any other applicable jurisdiction and by the procedures of any
applicable clearing agency, in each case as in effect from time to time, and all
such laws and clearing procedures shall be deemed to be incorporated herein by
reference. By its acceptance of any Smith Barney Warrant Certificate bearing the
Private Placement Legend, each holder of such a Smith Barney Warrant Certificate
shall be deemed to acknowledge the restrictions on transfer of such Smith Barney
Warrant Certificate set forth in this Smith Barney Warrant Agreement and in the
Private Placement Legend and agrees that it will transfer such Smith Barney
Warrant Certificate only as provided in this Smith Barney Warrant Agreement. The
Warrant Agent shall not register a transfer of any Smith Barney Warrant
Certificate unless such transfer complies with the restrictions on transfer of
such Smith Barney Warrant Certificate set forth in this Smith Barney Warrant
Agreement. In connection with any transfer of Smith Barney Warrant Certificates,
each Smith Barney
<PAGE> 12
Page 9
Warrant holder agrees by its acceptance of the Smith Barney Warrant Certificates
to furnish the Warrant Agent or the Company such certifications, legal opinions
or other information as either of them may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act and the
provisions of applicable Canadian provincial securities legislation; provided
that the Warrant Agent shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
SECTION 8. Terms of Smith Barney Warrants; Exercise of Smith Barney
Warrants. Subject to the terms of this Agreement, each Smith Barney Warrant
holder shall have the right, which may be exercised at any time from the date of
original issuance thereof and on or prior to the close of business on April 30,
2001 (the "Expiration Date") to exercise each Smith Barney Warrant and receive
from the Company the number of fully paid and nonassessable Smith Barney Warrant
Shares which the holder may at the time be entitled to receive on exercise of
such Smith Barney Warrants and payment of the Exercise Price (as herein defined)
then in effect for such Smith Barney Warrant Shares; provided that no Smith
Barney Warrant holder shall be entitled to exercise such holder's Smith Barney
Warrants at any time unless, at the time of exercise, (i) a registration
statement under the Securities Act covering the offer and sale of the Smith
Barney Warrant Shares has been filed with, and declared effective by, the
Securities and Exchange Commission (the "SEC"), and no stop order suspending the
effectiveness of such registration statement has been issued by the SEC or (ii)
the offer and sale of the Smith Barney Warrant Shares to the Smith Barney
Warrant holder are exempt from registration under the Securities Act and the
holder of the Smith Barney Warrants, if so requested by the Company, has
delivered to the Company an opinion of counsel to such effect. Each Smith Barney
Warrant, when exercised, will entitle the holder thereof to purchase one fully
paid and nonassessable Common Share at the Exercise Price. The Exercise Price
and the number of shares are both subject to adjustment under certain
circumstances as provided herein by Section 15. Each Smith Barney Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time.
A Smith Barney Warrant may be exercised at any time on or after the
date of original issuance thereof upon surrender to the Company at the principal
office of the Warrant Agent of the Smith Barney Warrant Certificate or
Certificates to be exercised
<PAGE> 13
Page 10
with the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by an "eligible guarantor" as
defined in the regulations promulgated under the Exchange Act and upon payment
to the Warrant Agent for the account of the Company of the Exercise Price, as
adjusted as herein provided, for each Smith Barney Warrant then exercised.
Payment of the aggregate Exercise Price shall be made in the form of cash or a
certified or official bank or bank cashier's check payable to the order of the
Company.
Subject to the provisions of Section 9 hereof, upon such surrender of
Smith Barney Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the Smith Barney Warrant holder and in such name or names as the Smith
Barney Warrant holder may designate, a certificate or certificates for the
number of whole Smith Barney Warrant Shares issuable upon the exercise of such
Smith Barney Warrants together with any cash which may be payable as provided in
Section 17 hereof; provided that if any consolidation, merger or lease or sale
of assets is proposed to be effected by the Company as described in Section 14
hereof, or a tender offer or an exchange offer for Common Shares of the Company
shall be made, upon such surrender of Smith Barney Warrants and payment of the
Exercise Price as aforesaid, the Company shall, as soon as possible, but in any
event not later than two Business Days thereafter, issue and cause to be
delivered to the registered holder thereof or any person so designated to be
named therein the full number of Smith Barney Warrant Shares issuable upon the
exercise of such Smith Barney Warrants in the manner described in this sentence
together with any cash which may be payable as provided in Section 17 hereof.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such Smith Barney Warrant Shares as of the date of the surrender of
such Smith Barney Warrants and payment of the aggregate Exercise Price. No
fractional shares shall be issued upon exercise of any Smith Barney Warrants in
accordance with Section 17 hereof.
The Smith Barney Warrants shall be exercisable at any time on or after
the date of original issuance thereof at the election of the holders thereof,
either in full or from time to time in part (in whole shares) and, in the event
that a Smith Barney Warrant Certificate is exercised in respect of fewer than
all of the Smith Barney Warrant Shares issuable on such exercise at any time
prior to the Expiration Date, a new Smith Barney Warrant Certificate evidencing
the remaining Smith Barney Warrant or Smith Barney Warrants will be issued, and
the Warrant Agent is hereby irrevocably authorized to countersign and to deliver
the required new Smith Barney Warrant Certificate or Certificates
<PAGE> 14
Page 11
pursuant to the provisions of this Section and of Section 4 hereof, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Smith Barney Warrant Certificates duly executed on behalf of the Company
for such purpose.
All Smith Barney Warrant Certificates surrendered upon exercise of
Smith Barney Warrants shall be canceled by the Warrant Agent. Such canceled
Smith Barney Warrant Certificates shall then be disposed of by the Company in
accordance with applicable law. The Warrant Agent shall account promptly to the
Company with respect to Smith Barney Warrants exercised and concurrently pay to
the Company all monies received by the Warrant Agent for the purchase of the
Smith Barney Warrant Shares through the exercise of such Smith Barney Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the Smith Barney Warrant
holders during normal business hours at its office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may request.
SECTION 9. Reports. So long as any of the Smith Barney Warrants remain
outstanding, the Company shall cause copies of all quarterly and annual
financial reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant
Agent and mailed to the holders of Smith Barney Warrants, in each case, within
15 days after filing with the SEC. If the Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
nevertheless continue to cause reports, comparable to those that it would be
required to file pursuant to Section 13 or 15(d) of the Exchange Act if it were
then subject to the requirements of either such Section, to be so filed with the
SEC for public availability (unless the SEC will not accept such a filing) and
with the Warrant Agent and mailed to the holders of Smith Barney Warrants, in
each case, within the same time periods as would have applied (including under
the preceding sentence) had the Company then been subject to the requirements of
Section 13 or 15(d) of the Exchange Act. The Company shall make available to
investors and prospective investors of the Smith Barney Warrants information
that satisfies the requirements of Rule 144A(d)(4) under the Securities Act.
SECTION 10. Payment of Taxes. No service charge shall be made to any
holder of a Smith Barney Warrant for any exercise,
<PAGE> 15
Page 12
exchange or registration of transfer of Smith Barney Warrant Certificates, and
the Company will pay all documentary stamp taxes attributable to the initial
issuance of Smith Barney Warrant Shares upon the exercise of Smith Barney
Warrants or to any Separation; provided that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Smith Barney Warrant Certificates or any certificates for
Smith Barney Warrant Shares in a name other than that of the registered holder
of a Smith Barney Warrant Certificate surrendered upon the exercise of a Smith
Barney Warrant, and the Company shall not be required to issue or deliver such
Smith Barney Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
SECTION 11. Mutilated or Missing Smith Barney Warrant Certificates. If
any of the Smith Barney Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue and the Warrant Agent may
countersign, in exchange and substitution for and upon cancellation of the
mutilated Smith Barney Warrant Certificate, or in lieu of and substitution for
the Smith Barney Warrant Certificate lost, stolen or destroyed, a new Smith
Barney Warrant Certificate of like tenor and representing an equivalent number
of Smith Barney Warrants, but only upon receipt of evidence satisfactory to the
Company and the Warrant Agent of such loss, theft or destruction of such Smith
Barney Warrant Certificate and indemnity and security there for, if requested,
also satisfactory to them. Applicants for such substitute Smith Barney Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 12. Reservation of Smith Barney Warrant Shares. The Company
will at all times reserve and keep available, free of preemptive rights and free
from all taxes, liens, charges and security interests with respect to the
issuance thereof, out of the aggregate of its authorized but unissued Common
Shares, for the purpose of enabling it to satisfy any obligation to issue Smith
Barney Warrant Shares upon exercise of Smith Barney Warrants, the maximum number
of Common Shares which may then be deliverable upon the exercise of all
outstanding Smith Barney Warrants.
The Company or the transfer agent for the Common Shares (the "Transfer
Agent") and every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the rights of purchase
aforesaid will be
<PAGE> 16
Page 13
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Smith Barney Warrants. The
Warrant Agent is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent the stock certificates required to honor outstanding
Smith Barney Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available to
the Warrant Agent any cash which may be payable as provided in Section 17
hereof. The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to each holder pursuant
to Section 18 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 15 hereof to reduce the Exercise Price below the then par value (if any)
of the Smith Barney Warrant Shares, the Company will take all corporate action
necessary, in the opinion of its counsel (which may be counsel employed by the
Company), in order that the Company may validly and legally issue fully paid and
nonassessable Smith Barney Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Smith Barney Warrant Shares will be,
upon payment of the Exercise Price and issuance thereof, duly and validly
issued, fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issuance
thereof.
SECTION 13. Obtaining Stock Exchange Listings. The Company shall from
time to time take all action necessary so that the Smith Barney Warrant Shares,
immediately upon their issuance upon the exercise of Smith Barney Warrants, will
be listed on the principal securities exchanges, interdealer quotation systems
and markets, if any, on which any Common Shares are then listed or quoted.
SECTION 14. Consolidation. In the event the Company consolidates with,
merges with or into, or sells all or substantially all of its property and
assets to another Person, each Smith Barney Warrant thereafter shall entitle the
holder thereof to receive upon exercise thereof the number of shares of capital
stock or other securities or property which the holder of a Common Share is
entitled to receive upon completion of such consolidation, merger or sale of
assets. If the Company merges
<PAGE> 17
Page 14
or consolidates with, or sells all or substantially all of its property and
assets to, another Person and, in connection therewith, consideration to the
holders of Common Shares in exchange for their shares is payable solely in cash,
or in the event of the dissolution, liquidation or winding-up of the Company,
then the holders of the Smith Barney Warrants will be entitled to receive
distributions on an equal basis with the holders of Common Shares or other
securities issuable upon exercise of the warrants, as if the Smith Barney
Warrants had been exercised immediately prior to such event, less the Exercise
Price. Upon receipt of such payment, if any, the Smith Barney Warrants will
expire and the rights of the holders thereof will cease.
In case of any such merger, consolidation or sale of assets, the
surviving or acquiring Person, and in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with the
Warrant Agent the funds or other consideration, if any, necessary to pay the
holders of the Smith Barney Warrants. After such funds and the surrendered Smith
Barney Warrant Certificate are received, the Warrant Agent shall make payment by
delivering a check in such amount as is appropriate (or, in the case of
consideration other than cash, shall transfer such other consideration as is
appropriate, to such Person or Persons as it may be directed in writing by the
holders surrendering such Smith Barney Warrants.
SECTION 15. Adjustment of Exercise Price. (a) In case the Company shall
make a dividend or other distribution on the Common Shares exclusively in Common
Shares (other than a distribution referred to in paragraph (c) of this Section),
the Exercise Price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Exercise
Price by a fraction of which the numerator shall be the number of shares of
Common Shares outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. In case the Company
shall make a dividend or other distribution on the Common Shares in shares of
its capital stock other than Common Shares, and such dividend or distribution
would not otherwise require reduction of the Exercise Price pursuant to
paragraph (d), then, the Exercise Price and the number and kind of shares of
capital stock of the Company issuable upon the exercise of a Smith Barney
Warrant (as in effect immediately prior to such dividend or distribution) shall
be proportionately adjusted so that the
<PAGE> 18
Page 15
holder of any Smith Barney Warrant thereafter exercised may receive the
aggregate number and kind of shares of capital stock of the Company that such
holder would have owned immediately following such dividend or distribution if
such Smith Barney Warrant had been exercised immediately prior thereto. For the
purpose of this paragraph (a), the number of Common Shares at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of Common Shares. The Company shall not pay any dividend or make any
distribution on Common Shares held in the treasury of the Company.
(b) Subject to the last sentence of paragraph (g) of this Section, in
case the Company shall make a dividend or other distribution on the Common
Shares consisting exclusively of, or shall otherwise issue to all holders of the
Common Shares, rights, options or warrants entitling the holders thereof to
subscribe for or purchase Common Shares or securities convertible into or
exchangeable for Common Shares at a price per share (determined on an
as-converted or as-exercised basis if the rights, options or warrants pertain to
securities convertible into or exchangeable for Common Shares) less than the
Current Market Price (determined as provided in paragraph (h) of this Section)
on the date fixed for the determination of shareholders entitled to receive such
rights, options or warrants, the Exercise Price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such Exercise Price by a fraction of which the numerator
shall be the number of Common Shares outstanding at the close of business on the
date fixed for such determination plus the number of Common Shares which the
aggregate of the offering price (including the minimum consideration payable
upon exercise or exchange of securities convertible into or exchangeable for
Common Shares) of the total number of Common Shares so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of Common Shares outstanding at the close of business on the
date fixed for such determination plus the number of Common Shares so offered
for subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of Common
Shares at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of Common Shares. The Company shall not issue any
rights, options or warrants in respect of Common Shares held in the treasury of
the Company.
(c) In case outstanding Common Shares shall be subdivided into a
greater number of Common Shares, the Exercise
<PAGE> 19
Page 16
Price in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately reduced, and,
conversely, in case outstanding Common Shares shall be combined into a smaller
number of Common Shares, the Exercise Price in effect at the opening of business
on the day following the day upon which such combination becomes effective shall
be proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which subdivision or combination becomes effective.
(d) (i) Subject to the last sentence of this paragraph (d)(i) and the
last sentence of paragraph (g) of this Section, in case the Company shall, by
dividend or otherwise, distribute to all holders of the Common Shares evidences
of its indebtedness, shares of any class of its capital stock, cash or other
assets (including securities, but excluding any rights, options or warrants
referred to in paragraph (b) of this Section, excluding any dividend or
distribution paid exclusively in cash out of consolidated current or retained
earnings as shown on the books of the Company prepared in accordance with GAAP
(other than any Extraordinary Cash Dividend (as hereinafter defined)) and
excluding any dividend or distribution referred to in paragraph (a) or (c) of
this Section), the Exercise Price shall be reduced by multiplying the Exercise
Price in effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as provided in
paragraph (h) of this Section) on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) on such date of the
portion of the evidences of indebtedness, shares of capital stock, cash and
other assets to be distributed applicable to one Common Share and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d)(i) by reference to the actual or
when-issued trading market for any securities comprising part or all of such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price pursuant to paragraph (h)
of this Section, to the extent possible. For purposes of this paragraph (d)(i),
an "Extraordinary Cash Dividend" shall be that portion, if any, of the aggregate
amount of all cash dividends paid in any fiscal year which exceed $25,000,000.
For purposes of this paragraph (d), any dividend or distribution that includes
Common Shares, rights, options or warrants to subscribe for or purchase Common
Shares or securities convertible into or exchangeable for Common
<PAGE> 20
Page 17
Shares shall be deemed to be (x) a dividend or distribution of the evidences of
indebtedness, cash assets or shares of capital stock other than such Common
Shares, such rights, options or warrants or such convertible or exchangeable
securities (making any Exercise Price reduction required by this paragraph
(d)(i) immediately followed by (y) in the case of such Common Shares or such
rights, options or warrants, a dividend or distribution thereof (making any
further Exercise Price reduction required by paragraph (a) and(b) of this
Section, except any Common Shares included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section), or (z)
in the case of such convertible or exchangeable securities, a dividend or
distribution of the number of Common Shares as would then be issuable upon the
exercise or exchange thereof, whether or not the exercise or exchange of such
securities is subject to any conditions (making any further Exercise Price
reduction required by paragraph (a) of this Section, except the shares deemed to
constitute such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the meaning
of paragraph (a) of this Section).
(ii)In case the Company shall issue Common Shares for a consideration
per share less than the Current Market Price (determined as provided in
paragraph (h) of this Section), the Exercise Price shall be reduced by
multiplying the Exercise Price in effect immediately prior to the close of
business on the date on which the Company fixes the offering price of such
additional shares by a fraction of which the numerator shall be the number of
Common Shares outstanding at the close of business on the date fixed for such
determination plus a fraction equal to the aggregate consideration received by
the Company from the issuance of such additional Common Shares over the Current
Market Price on the date on which the Company fixes the offering price of such
additional shares (determined as provided in paragraph (h) of this Section), and
the denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such issuance. The reduction in the Exercise
Price provided for in the preceding sentence shall not apply to (i) securities
issued in transactions described in paragraphs (a), (b), (c), (d)(i), (d)(ii) or
(f) of this Section or pursuant to the exercise or exchange of any such
securities (to the extent applicable); (ii) the exercise or exchange of
securities (including options) convertible or exchangeable for Common Shares
outstanding on the date of this Smith Barney Warrant Agreement, or issuable
pursuant to binding agreements in effect on the date of this Smith Barney
Warrant Agreement; (iii) Common Shares issued and issuable upon the exercise of
options issued to the Company's directors, officers and employees under bona
fide
<PAGE> 21
Page 18
employees benefit plans adopted by the Board of Directors and approved by the
holders of Common Shares when required by law or otherwise where such issuances
have been approved by the Board of Directors (but only to the extent that the
aggregate number of shares excluded hereby and issued after the date of this
Smith Barney Warrant Agreement shall not exceed 1% of the Common Shares
outstanding at the time of issuance); (iv) Common Shares issued to shareholders
of any person that merges into the Company in proportion to their stock holdings
of such person immediately prior to such merger, upon such merger; (v) Common
Shares issued in a bona fide underwritten public offering; (vi) Common Shares
issued in a bona fide private placement through a placement agent that is a
member firm of the National Association of Securities Dealers, Inc. (except to
the extent that any discount from the Current Market Price (determined as
provided in paragraph (h) of this Section) attributable to restrictions on
transferability of the Common Shares, as determined in good faith by the Board
of Directors and described in a resolution thereof which shall be filed with the
Warrant Agent, shall exceed 20%), or issuable pursuant to a binding agreement in
effect on the date of this Smith Barney Warrant Agreement; or (vii) Common
Shares issued as a dividend on any securities outstanding on the date of this
Smith Barney Warrant Agreement required to be made pursuant to the certificate
of designation pertaining to such securities in effect at the time such
securities were issued.
(iii) In case the Company shall issue any securities convertible into
or exchangeable for Common Shares for a consideration per Common Share
(including the minimum consideration per share payable upon exercise or exchange
of any securities convertible into or exchangeable for Common Shares) of Common
Shares initially deliverable upon exercise or exchange of such securities less
than the Current Market Price (determined as provided in paragraph (h) of this
Section), the Exercise Price shall be reduced by multiplying the Exercise Price
in effect immediately prior to the close of business on the date on which the
Company fixes the offering price of such additional shares by a fraction of
which the numerator shall be the number of Common Shares outstanding immediately
prior to the issuance of such securities plus a fraction equal to the aggregate
consideration received for the issuance of such securities (including the
minimum consideration per share payable upon exercise or exchange of any
securities convertible into or exchangeable for Common Shares) over the Current
Market Price on the date on which the Company fixes the offering price of such
additional shares (determined as provided in paragraph (h) of this Section) and
the denominator of which shall be the number of shares outstanding immediately
prior to the issuance of such securities plus the maximum number of shares
deliverable upon exercise of or in exchange for such securities at the initial
exercise or exchange
<PAGE> 22
Page 19
rate. The reduction in the Exercise Price provided for in the preceding sentence
shall not apply to (i) securities issued in transactions described in paragraphs
(a), (b) or (d) (i) of this Section; (ii) convertible securities issued to
shareholders of any person that merges into the Company, or with a Subsidiary of
the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger; (iii) convertible securities issued in a
bona fide underwritten public offering; (iv) convertible securities issued in a
bona fide private placement through a placement agent that is a member firm of
the National Association of Securities Dealers, Inc. (except to the extent that
any discount from the Current Market Price (determined as provided in paragraph
(h) of this Section) attributable to restrictions on transferability of Common
Shares issuable upon exercise, as determined in good faith by the Board of
Directors and described in a resolution thereof which shall be filed with the
Warrant Agent, shall exceed 20% of the then Current Market Price, or issuable
pursuant to a binding agreement in effect on the date of this Smith Barney
Warrant Agreement; or (v) stock options issued to the Company's directors,
officers or employees.
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Shares cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) (i) of this
Section or in connection with a transaction to which Section 14 applies in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of the Common Shares made exclusively in cash
within the 12 months preceding the date fixed for the determination of
shareholders entitled to such distribution and in respect of which no Exercise
Price adjustment pursuant to paragraph (d) (i) or this paragraph (e) has been
made previously and (ii) the aggregate of any cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) as of such
date of determination of consideration payable in respect of any tender offer by
the Company or a Subsidiary for all or any portion of the Common Shares, and any
purchase by the Company of Common Shares in the open market, consummated within
the 12 months preceding such date of determination and in respect of which no
Exercise Price adjustment pursuant to paragraph (f) of this Section has been
made previously, exceeds 12.5% of the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) on such date of
determination times the number of Common Shares outstanding on such date, the
Exercise Price shall be reduced by multiplying the Exercise Price in effect
immediately prior to the close of business on such date of determination by a
fraction of which the numerator shall be the Current Market Price
<PAGE> 23
Page 20
(determined as provided in paragraph (h) of this Section) on such date less the
amount of cash to be distributed at such time applicable to one Common Share and
the denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day after such
date.
(f) In case a tender of exchange offer made by the Company or any
subsidiary for all or any portion of the Common Shares shall be consummated, or
in case the Company shall purchase Common Shares in the open market, the
Exercise Price shall be reduced by multiplying the Exercise Price in effect
immediately prior to the Expiration Time by a fraction of which the numerator
shall be (x) the product of the Current Market Price (determined as provided in
paragraph (h) of this Section) times the number of Common Shares outstanding
(including any tendered or exchanged shares) at the Expiration Time and the
denominator shall be the sum of (A) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders upon
consummation of such tender or exchange offer, or upon such purchase, and (B)
the product of such Current Market Price times such number of outstanding shares
at the Expiration Time minus the number of shares accepted for payment in such
tender or exchange offer, or so purchased (the "Purchased Shares"). For the
purpose of this paragraph, "Expiration Time" means either the last time that
tenders may be made pursuant to a tender offer or exchanges may be made pursuant
to an exchange offer, or the time of an agreement to purchase shares in the open
market, as the case may be. Any reduction in the Exercise Price pursuant to this
paragraph shall be made immediately following the close of business on the last
trading day used to compute Current Market Price; provided, that, such reduction
shall be deemed to have become effective immediately prior to the opening of
business on the day following the Expiration Time. To the extent that a holder
exercises Smith Barney Warrants prior to the conclusion of the period for which
Current Market Price is to be calculated, any adjustment in the number of Common
Shares issuable upon exercise of such Smith Barney Warrant shall inure to the
benefit of the holder of record of such Smith Barney Warrant at the close of
business on the first Trading Day following the Expiration Time.
(g) The reclassification of Common Shares into securities which include
securities other than Common Shares (other than any reclassification upon a
consolidation or merger to which Section 14 applies) shall be deemed to involve
(i) a distribution of such securities other than Common Shares to all holders of
Common Shares (and the effective date of such reclassification shall be deemed
to be "the date fixed for the determination of shareholders entitled to such
distribution"
<PAGE> 24
Page 21
within the meaning of paragraph (d) (i) of this Section), and (ii) a subdivision
or combination, as the case may be, of the number of Common Shares outstanding
prior to such reclassification into the number of Common Shares outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective "or" the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of paragraph (c) of this Section). Rights, options or warrants issued by the
Company to all holders of the Common Shares entitling the holders thereof to
subscribe for or purchase Common Shares (either initially or under certain
circumstances), which rights, options or warrants (i) are deemed to be
transferred with such Common Shares, (ii) are not exercisable and (iii) are also
issued in respect of future issuances of Common Shares, in each case in clauses
(i) through (iii) until or upon the occurrence of a specified event or events
("Trigger Event"), shall for purposes of this Section 15 not be deemed issued
until the occurrence of the earliest Trigger Event.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Share (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 30 consecutive trading days
commencing 45 trading days before the date in question. For the purpose of any
computation under paragraph (f) of this Section, the Current Market Price on any
date shall be deemed to be the average of the daily closing prices for the five
consecutive trading days commencing on the first trading day immediately
following the expiration time. Notwithstanding anything to the contrary
contained in this paragraph, (i) the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d) or (e) above
occurs on or after the 15th trading day prior to the date in question and prior
to the "ex" date for the issuance or distribution requiring such computation,
the closing price for each trading day prior to the "ex" date for such other
event shall be adjusted by multiplying such closing price by the same fraction
by which the conversion price is so required to be adjusted as a result of such
other event, (ii) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
conversion price pursuant to paragraph (a),(b), (c), (d), (e) or (f) above
occurs on or after the "ex" date for the issuance or distribution requiring such
computation and on or prior to the date in question, the closing price for each
trading day on and after the "ex" date for such other event shall be adjusted by
multiplying such closing price
<PAGE> 25
Page 22
by the reciprocal of the fraction by which the conversion price is so required
to be adjusted as a result of such other event, and (iii) if the "ex" date for
the issuance or distribution requiring such computation is on or prior to the
date in question, after taking into account any adjustment required pursuant to
clause (ii) of this proviso, the closing price for each trading day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash and
the fair market value on the date in question (as determined by the Board of
Directors in a manner consistent with any determination of such value for the
purposes of paragraph (d) or (e) of this Section, whose determination shall be
conclusive and described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of Capital Stock or assets being distributed
applicable to one share of Common Stock of the Company as of the close of
business on the day before such "ex" date.
(i) (i) If any event shall occur as to which the other provisions of
this Section 15 are not strictly applicable but the failure to make any
adjustment would have the effect of depriving holders of the benefit of all or a
portion of the exercise rights in respect of any Smith Barney Warrant in
accordance with the essential intent and principles of this Section 15, then, in
each such case, the Company shall appoint an Independent Financial Expert, which
shall give its opinion upon the adjustment, if any, on a basis consistent with
the essential intent and principles established in this Section 15 necessary to
preserve, without dilution, such exercise rights. Upon receipt of such opinion,
the Company will promptly mail a copy thereof to the holders and shall make the
adjustments described therein. As used herein, an "Independent Financial Expert"
is a firm (a) which does not, and whose directors, officers and employees or
affiliates do not have a direct or indirect financial interest in the Company
and (b) which, in the judgment of the Board of Directors, is otherwise
independent and qualified to perform the task for which it is to be engaged.
(ii) The Company will not, by amendment of its articles of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Smith Barney Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders thereof
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (i) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Common Shares on the exercise
<PAGE> 26
Page 23
of the Smith Barney Warrants from time to time outstanding and (ii) will not
take any action which results in any adjustment of the Exercise Price if the
total number of Common Shares issuable after the action upon the exercise of all
of the Smith Barney Warrants would exceed the total number of Common Shares then
authorized by the Company's certificate of incorporation and available for the
purposes of issue upon such exercise.
(j) The Company may, but shall not be obligated to, make such
reductions in the Exercise Price, in addition to those required by paragraphs
(a), (b), (c), (d), (e), (f) and (g) of this Section, as it considers to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients or if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(k) No adjustment in the Exercise Price shall be required unless such
adjustment (plus any other adjustments not previously made by reason of this
paragraph (k)) would require an increase or decrease of at least 1% in the
Exercise Price; provided, however, that any adjustments which by reason of this
paragraph (k) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment shall be made in
respect of any change in the conversion price at which the Company's 9%
Convertible Subordinated Note due 2006 may be converted into Common Shares of
the Company on the "Reset Date", as contemplated by Section 13.1 of the
Indenture dated May 31, 1996 relating to such Notes.
(l) [Intentionally Deleted] Notwithstanding any other provision of this
Section 15, no adjustment to the Exercise Price shall reduce the Exercise Price
below the then par value per Common Share, and any such purported adjustment
shall instead reduce the Exercise Price to such par value. The Company hereby
covenants not to take any action to increase the par value per Common Share.
(m) In any case in which this Section 15 shall require that an
adjustment in the Exercise Price be made effective as of or immediately after a
record date for a specified event, the Company may elect to defer until the
occurrence of such event (i) issuing to the holder of any Smith Barney Warrant
exercised after such record date the Common Shares and other capital stock of
the Company, if any, issuable upon such exercise over and above the Common
Shares and other capital stock of the Company, if any, issuable upon such
exercise on the basis of the Exercise Price prior to such adjustment and (ii)
paying to such holder any amount in cash in lieu of a fractional share pursuant
to Section 17 hereof; provided that the Company
<PAGE> 27
Page 24
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional Common Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
(n) (i) No adjustment need be made for a transaction referred to in
subsections (a), (b), (c), (e) or (f) of this Section 15 if holders are to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which holders of Common Shares of the Company participate in the transaction.
(ii) No adjustment need be made for (x) a transaction referred to
in subsections (b), (d)(ii) or (d)(iii) of this Section 15 if the below market
portion of such issuances, taken together with the below market portion of all
other below market issuances and with the above market portion of all above
market tender or exchange offers described in clause (y) of this paragraph made
on and after the date of this Smith Barney Warrant Agreement, is less than 2.0%
of the Total Market Capitalization (as defined in the Senior Note Indenture) of
the Company (determined by reference to the sum of the percentages of Total
Market Capitalization of the Company attributable to each such transaction on
the date thereof) and (y) a transaction referred to in subsection (f) of this
Section 15 if the above market portion of such tender or exchange offers, taken
together with the above market portion of all other above market tender or
exchange offers and with the below market portion of all below market issuances
described in clause (x) of this paragraph made on or after the date of this
Smith Barney Warrant Agreement, is less than 2.0% of the Total Market
Capitalization of the Company (determined by reference to the sum of the
percentages of Total Market Capitalization of the Company attributable to each
such transaction on the date thereof).
(iii) No adjustment need be made for a change in the par value, or
from par value to no par value, or from no par value to par value, of the Common
Shares.
SECTION 16. [Intentionally Omitted.]
SECTION 17. Fractional Interests. The Company shall not be required to
issue fractional Smith Barney Warrant Shares on the exercise of Smith Barney
Warrants. If more than one Smith Barney Warrant shall be presented for exercise
in full at the same time by the same holder, the number of full Smith Barney
Warrant Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Smith Barney Warrant Shares
purchasable on exercise of the Smith Barney
<PAGE> 28
Page 25
Warrants so presented. If any fraction of a Smith Barney Warrant Share would,
except for the provisions of this Section 17, be issuable on the exercise of any
Smith Barney Warrants (or specified portion thereof), the Company shall notify
the Warrant Agent in writing of the amount to be paid in lieu of the fraction of
a Smith Barney Warrant Share and concurrently pay or provide to the Warrant
Agent for payment to the Smith Barney Warrant holder an amount in cash equal to
the product of (i) such fraction of a Warrant Share multiplied by (ii) the
difference of the current market price of a Common Share on the trading day
immediately preceding the date the Smith Barney Warrant is presented for
exercise over the Exercise Price, computed to the nearest whole cent.
SECTION 18. Notices to Smith Barney Warrant holders.
(i) Whenever the Exercise Price is adjusted as herein provided:
(a) The Company shall compute the adjusted Exercise Price in
accordance with Section 15 and shall prepare a certificate signed by the
Treasurer or Chief Financial Officer of the Company setting forth the adjusted
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based,and such certificate shall forthwith be filed (with a copy
to the Trustee) at each office or agency maintained for the purpose of exercise
of Warrants pursuant to this Agreement; and
(b) a notice stating that the Exercise Price has been adjusted and
setting forth the adjusted Exercise Price shall forthwith be prepared, and as
soon as practicable after it is prepared, such notice shall be furnished by the
Company to the Trustee and mailed by the Company at its expense to all
registered holders at their last addresses as they shall appear in the Smith
Barney Warrant register.
(ii) In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Shares payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require an Exercise Price adjustment
pursuant to paragraph (e) of Section 15; or
(b) the Company shall authorize the granting to the holders of its
Common Shares of rights, options or warrants to subscribe for or purchase any
shares of Capital Shares of any class or of any other rights (excluding shares
of Capital Shares or options for Capital Shares issued pursuant to a benefit
plan for employees, officers or directors of the Company; or
<PAGE> 29
Page 26
(c) of any reclassification of the Common Shares of the Company (other
than a subdivision or combination of the outstanding shares of such Common
Shares), or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company or any subsidiary shall commence a tender or exchange
offer (other than an exchange offer contemplated by clause (c) above) for all or
a portion of the outstanding shares of Common Shares (or shall amend any such
tender or exchange offer to change the maximum number of shares being sought or
the amount or type of consideration being offered (including by exchange)
therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to this Agreement, and shall cause to be mailed to all registered
holders at their last addresses as they shall appear in the Smith Barney Warrant
register, at least 21 days (or 11 days in any case specified in clause (a), (b)
or (e) above) prior to the applicable record, effective or expiration date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or granting of rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of its Common Shares of record who will be entitled to such
dividend, distribution, rights, options or warrants are to be determined, (y)
the date on which such reclassification, consolidation, merger, share exchange,
sale, transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of its Common
Shares of record shall be entitled to exchange their Common Shares, for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up, or (z) the date on which such tender or exchange offer (other
than an exchange offer contemplated by clause (y) above) commenced, the date on
which such tender or exchange offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Neither the failure to give any such notice nor
any defect therein shall affect the legality or validity of any action described
in clauses (a) through (e) of this Section 18.
<PAGE> 30
Page 27
SECTION 19. Warrant Agent. The Warrant Agent under takes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Smith Barney Warrants, by their
acceptance thereof, shall be bound.
(a) The statements contained herein and in the Smith Barney Warrant
Certificates shall be taken as statements of the Company. The Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Smith
Barney Warrant Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Smith Barney Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Smith Barney
Warrant Certificate in respect of any action taken, suffered or omitted by it
here under in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Smith Barney Warrant Certificate for any action
taken in reliance on any Smith Barney Warrant Certificate, certificate of
shares, notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties. The Warrant Agent shall not be
bound by any notice or demand, or any waiver, modification, termination or
revision of this Agreement or any of the terms hereof, unless evidenced by a
writing between the Company and the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent such compensation
from time to time as agreed upon between the Company and the Warrant Agent for
all services rendered by the Warrant Agent hereunder and in connection with the
execution of this Agreement, to reimburse the Warrant Agent for all expenses,
taxes (including withholding taxes and the reasonable fees and expenses of its
counsel and agents) and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution, delivery and performance
of its responsibilities under this Agreement and to indemnify the
<PAGE> 31
Page 28
Warrant Agent and its directors, officers and agents, and save them harmless
against any and all liabilities, including judgments, costs and counsel fees,
for anything done or omitted by the Warrant Agent and its directors, officers
and agents in the execution, delivery and performance of its responsibilities
under this Agreement except as a result of its gross negligence or bad faith.
The provisions of this Section 19(e) shall survive termination of this Agreement
and the resignation or removal of the Warrant Agent.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Smith Barney
Warrant Certificates shall furnish the Warrant Agent with reasonable security
and indemnity for any costs and expenses which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such action as
it may consider proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Smith Barney
Warrants may be enforced by the Warrant Agent without the possession of any of
the Smith Barney Warrant Certificates or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Smith Barney Warrants, as their respective rights or interests
may appear.
(g) Except as required by law, the Warrant Agent, and any stockholder,
director, officer or employee of the Warrant Agent, may buy, sell or deal in any
of the Smith Barney Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own gross negligence or
bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Smith Barney Warrant Certificate to make or
cause to be made any adjustment of
<PAGE> 32
Page 29
the Exercise Price or number of the Smith Barney Warrant Shares or other
securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Smith Barney Warrant Shares or of any securities or property which may at
any time be issued or delivered upon the exercise of any Smith Barney Warrant or
with respect to whether any such Smith Barney Warrant Shares or other securities
will when issued be validly issued and fully paid and nonassessable, and makes
no representation with respect thereto.
SECTION 20. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided that such corporation would be
eligible for appointment as a successor warrant agent under the provisions of
Section 21 hereof. To the extent practicable, the Warrant Agent shall provide
prior written notice to the Company of any such merger, consolidation,
succession or similar change with respect to the Warrant Agent; provided,
however, that the failure to deliver such notice will not affect the rights of
any of the parties hereto. In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, and in case at that
time any of the Smith Barney Warrant Certificates shall have been countersigned
but not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent; and in case at that time any of
the Smith Barney Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Smith Barney Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor to the Warrant Agent; and in all such cases such Smith Barney
Warrant Certificates shall have the full force and effect provided in the Smith
Barney Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Smith Barney Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been changed
may adopt the countersignature under its prior name, and in case at that time
any of the Smith Barney Warrant Certificates shall not have been
<PAGE> 33
Page 30
countersigned, the Warrant Agent may countersign such Smith Barney Warrant
Certificates either in its prior name or in its changed name, and in all such
cases such Smith Barney Warrant Certificates shall have the full force and
effect provided in the Smith Barney Warrant Certificates and in this Agreement.
SECTION 21. Change of Warrant Agent. If the Warrant Agent shall become
incapable of acting as Warrant Agent or shall resign as provided below, the
Company shall appoint a successor to such Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such incapacity by the Warrant Agent or by the registered
holders of a majority of Smith Barney Warrant Certificates, then the registered
holder of any Smith Barney Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant Agent.
Pending appointment of a successor to such Warrant Agent, either by the Company
or by such a court, the duties of the Warrant Agent shall be carried out by the
Company. The holders of a majority of the unexercised Smith Barney Warrants
shall be entitled at any time to remove the Warrant Agent and appoint a
successor to such Warrant Agent. Such successor to the Warrant Agent need not be
approved by the Company or the former Warrant Agent. After appointment the
successor to the Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; but the former Warrant Agent shall deliver and
transfer to the successor to the Warrant Agent any property at the time held by
it here under and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to give any notice provided for in
Section 21, however, or any defect therein, shall not affect the legality or
validity of the appointment of a successor to the Warrant Agent.
The Warrant Agent may resign at any time and be discharged from the
obligations hereby created by so notifying the Company in writing at least 30
days in advance of the proposed effective date of its resignation. If no
successor Warrant Agent accepts the engagement hereunder by such time, the
Company shall act as Warrant Agent.
SECTION 22. Notices to the Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Smith Barney Warrant Certificate to or on the
Company shall be sufficiently given or made when and if deposited in the mail,
first class or registered, postage prepaid, addressed (until another address is
filed in writing by the Company with the Warrant Agent), as follows:
<PAGE> 34
Page 31
Petersburg Long Distance Inc.,
166 Pearl Street,
Toronto, Ontario
Canada M5H 1L3
Attention: Vice President, Administration
with a copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103, U.S.A.
Attention: E.C. Anderson
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder(s) of any Smith Barney Warrant Certificate to the Warrant
Agent shall be sufficiently given when and if deposited in the mail, first-class
or registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Department
fax: (212) 815-5915
Notice may also be given by facsimile transmission (effective when
receipt is acknowledged) (effective at the time of delivery) or by overnight
delivery service (effective the next business day).
SECTION 23. Supplements and Amendments. The Company and the Warrant
Agent may from time to time, with the consent of The Toronto Stock Exchange,
supplement or amend this Agreement without the consent of any holders of Smith
Barney Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not in any way materially
adversely affect the interests of the holders of Smith Barney Warrant
Certificates. Any amendment or supplement to this Agreement that has a material
adverse effect on the interests of holders shall require the written consent of
registered holders of a majority of the then outstanding Smith Barney Warrants.
The consent of each holder of a Smith Barney Warrant affected shall be required
for any amendment pursuant to which the Exercise Price would be increased or the
number of Smith Barney Warrant
<PAGE> 35
Page 32
Shares purchasable upon exercise of Smith Barney Warrants would be decreased
(other than in accordance with Section 15 or 17 hereof).
In executing any amendment or supplement, the Warrant Agent shall be
entitled to receive an opinion of counsel to the Company to the effect that such
amendment or supplement is authorized and permitted by this Agreement.
SECTION 24. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 25. Termination. This Agreement shall terminate at 5:00 p.m.,
New York, New York time on April 30, 2001. Notwithstanding the foregoing, this
Agreement will terminate on such earlier date on which all outstanding Smith
Barney Warrants have been exercised. The provisions of Section 19 hereof shall
survive such termination.
SECTION 26. Governing Law; Jurisdiction. This Agreement and each Smith
Barney Warrant Certificate shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the
jurisdiction of any United States or State Court located in the State of New
York in any suit or proceeding based on or arising under this Agreement or the
Smith Barney Warrant Certificates and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in any such court. The
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company hereby agrees to designate
and appoint CT Corporation System, 1633 Broadway, New York, NY 10019 as an agent
upon whom process may be served in any suit or proceeding based on or arising
under this Agreement. The Company further agrees that service of process upon
the Company, or upon an agent appointed pursuant to the preceding sentence
accompanied with written notice of said service to the Company, as the case may
be, mailed by first class mail shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. Nothing
herein shall affect the Warrant Agent's or any Smith Barney Warrant holder's
right to serve process in any other manner permitted by law. The Company agrees
that a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.
<PAGE> 36
Page 33
SECTION 27. Indemnity. The Company shall indemnify the Warrant Agent
for, and hold it harmless against, any and all loss, liability or expense
(including reasonable attorneys' fees) arising out of or incurred by it in
connection with the performance of its duties hereunder, except as set forth in
the next paragraph. The Warrant Agent shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Warrant Agent to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend any such claim and the Warrant Agent shall cooperate in the
defense of such claim. The Warrant Agent 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 Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Warrant Agent through the Warrant
Agent's own willful misconduct, negligence or bad faith.
The Company's payment obligations pursuant to this Section 27 shall
survive the resignation or removal of the Warrant Agent and termination of this
Smith Barney Warrant Agreement.
SECTION 28. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Smith Barney Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered holders of the Smith Barney Warrant
Certificates.
SECTION 29. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 30. Further Assurances. From time to time on and after the date
hereof, the Company shall deliver or cause to be delivered to the Warrant Agent
such further documents and instruments and shall do and cause to be done such
further acts as the Warrant Agent shall reasonably request (it being under stood
that the Warrant Agent shall have no obligation to make such request) to carry
out more effectively the provisions and purposes of this Agreement, to evidence
compliance herewith or to assure itself that it is protected hereunder.
<PAGE> 37
Page 34
IN WITNESS WHEREOF, the parties here to have caused this Agreement to
be duly executed, as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
------------------------------------
------------------------------------
Name: James Hatt
Title: Chairman
THE BANK OF NEW YORK
By: /s/ Steven D. Torgeson
------------------------------------
------------------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
<PAGE> 38
Page 35
EXHIBIT A
EXERCISABLE AS TO 50,000 COMMON SHARES ON OR AFTER JUNE 12, 1996
AND AS TO 50,000 COMMON SHARES ON OR AFTER OCTOBER 30, 1996
AND ON OR BEFORE APRIL 30, 2001
No. 100,000 Smith Barney Warrants
------------
CUSIP 71623P128
---------
Smith Barney Warrant Certificate
PETERSBURG LONG DISTANCE INC.
This Certificate certifies that SMITH BARNEY INC., or registered
assigns, is the registered holder of 100,000 warrants expiring (the "Smith
Barney Warrants") to purchase the Common Shares (the "Common Shares"), of
Petersburg Long Distance Inc. ("the Company"). Each Smith Barney Warrant
entitles the holder upon exercise to receive from the Company, at any time on or
after 9:00 a.m., New York, New York time on the date of issuance thereof and on
or prior to the close of business on April 30, 2001 fully paid and nonassessable
Common Shares (each a "Smith Barney Warrant Share") at the initial exercise
price (the "Exercise Price") of $4.70 payable in the form of cash or certified
or official bank check payable to the order of the Company, upon surrender of
this Smith Barney Warrant Certificate and payment of the aggregate Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the Smith Barney Warrant Agreement referred
to herein. The Exercise Price and number of Smith Barney Warrant Shares issuable
upon exercise of the Smith Barney Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Smith Barney Warrant Agreement.
All capitalized terms not defined herein shall have the meaning assigned to such
terms in the Smith Barney Warrant Agreement.
No Smith Barney Warrant may be exercised after 5:00 p.m., New York, New
York on April 30, 2001 and to the extent not exercised by such time such Smith
Barney Warrants shall become void.
Reference is hereby made to the further provisions of this Smith Barney
Warrant Certificate set forth on the reverse hereof and such further provisions
shall far all purposes have the same effect as though fully set forth at this
place.
<PAGE> 39
Page 36
This Smith Barney Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Smith Barney
Warrant Agreement.
This Smith Barney Warrant Certificate shall be governed and construed
in accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, Petersburg Long Distance Inc. has caused this Smith
Barney Warrant Certificate to be signed by its Chief Executive Officer and by
its Secretary, each by a facsimile of his signature, and has caused a facsimile
of its corporate seal to be affixed here unto or imprinted here on
Dated:
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
--------------------------
James Hatt
Chairman
By: /s/ Alan Brown
--------------------------
Alan Brown
Secretary
(seal)
Countersigned:
as Warrant Agent
By:
----------------------
Authorized Signatory
<PAGE> 40
Page 37
Form of Smith Barney Warrant Certificate
Reverse
THE SMITH BARNEY WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE
THIS SMITH BARNEY WARRANT CERTIFICATE WAS ORIGINALLY ISSUED, THE
COMMON SHARES PURCHASABLE UPON THEIR EXERCISE, HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B)
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND THE PROVINCES OF CANADA.
THE COMMON SHARES OF THE COMPANY (THE "COMMON SHARES") FOR WHICH
THIS SMITH BARNEY WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD
IN THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT,
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS OR IN CANADA EXCEPT PURSUANT TO
AN APPLICABLE EXEMPTION. ACCORDINGLY, NO SMITH BARNEY WARRANT HOLDER
SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S SMITH BARNEY WARRANTS AT
ANY TIME UNLESS, AT THE TIME OF EXERCISE, (I) A REGISTRATION
STATEMENT UNDER THE ACT COVERING THE OFFER AND SALE OF THE COMMON
SHARES ISSUABLE UPON THE EXERCISE OF THIS SMITH BARNEY WARRANT (THE
"SMITH BARNEY WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED
EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"),
AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION
STATEMENT HAS BEEN ISSUED BY THE SEC OR (II) THE OFFER AND SALE OF
THE SMITH BARNEY WARRANT SHARES TO THE SMITH BARNEY WARRANT HOLDERS
ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT (AND
APPLICABLE CANADIAN PROVINCIAL SECURITIES LEGISLATION) AND THE SMITH
BARNEY WARRANT HOLDER, IF SO REQUESTED BY THE COMPANY, HAS DELIVERED
TO THE COMPANY AN OPINION OF COUNSEL TO SUCH EFFECT.
By accepting a Smith Barney Warrant Certificate bearing the legend above, each
holder shall be bound by all of the terms and provisions of the Smith Barney
Warrant Agreement (a copy of which is available on request to the Company or the
Warrant Agent) as fully and effectively as if such holder had signed the same.
The Smith Barney Warrants evidenced by this Smith Barney Warrant
Certificate are part of a duly authorized issue of Smith Barney Warrants
expiring April 30, 2001, entitling the holder upon exercise to receive Common
Shares of the Company (the
<PAGE> 41
Page 38
"Common Shares"), and are issued or to be issued pursuant to a Smith Barney
Warrant Agreement, dated as of May 31, 1996 (the "Smith Barney Warrant
Agreement"), duly executed and delivered by the Company to the Bank of New York,
as Warrant Agent (the "Warrant Agent"), which Smith Barney Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities there under of the Warrant Agent, the Company
and the holders (the words "holders" or "holder" meaning the registered holders
or registered holder) of the Smith Barney Warrants.
Smith Barney Warrants may be exercised at any time on or after 9:00
a.m., New York, New York time on the date of issuance thereof and on or prior to
the close of business on April 30, 2001. The holder of Smith Barney Warrants
evidenced by this Smith Barney Warrant Certificate may exercise them by
surrendering this Smith Barney Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in the form of cash or certified or official bank check or
official bank cashier's check payable to the order of the Company, at the office
of the Warrant Agent. In the event that upon any exercise of Smith Barney
Warrants evidenced hereby the number of Smith Barney Warrants exercised shall be
less than the total number of Smith Barney Warrants evidenced hereby, there
shall be issued to the holder hereof or his assignee a new Smith Barney Warrant
Certificate evidencing the number of Smith Barney Warrants not exercised.
The Smith Barney Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the Smith
Barney Warrant Agreement provides that the number of Common Shares issuable upon
the exercise of each Smith Barney Warrant shall be adjusted. No fractions of a
Common Share will be issued upon the exercise of any Smith Barney Warrant, but
the Company will pay the cash value thereof determined as provided in the Smith
Barney Warrant Agreement.
Smith Barney Warrant Certificates, when surrendered at the office of
the Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Smith Barney Warrant
Agreement, but without payment of any service charge, for another Smith Barney
Warrant Certificate or Smith Barney Warrant Certificates of like tenor
evidencing in the aggregate a like number of Smith Barney Warrants.
<PAGE> 42
Page 39
Upon due presentation for registration of transfer of this Smith Barney
Warrant Certificate at the office of the Warrant Agent a new Smith Barney
Warrant Certificate or Smith Barney Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Smith Barney Warrants shall be
issued to the transferee(s) in exchange for this Smith Barney Warrant
Certificate, subject to the limitations provided in the Smith Barney Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Smith Barney Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Smith Barney Warrants nor this Smith Barney Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
<PAGE> 43
Page 40
Form of Election to Purchase
(To Be Executed Upon Exercise Of Smith Barney Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Smith Barney Warrant Certificate, to receive __________
Common Shares and herewith tenders payment for such shares to the order of
Petersburg Long Distance, Inc. in the amount of $____ in accordance with the
terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of _____________________, whose address is
______________________ and that such shares be delivered to ________________
whose address is ___________.
If said number of shares is less than all of the Common Shares
purchasable hereunder, the undersigned requests that a new Smith Barney Warrant
Certificate representing the remaining balance of such shares be registered in
the name of _________________, whose address is ______________, and that such
Smith Barney Warrant Certificate be delivered to _______________, whose address
is ___________________.
Date: ____________
Your Signature:___________________
(Sign exactly as your name appears on the face of this Smith Barney
Warrant) Signature Guarantee:
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto Insert Taxpayer Identification No.
- ---------------------------------
- ---------------------------------
Please print or typewrite name and address including zip code of assignee the
within Smith Barney Warrant Certificate and all rights there under, hereby
irrevocably constituting and appointing
- ---------------------------------------
attorney to transfer the Smith Barney Warrants evidenced by said Smith Barney
Warrant Certificate (the "Smith Barney Warrants") on the books of the Company
with full power of substitution in the
premises.
<PAGE> 44
Page 41
In connection with any transfer of the Smith Barney Warrants occurring
prior to the date which is the earlier of (i) the date of an effective
Registration or (ii) three years after the later of the original issuance of the
Smith Barney Warrants or the last date on which the Smith Barney Warrants were
held by an affiliate of the Company, the undersigned confirms, that without
utilizing any general solicitation or general advertising:
Check One
(a) the Smith Barney Warrants are being transferred in compliance with
the exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
(b) the Smith Barney Warrants are being transferred other than in
accordance with (a) above and documents are being furnished which
comply with the conditions of transfer set forth in this Smith
Barney Warrant Certificate and the Smith Barney Warrant Agreement.
If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Smith Barney Warrants in the name of any Person other
than the holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 7(c) of the Smith Barney Warrant
Agreement shall have been satisfied.
Date: NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Smith Barney Warrant for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
<PAGE> 45
Page 42
Dated:
NOTICE: To be executed by an
executive officer
<PAGE> 46
Page 43
EXHIBIT B
FORM OF SMITH BARNEY WARRANT SHARES LEGEND
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER (IF AVAILABLE) AND
(B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND THE PROVINCES OF CANADA."
<PAGE> 1
EXHIBIT 4.11
COMPANY SENIOR NOTE ESCROW ACCOUNT AGREEMENT
This COMPANY SENIOR NOTE ESCROW ACCOUNT AGREEMENT (the "Agreement"),
dated as of May 31, 1996, among The Bank of New York, a New York banking
corporation, as escrow agent (in such capacity, the "Escrow Agent"), The Bank of
New York, a New York banking corporation, as trustee (in such capacity, the
"Senior Note Trustee") under the Senior Note Indenture (as defined herein), The
Bank of New York, a New York banking corporation, as trustee (in such capacity,
the "Convertible Note Trustee") under the Convertible Note Indenture (as defined
herein), and Petersburg Long Distance Inc., an Ontario corporation (the
"Company").
RECITALS
A. Pursuant to the Indenture, dated as of May 31, 1996 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Senior Note Indenture"), among the Company, the corporations acting as
guarantors and named therein (the "Senior Note Guarantors") and the Senior Note
Trustee, the Company is issuing $123,000,000 aggregate principal amount at
Stated Maturity of its 14% Senior Discount Notes due 2004 (the "Senior Notes").
B. Pursuant to the Indenture, dated as of May 31, 1996 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Convertible Note Indenture"), among the Company, the corporations acting as
guarantors and named therein (the "Convertible Note Guarantors", the Convertible
Note Guarantors and the Senior Note Guarantors are collectively called the
"Guarantors") and the Convertible Note Trustee, the Company is issuing
$26,500,000 aggregate principal amount of its 9% Convertible Subordinated Notes
due 2006 (the "Convertible Notes").
C. As security for its obligations, among other things, under the
Senior Notes and the Senior Note Indenture and as security for its obligations,
among other things, under the Convertible Notes and the Convertible Note
Indenture, the Company is required to enter into a Company Senior Note Security
and Pledge Agreement of even date herewith (the "Company Senior Note Security
Agreement"), with the Senior Note Trustee, the collateral agent named therein
(the "Senior Note Collateral Agent") and the Convertible Note Trustee in which
the Company is granting liens on certain collateral described therein (the
"Senior Note Collateral").
D. As security for its obligations, among other things, under the
Senior Notes and the Senior Note Indenture and as security for its obligations,
among other things, under the Convertible Notes and the Convertible Note
Indenture, the Company is required to deposit the Initial Escrow Amount (as
defined
<PAGE> 2
herein) in a special, segregated and irrevocable account in the name of and
beneficially owned by the Company which is pledged to, and to be under the sole
dominion and control of, the Senior Note Trustee, acting for its benefit and the
equal and ratable benefit of the Holders of the Senior Notes, and the
Convertible Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Convertible Notes (the "Company Senior Note Escrow
Account") pending the reinvestment of such amounts in accordance with the Senior
Note Indenture.
E. Under the terms of the Senior Note Indenture and the Company
Senior Note Security Agreement, the Company is required to deposit all
dividends, distributions, payments and proceeds of the Senior Note Collateral
consisting of cash or cash equivalents in the Company Senior Note Escrow Account
pending the reinvestment of such amounts in accordance with the Senior Note
Indenture.
F. As security for its obligations, among other things, under the
Senior Notes and the Senior Note Indenture and as security for its obligations,
among other things, under the Convertible Notes and the Convertible Note
Indenture, the Company is required to enter into a Company Convertible Note
Security and Pledge Agreement of even date herewith with the Convertible Note
Trustee, the collateral agent named therein (the "Convertible Note Collateral
Agent") and the Senior Note Trustee, in which the Company is granting Liens on
and a security interest in all of the Preferred Stock of Technocom Limited, an
Irish corporation and a subsidiary of the Company, directly or indirectly owned
by the Company and certain other Collateral described therein (the "Convertible
Note Collateral").
G. The parties have entered into this Agreement in order to set
forth the conditions upon which, and the manner in which, funds will be
disbursed from the Company Senior Note Escrow Account and released from the
security interest and Liens described above.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Terms used herein and not defined herein shall
have the meanings as defined in the Senior Note Indenture. In addition to any
other defined terms used herein, the following terms shall constitute defined
terms for purposes of this Agreement and shall have the meanings set forth
below:
"Affiliates" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified person
-2-
<PAGE> 3
or (ii) any other person who is a director or officer (A) of such specified
person, (B) of any subsidiary of such specified person or (C) of any person
described in clause (i) above or (iii) any person in which such person has,
directly or indirectly, a 5% or greater voting or economic interest or the power
to control. For purposes of this definition, control of a person means the
power, directly or indirectly, to direct or cause the direction of the
management or policies of such person whether through the ownership of voting
securities or by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied pursuant to
Section 3(a) or pursuant to Section 6(b) (iii).
"Available Funds" means (A) the sum of (i) all amounts deposited in
the Company Senior Note Escrow Account from time to time and (ii) interest
earned or dividends paid on the funds in the Escrow Accounts (including holdings
of Eligible Cash Equivalents), less (B) the aggregate disbursements previously
made pursuant to this Agreement.
"Collateral" shall have the meaning given in Section 6(a) hereof.
"Company Senior Note Escrow Account" shall have the meaning given in
Section 2(b).
"Convertible Note Trustee" shall include any successor trustee
appointed pursuant to the Convertible Note Indenture.
"Default" means a "Default" as defined in Section 1.1 of the Senior
Note Indenture until the Senior Notes are no longer outstanding and the Senior
Note Indenture has been satisfied and discharged, in which case a "Default"
means a "Default" as defined in Section 1.1 of the Convertible Note Indenture if
not then satisfied and discharged.
"Disbursement Request" means a notice sent by the Company to the
Escrow Agent requesting a disbursement of funds from any Escrow Account, in
substantially the form of Exhibit A hereto. Each Disbursement Request shall be
signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer or
any Vice President of the Company.
"Eligible Cash Equivalents" 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,
certificates of deposit, or Eurodollar deposits of any commercial bank organized
in the United
-3-
<PAGE> 4
States having capital and surplus in excess of $500,000,000, (iii) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing, or subject to tender
at the option of the holder thereof within ninety days after the date of
acquisition thereof and, at the time of acquisition having a rating of A or
better from Standard & Poor's or A-2 or better from Moody's, (v) commercial
paper issued by the parent corporation of any commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 and
commercial paper issued by non-bank issuers rated A-1 by Standard & Poor's or
P-1 by Moody's and in each case maturing within 270 days after the date of
acquisition, (vi) overnight bank deposits and bankers' acceptances at any
commercial bank organized in the United States having capital and surplus in
excess of $500,000,000, (vii) deposits available for withdrawal on demand with a
commercial bank organized in the United States having capital and surplus in
excess of $500,000,000 and (viii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (vi).
"Eligible Institution" means a commercial banking institution that
has combined capital and surplus of not less than $500,000,000 its equivalent in
foreign currency, whose debt is rated "A" (or higher) or the equivalent rating
according to Standard & Poor's or Moody's at the time as of which any investment
or rollover therein is made.
"Escrow Accounts" means the Company Senior Note Escrow Account and
the Leasing Company Escrow Accounts.
"Escrow Account Statement" shall have the meaning given in Section
2(g).
"Escrow Agent" shall have the meaning set forth in the preamble to
this Agreement.
"Event of Default" means an "Event of Default" as defined in Section
6.1 of the Senior Note Indenture until the Senior Notes are no longer
outstanding and the Senior Note Indenture and the Senior Note Collateral
Documents have been satisfied and discharged, in which case "Event of Default"
means an "Event of Default" as defined in Section 1.1 of the Convertible Note
Indenture if not then satisfied and discharged.
"Initial Escrow Amount" shall mean $46,000,000 of the net proceeds
received by the Company from the sale of the Units pursuant to the Purchase
Agreement.
-4-
<PAGE> 5
"Interest Payment Date" means June 1 and December 1 of each year,
commencing on June 1, 1999, until the Senior Notes are paid in full.
"Issue Date" means June 12, 1996.
"Leasing Company" means initially PLD Asset Leasing Limited and PLD
Capital Limited, each a special purpose Cypriot corporation, a Wholly-Owned
Restricted Subsidiary and a Guarantor and any other Person constituting a
Leasing Company for purposes of the Senior Note Indenture.
"Leasing Company Escrow Account" means the escrow account
established pursuant to Section 2(b) of each Leasing Company Escrow Account
Agreement.
"Leasing Company Escrow Account Agreement" means initially that
certain Leasing Company Escrow Account Agreement of even date herewith among the
Escrow Agent, the Trustee and PLD Asset Leasing Limited, and that certain
Leasing Company Escrow Account Agreement of even date herewith among the Escrow
Agent, the Trustee and PLD Capital Limited and any Leasing Company Senior Note
Escrow Account Agreement executed by a Leasing Company in the future.
"Senior Note Trustee" shall include any successor Trustee appointed
pursuant to the Senior Note Indenture.
"Trustees" means, collectively, the Convertible Note Trustee and the
Senior Note Trustee.
2. Senior Note Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and the Trustees hereby
appoint the Escrow Agent, and the Escrow Agent hereby accepts appointment, as
escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Company Senior Note Escrow Account. Concurrent
with the execution and delivery hereof, the Escrow Agent shall establish and
maintain in the name of the Company at The Bank of New York, a special,
segregated and irrevocable escrow account designated "Senior Note Escrow Account
pledged by Petersburg Long Distance Inc. to The Bank of New York, as Trustee"
(the "Company Senior Note Escrow Account"). All funds accepted by the Escrow
Agent pursuant to this Agreement shall be deposited in the name of and
beneficially owned by the Company and pledged to, and under the sole dominion
and control of, the Senior Note Trustee, acting for its benefit and the equal
and ratable benefit of the Holders of the Senior Notes and the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of the Holders
of the Convertible Notes. All such funds shall be held in the Company
-5-
<PAGE> 6
Senior Note Escrow Account until disbursed in accordance with the terms hereof.
The Company Senior Note Escrow Account, the funds held therein and any Eligible
Cash Equivalents held by the Escrow Agent in which such funds are invested shall
be beneficially owned by the Company and pledged to and under the sole dominion
and control of the Senior Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Senior Notes, and the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of Holders of
the Convertible Notes. Concurrently with the execution and delivery hereof, the
Company shall deliver the Initial Escrow Amount to the Escrow Agent for deposit
into the Company Senior Note Escrow Account against the Escrow Agent's written
acknowledgement and receipt of the Initial Escrow Amount.
(c) The Company shall provide notice to the Collateral Agent and the
Trustee of the source of any moneys deposited to the Senior Note Escrow Account
by reference to the applicable provisions of the Senior Note Indenture and shall
keep an ongoing record of the amounts so deposited and disbursed in accordance
with this Escrow Agreement. It shall be the Company's responsibility to satisfy
the Collateral Agent as to the accounting for the Escrow Account, with a view to
ensuring that the amounts required to be calculated for any disbursement are
ascertainable. The Company shall also from time to time specify in writing what
funds and/or Eligible Cash Equivalents contained in the Company Senior Note
Escrow Account and/or the Leasing Company Escrow Accounts are designated as
satisfying the requirements of Section 11.4(m) of the Senior Note Indenture and
Section 11.8(l) of the Convertible Note Indenture.
(d) Escrow Agent Compensation. The Company shall pay to the Escrow
Agent such compensation for services to be performed by it under this Agreement
as the Company and the Escrow Agent may agree in writing from time to time. The
Escrow Agent shall be paid any compensation owed to it directly by the Company
and shall not disburse from the Company Senior Note Escrow Account any such
amounts.
The Company shall reimburse the Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by the Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel. The
Escrow Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from the Company Senior Note Escrow Account any such
amounts.
The provisions of this Section 2(d) shall survive termination of
this Agreement.
-6-
<PAGE> 7
(e) Investment of Funds in the Company Senior Note Escrow Account.
Pending investment thereof in accordance with the Senior Note Indenture (and the
Convertible Note Indenture, if the Senior Notes are no longer outstanding and
the Senior Note Indenture has been satisfied and discharged), funds deposited in
the Company Senior Note Escrow Account shall be invested and reinvested only
upon the following terms and conditions:
(i) Acceptable Investments. All funds deposited or held in the
Company Senior Note Escrow Account at any time shall be invested, at the
direction of the Company except during the continuance of a Default or an
Event of Default, and at the direction of the Senior Note Trustee, if any
of the Senior Notes are outstanding, or the Convertible Note Trustee, if
the Senior Notes are no longer outstanding and the Senior Note Indenture
has been satisfied and discharged, during the continuance of a Default or
an Event of Default, by the Escrow Agent in Eligible Cash Equivalents
which constitute Permitted Investments for the Company in accordance with
the Company's or the applicable Trustee's written instructions, as
applicable, from time to time to the Escrow Agent; provided, however, that
any such written instruction shall specify the particular Investment to be
made, shall contain the certification referred to in Section 2(e)(ii), if
required, and shall be executed by any officer of the Company. All
Eligible Cash Equivalents shall be assigned to and held in the possession
of, or, in the case of Eligible Cash Equivalents maintained in book entry
form with the Federal Reserve Bank, transferred to a book entry account in
the name of, the Escrow Agent, as pledgee, with such guarantees as are
customary, except that Eligible Cash Equivalents maintained in book entry
form with the Federal Reserve Bank shall be transferred to a book entry
account in the name of the Escrow Agent at the Federal Reserve Bank that
includes only Eligible Cash Equivalents held by the Escrow Agent for its
customers and segregated by separate recordation in the books and records
of the Escrow Agent.
(ii) Security Interest in and Lien on Investments. No
investment of funds in the Company Senior Note Escrow Account shall be
made unless the Company has certified to the Escrow Agent and the Trustees
that, upon such investment, each of the Senior Note Trustee and the
Convertible Note Trustee will have a first priority perfected Lien and
security interest for the benefit of the Senior Note Trustee and the equal
and ratable benefit of the Holders of the Senior Notes and for the benefit
of the Convertible Note Trustee and the equal and ratable benefit of the
Holders of the Convertible Notes in the applicable Investment. A
certificate as to a class of investments need not be issued with respect
to individual investments in securities in that class if the certificate
applicable to the class remains accurate with
-7-
<PAGE> 8
respect to such individual investments, which continued accuracy the
Escrow Agent may conclusively assume. Promptly after the Issue Date, and
within 3 months after the anniversary of the Issue Date, until the payment
in full of the Senior Notes in accordance with the terms thereof and of
the Senior Note Indenture, and all other Obligations then due and owing
under the Senior Notes, the Senior Note Indenture, this Agreement and the
other Senior Note Collateral Documents, each of the Trustees and the
Escrow Agent shall receive an Opinion of Counsel, dated each such date as
applicable, which opinion shall meet the requirements of Section 314(b) of
the Trust Indenture Act of 1939, as amended (the "TIA").
(iii) Interest and Dividends. All interest earned and
dividends paid on funds invested in Eligible Cash Equivalents shall be
deposited in the Company Senior Note Escrow Account as additional
Collateral beneficially owned by the Company and pledged to the Senior
Note Trustee, acting for its benefit and the equal and ratable benefit of
the Holders of the Senior Notes, and to the Convertible Note Trustee,
acting for its benefit and the equal and ratable benefit of the Holders of
the Convertible Notes, and shall be reinvested in accordance with the
terms hereof.
(iv) Limitation on Escrow Agent's Responsibilities. The Escrow
Agent's sole responsibilities under this Section 2 shall be (A) to retain,
or cause its agent in the State of New York to retain, possession of
certificated Eligible Cash Equivalents (except, however, that the Escrow
Agent may surrender possession to the issuer of any such Eligible Cash
Equivalent for the purpose of effecting assignment, crediting interest, or
reinvesting such security or reducing such security to cash) and to be the
registered or designated owner of Eligible Cash Equivalents which are not
certificated, (B) to follow the Company's or the applicable Trustee's
written instructions, as applicable, given in accordance with Section
2(e)(i), (C) to invest and reinvest funds pursuant to this Section 2(e)
and (D) to use reasonable efforts to reduce to cash such Eligible Cash
Equivalents as may be required to fund any disbursement or payment in
accordance with Section 3. In connection with clause (i) above, the Escrow
Agent will maintain, or cause its agent in the State of New York to
maintain, continuous possession in the State of New York of certificated
Eligible Cash Equivalents and cash included in the Collateral and will
cause uncertificated Eligible Cash Equivalents to be registered in the
book-entry system of, and transferred to an account of the Escrow Agent or
a sub-agent of the Escrow Agent at, the Federal Reserve Bank of New York.
Except as provided in Section 6, the Escrow Agent shall have no other
responsibilities with respect to perfecting or maintaining the perfection
of the both Trustees' Liens and security interest in the Collateral and
shall not be required
-8-
<PAGE> 9
to file any instrument, document or notice in any public office at any
time or times. In connection with clause (D) above, the Escrow Agent shall
not be required to reduce to cash any Eligible Cash Equivalents to fund
any disbursement or payment in accordance with Section 3 in the absence of
written instructions signed by an officer of the Company specifying the
particular investment to liquidate unless a Default or Event of Default
has occurred and is continuing, in which case such written instructions
shall be signed by a Trust Officer of the Senior Note Trustee or, if no
Senior Notes are then outstanding and the Senior Note Indenture has been
satisfied and discharged, of the Convertible Note Trustee. If no such
written instructions are received, the Escrow Agent shall liquidate those
Eligible Cash Equivalents having the lowest interest rate per annum,
regardless of maturity, or if none such exist, those having the nearest
maturity. The Escrow Agent shall have no duty to determine whether or not
to file or record any document or instrument in connection with this
Agreement, but will follow the instructions of the applicable Trustee.
(f) Substitution of Escrow Agent. The Escrow Agent may resign by
giving not less than 30 days' prior written notice to the Company and the
Trustees. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds and Eligible Cash Equivalents maintained by the Escrow
Agent hereunder and copies of all books, records, plans and other documents in
the Escrow Agent's possession relating to such funds or Eligible Cash
Equivalents or this Agreement to a successor Escrow Agent mutually approved by
the Company and the Trustees (which approvals shall not be unreasonably withheld
or delayed) and (ii) the Company, the Trustees and such successor Escrow Agent
entering into this Agreement or any written successor agreement no less
favorable to the interests of the Holders of the Senior Notes, the Holders of
the Convertible Notes and the Trustees than this Agreement; and the Escrow Agent
shall thereupon be discharged of all obligations under this Agreement and shall
have no further duties, obligations or responsibilities in connection herewith,
except as set forth in Section 4. If a successor Escrow Agent has not been
appointed or has not accepted such appointment within 30 days after notice of
resignation is given to the Company, the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor Escrow Agent.
(g) Escrow Account Statement. At least 30 days prior to each
Interest Payment Date, the Escrow Agent shall deliver to the Company, the
Trustees and the applicable escrow agent for each Leasing Company Escrow Account
a statement setting forth with reasonable particularity the balance of funds
then in the Company Senior Note Escrow Account and the manner in which such
funds are invested (the "Senior Note Escrow Account Statement"). The parties
hereto irrevocably instruct the Escrow Agent that on the first date
-9-
<PAGE> 10
upon which the balance in the Company Senior Note Escrow Account (including the
holdings of all Eligible Cash Equivalents) is reduced to zero, the Escrow Agent
shall deliver to the Company and to the Trustees a notice that the balance in
the Company Senior Note Escrow Account has been reduced to zero.
3. Disbursements.
(a) Disbursement Request; Disbursements. (i) At least two Business
Days prior to an Interest Payment Date, the Company and the Senior Note Trustee
shall submit to the Escrow Agent a completed Disbursement Request substantially
in the form of Exhibit A hereto requesting funds from the Company Senior Note
Escrow Account in an amount equal to the interest owed on the Senior Notes under
the Senior Note Indenture for payment of such interest on such Interest Payment
Date, unless the Company has disbursed and the Senior Note Trustee has received
funds from the Company in such amount on or before such date for such interest
payment. Nevertheless, any funds or Eligible Cash Equivalents (or the proceeds
or reinvestments thereof) previously designated in an Officer's Certificate
delivered pursuant to Section 2(c) of this Agreement as representing funds or
Eligible Cash Equivalents designated to satisfy the requirements of Section
11.4(m) of the Senior Note Indenture and Section 11.8(l) of the Convertible Note
Indenture requiring the Company and the Leasing Companies to retain in the
Escrow Accounts at all times after November 30, 1998 shall not be disbursed to
the Company or any Leasing Company except as permitted in such Section 11.4(m)
and Section 11.8(l). Provided that any such Disbursement Request is not rejected
by it, the Escrow Agent, at least on (or if the Senior Note Trustee and the
Escrow Agent are the same entity, two Business Days after) receipt of such
Disbursement Request, shall disburse the funds requested in such Disbursement
Request by wire or book-entry transfer of immediately available funds to such
Trustee. The Escrow Agent shall notify the Senior Note Trustee as soon as
reasonably possible if any such Disbursement Request is rejected and the
reason(s) therefor.
(ii) In addition, the Company may submit a completed Disbursement Request
for a release of funds to the Company or a Leasing Company, as applicable, from
the Senior Note Escrow Account, provided that (i) the applicable conditions set
forth in Section 11.4 of the Senior Note Indenture and Section 11.8 of the
Convertible Note Indenture until such time as the Convertible Notes are no
longer outstanding and the Convertible Note Indenture has been satisfied and
discharged have been satisfied for such release to the Company or a Leasing
Company, as applicable, (ii) the Company shall have delivered to the Senior Note
Trustee the applicable Officers' Certificate required by such Section 11.4 on or
before such disbursement date and (iii) the Senior Note Trustee has executed the
certification contained in the Disbursement Request. Provided that any such
Disbursement Request is not
-10-
<PAGE> 11
rejected by it, the Escrow Agent at least two (2) Business Days after the
receipt of such Disbursement Request shall disburse the funds requested in such
Disbursement Request by wire or book-entry transfer of immediately available
funds to the Company or a Leasing Company, as applicable. The Escrow Agent shall
notify the Senior Note Trustee and the Company as soon as reasonably possible if
any such Disbursement Request is rejected and the reason(s) therefor.
(iii) If an Event of Default under the Senior Note Indenture has occurred
and is continuing, the Senior Note Trustee shall be entitled unilaterally to
initiate withdrawals by executing a Disbursement Request which will be
substantially similar to the form of Exhibit A but which need only to be
executed by the Senior Note Trustee.
(iv) If the Escrow Agent receives a written notice from the Senior Note
Trustee, acknowledged by the Convertible Note Trustee, that the Senior Notes
have been paid in full and all other obligations then due and owing under the
Senior Note Indenture, the Guarantees of the Senior Note Guarantors contained
therein, and the other Senior Note Collateral Documents have been paid in full,
the Senior Note Indenture has been satisfied and discharged and the Convertible
Notes remain outstanding and not paid in full, all funds and Eligible Cash
Equivalents then held in the Company Senior Note Escrow Account shall be
withdrawn and transferred to the escrow agent under the Company Convertible Note
Escrow Agreement or such other place as the Convertible Note Trustee directs in
such acknowledgment. This disbursement shall be made whether or not an Event of
Default (as defined in the Convertible Note Indenture) has occurred and is
continuing.
(b) Conditions Precedent to Disbursement. Subject to Section 4 and
any mandatory provisions of applicable law, the Escrow Agent shall make the
payments to be made pursuant to a completed Disbursement Request if (i) the
Company shall have submitted, in accordance with the provisions of Section 3(a)
herein, such Disbursement Request to the Escrow Agent substantially in the form
of Exhibit A with blanks appropriately filled in containing the signed
certification of the Senior Note Trustee included in such form and (ii) the
Escrow Agent shall not have received any notice from the Senior Note Trustee
that as a result of an Event of Default the Indebtedness represented by the
Senior Notes has been accelerated and has become due and payable (in which event
the Escrow Agent shall apply all Available Funds as required by Section
6(b)(iii)).
(c) No Distributions. Provided that no Event of Default has occurred
and is continuing, the Company shall initiate all requests for withdrawals of
funds from the Company Senior Note Escrow Account by executing a Disbursement
Request and submitting such request to the Senior Note Trustee. However, the
Company shall not be entitled to direct the Escrow Agent to make
-11-
<PAGE> 12
distributions from the Company Senior Note Escrow Account except upon
certification by the Senior Note Trustee on a Disbursement Request that the
applicable conditions of the Senior Note Indenture and the Convertible Note
Indenture have been satisfied, as provided in Section 3(a). The Senior Note
Trustee shall not, except following an Event of Default, be entitled
unilaterally to initiate withdrawals.
(d) Deposits Irrevocable. Any deposits made into the Company Senior
Note Escrow Account hereunder shall be irrevocable and the amount of such
deposits and any instrument or security held in the Company Senior Note Escrow
Account hereunder and all interest thereon shall be held in trust by the Escrow
Agent and applied solely as provided herein.
4. Limitation of the Escrow Agent's Liability; Responsibilities of
the Escrow Agent. The Escrow Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) the Escrow Agent does not represent,
warrant or guaranty to the Holders of the Senior Notes or the Holders of the
Convertible Notes from time to time the performance of the Company; (ii) the
Escrow Agent shall have no responsibility to the Company or the Holders of the
Senior Notes, the Holders of the Convertible Notes or the Trustees from time to
time as a consequence of performance or non-performance by the Escrow Agent
hereunder, except for any negligence or willful misconduct of the Escrow Agent;
(iii) the Company shall remain solely responsible for all aspects of the
Company's business and conduct; and (iv) the Escrow Agent is not obligated to
supervise, inspect or inform the Company or any third party of any matter
referred to above.
No implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Eligible
Cash Equivalents held by it hereunder, including without limitation any
liability for any delay not resulting from negligence or willful misconduct in
such investment, reinvestment or liquidation, or for any loss of principal or
income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial order
or judgment, upon any written opinion of counsel or upon any certification,
instruction, notice, or other writing delivered to it by the Company or either
Trustee in compliance with the provisions of this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of service thereof. The Escrow Agent may
act in reliance upon any instrument comporting
-12-
<PAGE> 13
with the provisions of this Agreement or signature believed by it to be genuine
and may assume that any person purporting to give notice or receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
The Escrow Agent may act pursuant to the written advice of counsel
chosen by it with respect to any matter relating to this Agreement and (subject
to clause (ii) of the first paragraph of this Section 4) shall not be liable for
any action taken or omitted in accordance with such advice.
The Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement
with respect to any funds or property deposited hereunder, the Escrow Agent
shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds or property, and the Escrow Agent shall
not be or become liable for its failure or refusal to comply with conflicting
claims, demands or instructions. The Escrow Agent shall be entitled to refuse to
act until either any conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by agreement
between the conflicting claimants as evidenced in a writing, satisfactory to the
Escrow Agent, or the Escrow Agent shall have received security or an indemnity
satisfactory to the Escrow Agent sufficient to save the Escrow Agent harmless
from and against any and all loss, liability or expense which the Escrow Agent
may incur by reason of its acting. The Escrow Agent may in addition elect in its
sole option to commence an interpleader action or seek other judicial relief or
orders as the Escrow Agent may deem necessary.
No provision of this Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
5. Indemnity. The Company shall indemnify, hold harmless and defend
the Escrow Agent and its directors, officers, agents, employees and controlling
persons, from and against any and all claims, actions, obligations, liabilities
and expenses, including defense costs, investigative fees and costs, legal fees,
and claims for damages, arising from the Escrow Agent's performance under this
Agreement, except to the extent that such liability, expense or claim is
directly attributable to the negligence or willful misconduct of any of the
foregoing persons. The provisions of this Section shall survive any termination,
satisfaction or discharge of this Agreement as well as the resignation or
removal
-13-
<PAGE> 14
of the Escrow Agent. The provisions of this paragraph 5 shall survive the
termination of this Agreement.
6. Grant of Liens and Security Interest; Instructions to Escrow
Agent.
(a) The Company hereby irrevocably grants a first priority security
interest in and Lien on, and pledges, assigns and sets over to the Senior Note
Trustee, acting for its benefit and the equal and ratable benefit of the Holders
of the Senior Notes, and to the Convertible Note Trustee, acting for its benefit
and the equal and ratable benefit of the Holders of the Convertible Notes, all
of the Company's right, title and interest in the Company Senior Note Escrow
Account, and all property now or hereafter placed or deposited in, or delivered
to the Escrow Agent for placement or deposit in, the Company Senior Note Escrow
Account, including, without limitation, all funds held therein, all Eligible
Cash Equivalents held by (or otherwise maintained in the name of) the Escrow
Agent pursuant to Section 2, and all proceeds thereof as well as all rights of
the Company under this Agreement (collectively, the "Collateral"), in order to
secure all obligations and indebtedness of the Company under the Senior Notes
and any other obligation, now or hereafter arising, of every kind and nature,
owed by the Company or the Senior Note Guarantors under the Senior Note
Indenture, the related guarantees thereunder or the Senior Note Collateral
Documents to the Holders of the Senior Notes or to the Senior Note Trustee and
all obligations and indebtedness of the Company or the Convertible Note
Guarantors under the Convertible Note Indenture, the related guarantees
thereunder or the Convertible Note Collateral Documents to the Holders of the
Convertible Notes or the Convertible Note Trustee. The Escrow Agent hereby
acknowledges the Trustees' security interest and Lien as set forth above. The
Company shall take all actions necessary on its part to insure the continuance
of a first priority security interest in and Lien on the Collateral in favor of
the Trustees in order to secure all such obligations and indebtedness.
(b) The Company and the Trustees hereby irrevocably instruct the
Escrow Agent to, and the Escrow Agent shall, (i) (A) at all times maintain sole
dominion and control over funds and Eligible Cash Equivalents in the Company
Senior Note Escrow Account, acting for the benefit of the Trustees to the extent
specifically required herein, (B) maintain, or cause its agent within the State
of New York to maintain, possession of all certificated Eligible Cash
Equivalents purchased hereunder that are physically possessed by the Escrow
Agent in order for the Trustees to enjoy a continuous perfected first priority
security interest therein under the law of the State of New York (the Company
hereby agreeing that in the event any certificated Eligible Cash Equivalents are
in the possession of the Company or a third party, the Company shall use its
best efforts to deliver all such certificates to the Escrow Agent), (C) take all
steps specified by
-14-
<PAGE> 15
the Company pursuant to paragraph (a) above to cause the Trustees to enjoy a
continuous perfected first priority security interest and Liens under the New
York Uniform Commercial Code and any applicable law of the State of New York in
all Eligible Cash Equivalents purchased hereunder that are not certificated and
(D) maintain the Collateral free and clear of all Liens, security interests,
safekeeping or other charges, demands and claims against the Escrow Agent of any
nature now or hereafter existing in favor of anyone other than the Trustees;
(ii) promptly notify the Trustees if the Escrow Agent receives written notice
that any Person other than the Trustees has or claims to have a Lien on or
security interest in any portion of the Collateral and (iii) in addition to
disbursing amounts held in escrow pursuant to any Disbursement Requests given to
it by the Trustees pursuant to Section 3(a)(iv), upon receipt of written notice
from the Senior Note Trustee of the acceleration of the maturity of the Senior
Notes, and direction from the Senior Note Trustee to disburse all Available
Funds to the Senior Note Trustee, as promptly as practicable disburse all funds
held in the Company Senior Note Escrow Account to the Trustee and transfer title
to all Eligible Cash Equivalents held by the Escrow Agent hereunder to the
Senior Note Trustee. The Escrow Agent shall not have any right to receive
compensation from either Trustee and is without any authority to obligate either
Trustee or to compromise or pledge its security interest and Lien hereunder.
Accordingly, the Escrow Agent is hereby directed to cooperate with the Trustees
in the exercise of their respective rights in the Collateral provided for
herein.
(c) Any money and Eligible Cash Equivalents collected by the Senior
Note Trustee pursuant to Section 6(b)(iii) shall be applied as provided in
Section 6.9 of the Senior Note Indenture.
(d) Upon demand, the Company will execute and deliver to either
Trustee such instruments and documents as such Trustee may reasonably deem
necessary or advisable to confirm or perfect the rights of the Trustees under
this Agreement and the Trustees' interest in the Collateral. The Trustees shall
be entitled to take all necessary action to preserve and protect the security
interest created hereby as a Lien and encumbrance upon the Collateral.
(e) The Company hereby appoints each Trustee as its attorney-in-fact
with full power of substitution, exercisable upon the occurrence and during the
continuance of a Default or Event of Default, to do any act which the Company is
obligated hereto to do, and each Trustee may, but shall not be obligated to,
exercise such rights as the Company might exercise with respect to the
Collateral and take any action in the Company's name to protect the Trustees'
Liens and security interest hereunder. In addition to the rights provided under
Section 6(b) (iii) hereof, upon an Event of Default as defined in the Senior
Note Indenture and for so long as such Event of Default continues, the Senior
Note Trustee may exercise in respect of the Collateral, in addition to other
rights and remedies
-15-
<PAGE> 16
provided for herein or otherwise available to it, all the rights and remedies of
a secured party under the New York Uniform Commercial Code or other applicable
law, and the Senior Note Trustee may also upon obtaining possession of the
Collateral as set forth herein, without notice to the Company except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any of the
Senior Note Trustee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Senior Note Trustee may deem
commercially reasonable. The Company acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale. The Company agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to the
Company of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Senior
Note Trustee shall not be obligated to make any sale regardless of notice of
sale having been given. The Senior Note Trustee may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. The Senior Note Trustee shall give to the
Convertible Note Trustee copies of notices sent to the Company, as well as any
other notices required by applicable law to be given to a Lienholder. If the
Senior Notes are no longer outstanding and the Senior Notes Indenture has been
satisfied and discharged, the foregoing rights and remedies may be exercised by
the Convertible Note Trustee.
7. Termination. This Agreement shall terminate automatically ten
(10) days following disbursement of all funds remaining in all the Escrow
Accounts (including Eligible Cash Equivalents) and the payment in full of the
Senior Notes and all other Obligations then due and owing under the Senior Note
Indenture, the guarantees thereunder and the Senior Note Collateral Documents,
unless sooner terminated by agreement of the parties hereto (in accordance with
the terms hereof, not in violation of the Senior Note Indenture; the Senior Note
Trustee may not agree to terminate this Agreement unless it has received the
consent of 100% of the Holders of all of the Senior Notes outstanding and the
Convertible Note Trustee may not agree to terminate this Agreement unless it has
received the consent of 100% of the Holders of all of the Convertible Notes
outstanding); provided, however, that the obligations of the Company under
Section 2(d) and Section 5 (and any existing claims thereunder) shall survive
termination of this Agreement or the resignation of the Escrow Agent; provided,
further, however, that until such tenth day, the Company will cause this
Agreement (or any permitted successor agreement) to remain in effect and will
cause there to be an Escrow Agent (including any permitted successor thereto)
acting hereunder (or under any such permitted successor agreement).
-16-
<PAGE> 17
8. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns. Nothing herein shall restrict the Escrow
Agent from performing its duties through a sub-agent.
(d) Benefit. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; provided, however, that the Holders of the Senior Notes and their
permitted assigns and the Holders of the Convertible Notes and their permitted
assigns shall be entitled to the benefits hereof and to enforce this Agreement.
(e) Time. Time is of the essence with respect to each provision of
this Agreement.
(f) Entire Agreement; Amendments. This Agreement, the Senior Note
Indenture and the Convertible Note Indenture contain the entire agreement among
the parties with respect to the subject matter hereof and supersede any and all
prior agreements, understandings and commitments, whether oral or written. This
Agreement may be amended only in accordance with Article IX of the Senior Note
Indenture and Article IX of the Convertible Note Indenture and further by a
writing signed by a duly authorized representative of each party hereto.
(g) Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either: (a) on the day of hand delivery; (b) three Business Days
following the day
-17-
<PAGE> 18
sent, when sent by United States certified mail, postage and certification fee
prepaid, return receipt requested, addressed as set forth below; (c) when
transmitted by telecopy with verbal confirmation of receipt by the telecopy
operator to the telecopy number set forth below; or (d) one business day
following the day timely delivered to a next-day air courier addressed as set
forth below:
To Escrow Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
To each Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
To the Company:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
Attention: Chairman
Telecopy: 416-979-9754
Telephone: 416-593-4989
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
-18-
<PAGE> 19
(i) Captions. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) Choice of Law; Waiver of Jury Trial. The existence, validity,
construction, operation and effect of any and all terms and provisions of this
Agreement shall be determined in accordance with and governed by the laws of the
State of New York, without regard to principles of conflicts of law. The parties
to this Agreement hereby agree that jurisdiction over such parties and over the
subject matter of any action or proceeding arising under this Agreement may be
exercised by a competent Court of the State of New York, or by a United States
Court, sitting in New York City. The Company hereby submits to the personal
jurisdiction of such courts, hereby waives personal service of process upon it
and hereby waives, to the extent permitted by applicable law, the right to a
trial by jury in any action or proceeding with the Escrow Agent. All actions and
proceedings brought by the Company against the Escrow Agent relating to or
arising from, directly or indirectly, this Agreement shall be litigated only in
courts within the State of New York. The Company waives any objection that it
may have to the location of the court in which the Escrow Agent has commenced a
proceeding described in this paragraph including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens.
(k) Authority of the Company; Valid and Binding Agreement. The
Company hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered on its behalf and constitutes the legal,
valid and binding obligation of the Company. The execution, delivery and
performance of this Agreement by the Company does not violate any applicable law
or regulation to which the Company is subject and does not require the consent
of any governmental or other regulatory body to which the Company is subject,
except for such consents and approvals as have been obtained and are in full
force and effect.
(l) Authority of the Escrow Agent and the Trustees; Valid and
Binding Agreement. Each of the Escrow Agent and the Trustees hereby represents
and warrants that this Agreement has been duly authorized, executed and
delivered on its behalf and constitutes its legal, valid and binding obligation.
(m) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation System, 1633 Broadway, New York, New York 10019 (or
any successor), as its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this Agreement that may be
instituted in any federal or state court in the State of New York, or brought
under federal or state securities
-19-
<PAGE> 20
laws, and acknowledges that CT Corporation System has accepted such designation,
(ii) submits to the jurisdiction of any such court in any such suit or
proceeding, and (iii) agrees that service of process upon CT Corporation System
(or any successor) and written notice of said service to the Company (mailed or
delivered to Messrs. Morgan, Lewis & Bockius LLP, 2000 One Logan Square,
Philadelphia, PA 19103, Attention: E. Clive Anderson, Esq.) shall be deemed in
every respect effective service of process upon the Company in any such suit or
proceeding. The Company further agrees to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such destination and appointment of CT Corporation System
(or any successor) in full force and effect so long as any of the Senior Notes
shall be outstanding.
To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, it
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, to the extent permitted by law.
-20-
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed and delivered this
Company Senior Note Escrow Account Agreement as of the day first above written.
ESCROW AGENT: THE BANK OF NEW YORK,
as Escrow Agent
By: /s/ STEVEN D. TORGESON
------------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
SENIOR NOTE TRUSTEE: THE BANK OF NEW YORK,
as Senior Note Trustee
By: /s/ STEVEN D. TORGESON
------------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
CONVERTIBLE NOTE TRUSTEE: THE BANK OF NEW YORK,
as Convertible Note Trustee
By: /s/ STEVEN D. TORGESON
------------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
COMPANY: PETERSBURG LONG DISTANCE INC.
By: /s/ JAMES HATT
------------------------------
Name: James Hatt
Title: Chairman
<PAGE> 22
EXHIBIT A
Form of Disbursement Request
[Letterhead of the Company]
[Date]
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Re: Disbursement Request No.
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Company Senior Note Escrow Account Agreement, dated
as of May 31, 1996 (the "Company Senior Note Escrow Agreement") among you (the
"Escrow Agent"), The Bank of New York as Senior Note Trustee, The Bank of New
York as Convertible Note Trustee and Petersburg Long Distance Inc., an Ontario
corporation (the "Company"). Capitalized terms used herein shall have the
meaning given in the Company Senior Note Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement Request
under the Company Senior Note Escrow Agreement.
The undersigned hereby notifies you that the Company has requested,
and has satisfied the conditions contained in Section __ of the Senior Note
Indenture for, the release of $______, from the Senior Note Escrow Account which
was deposited on __________ as a result of [specify source of deposit, i.e.,
asset sale of [type of asset] for Net Cash Proceeds of $_________, which amount
will be invested or used as follows:
.
In connection with the requested disbursement, the undersigned
hereby notifies you that:
1. The Senior Notes have [not], as a result of an Event of Default
(as defined in the Senior Note Indenture), been accelerated and become due
and payable.
2. An opinion of counsel as required by the Senior Note
Indenture is delivered herewith.
-22-
<PAGE> 23
3. The Collateral Documents have been delivered to the
Trustee.
4. [add wire instructions].
The Escrow Agent is entitled to rely on the foregoing in disbursing
funds relating to this Disbursement Request.
PETERSBURG LONG DISTANCE INC.
By:_________________________
Name:
Title:
The Senior Note Trustee hereby certifies to the Escrow Agent that it
has received the applicable Officers' Certificate described in Section 11.4 of
the Senior Note Indenture for the release of the funds to be disbursed pursuant
to the foregoing Disbursement Request.
THE BANK OF NEW YORK,
as Senior Note Trustee
By:________________________
Name:
Title:
The Convertible Note Trustee hereby certifies to the Escrow Agent
that it has received the applicable Officers' Certificate described in Section
11.8 of the Convertible Note Indenture for the release of the funds to be
disbursed pursuant to the foregoing Disbursement Request.
THE BANK OF NEW YORK,
as Convertible Note Trustee
By:________________________
Name:
Title:
-23-
<PAGE> 1
EXHIBIT 4.12
COMPANY CONVERTIBLE NOTE ESCROW ACCOUNT AGREEMENT
This COMPANY CONVERTIBLE NOTE ESCROW ACCOUNT AGREEMENT (the
"Agreement"), dated as of May 31, 1996, among The Bank of New York, a New York
banking corporation, as escrow agent (in such capacity, the "Escrow Agent"), The
Bank of New York, a New York banking corporation, as trustee (in such capacity,
the "Convertible Note Trustee") under the Convertible Note Indenture (as defined
herein), The Bank of New York, a New York banking corporation, as trustee (in
such capacity, the "Senior Note Trustee") under the Senior Note Indenture (as
defined herein), and Petersburg Long Distance Inc., an Ontario corporation (the
"Company").
RECITALS
A. Pursuant to the Indenture, dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture"), among the Company, the corporations
acting as guarantors and named therein (the "Convertible Note Guarantors") and
the Convertible Note Trustee, the Company is issuing $26,500,000 aggregate
principal amount of its 9% Convertible Subordinated Notes due 2006 (the
"Convertible Notes").
B. Pursuant to the Indenture, dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Senior Note Indenture"), among the Company, the corporations acting
as guarantors and named therein (the "Senior Note Guarantors"; the Senior Note
Guarantors and the Convertible Note Guarantors are collectively called the
"Guarantors"), and the Senior Note Trustee, the Company is issuing $123,000,000
aggregate principal amount at maturity of its 14% Senior Discount Notes due 2004
(the "Senior Notes").
C. As security for its obligations, among other things, under
the Convertible Notes and the Convertible Note Indenture and as security for its
obligations, among other things, under the Senior Notes and the Senior Note
Indenture, the Company is required to enter into a Company Convertible Note
Security and Pledge Agreement of even date herewith (the "Company Convertible
Note Security Agreement") with the Convertible Note Trustee, the collateral
agent named therein (the "Convertible Note Collateral Agent") and the Senior
Note Trustee, in which the Company is granting Liens on and a security interest
in all of the Preferred Stock of Technocom Limited, an Irish corporation and a
subsidiary of the Company, directly or indirectly owned by the Company (the
"Technocom Preferred Stock") and certain other collateral described therein (the
"Convertible Note Collateral").
<PAGE> 2
D. Under the terms of the Convertible Note Indenture and the
Company Convertible Note Security Agreement, the Company is required to deposit
all dividends, distributions, payments and proceeds of the Convertible Note
Collateral consisting of cash or cash equivalents in a special, segregated and
irrevocable account in the name of and beneficially owned by the Company which
is pledged to, and to be under the sole dominion and control of, the Convertible
Note Trustee, acting for its benefit and the equal and ratable benefit of the
Holders of the Convertible Notes, and the Senior Note Trustee, acting for its
benefit and the equal and ratable benefit of the Holders of the Senior Notes,
(the "Company Convertible Note Escrow Account") pending the reinvestment of such
amounts in accordance with the Convertible Note Indenture.
E. As security for its obligations, among other things, under
the Senior Notes and the Senior Note Indenture and as security for its
obligations, among other things, under the Convertible Notes and the Convertible
Note Indenture, the Company is required to enter into a Company Senior Note
Security and Pledge Agreement, with the Senior Note Trustee, the collateral
agent named therein (the "Senior Note Collateral Agent") and the Convertible
Note Trustee in which the Company is granting liens on certain collateral
described therein (the "Senior Note Collateral").
F. The parties have entered into this Agreement in order to
set forth the conditions upon which, and the manner in which, funds will be
disbursed from the Company Convertible Note Escrow Account and released from the
security interest and Liens described above.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Terms used herein and not defined herein
shall have the meanings as defined in the Convertible Note Indenture. In
addition to any other defined terms used herein, the following terms shall
constitute defined terms for purposes of this Agreement and shall have the
meanings set forth below:
"Affiliates" of any specified person means (i) any other
person which, directly or indirectly, is in control of, is controlled by or is
under common control with such specified person or (ii) any other person who is
a director or officer (A) of such specified person, (B) of any subsidiary of
such specified person or (C) of any person described in clause (i) above or
(iii) any person in which such person has, directly or indirectly, a 5% or
greater voting or economic interest or the power to control. For purposes of
this definition, control of a person means the power, directly or indirectly, to
direct or cause the direction of the management
-2-
<PAGE> 3
or policies of such person whether through the ownership of voting securities or
by contract or otherwise and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied
pursuant to Section 3(a) or pursuant to Section 6(b) (iii).
"Available Funds" means (A) the sum of (i) all amounts
deposited in the Company Convertible Note Escrow Account from time to time and
(ii) interest earned or dividends paid on the funds in the Escrow Accounts
(including holdings of Eligible Cash Equivalents), less (B) the aggregate
disbursements previously made pursuant to this Agreement.
"Collateral" shall have the meaning given in Section 6(a)
hereof.
"Company Convertible Note Escrow Account" shall have the
meaning given in to Section 2(b).
"Convertible Note Trustee" shall include any successor trustee
appointed pursuant to the Convertible Note Indenture.
"Default" means a "Default" as defined in Section 1.1 of the
Convertible Note Indenture until the Convertible Notes are no longer outstanding
and the Convertible Note Indenture has been satisfied and discharged, in which
case a "Default" means a "Default" as defined in Section 1.1 of the Senior Note
Indenture if not then satisfied and discharged.
"Disbursement Request" means a notice sent by the Company to
the Escrow Agent requesting a disbursement of funds from any Escrow Account, in
substantially the form of Exhibit A hereto. Each Disbursement Request shall be
signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer or
any Vice President of the Company.
"Eligible Cash Equivalents" 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,
certificates of deposit, or Eurodollar deposits of any commercial bank organized
in the United States having capital and surplus in excess of $500,000,000, (iii)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, (iv) direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing, or
subject to tender at the option of the holder thereof within ninety
-3-
<PAGE> 4
days after the date of acquisition thereof and, at the time of acquisition
having a rating of A or better from Standard & Poor's or A-2 or better from
Moody's, (v) commercial paper issued by the parent corporation of any commercial
bank organized in the United States having capital and surplus in excess of
$500,000,000 and commercial paper issued by non-bank issuers rated A-1 by
Standard & Poor's or P-1 by Moody's and in each case maturing within 270 days
after the date of acquisition, (vi) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States having capital
and surplus in excess of $500,000,000, (vii) deposits available for withdrawal
on demand with a commercial bank organized in the United States having capital
and surplus in excess of $500,000,000 and (viii) investments in money market
funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (vi).
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500,000,000 its
equivalent in foreign currency, whose debt is rated "A" (or higher) or the
equivalent rating according to Standard & Poor's or Moody's at the time as of
which any investment or rollover therein is made.
"Escrow Account Statement" shall have the meaning given
in Section 2(g).
"Escrow Agent" shall have the meaning set forth in the
preamble to this Agreement.
"Event of Default" means an "Event of Default" as defined in
Section 6.1 of the Convertible Note Indenture until the Convertible Notes are no
longer outstanding and the Convertible Note Indenture and the Convertible Note
Collateral Documents have been satisfied and discharged, in which case "Event of
Default" means an "Event of Default" as defined in Section 1.1 of the Senior
Note Indenture if not then satisfied and discharged.
"Interest Payment Date" means June 1 and December 1 of each
year, commencing on December 1, 1996, until the Convertible Notes are paid in
full.
"Issue Date" means June 12, 1996.
"Senior Note Trustee" shall include any successor Trustee
appointed pursuant to the Senior Note Indenture.
"Trustees" means, collectively, the Convertible Note
Trustee and the Senior Note Trustee.
2. Convertible Note Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and the
-4-
<PAGE> 5
Trustees hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts
appointment, as escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Company Convertible Note Escrow Account.
Concurrent with the execution and delivery hereof, the Escrow Agent shall
establish and maintain in the name of the Company at The Bank of New York, a
special, segregated and irrevocable escrow account designated "Convertible Note
Escrow Account pledged by Petersburg Long Distance Inc. to The Bank of New York,
as Trustee" (the "Company Convertible Note Escrow Account"). All funds accepted
by the Escrow Agent pursuant to this Agreement shall be deposited in the name of
and beneficially owned by the Company and pledged to, and under the sole
dominion and control of, the Convertible Note Trustee, acting for its benefit
and the equal and ratable benefit of the Holders of the Convertible Notes, and
the Senior Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Senior Notes. All such funds shall be held in the
Company Convertible Note Escrow Account until disbursed in accordance with the
terms hereof. The Company Convertible Note Escrow Account, the funds held
therein and any Eligible Cash Equivalents held by the Escrow Agent in which such
funds are invested shall be beneficially owned by the Company and pledged to and
under the sole dominion and control of the Convertible Note Trustee, acting for
its benefit and the equal and ratable benefit of the Holders of the Convertible
Notes, and of the Senior Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Senior Notes.
(c) The Company shall provide notice to the Collateral Agent
and the Trustee of the source of any moneys deposited to the Company Convertible
Note Escrow Account by reference to the applicable provisions of the Convertible
Note Indenture, and shall keep an ongoing record of the amounts so deposited and
disbursed in accordance with this Escrow Agreement. The Company shall also
specify in writing from time to time what funds and/or Eligible Cash Equivalents
contained in the Company Senior Note Escrow Account and/or the Leasing Company
Escrow Accounts are designated to satisfy the requirements of Section 11.8(l) of
the Convertible Note Indenture and Section 11.4 of the Senior Note Indenture. It
shall be the Company's responsibility to satisfy the Collateral Agent as to the
accounting for the Escrow Account, with a view to ensuring that the amounts
required to be calculated for any disbursement are ascertainable.
(d) Escrow Agent Compensation. The Company shall pay to the
Escrow Agent such compensation for services to be performed by it under this
Agreement as the Company and the Escrow Agent may agree in writing from time to
time. The Escrow Agent shall be paid any compensation owed to it directly by the
Company and shall not disburse from the Company Convertible Note Escrow Account
any such amounts.
-5-
<PAGE> 6
The Company shall reimburse the Escrow Agent upon request for
all reasonable expenses, disbursements, and advances incurred or made by the
Escrow Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel. The
Escrow Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from the Company Convertible Note Escrow Account any such
amounts.
The provisions of this Section 2(d) shall survive termination
of this Agreement.
(e) Investment of Funds in the Company Convertible Note Escrow
Account. Pending investment thereof in accordance with the Convertible Note
Indenture (and the Senior Note Indenture, if the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged), funds deposited in the Company Convertible Note Escrow Account
shall be invested and reinvested only upon the following terms and conditions:
(i) Acceptable Investments. All funds deposited or
held in the Company Convertible Note Escrow Account at any time shall
be invested, at the direction of the Company except during the
continuance of a Default or an Event of Default, and at the direction
of the Convertible Note Trustee, if any of the Convertible Notes are
outstanding, or the Senior Note Trustee, if the Convertible Notes are
no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged, during the continuance of a Default or an
Event of Default, by the Escrow Agent in Eligible Cash Equivalents for
the Company in accordance with the Company's or the applicable
Trustee's written instructions, as applicable, from time to time to the
Escrow Agent; provided, however, that any such written instruction
shall specify the particular Investment to be made, shall contain the
certification referred to in Section 2(e)(ii), if required, and shall
be executed by any officer of the Company. All Eligible Cash
Equivalents shall be assigned to and held in the possession of, or, in
the case of Eligible Cash Equivalents maintained in book entry form
with the Federal Reserve Bank, transferred to a book entry account in
the name of, the Escrow Agent, as pledgee, with such guarantees as are
customary, except that Eligible Cash Equivalents maintained in book
entry form with the Federal Reserve Bank shall be transferred to a book
entry account in the name of the Escrow Agent at the Federal Reserve
Bank that includes only Eligible Cash Equivalents held by the Escrow
Agent for its customers and segregated by separate recordation in the
books and records of the Escrow Agent.
(ii) Security Interest in and Lien on Investments.
No investment of funds in the Company Convertible Note Escrow
Account shall be made unless the Company has certified to the
-6-
<PAGE> 7
Escrow Agent and the Trustees that, upon such investment, each of the
Convertible Note Trustee and the Senior Note Trustee will have a first
priority perfected Lien and security interest for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the
Holders of the Convertible Notes and for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior
Notes in the applicable Investment. A certificate as to a class of
investments need not be issued with respect to individual investments
in securities in that class if the certificate applicable to the class
remains accurate with respect to such individual investments, which
continued accuracy the Escrow Agent may conclusively assume. Promptly
after the Issue Date, and within 3 months after the anniversary of the
Issue Date, until the payment in full of the Convertible Notes in
accordance with the terms thereof and of the Convertible Note
Indenture, and all other Obligations then due and owing under the
Convertible Notes, the Convertible Note Indenture, this Agreement and
the other Convertible Note Collateral Documents, each of the Trustees
and the Escrow Agent shall receive an Opinion of Counsel, dated each
such date as applicable, which opinion shall meet the requirements of
Section 314(b) of the Trust Indenture Act of 1939, as amended (the
"TIA").
(iii) Interest and Dividends. All interest earned and
dividends paid on funds invested in Eligible Cash Equivalents shall be
deposited in the Company Convertible Note Escrow Account as additional
Collateral beneficially owned by the Company and pledged to the
Convertible Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Convertible Notes, and to the
Senior Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Senior Notes, and shall be reinvested in
accordance with the terms hereof.
(iv) Limitation on Escrow Agent's Responsibilities.
The Escrow Agent's sole responsibilities under this Section 2
shall be (A) to retain, or cause its agent in the State of New
York to retain, possession of certificated Eligible Cash
Equivalents (except, however, that the Escrow Agent may
surrender possession to the issuer of any such Eligible Cash
Equivalent for the purpose of effecting assignment, crediting
interest, or reinvesting such security or reducing such
security to cash) and to be the registered or designated owner
of Eligible Cash Equivalents which are not certificated, (B)
to follow the Company's or the applicable Trustee's written
instructions, as applicable, given in accordance with Section
2(e)(i), (C) to invest and reinvest funds pursuant to this
Section 2(e) and (D) to use reasonable efforts to reduce to
cash such Eligible Cash Equivalents as may be required to fund
any disbursement or payment in accordance with Section 3. In
-7-
<PAGE> 8
connection with clause (i) above, the Escrow Agent will maintain, or
cause its agent in the State of New York to maintain, continuous
possession in the State of New York of certificated Eligible Cash
Equivalents and cash included in the Collateral and will cause
uncertificated Eligible Cash Equivalents to be registered in the
book-entry system of, and transferred to an account of the Escrow Agent
or a sub-agent of the Escrow Agent at, the Federal Reserve Bank of New
York. Except as provided in Section 6, the Escrow Agent shall have no
other responsibilities with respect to perfecting or maintaining the
perfection of both Trustees' Liens and security interest in the
Collateral and shall not be required to file any instrument, document
or notice in any public office at any time or times. In connection with
clause (D) above, the Escrow Agent shall not be required to reduce to
cash any Eligible Cash Equivalents to fund any disbursement or payment
in accordance with Section 3 in the absence of written instructions
signed by an officer of the Company specifying the particular
investment to liquidate unless a Default or Event of Default has
occurred and is continuing, in which case such written instructions
shall be signed by a Trust Officer of the Convertible Note Trustee or,
if no Convertible Notes are then outstanding and the Convertible Note
Indenture has been satisfied and discharged, of the Senior Note
Trustee. If no such written instructions are received, the Escrow Agent
shall liquidate those Eligible Cash Equivalents having the lowest
interest rate per annum, regardless of maturity, or if none such exist,
those having the nearest maturity. The Escrow Agent shall have no duty
to determine whether or not to file or record any document or
instrument in connection with this Agreement, but will follow the
instructions of the applicable Trustee.
(f) Substitution of Escrow Agent. The Escrow Agent may resign
by giving not less than 30 days' prior written notice to the Company and the
Trustees. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds and Eligible Cash Equivalents maintained by the Escrow
Agent hereunder and copies of all books, records, plans and other documents in
the Escrow Agent's possession relating to such funds or Eligible Cash
Equivalents or this Agreement to a successor Escrow Agent mutually approved by
the Company and the Trustees (which approvals shall not be unreasonably withheld
or delayed) and (ii) the Company, the Trustees and such successor Escrow Agent
entering into this Agreement or any written successor agreement no less
favorable to the interests of the Holders of the Convertible Notes, the Holders
of the Senior Notes and the Trustees than this Agreement; and the Escrow Agent
shall thereupon be discharged of all obligations under this Agreement and shall
have no further duties, obligations or responsibilities in connection herewith,
except as set forth in Section 4. If a successor Escrow Agent has not been
appointed or has not accepted such appointment within 30 days after notice of
resignation is
-8-
<PAGE> 9
given to the Company, the Escrow Agent may apply to a court of competent
jurisdiction for the appointment of a successor Escrow Agent.
(g) Escrow Account Statement. At least 30 days prior to each
Interest Payment Date, the Escrow Agent shall deliver to the Company and the
Trustees a statement setting forth with reasonable particularity the balance of
funds then in the Company Convertible Note Escrow Account and the manner in
which such funds are invested (the "Convertible Note Escrow Account Statement").
3. Disbursements.
(a) Disbursement Request; Disbursements. (i) At least two
Business Days prior to an Interest Payment Date, the Company and the Convertible
Note Trustee shall submit to the Escrow Agent a completed Disbursement Request
substantially in the form of Exhibit A hereto requesting funds from the Company
Convertible Note Escrow Account in an amount equal to the interest owed on the
Convertible Notes under the Convertible Note Indenture for payment of such
interest on such Interest Payment Date, unless the Company has disbursed and the
Convertible Note Trustee has received funds from the Company in such amount on
or before such date for such interest payment. Provided that any such
Disbursement Request is not rejected by it, the Escrow Agent, at least on (or if
the Convertible Note Trustee and the Escrow Agent are the same entity, two
Business Days after) receipt of such Disbursement Request, shall disburse the
funds requested in such Disbursement Request by wire or book-entry transfer of
immediately available funds to such Trustee. The Escrow Agent shall notify the
Convertible Note Trustee as soon as reasonably possible if any such Disbursement
Request is rejected and the reason(s) therefor.
(ii) In addition, the Company may submit a completed
Disbursement Request for a release of funds to the Company or a Leasing Company,
as applicable, from the Company Convertible Note Escrow Account, provided that
(i) the applicable conditions set forth in Section 11.4 of the Convertible Note
Indenture and Section 11.8 of the Senior Note Indenture until such time as the
Senior Notes are no longer outstanding and the Senior Note Indenture has been
satisfied and discharged have been satisfied for such release to the Company or
a Leasing Company, as applicable, (ii) the Company shall have delivered to the
Convertible Note Trustee the applicable Officers' Certificate required by such
Section 11.4 on or before such disbursement date and (iii) the Convertible Note
Trustee has executed the certification contained in the Disbursement Request.
Provided that any such Disbursement Request is not rejected by it, the Escrow
Agent at least two (2) Business Days after the receipt of such Disbursement
Request shall disburse the funds requested in such Disbursement Request by wire
or book-entry transfer of immediately available funds to the Company or a
Leasing Company, as applicable. The Escrow Agent shall notify the
-9-
<PAGE> 10
Convertible Note Trustee and the Company as soon as reasonably possible if any
such Disbursement Request is rejected and the reason(s) therefor.
(iii) If an Event of Default under the Convertible Note Indenture has
occurred and is continuing, the Convertible Note Trustee shall be entitled
unilaterally to initiate withdrawals by executing a Disbursement Request which
will be substantially similar to the form of Exhibit A but which need only to be
executed by the Convertible Note Trustee.
(iv) If the Escrow Agent receives a written notice from the Convertible
Note Trustee, acknowledged by the Senior Note Trustee, that the Convertible
Notes have been paid in full and all other obligations then due and owing under
the Convertible Note Indenture, the guarantees of the Convertible Note
Guarantors contained therein and the other Convertible Note Collateral Documents
have been paid in full and the Convertible Note Indenture has been satisfied and
released and the Senior Notes remain outstanding and not paid in full, all funds
and Eligible Cash Equivalents then held in the Company Convertible Note Escrow
Account shall be withdrawn and transferred to the Senior Note Escrow Agent or
such other place as the Senior Note Trustee directs in such acknowledgement.
This disbursement shall be made whether or not an Event of Default (as defined
in the Senior Note Indenture) has occurred and is continuing.
(b) Conditions Precedent to Disbursement. Subject to Section 4
and any mandatory provisions of applicable law, the Escrow Agent shall make the
payments to be made pursuant to a completed Disbursement Request if (i) the
Company shall have submitted, in accordance with the provisions of Section 3(a)
herein, such Disbursement Request to the Escrow Agent substantially in the form
of Exhibit A with blanks appropriately filled in containing the signed
certification of the Convertible Note Trustee included in such form and (ii) the
Escrow Agent shall not have received any notice from the Convertible Note
Trustee that as a result of an Event of Default the Indebtedness represented by
the Convertible Notes has been accelerated and has become due and payable (in
which event the Escrow Agent shall apply all Available Funds as required by
Section 6(b)(iii)).
(c) No Distributions. Provided that no Event of Default has
occurred and is continuing, the Company shall initiate all requests for
withdrawals of funds from the Company Convertible Note Escrow Account by
executing a Disbursement Request and submitting such request to the Convertible
Note Trustee. However, the Company shall not be entitled to direct the Escrow
Agent to make distributions from the Company Convertible Note Escrow Account
except upon certification by the Convertible Note Trustee on a Disbursement
Request that the applicable conditions of the Convertible Note Indenture and the
Senior Note Indenture have been
-10-
<PAGE> 11
satisfied, as provided in Section 3(a). The Convertible Note Trustee shall not,
except following an Event of Default, be entitled unilaterally to initiate
withdrawals.
(d) Deposits Irrevocable. Any deposits made into the Company
Convertible Note Escrow Account hereunder shall be irrevocable and the amount of
such deposits and any instrument or security held in the Company Convertible
Note Escrow Account hereunder and all interest thereon shall be held in trust by
the Escrow Agent and applied solely as provided herein.
4. Limitation of the Escrow Agent's Liability;
Responsibilities of the Escrow Agent. The Escrow Agent's responsibility and
liability under this Agreement shall be limited as follows: (i) the Escrow Agent
does not represent, warrant or guaranty to the Holders of the Convertible Notes
or the Holders of the Senior Notes from time to time the performance of the
Company; (ii) the Escrow Agent shall have no responsibility to the Company or
the Holders of the Convertible Notes, the Holders of the Senior Notes or the
Trustees from time to time as a consequence of performance or non-performance by
the Escrow Agent hereunder, except for any negligence or willful misconduct of
the Escrow Agent; (iii) the Company shall remain solely responsible for all
aspects of the Company's business and conduct; and (iv) the Escrow Agent is not
obligated to supervise, inspect or inform the Company or any third party of any
matter referred to above.
No implied covenants or obligations shall be inferred from
this Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by
the provisions of any agreement beyond the specific terms hereof. Specifically
and without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Eligible
Cash Equivalents held by it hereunder, including without limitation any
liability for any delay not resulting from negligence or willful misconduct in
such investment, reinvestment or liquidation, or for any loss of principal or
income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial
order or judgment, upon any written opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Company or either Trustee in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness of any
fact stated therein or the propriety or validity of service thereof. The Escrow
Agent may act in reliance upon any instrument comporting with the provisions of
this Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
-11-
<PAGE> 12
authorized to do so.
The Escrow Agent may act pursuant to the written advice of
counsel chosen by it with respect to any matter relating to this Agreement and
(subject to clause (ii) of the first paragraph of this Section 4) shall not be
liable for any action taken or omitted in accordance with such advice.
The Escrow Agent shall not be called upon to advise any party
as to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this
Agreement with respect to any funds or property deposited hereunder, the Escrow
Agent shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds or property, and the Escrow Agent shall
not be or become liable for its failure or refusal to comply with conflicting
claims, demands or instructions. The Escrow Agent shall be entitled to refuse to
act until either any conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by agreement
between the conflicting claimants as evidenced in a writing, satisfactory to the
Escrow Agent, or the Escrow Agent shall have received security or an indemnity
satisfactory to the Escrow Agent sufficient to save the Escrow Agent harmless
from and against any and all loss, liability or expense which the Escrow Agent
may incur by reason of its acting. The Escrow Agent may in addition elect in its
sole option to commence an interpleader action or seek other judicial relief or
orders as the Escrow Agent may deem necessary.
No provision of this Agreement shall require the Escrow Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder.
5. Indemnity. The Company shall indemnify, hold harmless and
defend the Escrow Agent and its directors, officers, agents, employees and
controlling persons, from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative fees and costs,
legal fees, and claims for damages, arising from the Escrow Agent's performance
under this Agreement, except to the extent that such liability, expense or claim
is directly attributable to the negligence or willful misconduct of any of the
foregoing persons. The provisions of this Section shall survive any termination,
satisfaction or discharge of this Agreement as well as the resignation or
removal of the Escrow Agent. The provisions of this paragraph 5 shall survive
the termination of this Agreement.
` -12-
<PAGE> 13
6. Grant of Liens and Security Interest; Instructions
to Escrow Agent.
(a) The Company hereby irrevocably grants a first priority
security interest in and Lien on, and pledges, assigns and sets over to the
Convertible Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Convertible Notes, and to the Senior Note Trustee,
acting for its benefit and the equal and ratable benefit of the Holders of the
Senior Notes, all of the Company's right, title and interest in the Company
Convertible Note Escrow Account, and all property now or hereafter placed or
deposited in, or delivered to the Escrow Agent for placement or deposit in, the
Company Convertible Note Escrow Account, including, without limitation, all
funds held therein, all Eligible Cash Equivalents held by (or otherwise
maintained in the name of) the Escrow Agent pursuant to Section 2, and all
proceeds thereof as well as all rights of the Company under this Agreement
(collectively, the "Collateral"), in order to secure all obligations and
indebtedness of the Company under the Convertible Notes and any other
obligation, now or hereafter arising, of every kind and nature, owed by the
Company or the Convertible Note Guarantors under the Convertible Note Indenture,
the related guarantees thereunder or the Convertible Note Collateral Documents
to the Holders of the Convertible Notes or to the Convertible Note Trustee and
all obligations and indebtedness of the Company or the Senior Note Guarantors
under the Senior Note Indenture, the related guarantees thereunder or the Senior
Note Collateral Documents to the Holders of the Senior Notes or the Senior Note
Trustee. The Escrow Agent hereby acknowledges the Trustees' security interest
and Lien as set forth above. The Company shall take all actions necessary on its
part to insure the continuance of a first priority security interest in and Lien
on the Collateral in favor of the Trustees in order to secure all such
obligations and indebtedness.
(b) The Company and the Trustees hereby irrevocably instruct
the Escrow Agent to, and the Escrow Agent shall, (i) (A) at all times maintain
sole dominion and control over funds and Eligible Cash Equivalents in the
Company Convertible Note Escrow Account, acting for the benefit of the Trustees
to the extent specifically required herein, (B) maintain, or cause its agent
within the State of New York to maintain, possession of all certificated
Eligible Cash Equivalents purchased hereunder that are physically possessed by
the Escrow Agent in order for the Trustees to enjoy a continuous perfected first
priority security interest therein under the law of the State of New York (the
Company hereby agreeing that in the event any certificated Eligible Cash
Equivalents are in the possession of the Company or a third party, the Company
shall use its best efforts to deliver all such certificates to the Escrow
Agent), (C) take all steps specified by the Company pursuant to paragraph (a)
above to cause the Trustees to enjoy a continuous perfected first priority
security interest and Liens under the New York Uniform Commercial Code and any
-13-
<PAGE> 14
applicable law of the State of New York in all Eligible Cash Equivalents
purchased hereunder that are not certificated and (D) maintain the Collateral
free and clear of all Liens, security interests, safekeeping or other charges,
demands and claims against the Escrow Agent of any nature now or hereafter
existing in favor of anyone other than the Trustees; (ii) promptly notify the
Trustees if the Escrow Agent receives written notice that any Person other than
the Trustees has or claims to have a Lien on or security interest in any portion
of the Collateral and (iii) in addition to disbursing amounts held in escrow
pursuant to any Disbursement Requests given to it by the Trustees pursuant to
Section 3(a)(iv), upon receipt of written notice from the Convertible Note
Trustee of the acceleration of the maturity of the Convertible Notes, and
direction from the Convertible Note Trustee to disburse all Available Funds to
the Convertible Note Trustee, as promptly as practicable disburse all funds held
in the Company Convertible Note Escrow Account to the Convertible Note Trustee
and transfer title to all Eligible Cash Equivalents held by the Escrow Agent
hereunder to the Convertible Note Trustee. The Escrow Agent shall not have any
right to receive compensation from either Trustee and is without any authority
to obligate either Trustee or to compromise or pledge its security interest and
Lien hereunder. Accordingly, the Escrow Agent is hereby directed to cooperate
with the Trustees in the exercise of their respective rights in the Collateral
provided for herein.
(c) Any money and Eligible Cash Equivalents collected by the
Convertible Note Trustee pursuant to Section 6(b)(iii) shall be applied as
provided in Section 6.9 of the Convertible Note Indenture.
(d) Upon demand, the Company will execute and deliver to
either Trustee such instruments and documents as such Trustee may reasonably
deem necessary or advisable to confirm or perfect the rights of the Trustees
under this Agreement and the Trustees' interest in the Collateral. The Trustees
shall be entitled to take all necessary action to preserve and protect the
security interest created hereby as a Lien and encumbrance upon the Collateral.
(e) The Company hereby appoints each Trustee as its
attorney-in-fact with full power of substitution, exercisable upon the
occurrence and during the continuance of a Default or Event of Default, to do
any act which the Company is obligated hereto to do, and each Trustee may, but
shall not be obligated to, exercise such rights as the Company might exercise
with respect to the Collateral and take any action in the Company's name to
protect the Trustees' Liens and security interest hereunder. In addition to the
rights provided under Section 6(b)(iii) hereof, upon an Event of Default as
defined in the Convertible Note Indenture and for so long as such Event of
Default continues, the Convertible Note Trustee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all
-14-
<PAGE> 15
the rights and remedies of a secured party under the New York Uniform Commercial
Code or other applicable law, and the Convertible Note Trustee may also upon
obtaining possession of the Collateral as set forth herein, without notice to
the Company except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any exchange, broker's
board or at any of the Convertible Note Trustee's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Convertible Note Trustee may deem commercially reasonable. The Company
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale.
The Company agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days' notice to the Company of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Convertible Note Trustee shall not be
obligated to make any sale regardless of notice of sale having been given. The
Convertible Note Trustee may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Convertible Note Trustee shall give to the Senior Note Trustee
copies of notices sent to the Company, as well as any other notices required by
applicable law to be given to a Lienholder. If the Convertible Notes are no
longer outstanding and the Convertible Note Indenture has been satisfied and
discharged, the foregoing rights and remedies may be exercised by the Senior
Note Trustee.
7. Termination. This Agreement shall terminate automatically
ten (10) days following disbursement of all funds remaining in the Company
Convertible Note Escrow Account (including Eligible Cash Equivalents) and the
payment in full of the Convertible Notes and all other Obligations then due and
owing under the Convertible Note Indenture, the guarantees thereunder and the
Convertible Note Collateral Documents, unless sooner terminated by agreement of
the parties hereto (in accordance with the terms hereof, not in violation of the
Convertible Note Indenture; the Convertible Note Trustee may not agree to
terminate this Agreement unless it has received the consent of 100% of the
Holders of all of the Convertible Notes outstanding and the Senior Note Trustee
may not agree to terminate this Agreement unless it has received the consent of
100% of the Holders of all of the Senior Notes outstanding); provided, however,
that the obligations of the Company under Section 2(c) and Section 5 (and any
existing claims thereunder) shall survive termination of this Agreement or the
resignation of the Escrow Agent; provided, further, however, that until such
tenth day, the Company will cause this Agreement (or any permitted successor
agreement) to remain in effect and will cause there to be an Escrow Agent
(including any permitted successor thereto) acting hereunder (or under any such
permitted successor agreement).
-15-
<PAGE> 16
8. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach
of this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more
of the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties
hereto, and the rights and duties of any party hereunder shall not be assignable
except with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns. Nothing herein shall restrict the Escrow
Agent from performing its duties through a sub-agent.
(d) Benefit. The parties hereto and their successors and
permitted assigns, but no others, shall be bound hereby and entitled to the
benefits hereof; provided, however, that the Holders of the Convertible Notes
and their permitted assigns and the Holders of the Senior Notes and their
permitted assigns shall be entitled to the benefits hereof and to enforce this
Agreement.
(e) Time. Time is of the essence with respect to each
provision of this Agreement.
(f) Entire Agreement; Amendments. This Agreement, the
Convertible Note Indenture and the Senior Note Indenture contain the entire
agreement among the parties with respect to the subject matter hereof and
supersede any and all prior agreements, understandings and commitments, whether
oral or written. This Agreement may be amended only in accordance with Article
IX of the Convertible Note Indenture and Article IX of the Senior Note Indenture
and further by a writing signed by a duly authorized representative of each
party hereto.
(g) Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either: (a) on the day of hand delivery; (b) three Business Days
following the day
-16-
<PAGE> 17
sent, when sent by United States certified mail, postage and certification fee
prepaid, return receipt requested, addressed as set forth below; (c) when
transmitted by telecopy with verbal confirmation of receipt by the telecopy
operator to the telecopy number set forth below; or (d) one business day
following the day timely delivered to a next-day air courier addressed as set
forth below:
To Escrow Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
To each Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
To the Company:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
CANADA M5H 1L3
Attention: Chairman
Telecopy: 416-979-9754
Telephone: 416-593-4989
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section .
(h) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for
-17-
<PAGE> 18
convenience only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
(j) Choice of Law; Waiver of Jury Trial. The existence,
validity, construction, operation and effect of any and all terms and provisions
of this Agreement shall be determined in accordance with and governed by the
laws of the State of New York, without regard to principles of conflicts of law.
The parties to this Agreement hereby agree that jurisdiction over such parties
and over the subject matter of any action or proceeding arising under this
Agreement may be exercised by a competent Court of the State of New York, or by
a United States Court, sitting in New York City. The Company hereby submits to
the personal jurisdiction of such courts, hereby waives personal service of
process upon it and hereby waives, to the extent permitted by applicable law,
the right to a trial by jury in any action or proceeding with the Escrow Agent.
All actions and proceedings brought by the Company against the Escrow Agent
relating to or arising from, directly or indirectly, this Agreement shall be
litigated only in courts within the State of New York. The Company waives any
objection that it may have to the location of the court in which the Escrow
Agent has commenced a proceeding described in this paragraph including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens.
(k) Authority of the Company; Valid and Binding Agreement. The
Company hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered on its behalf and constitutes the legal,
valid and binding obligation of the Company. The execution, delivery and
performance of this Agreement by the Company does not violate any applicable law
or regulation to which the Company is subject and does not require the consent
of any governmental or other regulatory body to which the Company is subject,
except for such consents and approvals as have been obtained and are in full
force and effect.
(l) Authority of the Escrow Agent and the Trustees; Valid and
Binding Agreement. Each of the Escrow Agent and the Trustees hereby represents
and warrants that this Agreement has been duly authorized, executed and
delivered on its behalf and constitutes its legal, valid and binding obligation.
(m) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation System, 1633 Broadway, New York, New York 10019 (or
any successor), as its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this Agreement that may be
instituted in any federal or state court in the State of New York, or brought
under federal or state securities laws, and acknowledges that CT Corporation
System has accepted such
-18-
<PAGE> 19
designation, (ii) submits to the jurisdiction of any such court in any such suit
or proceeding, and (iii) agrees that service of process upon CT Corporation
System (or any successor) and written notice of said service to the Company
(mailed or delivered to Messrs. Morgan, Lewis & Bockius LLP, 2000 One Logan
Square, Philadelphia, PA 19103, Attention: E. Clive Anderson, Esq.) shall be
deemed in every respect effective service of process upon the Company in any
such suit or proceeding. The Company further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such destination and appointment of
CT Corporation System (or any successor) in full force and effect so long as any
of the Convertible Notes shall be outstanding.
To the extent that the Company has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, it
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, to the extent permitted by law.
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed and delivered
this Company Convertible Note Escrow Account Agreement as of the day first above
written.
ESCROW AGENT: THE BANK OF NEW YORK,
as Escrow Agent
By: /s/ Steven D. Torgeson
-------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
CONVERTIBLE NOTE TRUSTEE: THE BANK OF NEW YORK,
as Convertible Note Trustee
By: /s/ Steven D. Torgeson
-------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
SENIOR NOTE TRUSTEE: THE BANK OF NEW YORK,
as Senior Note Trustee
By: /s/ Steven D. Torgeson
-------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
COMPANY: PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
-------------------------
Name: James Hatt
Title: Chairman
<PAGE> 21
EXHIBIT A
Form of Disbursement Request
[Letterhead of the Company]
[Date]
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Re: Disbursement Request No.
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Company Convertible Note Escrow Account
Agreement, dated as of May 31, 1996 (the "Company Convertible Note Escrow
Agreement") among you (the "Escrow Agent"), The Bank of New York as Convertible
Note Trustee, The Bank of New York as Senior Note Trustee and Petersburg Long
Distance Inc., an Ontario corporation (the "Company"). Capitalized terms used
herein shall have the meaning given in the Company Convertible Note Escrow
Agreement.
This letter constitutes a Payment Notice and Disbursement
Request under the Company Convertible Note Escrow Agreement.
The undersigned hereby notifies you that the Company has
requested, and has satisfied the conditions contained in Section 11.4 of the
Convertible Note Indenture for, the release of $______, from the Company
Convertible Note Escrow Account which was deposited on as a
result of [specify source of deposit, e.g., asset sale of specific type of
asset] for Net Cash Proceeds of $ which amount will be invested or used
as follows: .
In connection with the requested disbursement, the undersigned
hereby notifies you that:
1. The Convertible Notes have [not], as a result of an
Event of Default (as defined in the Convertible Note Indenture), been
accelerated and become due and payable.
2. An Opinion of Counsel as required by the Convertible
Note Indenture is delivered herewith.
-21-
<PAGE> 22
3. The Collateral Documents have been delivered to the
Trustee.
4. [add wire instructions].
The Escrow Agent is entitled to rely on the foregoing in
disbursing funds relating to this Disbursement Request.
-22-
<PAGE> 23
PETERSBURG LONG DISTANCE INC.
By:_________________________
Name:
Title:
The Convertible Note Trustee hereby certifies to the Escrow
Agent that it has received the applicable Officers' Certificate described in
Section 11.4 of the Convertible Note Indenture for the release of the funds to
be disbursed pursuant to the foregoing Disbursement Request.
THE BANK OF NEW YORK, as
Convertible Note Trustee
By: _______________________
Name:
Title:
The Senior Note Trustee hereby certifies to the Escrow Agent
that it has received the applicable Officers' Certificate described in Section
11.8 of the Senior Note Indenture for the release of the funds to the disbursed
pursuant to the foregoing Disbursement Request.
THE BANK OF NEW YORK, as
Convertible Note Trustee
By: _______________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.13
LEASING COMPANY ESCROW ACCOUNT AGREEMENT
[PLD ASSET LEASING LIMITED]
This LEASING COMPANY ESCROW ACCOUNT AGREEMENT (the
"Agreement"), dated as of May 31, 1996, among The Bank of New York, a New York
banking corporation, as escrow agent (in such capacity, the "Escrow Agent"), The
Bank of New York, a New York banking corporation, as trustee (in such capacity,
the "Senior Note Trustee") under the Senior Note Indenture (as defined herein),
The Bank of New York, a New York banking corporation, as trustee (in such
capacity, the "Convertible Note Trustee") under the Convertible Note Indenture
(as defined herein), and PLD Asset Leasing Limited, a Cypriot corporation (the
"Leasing Company").
RECITALS
A. Pursuant to the Indenture, dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Senior Note Indenture"), among Petersburg Long Distance Inc., an
Ontario corporation (the "Company"), the corporations acting as guarantors and
named therein (the "Senior Note Guarantors" and each, a "Senior Note Guarantor")
and the Trustee, the Company is issuing $123,000,000 aggregate principal amount
at stated maturity of its 14% Senior Discount Notes due June 1, 2004 (the
"Senior Notes").
B. Pursuant to the Indenture, dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture"), among the Company, the corporations
acting as guarantors and named therein (the "Convertible Note Guarantors") and
the Convertible Note Trustee, the Company is issuing $26,500,000 aggregate
principal amount of its 9% Convertible Subordinated Notes due 2006 (the
"Convertible Notes").
C. Pursuant to the Senior Note Indenture and the Convertible
Note Indenture, the Leasing Company has jointly and severally, irrevocably and
unconditionally guaranteed all of the obligations of the Company under the
Senior Notes, the Senior Note Indenture and the Senior Note Collateral Documents
and under the Convertible Notes, the Convertible Note Indenture and the
Convertible Note Collateral Documents and all of the obligations of the Senior
Note Guarantors under the Senior Note Indenture, Senior Note Guarantees and the
other Senior Note Collateral Documents.
D. As security for its obligations, among other things, under
the Senior Notes and the Senior Note Indenture and as security for its
obligations, among other things, under the Convertible Notes and the Convertible
Note Indenture, the Leasing Company is required to enter into a Leasing Company
Security and Pledge Agreement of even date herewith (the "Leasing Company
<PAGE> 2
Security Agreement") with the Senior Note Trustee, the collateral agent named
therein (the "Senior Note Escrow Agent") and the Convertible Note Trustee, in
which the Company is granting Liens on and a security interest in certain
collateral described therein (the "Senior Note Collateral").
E. Under the terms of the Senior Note Indenture and the
Leasing Company Pledge and Security Agreement, the Leasing Company is required
to deposit (i) all funds which it receives from the Company, whether
representing the proceeds of the Senior Notes or otherwise, (ii) all payments
which it receives from Restricted Subsidiaries or Qualified Joint Ventures
allocable or related to or in connection with Telecommunications Asset Leases,
Investments constituting lease or rental payments or other payments, or from
Persons in which Qualified Investments are made, whether constituting interest
and principal payments, dividends or distributions or other payments and (iii)
all funds which it receives from other Leasing Companies in a special,
segregated and irrevocable account in the name of and beneficially owned by the
Leasing Company which is pledged to, and to be under the sole dominion and
control of, the Senior Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Senior Notes, and the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of the Holders
of the Convertible Notes (the "Leasing Company Escrow Account") pending the
reinvestment of such amounts in accordance with the Senior Note Indenture.
F. The parties have entered into this Agreement in order to
set forth the conditions upon which, and the manner in which, funds will be
disbursed from the Leasing Company Escrow Account and released from the security
interest and Liens described above.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Terms used herein and not defined herein
shall have the meanings as defined in the Senior Note Indenture. In addition to
any other defined terms used herein, the following terms shall constitute
defined terms for purposes of this Agreement and shall have the meanings set
forth below:
"Affiliates" of any specified person means (i) any other
person which, directly or indirectly, is in control of, is controlled by or is
under common control with such specified person or (ii) any other person who is
a director or officer (A) of such specified person, (B) of any subsidiary of
such specified person or (C) of any person described in clause (i) above or
(iii) any person
-2-
<PAGE> 3
in which such person has, directly or indirectly, a 5% or greater voting or
economic interest or the power to control. For purposes of this definition,
control of a person means the power, directly or indirectly, to direct or cause
the direction of the management or policies of such person whether through the
ownership of voting securities or by contract or otherwise and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied
pursuant to Section 3(a) or pursuant to Section 6(b) (iii).
"Available Funds" means (A) the sum of (i) all amounts
deposited in the Leasing Company Escrow Account from time to time and (ii)
interest earned or dividends paid on the funds in the Escrow Accounts (including
holdings of Eligible Cash Equivalents), less (B) the aggregate disbursements
previously made pursuant to this Agreement.
"Collateral" shall have the meaning given in Section 6(a)
hereof.
"Company Senior Note Escrow Account" means the escrow account
established pursuant to Section 2(b) of the Company Senior Note Escrow Account
Agreement.
"Company Senior Note Escrow Account Agreement" means that
certain Company Senior Note Escrow Account Agreement of even date herewith among
the Escrow Agent, the Trustee and the Company.
"Default" means a "Default" as defined in Section 1.1 of the
Senior Note Indenture until the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged in which case a
"Default" means a "Default" as defined in Section 1.1 of the Convertible Note
Indenture if not then satisfied and discharged.
"Disbursement Request" means a notice sent by the Leasing
Company to the Escrow Agent requesting a disbursement of funds from the Leasing
Company Escrow Account, in substantially the form of Exhibit A hereto. Each
Disbursement Request shall be signed by the Chairman of the Board, a Vice
Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer or any Vice President of the Company.
"Eligible Cash Equivalents" 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,
certificates of deposit, or Eurodollar deposits of any commercial bank organized
in the United States having capital and surplus in excess of $500,000,000, (iii)
repurchase obligations with a term of not more than seven days for
-3-
<PAGE> 4
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing, or subject to tender at the option of the holder thereof within ninety
days after the date of acquisition thereof and, at the time of acquisition
having a rating of A or better from Standard & Poor's or A-2 or better from
Moody's, (v) commercial paper issued by the parent corporation of any commercial
bank organized in the United States having capital and surplus in excess of
$500,000,000 and commercial paper issued by non-bank issuers rated A-1 by
Standard & Poor's or P-1 by Moody's and in each case maturing within 270 days
after the date of acquisition, (vi) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States having capital
and surplus in excess of $500,000,000, (vii) deposits available for withdrawal
on demand with a commercial bank organized in the United States having capital
and surplus in excess of $500,000,000 and (viii) investments in money market
funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (vi).
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500,000,000 its
equivalent in foreign currency, whose debt is rated "A" (or higher) or the
equivalent rating according to Standard & Poor's or Moody's at the time as of
which any investment or rollover therein is made.
"Escrow Account Statement" shall have the meaning given
in Section 2(g).
"Escrow Agent" shall have the meaning set forth in the
preamble to this Agreement.
"Event of Default" means an "Event of Default" as defined in
Section 6.1 of the Senior Note Indenture until the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged, in
which case "Event of Default" means an "Event of Default" as defined in Section
1.1 of the Convertible Note Indenture if not then satisfied and discharged.
"Initial Escrow Amount" shall mean $46,000,000 of the net
proceeds received by the Company from the sale of the Senior Notes pursuant to
the Purchase Agreement.
"Interest Payment Date" means June 1 and December 1 of each
year, commencing on December 1, 1996, until the Senior Notes and the Convertible
Notes are paid in full.
"Issue Date" means June 12, 1996.
-4-
<PAGE> 5
"Leasing Company Escrow Account" shall have the meaning given
in Section 2(b).
"Senior Note Discharge Date" shall mean such time as the
Senior Notes are no longer outstanding and the Senior Note Indenture and the
Senior Note Collateral Documents have been satisfied and discharged.
"Trustees" means, collectively, the Convertible Note
Trustee and the Senior Note Trustee.
2. Leasing Company Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Leasing Company and the
Trustees hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts
appointment, as escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Leasing Company Escrow Account.
Concurrent with the execution and delivery hereof, the Escrow Agent shall
establish and maintain in the name of the Leasing Company at The Bank of New
York, a special, segregated and irrevocable escrow account designated "Leasing
Company Escrow Account pledged by PLD Asset Leasing Limited to The Bank of New
York, as Trustee" (the "Leasing Company Escrow Account"). All funds accepted by
the Escrow Agent pursuant to this Agreement shall be deposited in the name of
and beneficially owned by the Leasing Company and pledged to, and under the sole
dominion and control of, the Senior Note Trustee, acting for its benefit and the
equal and ratable benefit of the Holders of the Senior Notes, and the
Convertible Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Convertible Notes. All such funds shall be held in
the Leasing Company Escrow Account until disbursed in accordance with the terms
hereof. The Leasing Company Escrow Account, the funds held therein and any
Eligible Cash Equivalents held by the Escrow Agent in which such funds are
invested shall be beneficially owned by the Leasing Company and pledged to and
under the sole dominion and control of the Senior Note Trustee, acting for its
benefit and the equal and ratable benefit of the Holders of the Senior Notes,
and the Convertible Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Convertible Notes.
(c) The Company shall provide notice to the Collateral Agent
and the Trustee of the source of any money deposited to the Leasing Company
Escrow Account by reference to the applicable provisions of the Senior Note
Indenture, and shall keep an ongoing record of the amounts so deposited and
disbursed in accordance with this Escrow Agreement. It shall be the Company's
responsibility to satisfy the Collateral Agent as to the accounting for the
Escrow Account with a view to ensuring that the amounts required to be
calculated for any disbursement are ascertainable.
-5-
<PAGE> 6
(d) Escrow Agent Compensation. The Leasing Company shall pay
to the Escrow Agent such compensation for services to be performed by it under
this Agreement as the Leasing Company and the Escrow Agent may agree in writing
from time to time. The Escrow Agent shall be paid any compensation owed to it
directly by the Leasing Company and shall not disburse from the Leasing Company
Escrow Account any such amounts.
The Leasing Company shall reimburse the Escrow Agent upon
request for all reasonable expenses, disbursements, and advances incurred or
made by the Escrow Agent in implementing any of the provisions of this
Agreement, including compensation and the reasonable expenses and disbursements
of its counsel. The Escrow Agent shall be paid any such expenses owed to it
directly by the Leasing Company and shall not disburse from the Leasing Company
Escrow Account any such amounts.
The provisions of this Section 2(d) shall survive termination
of this Agreement.
(e) Investment of Funds in the Leasing Company Escrow Account.
Pending investment thereof in accordance with the Senior Note Indenture (and the
Convertible Note Indenture, if the Senior Notes are no longer outstanding and
the Senior Note Indenture and the Senior Note Collateral Documents have been
satisfied and discharged), funds deposited in the Leasing Company Escrow Account
shall be invested and reinvested only upon the following terms and conditions:
(i) Acceptable Investments. All funds deposited or
held in the Leasing Company Escrow Account at any time shall be
invested, at the direction of the Leasing Company except during the
continuance of a Default or an Event of Default, and at the direction
of the Senior Note Trustee, if any of the Senior Notes are outstanding,
or the Convertible Note Trustee, if the Senior Notes are no longer
outstanding and the Senior Note Indenture and the Senior Note
Collateral Documents have been satisfied and discharged, during the
continuance of a Default or an Event of Default, by the Escrow Agent in
Eligible Cash Equivalents for the Company in accordance with the
Company's or the applicable Trustee's written instructions, as
applicable, from time to time to the Escrow Agent; provided, however,
that any such written instruction shall specify the particular
Investment to be made, shall contain the certification referred to in
Section 2(e)(ii), if required, and shall be executed by any officer of
the Company. All Eligible Cash Equivalents shall be assigned to and
held in the possession of, or, in the case of Eligible Cash Equivalents
maintained in book entry form with the Federal Reserve Bank,
transferred to a book entry account in the name of, the Escrow Agent,
as pledgee, with such guarantees as are customary, except that Eligible
Cash Equivalents maintained in
-6-
<PAGE> 7
book entry form with the Federal Reserve Bank shall be transferred to a
book entry account in the name of the Escrow Agent at the Federal
Reserve Bank that includes only Eligible Cash Equivalents held by the
Escrow Agent for its customers and segregated by separate recordation
in the books and records of the Escrow Agent.
(ii) Security Interest in and Lien on Investments. No
investment of funds in the Leasing Company Escrow Account shall be made
unless the Leasing Company has certified to the Escrow Agent and the
Trustees that, upon such investment, each of the Senior Note Trustee
and the Convertible Note Trustee will have a first priority perfected
Lien and security interest for the benefit of the Senior Note Trustee
and the equal and ratable benefit of the Holders of the Senior Notes
and for the benefit of the Convertible Note Trustee and the equal and
ratable benefit of the Holders of the Convertible Notes in the
applicable Investment. A certificate as to a class of investments need
not be issued with respect to individual investments in securities in
that class if the certificate applicable to the class remains accurate
with respect to such individual investments, which continued accuracy
the Escrow Agent may conclusively assume. Promptly after the Issue
Date, and within 3 months after the anniversary of the Issue Date,
until the payment in full of the Senior Notes in accordance with the
terms thereof and of the Senior Note Indenture, and all other
Obligations then due and owing under the Senior Notes, the Senior Note
Indenture, this Agreement and the other Senior Note Collateral
Documents, each of the Trustees and the Escrow Agent shall receive an
Opinion of Counsel, dated each such date as applicable, which opinion
shall meet the requirements of Section 314(b) of the Trust Indenture
Act of 1939, as amended (the "TIA").
(iii) Interest and Dividends. All interest earned and
dividends paid on funds invested in Eligible Cash Equivalents shall be
deposited in the Leasing Company Escrow Account as additional
Collateral beneficially owned by the Leasing Company and pledged to the
Senior Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Senior Notes, and to the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of
the Holders of the Convertible Notes, and shall be reinvested in
accordance with the terms hereof.
(iv) Limitation on Escrow Agent's Responsibilities.
The Escrow Agent's sole responsibilities under this Section 2 shall be
(A) to retain, or cause its agent in the State of New York to retain,
possession of certificated Eligible Cash Equivalents (except, however,
that the Escrow Agent may surrender possession to the issuer of any
such Eligible Cash Equivalent for the purpose of effecting assignment,
crediting
-7-
<PAGE> 8
interest, or reinvesting such security or reducing such security to
cash) and to be the registered or designated owner of Eligible Cash
Equivalents which are not certificated, (B) to follow the Leasing
Company's or the applicable Trustee's written instructions, as
applicable, given in accordance with Section 2(e)(i), (C) to invest and
reinvest funds pursuant to this Section 2(e) and (D) to use reasonable
efforts to reduce to cash such Eligible Cash Equivalents as may be
required to fund any disbursement or payment in accordance with Section
3. In connection with clause (i) above, the Escrow Agent will maintain,
or cause its agent in the State of New York to maintain, continuous
possession in the State of New York of certificated Eligible Cash
Equivalents and cash included in the Collateral and will cause
uncertificated Eligible Cash Equivalents to be registered in the
book-entry system of, and transferred to an account of the Escrow Agent
or a sub-agent of the Escrow Agent at, the Federal Reserve Bank of New
York. Except as provided in Section 6, the Escrow Agent shall have no
other responsibilities with respect to perfecting or maintaining the
perfection of both Trustees' Liens and security interest in the
Collateral and shall not be required to file any instrument, document
or notice in any public office at any time or times. In connection with
clause (D) above, the Escrow Agent shall not be required to reduce to
cash any Eligible Cash Equivalents to fund any disbursement or payment
in accordance with Section 3 in the absence of written instructions
signed by an officer of the Leasing Company specifying the particular
investment to liquidate unless a Default or Event of Default has
occurred and is continuing, in which case such written instructions
shall be signed by a Trust Officer of the Senior Note Trustee or, after
the Senior Note Discharge Date, of the Convertible Note Trustee. If no
such written instructions are received, the Escrow Agent shall
liquidate those Eligible Cash Equivalents having the lowest interest
rate per annum, regardless of maturity, or if none such exist, those
having the nearest maturity. The Escrow Agent shall have no duty to
determine whether or not to file or record any document or instrument
in connection with this Agreement, but will follow the instructions of
the applicable Trustee.
(f) Substitution of Escrow Agent. The Escrow Agent may resign
by giving not less than 30 days' prior written notice to the Leasing Company and
the Senior Note Trustee or, after the Senior Note Discharge Date, to the
Convertible Note Trustee. Such resignation shall take effect upon the later to
occur of (i) delivery of all funds and Eligible Cash Equivalents maintained by
the Escrow Agent hereunder and copies of all books, records, plans and other
documents in the Escrow Agent's possession relating to such funds or Eligible
Cash Equivalents or this Agreement to a successor Escrow Agent mutually approved
by the Leasing Company and the Senior Note Trustee or, after the Senior Note
Discharge Date,
-8-
<PAGE> 9
to the Convertible Note Trustee (which approvals shall not be unreasonably
withheld or delayed) and (ii) the Leasing Company, the Senior Note Trustee or,
after the Senior Note Discharge Date, to the Convertible Note Trustee and such
successor Escrow Agent entering into this Agreement or any written successor
agreement no less favorable to the interests of the Holders of the Convertible
Notes, the Holders of the Senior Notes and the Trustees than this Agreement; and
the Escrow Agent shall thereupon be discharged of all obligations under this
Agreement and shall have no further duties, obligations or responsibilities in
connection herewith, except as set forth in Section 4. If a successor Escrow
Agent has not been appointed or has not accepted such appointment within 30 days
after notice of resignation is given to the Leasing Company, the Escrow Agent
may apply to a court of competent jurisdiction for the appointment of a
successor Escrow Agent.
(g) Escrow Account Statement. At least 30 days prior to each
Interest Payment Date, the Escrow Agent shall deliver to the Leasing Company,
the Trustees and the escrow agent for the Company Senior Note Escrow Account a
statement setting forth with reasonable particularity the balance of funds then
in the Leasing Company Escrow Account and the manner in which such funds are
invested (the "Escrow Account Statement").
3. Disbursements.
(a) Disbursement Request; Disbursements. (i) At least two
Business Days prior to an Interest Payment Date, the Leasing Company and the
Senior Note Trustee, until the Senior Note Discharge Date, and thereafter, the
Convertible Note Trustee, shall submit to the Escrow Agent a completed
Disbursement Request substantially in the form of Exhibit A hereto requesting
funds from the Leasing Company Escrow Account in an amount equal to the interest
owed on the Senior Notes under the Senior Note Indenture until the Senior Note
Discharge Date, and thereafter, the Convertible Notes under the Convertible Note
Indenture, for payment of such interest on such Interest Payment Date, unless
the Company or the Leasing Company has disbursed and the Senior Note Trustee or
the Convertible Note Trustee, as the case may be, has received funds from the
Company or the Leasing Company in such amount on or before such date for such
interest payment. Nevertheless, any funds or Eligible Cash Equivalents (or the
proceeds or reinvestments thereof) previously designated in an Officer's
Certificate delivered pursuant to Section 2(c) of this Agreement as representing
funds or Eligible Cash Equivalents designated to satisfy the requirements of
Section 11.4(m) of the Senior Note Indenture and Section 11.8(l) of the
Convertible Note Indenture requiring the Company and/or the Leasing Companies to
retain in the Company Senior Note Escrow Account and the Leasing Company Escrow
Accounts the Senior Note Interest Payment Escrow Amount at all times after
November 30, 1998 shall not be disbursed to the Leasing Company except as
contemplated in such Section 11.4 and Section
-9-
<PAGE> 10
11.8. Provided that any such Disbursement Request is not rejected by it, the
Escrow Agent, at least on (or if the Senior Note Trustee and the Escrow Agent
are the same entity, two Business Days after) receipt of such Disbursement
Request, shall disburse the funds requested in such Disbursement Request by wire
or book-entry transfer of immediately available funds to the Senior Note
Trustee, and shall promptly notify the Convertible Note Trustee of such
disbursement. The Escrow Agent shall notify the Trustees as soon as reasonably
possible if any such Disbursement Request is rejected and the reason(s)
therefor.
(ii) In addition, the Leasing Company may submit a completed
Disbursement Request for a release of funds to the Leasing Company or the
Company, as applicable, from the Leasing Company Escrow Account, provided that
(i) the applicable conditions set forth in Section 11.4 of the Senior Note
Indenture and Section 11.8 of the Convertible Note Indenture until such time as
the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged have been satisfied for such release
to the Leasing Company or the Company, as applicable, (ii) the Leasing Company
shall have delivered to the Senior Note Trustee or the Convertible note Trustee,
as applicable, the applicable Officer's Certificate required by such Section
11.4 of the Senior note Indenture or Section 11.8 of the Convertible Note
Indenture, as applicable, on or before such disbursement date and (iii) the
Senior Note Trustee or Convertible Note Trustee, as applicable, has executed the
certification contained in the Disbursement Request. Provided that any such
Disbursement Request is not rejected by it, the Escrow Agent at least two (2)
Business Days after the receipt of such Disbursement Request shall disburse the
funds requested in such Disbursement Request by wire or book-entry transfer of
immediately available funds to the Company or the Leasing Company, as
applicable. The Escrow Agent shall notify the Trustees and the Leasing Company
as soon as reasonably possible if any such Disbursement Request is rejected and
the reason(s) therefor.
(iii) If an Event of Default under the Senior Note Indenture or under
the Convertible Note Indenture has occurred and is continuing, the Senior Note
Trustee, in the case of an Event of Default under the Senior Note Indenture, or
the Convertible Note Trustee, in the case of an Event of Default under the
Convertible Note Indenture, shall be entitled unilaterally to initiate
withdrawals by executing a Disbursement Request which will be substantially
similar to the form of Exhibit A but which need only to be executed by the
Senior Note Trustee, in the case of an Event of Default under the Senior Note
Indenture, or the Convertible Note Trustee, in the case of an Event of Default
under the Convertible Note Indenture.
(b) Conditions Precedent to Disbursement. Subject to Section 4
and any mandatory provisions of applicable law, the Escrow Agent shall make the
payments to be made pursuant to a
-10-
<PAGE> 11
completed Disbursement Request if (i) the Company shall have submitted, in
accordance with the provisions of Section 3(a) herein, such Disbursement Request
to the Escrow Agent substantially in the form of Exhibit A with blanks
appropriately filled in containing the signed certification of the Senior Note
Trustee prior to the Senior Note Payment Date and thereafter of the Convertible
Note Trustee included in such form and (ii) the Escrow Agent shall not have
received any notice from the Senior Note Trustee that as a result of an Event of
Default the Indebtedness represented by the Senior Notes has been accelerated
and has become due and payable (in which event the Escrow Agent shall apply all
Available Funds as required by Section 6(b)(iii)).
(c) No Distributions. Provided that no Event of Default has
occurred and is continuing, the Leasing Company shall initiate all requests for
withdrawals of funds from the Escrow Account by executing a Disbursement Request
and submitting such request to the Senior Note Trustee, if prior to the Senior
Note Discharge Date and to the Convertible Note Trustee if subsequent to the
Senior Note Discharge Date. However, the Leasing Company shall not be entitled
to make withdrawals or distributions or to direct the Escrow Agent to make
withdrawals or distributions from the Escrow Accounts except upon certification
by the Senior Note Trustee, if prior to the Senior Note Discharge Date and by
the Convertible Note Trustee if subsequent to the Senior Note Discharge Date, on
a Disbursement Request that the applicable conditions of the Senior Note
Indenture or Convertible Note Indenture, as the case may be, have been
satisfied, as provided in Section 3(a). The Senior Note Trustee shall, prior to
the Senior Note Discharge Date, be entitled unilaterally to initiate withdrawals
or any other act.
(d) Deposits Irrevocable. Any deposits made into the Leasing
Company Escrow Account hereunder shall be irrevocable and the amount of such
deposits and any instrument or security held in the Leasing Company Escrow
Account hereunder and all interest thereon shall be held in trust by the Escrow
Agent and applied solely as provided herein.
4. Limitation of the Escrow Agent's Liability;
Responsibilities of the Escrow Agent. The Escrow Agent's responsibility and
liability under this Agreement shall be limited as follows: (i) the Escrow Agent
does not represent, warrant or guaranty to the Holders of the Senior Notes from
time to time or the Holders of the Convertible Notes the performance of the
Leasing Company; (ii) the Escrow Agent shall have no responsibility to the
Leasing Company or the Holders of the Senior Notes, the Holders of the
Convertible Notes or the Trustees from time to time as a consequence of
performance or non-performance by the Escrow Agent hereunder, except for any
negligence or willful misconduct of the Escrow Agent; (iii) the Leasing Company
shall remain solely responsible for all aspects of the Leasing Company's
business and conduct; and (iv) the Escrow Agent is not obligated to supervise,
-11-
<PAGE> 12
inspect or inform the Leasing Company or any third party of any matter referred
to above.
No implied covenants or obligations shall be inferred from
this Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by
the provisions of any agreement beyond the specific terms hereof. Specifically
and without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Eligible
Cash Equivalents held by it hereunder, including without limitation any
liability for any delay not resulting from negligence or willful misconduct in
such investment, reinvestment or liquidation, or for any loss of principal or
income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial
order or judgment, upon any written opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Leasing Company or the Trustees in compliance with the provisions of this
Agreement without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of service
thereof. The Escrow Agent may act in reliance upon any instrument comporting
with the provisions of this Agreement or signature believed by it to be genuine
and may assume that any person purporting to give notice or receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
The Escrow Agent may act pursuant to the written advice of
counsel chosen by it with respect to any matter relating to this Agreement and
(subject to clause (ii) of the first paragraph of this Section 4) shall not be
liable for any action taken or omitted in accordance with such advice.
The Escrow Agent shall not be called upon to advise any party
as to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this
Agreement with respect to any funds or property deposited hereunder, the Escrow
Agent shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds or property, and the Escrow Agent shall
not be or become liable for its failure or refusal to comply with conflicting
claims, demands or instructions. The Escrow Agent shall be entitled to refuse to
act until either any conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by agreement
between the conflicting claimants as evidenced in a writing, satisfactory to
-12-
<PAGE> 13
the Escrow Agent, or the Escrow Agent shall have received security or an
indemnity satisfactory to the Escrow Agent sufficient to save the Escrow Agent
harmless from and against any and all loss, liability or expense which the
Escrow Agent may incur by reason of its acting. The Escrow Agent may in addition
elect in its sole option to commence an interpleader action or seek other
judicial relief or orders as the Escrow Agent may deem necessary.
No provision of this Agreement shall require the Escrow Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder.
5. Indemnity. The Leasing Company shall indemnify, hold
harmless and defend the Escrow Agent and its directors, officers, agents,
employees and controlling persons, from and against any and all claims, actions,
obligations, liabilities and expenses, including defense costs, investigative
fees and costs, legal fees, and claims for damages, arising from the Escrow
Agent's performance under this Agreement, except to the extent that such
liability, expense or claim is directly attributable to the negligence or
willful misconduct of any of the foregoing persons. The provisions of this
Section shall survive any termination, satisfaction or discharge of this
Agreement as well as the resignation or removal of the Escrow Agent. The
provisions of this paragraph 5 shall survive the termination of this Agreement.
6. Grant of Liens and Security Interest; Instructions
to Escrow Agent.
(a) The Leasing Company hereby irrevocably grants a first
priority security interest in and Lien on, and pledges, assigns and sets over to
the Senior Note Trustee for the equal and ratable benefit of the Holders of the
Senior Notes, and to the Convertible Note Trustee, acting for its benefit and
the equal and ratable benefit of the Holders of the Convertible Notes, all of
the Leasing Company's right, title and interest in the Leasing Company Escrow
Account, and all property now or hereafter placed or deposited in, or delivered
to the Escrow Agent for placement or deposit in, the Leasing Company Escrow
Account, including, without limitation, all funds held therein, all Eligible
Cash Equivalents held by (or otherwise maintained in the name of) the Escrow
Agent pursuant to Section 2, and all proceeds thereof as well as all rights of
the Leasing Company under this Agreement (collectively, the "Collateral"), in
order to secure all obligations and indebtedness of the Leasing Company under
the Senior Notes and any other obligation, now or hereafter arising, of every
kind and nature, owed by the Leasing Company or the Senior Note Guarantors under
the Senior Note Indenture, the related guarantees thereunder or the Senior Note
Collateral Documents to the Holders of the Senior Notes or to the Senior Note
Trustee and all obligations and indebtedness of the Leasing Company under the
Convertible Notes and
-13-
<PAGE> 14
any other obligation, now or hereafter arising, of every kind and nature, owed
by the Leasing Company or the Convertible Note Guarantors under the Convertible
Note Indenture, the related guarantees thereunder or the Convertible Note
Collateral Documents to the Holders of the Convertible Notes or to the
Convertible Note Trustee. The Escrow Agent hereby acknowledges the Trustees'
security interest and Lien as set forth above. The Leasing Company shall take
all actions necessary on its part to insure the continuance of a first priority
security interest in and Lien on the Collateral in favor of the Trustees in
order to secure all such obligations and indebtedness.
(b) The Leasing Company and the Trustees hereby irrevocably
instruct the Escrow Agent to, and the Escrow Agent shall (i) (A) at all times
maintain sole dominion and control over funds and Eligible Cash Equivalents in
the Leasing Company Escrow Account, acting for the benefit of the Trustees to
the extent specifically required herein, (B) maintain, or cause its agent within
the State of New York to maintain, possession of all certificated Eligible Cash
Equivalents purchased hereunder that are physically possessed by the Escrow
Agent in order for the Trustees to enjoy a continuous perfected first priority
security interest therein under the law of the State of New York (the Leasing
Company hereby agreeing that in the event any certificated Eligible Cash
Equivalents are in the possession of the Leasing Company or a third party, the
Leasing Company shall use its best efforts to deliver all such certificates to
the Escrow Agent), (C) take all steps specified by the Leasing Company pursuant
to paragraph (a) above to cause the Trustees to enjoy a continuous perfected
first priority security interest and Liens under the New York Uniform Commercial
Code and any applicable law of the State of New York in all Eligible Cash
Equivalents purchased hereunder that are not certificated and (D) maintain the
Collateral free and clear of all Liens, security interests, safekeeping or other
charges, demands and claims against the Escrow Agent of any nature now or
hereafter existing in favor of anyone other than the Trustees; (ii) promptly
notify the Trustees if the Escrow Agent receives written notice that any Person
other than the Trustees has or claims to have a Lien on or security interest in
any portion of the Collateral and (iii) in addition to disbursing amounts held
in escrow pursuant to any Disbursement Requests given to it by the Senior Note
Trustee pursuant to Section 3(a)(iv), upon receipt of written notice from the
Trustee of the acceleration of the maturity of the Senior Notes, and direction
from the Senior Note Trustee to disburse all Available Funds to the Senior Note
Trustee, as promptly as practicable disburse all funds held in the Leasing
Company Escrow Account to the Senior Note Trustee and transfer title to all
Eligible Cash Equivalents held by the Escrow Agent hereunder to the Senior Note
Trustee. The Escrow Agent shall not have any right to receive compensation from
either Trustee and is without any authority to obligate either Trustee or to
compromise or pledge its security interest and Lien hereunder. Accordingly, the
Escrow
-14-
<PAGE> 15
Agent is hereby directed to cooperate with the Trustees in the exercise of their
respective rights in the Collateral provided for herein.
(c) Any money and Eligible Cash Equivalents collected by the
Senior Note Trustee pursuant to Section 6(b)(iii) shall be applied as provided
in Section 6.9 of the Senior Note Indenture.
(d) Upon demand, the Leasing Company will execute and deliver
to either Trustee such instruments and documents as such Trustee may reasonably
deem necessary or advisable to confirm or perfect the rights of the Trustees
under this Agreement and the Trustees' interest in the Collateral. The Trustees
shall be entitled to take all necessary action to preserve and protect the
security interest created hereby as a Lien and encumbrance upon the Collateral.
(e) The Leasing Company hereby appoints each Trustee as its
attorney-in-fact with full power of substitution, exercisable upon the
occurrence and during the continuance of a Default or Event of Default, to do
any act which the Leasing Company is obligated hereto to do, and each Trustee
may, but shall not be obligated to, exercise such rights as the Leasing Company
might exercise with respect to the Collateral and take any action in the Leasing
Company's name to protect the Trustees' Liens and security interest hereunder.
In addition to the rights provided under Section 6(b)(iii) hereof, upon an Event
of Default as defined in the Senior Note Indenture and for so long as such Event
of Default continues, the Senior Note Trustee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party under
the New York Uniform Commercial Code or other applicable law, and the Senior
Note Trustee may also upon obtaining possession of the Collateral as set forth
herein, without notice to the Leasing Company except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Senior Note Trustee's
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Senior Note Trustee may deem commercially reasonable. The
Leasing Company acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale. The Leasing Company agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days' notice to the Leasing Company of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. If the Senior Notes
are no longer outstanding
-15-
<PAGE> 16
and the Senior Note Indenture has been satisfied and discharged, the foregoing
rights and remedies may be exercised by the Convertible Note Trustee.
7. Termination. This Agreement shall terminate automatically
ten (10) days following disbursement of all funds remaining in the Leasing
Company Escrow Account (including Eligible Cash Equivalents) and the payment in
full of the Senior Notes and all other Obligations then due and owing under the
Senior Note Indenture, the related guarantees thereunder, the Senior Note
Collateral Documents, the Convertible Note Indenture, Convertible Note
Guarantees and the Convertible Note Collateral Documents, unless sooner
terminated by agreement of the parties hereto (in accordance with the terms
hereof, not in violation of the Senior Note Indenture or the Convertible Note
Indenture; neither the Senior Note Trustee nor the Convertible Note Trustee may
agree to terminate this Agreement unless the Senior Note Trustee has received
the consent of 100% of the Holders of all of the Senior Notes outstanding or the
Convertible Note Trustee has received the consent of 100% of the Holders of all
of the Convertible Notes outstanding); provided, however, that the obligations
of the Leasing Company under Section 2(d) and Section 5 (and any existing claims
thereunder) shall survive termination of this Agreement or the resignation of
the Escrow Agent; provided, further, however, that until such tenth day, the
Leasing Company will cause this Agreement (or any permitted successor agreement)
to remain in effect and will cause there to be an Escrow Agent (including any
permitted successor thereto) acting hereunder (or under any such permitted
successor agreement).
8. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach
of this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more
of the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties
hereto, and the rights and duties of any party hereunder shall not be assignable
except with the prior written consent of
-16-
<PAGE> 17
the other parties. Notwithstanding the foregoing, this Agreement shall inure to
and be binding upon the parties and their successors and permitted assigns.
Nothing herein shall restrict the Escrow Agent from performing its duties
through a sub-agent.
(d) Benefit. The parties hereto and their successors and
permitted assigns, but no others, shall be bound hereby and entitled to the
benefits hereof; provided, however, that the holders of the Senior Notes and
their permitted assigns shall be entitled to the benefits hereof and to enforce
this Agreement.
(e) Time. Time is of the essence with respect to each
provision of this Agreement.
(f) Entire Agreement; Amendments. This Agreement and the
Senior Note Indenture and the Convertible Note Indenture contain the entire
agreement among the parties with respect to the subject matter hereof and
supersede any and all prior agreements, understandings and commitments, whether
oral or written. This Agreement may be amended only in accordance with Article
IX of the Senior Note Indenture and Article IX of the Convertible Note Indenture
and further by a writing signed by a duly authorized representative of each
party hereto.
(g) Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either: (a) on the day of hand delivery; (b) three Business Days
following the day sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, addressed as set forth
below; (c) when transmitted by telecopy with verbal confirmation of receipt by
the telecopy operator to the telecopy number set forth below; or (d) one
business day following the day timely delivered to a next-day air courier
addressed as set forth below:
To Escrow Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
-17-
<PAGE> 18
To each Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
To the Leasing Company:
PLD Asset Leasing Limited
c/o Phoebus, Christos Clerides,
N. Pirilides & Associates
Stassinos Court
Corner of Stassinos Ave.
& Ayias Elenis 2
3rd Floor, P.O. Box 1884
Nicosia, CYPRUS
Attention: Dr. Christos Clerides
Telecopy: 02-443015
Telephone: 02-366065
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience
only and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) Choice of Law; Waiver of Jury Trial. The existence,
validity, construction, operation and effect of any and all terms and provisions
of this Agreement shall be determined in accordance with and governed by the
laws of the State of New York, without regard to principles of conflicts of law.
The parties to this Agreement hereby agree that jurisdiction over such parties
and over the subject matter of any action or proceeding arising under this
Agreement may be exercised by a competent Court of the State of New York, or by
a United States Court, sitting in New York City. The Leasing Company hereby
submits to the personal jurisdiction of such courts, hereby waives personal
service of process upon it and hereby waives, to the extent permitted by
applicable law, the right to a trial by jury in any action or proceeding with
the Escrow Agent. All actions and proceedings brought by the Leasing Company
-18-
<PAGE> 19
against the Escrow Agent relating to or arising from, directly or indirectly,
this Agreement shall be litigated only in courts within the State of New York.
The Leasing Company waives any objection that it may have to the location of the
court in which the Escrow Agent has commenced a proceeding described in this
paragraph including, without limitation, any objection to the laying of venue or
based on the grounds of forum non conveniens.
(k) Authority of the Leasing Company; Valid and Binding
Agreement. The Leasing Company hereby represents and warrants that this
Agreement has been duly authorized, executed and delivered on its behalf and
constitutes the legal, valid and binding obligation of the Leasing Company. The
execution, delivery and performance of this Agreement by the Leasing Company
does not violate any applicable law or regulation to which the Leasing Company
is subject and does not require the consent of any governmental or other
regulatory body to which the Leasing Company is subject, except for such
consents and approvals as have been obtained and are in full force and effect.
(l) Authority of the Escrow Agent and the Trustees; Valid and
Binding Agreement. Each of the Escrow Agent and the Trustees hereby represents
and warrants that this Agreement has been duly authorized, executed and
delivered on its behalf and constitutes its legal, valid and binding obligation.
(m) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Leasing Company
(i) acknowledges that it has, by separate written instrument, irrevocably
designated and appointed CT Corporation System, 1633 Broadway, New York, New
York 10019 (or any successor), as its authorized agent upon which process may be
served in any suit or proceeding arising out of or relating to this Agreement
that may be instituted in any federal or state court in the State of New York,
or brought under federal or state securities laws, and acknowledges that CT
Corporation System has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding, and (iii) agrees
that service of process upon CT Corporation System (or any successor) and
written notice of said service to the Leasing Company (mailed or delivered to
Messrs. Morgan, Lewis & Bockius LLP, 2000 One Logan Square, Philadelphia, PA
19103, Attention: E. Clive Anderson, Esq. shall be deemed in every respect
effective service of process upon the Leasing Company in any such suit or
proceeding. The Leasing Company further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such destination and appointment of
CT Corporation System (or any successor) in full force and effect so long as any
of the Senior Notes shall be outstanding.
To the extent that the Leasing Company has or hereafter may
acquire any immunity from jurisdiction of any court or from any
-19-
<PAGE> 20
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.
-20-
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed and delivered
this Leasing Company Escrow Account Agreement as of the day first above written.
ESCROW AGENT: THE BANK OF NEW YORK,
as Escrow Agent
By: /s/ Steven D. Torgeson
---------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
SENIOR NOTE TRUSTEE: THE BANK OF NEW YORK,
as Senior Note Trustee
By: /s/ Steven D. Torgeson
---------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
CONVERTIBLE NOTE TRUSTEE: THE BANK OF NEW YORK,
as Convertible Note Trustee
By: /s/ Steven D. Torgeson
---------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
Leasing Company: PLD ASSET LEASING LIMITED
By:/s/ Clayton A. Waite
------------------------
Name: Clayton A. Waite
Title: Director
-21-
<PAGE> 22
EXHIBIT A
Form of Disbursement Request
[Letterhead of PLD Asset Leasing Limited]
[Date]
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Re: Disbursement Request No.
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Leasing Company Escrow Agreement, dated as of
May 31, 1996 (the "Leasing Company Escrow Agreement") among you (the "Escrow
Agent"), The Bank of New York as Senior Note Trustee, The Bank of New York as
Convertible Note Trustee, and PLD Asset Leasing Limited, a Cypriot corporation
(the "Leasing Company"). Capitalized terms used herein shall have the meaning
given in the Leasing Company Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement
Request under the Leasing Company Escrow Agreement.
The undersigned hereby notifies you that the Leasing Company
has requested, and has satisfied the conditions contained in Section 11.4 of the
Senior Note Indenture for, the release of $______, from the Leasing Company
Escrow Account of PLD Asset Leasing Limited which was deposited on ________ as a
result of [specify source of deposit, e.g., asset sale of specified assets]
for Net Cash Proceeds of $______ which amount will be invested or used as
follows: .
In connection with the requested disbursement, the undersigned
hereby notifies you that:
1. The Senior Notes have [not], as a result of an Event of
Default (as defined in the Senior Note Indenture), been accelerated and
become due and payable.
2. An Opinion of Counsel as required by the Senior Note
Indenture is delivered herewith.
-22-
<PAGE> 23
3. The Collateral Documents have been delivered to the
Trustee.
4. [add wire instructions].
The Escrow Agent is entitled to rely on the foregoing in
disbursing funds relating to this Disbursement Request.
PLD ASSET LEASING LIMITED
By:_____________________
Name:
Title:
The Senior Note Trustee hereby certifies to the Escrow Agent
that it has received the applicable Officers' Certificate described in Section
11.4 of the Senior Note Indenture for the release of the funds to be disbursed
pursuant to the foregoing Disbursement Request.
THE BANK OF NEW YORK, as Senior
Note Trustee
By: _______________________
Name:
Title:
If applicable:
The Convertible Note Trustee hereby certifies to the Escrow
Agent that it has received the applicable Officers' Certificate described in
Section 11.8 of the Convertible Note Indenture for the release of the funds to
be disbursed pursuant to the foregoing Disbursement Request.
THE BANK OF NEW YORK, as
Convertible Note Trustee
By: _______________________
Name:
Title:
-23-
<PAGE> 1
EXHIBIT 4.14
LEASING COMPANY ESCROW ACCOUNT AGREEMENT
[PLD CAPITAL LIMITED]
This LEASING COMPANY ESCROW ACCOUNT AGREEMENT (the "Agreement"), dated
as of May 31, 1996, among The Bank of New York, a New York banking corporation,
as escrow agent (in such capacity, the "Escrow Agent"), The Bank of New York, a
New York banking corporation, as trustee (in such capacity, the "Senior Note
Trustee") under the Senior Note Indenture (as defined herein), The Bank of New
York, a New York banking corporation, as trustee (in such capacity, the
"Convertible Note Trustee") under the Convertible Note Indenture (as defined
herein), and PLD Capital Limited, a Cypriot corporation (the "Leasing Company").
RECITALS
A. Pursuant to the Indenture, dated as of May 31, 1996 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Senior Note Indenture"), among Petersburg Long Distance Inc., an Ontario
corporation (the "Company"), the corporations acting as guarantors and named
therein (the "Senior Note Guarantors" and each, a "Senior Note Guarantor") and
the Trustee, the Company is issuing $123,000,000 aggregate principal amount at
stated maturity of its 14% Senior Discount Notes due June 1, 2004 (the "Senior
Notes").
B. Pursuant to the Indenture, dated as of May 31, 1996 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Convertible Note Indenture"), among the Company, the corporations acting as
guarantors and named therein (the "Convertible Note Guarantors") and the
Convertible Note Trustee, the Company is issuing $26,500,000 aggregate principal
amount of its 9% Convertible Subordinated Notes due 2006 (the "Convertible
Notes").
C. Pursuant to the Senior Note Indenture and the Convertible Note
Indenture, the Leasing Company has jointly and severally, irrevocably and
unconditionally guaranteed all of the obligations of the Company under the
Senior Notes, the Senior Note Indenture and the Senior Note Collateral Documents
and under the Convertible Notes, the Convertible Note Indenture and the
Convertible Note Collateral Documents and all of the obligations of the Senior
Note Guarantors under the Senior Note Indenture, Senior Note Guarantees and the
other Senior Note Collateral Documents.
D. As security for its obligations, among other things, under the
Senior Notes and the Senior Note Indenture and as security for its obligations,
among other things, under the Convertible Notes and the Convertible Note
Indenture, the Leasing Company is required to enter into a Leasing Company
Security and Pledge Agreement of even date herewith (the "Leasing Company
<PAGE> 2
Security Agreement") with the Senior Note Trustee, the collateral agent named
therein (the "Senior Note Escrow Agent") and the Convertible Note Trustee, in
which the Company is granting Liens on and a security interest in certain
collateral described therein (the "Senior Note Collateral").
E. Under the terms of the Senior Note Indenture and the Leasing Company
Pledge and Security Agreement, the Leasing Company is required to deposit (i)
all funds which it receives from the Company, whether representing the proceeds
of the Senior Notes or otherwise, (ii) all payments which it receives from
Restricted Subsidiaries or Qualified Joint Ventures allocable or related to or
in connection with Telecommunications Asset Leases, Investments constituting
lease or rental payments or other payments, or from Persons in which Qualified
Investments are made, whether constituting interest and principal payments,
dividends or distributions or other payments and (iii) all funds which it
receives from other Leasing Companies in a special, segregated and irrevocable
account in the name of and beneficially owned by the Leasing Company which is
pledged to, and to be under the sole dominion and control of, the Senior Note
Trustee, acting for its benefit and the equal and ratable benefit of the Holders
of the Senior Notes, and the Convertible Note Trustee, acting for its benefit
and the equal and ratable benefit of the Holders of the Convertible Notes (the
"Leasing Company Escrow Account") pending the reinvestment of such amounts in
accordance with the Senior Note Indenture.
F. The parties have entered into this Agreement in order to set forth
the conditions upon which, and the manner in which, funds will be disbursed from
the Leasing Company Escrow Account and released from the security interest and
Liens described above.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Terms used herein and not defined herein shall have
the meanings as defined in the Senior Note Indenture. In addition to any other
defined terms used herein, the following terms shall constitute defined terms
for purposes of this Agreement and shall have the meanings set forth below:
"Affiliates" of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director or
officer (A) of such specified person, (B) of any subsidiary of such specified
person or (C) of any person described in clause (i) above or (iii) any person
-2-
<PAGE> 3
in which such person has, directly or indirectly, a 5% or greater voting or
economic interest or the power to control. For purposes of this definition,
control of a person means the power, directly or indirectly, to direct or cause
the direction of the management or policies of such person whether through the
ownership of voting securities or by contract or otherwise and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied pursuant to
Section 3(a) or pursuant to Section 6(b) (iii).
"Available Funds" means (A) the sum of (i) all amounts deposited in the
Leasing Company Escrow Account from time to time and (ii) interest earned or
dividends paid on the funds in the Escrow Accounts (including holdings of
Eligible Cash Equivalents), less (B) the aggregate disbursements previously made
pursuant to this Agreement.
"Collateral" shall have the meaning given in Section 6(a) hereof.
"Company Senior Note Escrow Account" means the escrow account
established pursuant to Section 2(b) of the Company Senior Note Escrow Account
Agreement.
"Company Senior Note Escrow Account Agreement" means that certain
Company Senior Note Escrow Account Agreement of even date herewith among the
Escrow Agent, the Trustee and the Company.
"Default" means a "Default" as defined in Section 1.1 of the Senior
Note Indenture until the Senior Notes are no longer outstanding and the Senior
Note Indenture has been satisfied and discharged in which case a "Default" means
a "Default" as defined in Section 1.1 of the Convertible Note Indenture if not
then satisfied and discharged.
"Disbursement Request" means a notice sent by the Leasing Company to
the Escrow Agent requesting a disbursement of funds from the Leasing Company
Escrow Account, in substantially the form of Exhibit A hereto. Each Disbursement
Request shall be signed by the Chairman of the Board, a Vice Chairman of the
Board, the Chief Executive Officer, the Chief Operating Officer, the Chief
Financial Officer or any Vice President of the Company.
"Eligible Cash Equivalents" 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,
certificates of deposit, or Eurodollar deposits of any commercial bank organized
in the United States having capital and surplus in excess of $500,000,000, (iii)
repurchase obligations with a term of not more than seven days for
-3-
<PAGE> 4
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing, or subject to tender at the option of the holder thereof within ninety
days after the date of acquisition thereof and, at the time of acquisition
having a rating of A or better from Standard & Poor's or A-2 or better from
Moody's, (v) commercial paper issued by the parent corporation of any commercial
bank organized in the United States having capital and surplus in excess of
$500,000,000 and commercial paper issued by non-bank issuers rated A-1 by
Standard & Poor's or P-1 by Moody's and in each case maturing within 270 days
after the date of acquisition, (vi) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States having capital
and surplus in excess of $500,000,000, (vii) deposits available for withdrawal
on demand with a commercial bank organized in the United States having capital
and surplus in excess of $500,000,000 and (viii) investments in money market
funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (vi).
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500,000,000 its equivalent in
foreign currency, whose debt is rated "A" (or higher) or the equivalent rating
according to Standard & Poor's or Moody's at the time as of which any investment
or rollover therein is made.
"Escrow Account Statement" shall have the meaning given in Section
2(g).
"Escrow Agent" shall have the meaning set forth in the preamble to this
Agreement.
"Event of Default" means an "Event of Default" as defined in Section
6.1 of the Senior Note Indenture until the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged, in
which case "Event of Default" means an "Event of Default" as defined in Section
1.1 of the Convertible Note Indenture if not then satisfied and discharged.
"Initial Escrow Amount" shall mean $46,000,000 of the net proceeds
received by the Company from the sale of the Senior Notes pursuant to the
Purchase Agreement.
"Interest Payment Date" means June 1 and December 1 of each year,
commencing on December 1, 1996, until the Senior Notes and the Convertible Notes
are paid in full.
"Issue Date" means June 12, 1996.
-4-
<PAGE> 5
"Leasing Company Escrow Account" shall have the meaning given in
Section 2(b).
"Senior Note Discharge Date" shall mean such time as the Senior Notes
are no longer outstanding and the Senior Note Indenture and the Senior Note
Collateral Documents have been satisfied and discharged.
"Trustees" means, collectively, the Convertible Note Trustee and the
Senior Note Trustee.
2. Leasing Company Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Leasing Company and the Trustees
hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts
appointment, as escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Leasing Company Escrow Account. Concurrent with
the execution and delivery hereof, the Escrow Agent shall establish and maintain
in the name of the Leasing Company at The Bank of New York, a special,
segregated and irrevocable escrow account designated "Leasing Company Escrow
Account pledged by PLD Capital Limited to The Bank of New York, as Trustee" (the
"Leasing Company Escrow Account"). All funds accepted by the Escrow Agent
pursuant to this Agreement shall be deposited in the name of and beneficially
owned by the Leasing Company and pledged to, and under the sole dominion and
control of, the Senior Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Senior Notes, and the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of the Holders
of the Convertible Notes. All such funds shall be held in the Leasing Company
Escrow Account until disbursed in accordance with the terms hereof. The Leasing
Company Escrow Account, the funds held therein and any Eligible Cash Equivalents
held by the Escrow Agent in which such funds are invested shall be beneficially
owned by the Leasing Company and pledged to and under the sole dominion and
control of the Senior Note Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Senior Notes, and the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of the Holders
of the Convertible Notes.
(c) The Company shall provide notice to the Collateral Agent and the
Trustee of the source of any money deposited to the Leasing Company Escrow
Account by reference to the applicable provisions of the Senior Note Indenture,
and shall keep an ongoing record of the amounts so deposited and disbursed in
accordance with this Escrow Agreement. It shall be the Company's responsibility
to satisfy the Collateral Agent as to the accounting for the Escrow Account with
a view to ensuring that the amounts required to be calculated for any
disbursement are ascertainable.
-5-
<PAGE> 6
(d) Escrow Agent Compensation. The Leasing Company shall pay to the
Escrow Agent such compensation for services to be performed by it under this
Agreement as the Leasing Company and the Escrow Agent may agree in writing from
time to time. The Escrow Agent shall be paid any compensation owed to it
directly by the Leasing Company and shall not disburse from the Leasing Company
Escrow Account any such amounts.
The Leasing Company shall reimburse the Escrow Agent upon request for
all reasonable expenses, disbursements, and advances incurred or made by the
Escrow Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel. The
Escrow Agent shall be paid any such expenses owed to it directly by the Leasing
Company and shall not disburse from the Leasing Company Escrow Account any such
amounts.
The provisions of this Section 2(d) shall survive termination of this
Agreement.
(e) Investment of Funds in the Leasing Company Escrow Account. Pending
investment thereof in accordance with the Senior Note Indenture (and the
Convertible Note Indenture, if the Senior Notes are no longer outstanding and
the Senior Note Indenture and the Senior Note Collateral Documents have been
satisfied and discharged), funds deposited in the Leasing Company Escrow Account
shall be invested and reinvested only upon the following terms and conditions:
(i) Acceptable Investments. All funds deposited or held in the
Leasing Company Escrow Account at any time shall be invested, at the
direction of the Leasing Company except during the continuance of a
Default or an Event of Default, and at the direction of the Senior Note
Trustee, if any of the Senior Notes are outstanding, or the Convertible
Note Trustee, if the Senior Notes are no longer outstanding and the
Senior Note Indenture and the Senior Note Collateral Documents have
been satisfied and discharged, during the continuance of a Default or
an Event of Default, by the Escrow Agent in Eligible Cash Equivalents
for the Company in accordance with the Company's or the applicable
Trustee's written instructions, as applicable, from time to time to the
Escrow Agent; provided, however, that any such written instruction
shall specify the particular Investment to be made, shall contain the
certification referred to in Section 2(e)(ii), if required, and shall
be executed by any officer of the Company. All Eligible Cash
Equivalents shall be assigned to and held in the possession of, or, in
the case of Eligible Cash Equivalents maintained in book entry form
with the Federal Reserve Bank, transferred to a book entry account in
the name of, the Escrow Agent, as pledgee, with such guarantees as are
customary, except that Eligible Cash Equivalents maintained in
-6-
<PAGE> 7
book entry form with the Federal Reserve Bank shall be transferred to a
book entry account in the name of the Escrow Agent at the Federal
Reserve Bank that includes only Eligible Cash Equivalents held by the
Escrow Agent for its customers and segregated by separate recordation
in the books and records of the Escrow Agent.
(ii) Security Interest in and Lien on Investments. No
investment of funds in the Leasing Company Escrow Account shall be made
unless the Leasing Company has certified to the Escrow Agent and the
Trustees that, upon such investment, each of the Senior Note Trustee
and the Convertible Note Trustee will have a first priority perfected
Lien and security interest for the benefit of the Senior Note Trustee
and the equal and ratable benefit of the Holders of the Senior Notes
and for the benefit of the Convertible Note Trustee and the equal and
ratable benefit of the Holders of the Convertible Notes in the
applicable Investment. A certificate as to a class of investments need
not be issued with respect to individual investments in securities in
that class if the certificate applicable to the class remains accurate
with respect to such individual investments, which continued accuracy
the Escrow Agent may conclusively assume. Promptly after the Issue
Date, and within 3 months after the anniversary of the Issue Date,
until the payment in full of the Senior Notes in accordance with the
terms thereof and of the Senior Note Indenture, and all other
Obligations then due and owing under the Senior Notes, the Senior Note
Indenture, this Agreement and the other Senior Note Collateral
Documents, each of the Trustees and the Escrow Agent shall receive an
Opinion of Counsel, dated each such date as applicable, which opinion
shall meet the requirements of Section 314(b) of the Trust Indenture
Act of 1939, as amended (the "TIA").
(iii) Interest and Dividends. All interest earned and
dividends paid on funds invested in Eligible Cash Equivalents shall be
deposited in the Leasing Company Escrow Account as additional
Collateral beneficially owned by the Leasing Company and pledged to the
Senior Note Trustee, acting for its benefit and the equal and ratable
benefit of the Holders of the Senior Notes, and to the Convertible Note
Trustee, acting for its benefit and the equal and ratable benefit of
the Holders of the Convertible Notes, and shall be reinvested in
accordance with the terms hereof.
(iv) Limitation on Escrow Agent's Responsibilities. The Escrow
Agent's sole responsibilities under this Section 2 shall be (A) to
retain, or cause its agent in the State of New York to retain,
possession of certificated Eligible Cash Equivalents (except, however,
that the Escrow Agent may surrender possession to the issuer of any
such Eligible Cash Equivalent for the purpose of effecting assignment,
crediting
-7-
<PAGE> 8
interest, or reinvesting such security or reducing such security to
cash) and to be the registered or designated owner of Eligible Cash
Equivalents which are not certificated, (B) to follow the Leasing
Company's or the applicable Trustee's written instructions, as
applicable, given in accordance with Section 2(e)(i), (C) to invest and
reinvest funds pursuant to this Section 2(e) and (D) to use reasonable
efforts to reduce to cash such Eligible Cash Equivalents as may be
required to fund any disbursement or payment in accordance with Section
3. In connection with clause (i) above, the Escrow Agent will maintain,
or cause its agent in the State of New York to maintain, continuous
possession in the State of New York of certificated Eligible Cash
Equivalents and cash included in the Collateral and will cause
uncertificated Eligible Cash Equivalents to be registered in the
book-entry system of, and transferred to an account of the Escrow Agent
or a sub-agent of the Escrow Agent at, the Federal Reserve Bank of New
York. Except as provided in Section 6, the Escrow Agent shall have no
other responsibilities with respect to perfecting or maintaining the
perfection of both Trustees' Liens and security interest in the
Collateral and shall not be required to file any instrument, document
or notice in any public office at any time or times. In connection with
clause (D) above, the Escrow Agent shall not be required to reduce to
cash any Eligible Cash Equivalents to fund any disbursement or payment
in accordance with Section 3 in the absence of written instructions
signed by an officer of the Leasing Company specifying the particular
investment to liquidate unless a Default or Event of Default has
occurred and is continuing, in which case such written instructions
shall be signed by a Trust Officer of the Senior Note Trustee or, after
the Senior Note Discharge Date, of the Convertible Note Trustee. If no
such written instructions are received, the Escrow Agent shall
liquidate those Eligible Cash Equivalents having the lowest interest
rate per annum, regardless of maturity, or if none such exist, those
having the nearest maturity. The Escrow Agent shall have no duty to
determine whether or not to file or record any document or instrument
in connection with this Agreement, but will follow the instructions of
the applicable Trustee.
(f) Substitution of Escrow Agent. The Escrow Agent may resign by giving
not less than 30 days' prior written notice to the Leasing Company and the
Senior Note Trustee or, after the Senior Note Discharge Date, to the Convertible
Note Trustee. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds and Eligible Cash Equivalents maintained by the Escrow
Agent hereunder and copies of all books, records, plans and other documents in
the Escrow Agent's possession relating to such funds or Eligible Cash
Equivalents or this Agreement to a successor Escrow Agent mutually approved by
the Leasing Company and the Senior Note Trustee or, after the Senior Note
Discharge Date,
-8-
<PAGE> 9
to the Convertible Note Trustee (which approvals shall not be unreasonably
withheld or delayed) and (ii) the Leasing Company, the Senior Note Trustee or,
after the Senior Note Discharge Date, to the Convertible Note Trustee and such
successor Escrow Agent entering into this Agreement or any written successor
agreement no less favorable to the interests of the Holders of the Convertible
Notes, the Holders of the Senior Notes and the Trustees than this Agreement; and
the Escrow Agent shall thereupon be discharged of all obligations under this
Agreement and shall have no further duties, obligations or responsibilities in
connection herewith, except as set forth in Section 4. If a successor Escrow
Agent has not been appointed or has not accepted such appointment within 30 days
after notice of resignation is given to the Leasing Company, the Escrow Agent
may apply to a court of competent jurisdiction for the appointment of a
successor Escrow Agent.
(g) Escrow Account Statement. At least 30 days prior to each Interest
Payment Date, the Escrow Agent shall deliver to the Leasing Company, the
Trustees and the escrow agent for the Company Senior Note Escrow Account a
statement setting forth with reasonable particularity the balance of funds then
in the Leasing Company Escrow Account and the manner in which such funds are
invested (the "Escrow Account Statement").
3. Disbursements.
(a) Disbursement Request; Disbursements. (i) At least two Business Days
prior to an Interest Payment Date, the Leasing Company and the Senior Note
Trustee, until the Senior Note Discharge Date, and thereafter, the Convertible
Note Trustee, shall submit to the Escrow Agent a completed Disbursement Request
substantially in the form of Exhibit A hereto requesting funds from the Leasing
Company Escrow Account in an amount equal to the interest owed on the Senior
Notes under the Senior Note Indenture until the Senior Note Discharge Date, and
thereafter, the Convertible Notes under the Convertible Note Indenture, for
payment of such interest on such Interest Payment Date, unless the Company or
the Leasing Company has disbursed and the Senior Note Trustee or the Convertible
Note Trustee, as the case may be, has received funds from the Company or the
Leasing Company in such amount on or before such date for such interest payment.
Nevertheless, any funds or Eligible Cash Equivalents (or the proceeds or
reinvestments thereof) previously designated in an Officer's Certificate
delivered pursuant to Section 2(c) of this Agreement as representing funds or
Eligible Cash Equivalents designated to satisfy the requirements of Section
11.4(m) of the Senior Note Indenture and Section 11.8(l) of the Convertible Note
Indenture requiring the Company and/or the Leasing Companies to retain in the
Company Senior Note Escrow Account and the Leasing Company Escrow Accounts the
Senior Note Interest Payment Escrow Amount at all times after November 30, 1998
shall not be disbursed to the Leasing Company except as contemplated in such
Section 11.4 and Section
-9-
<PAGE> 10
11.8. Provided that any such Disbursement Request is not rejected by it, the
Escrow Agent, at least on (or if the Senior Note Trustee and the Escrow Agent
are the same entity, two Business Days after) receipt of such Disbursement
Request, shall disburse the funds requested in such Disbursement Request by wire
or book-entry transfer of immediately available funds to the Senior Note
Trustee, and shall promptly notify the Convertible Note Trustee of such
disbursement. The Escrow Agent shall notify the Trustees as soon as reasonably
possible if any such Disbursement Request is rejected and the reason(s)
therefor.
(ii) In addition, the Leasing Company may submit a completed
Disbursement Request for a release of funds to the Leasing Company or the
Company, as applicable, from the Leasing Company Escrow Account, provided that
(i) the applicable conditions set forth in Section 11.4 of the Senior Note
Indenture and Section 11.8 of the Convertible Note Indenture until such time as
the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged have been satisfied for such release
to the Leasing Company or the Company, as applicable, (ii) the Leasing Company
shall have delivered to the Senior Note Trustee or the Convertible note Trustee,
as applicable, the applicable Officer's Certificate required by such Section
11.4 of the Senior note Indenture or Section 11.8 of the Convertible Note
Indenture, as applicable, on or before such disbursement date and (iii) the
Senior Note Trustee or Convertible Note Trustee, as applicable, has executed the
certification contained in the Disbursement Request. Provided that any such
Disbursement Request is not rejected by it, the Escrow Agent at least two (2)
Business Days after the receipt of such Disbursement Request shall disburse the
funds requested in such Disbursement Request by wire or book-entry transfer of
immediately available funds to the Company or the Leasing Company, as
applicable. The Escrow Agent shall notify the Trustees and the Leasing Company
as soon as reasonably possible if any such Disbursement Request is rejected and
the reason(s) therefor.
(iii) If an Event of Default under the Senior Note Indenture or under
the Convertible Note Indenture has occurred and is continuing, the Senior Note
Trustee, in the case of an Event of Default under the Senior Note Indenture, or
the Convertible Note Trustee, in the case of an Event of Default under the
Convertible Note Indenture, shall be entitled unilaterally to initiate
withdrawals by executing a Disbursement Request which will be substantially
similar to the form of Exhibit A but which need only to be executed by the
Senior Note Trustee, in the case of an Event of Default under the Senior Note
Indenture, or the Convertible Note Trustee, in the case of an Event of Default
under the Convertible Note Indenture.
(b) Conditions Precedent to Disbursement. Subject to Section 4
and any mandatory provisions of applicable law, the Escrow Agent shall make the
payments to be made pursuant to a
-10-
<PAGE> 11
completed Disbursement Request if (i) the Company shall have submitted, in
accordance with the provisions of Section 3(a) herein, such Disbursement Request
to the Escrow Agent substantially in the form of Exhibit A with blanks
appropriately filled in containing the signed certification of the Senior Note
Trustee prior to the Senior Note Payment Date and thereafter of the Convertible
Note Trustee included in such form and (ii) the Escrow Agent shall not have
received any notice from the Senior Note Trustee that as a result of an Event of
Default the Indebtedness represented by the Senior Notes has been accelerated
and has become due and payable (in which event the Escrow Agent shall apply all
Available Funds as required by Section 6(b)(iii)).
(c) No Distributions. Provided that no Event of Default has occurred
and is continuing, the Leasing Company shall initiate all requests for
withdrawals of funds from the Escrow Account by executing a Disbursement Request
and submitting such request to the Senior Note Trustee, if prior to the Senior
Note Discharge Date and to the Convertible Note Trustee if subsequent to the
Senior Note Discharge Date. However, the Leasing Company shall not be entitled
to make withdrawals or distributions or to direct the Escrow Agent to make
withdrawals or distributions from the Escrow Accounts except upon certification
by the Senior Note Trustee, if prior to the Senior Note Discharge Date and by
the Convertible Note Trustee if subsequent to the Senior Note Discharge Date, on
a Disbursement Request that the applicable conditions of the Senior Note
Indenture or Convertible Note Indenture, as the case may be, have been
satisfied, as provided in Section 3(a). The Senior Note Trustee shall, prior to
the Senior Note Discharge Date, be entitled unilaterally to initiate withdrawals
or any other act.
(d) Deposits Irrevocable. Any deposits made into the Leasing Company
Escrow Account hereunder shall be irrevocable and the amount of such deposits
and any instrument or security held in the Leasing Company Escrow Account
hereunder and all interest thereon shall be held in trust by the Escrow Agent
and applied solely as provided herein.
4. Limitation of the Escrow Agent's Liability; Responsibilities of the
Escrow Agent. The Escrow Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) the Escrow Agent does not represent,
warrant or guaranty to the Holders of the Senior Notes from time to time or the
Holders of the Convertible Notes the performance of the Leasing Company; (ii)
the Escrow Agent shall have no responsibility to the Leasing Company or the
Holders of the Senior Notes, the Holders of the Convertible Notes or the
Trustees from time to time as a consequence of performance or non-performance by
the Escrow Agent hereunder, except for any negligence or willful misconduct of
the Escrow Agent; (iii) the Leasing Company shall remain solely responsible for
all aspects of the Leasing Company's business and conduct; and (iv) the Escrow
Agent is not obligated to supervise,
-11-
<PAGE> 12
inspect or inform the Leasing Company or any third party of any matter referred
to above.
No implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Eligible
Cash Equivalents held by it hereunder, including without limitation any
liability for any delay not resulting from negligence or willful misconduct in
such investment, reinvestment or liquidation, or for any loss of principal or
income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial order or
judgment, upon any written opinion of counsel or upon any certification,
instruction, notice, or other writing delivered to it by the Leasing Company or
the Trustees in compliance with the provisions of this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of service thereof. The Escrow Agent may
act in reliance upon any instrument comporting with the provisions of this
Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
The Escrow Agent may act pursuant to the written advice of counsel
chosen by it with respect to any matter relating to this Agreement and (subject
to clause (ii) of the first paragraph of this Section 4) shall not be liable for
any action taken or omitted in accordance with such advice.
The Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement with
respect to any funds or property deposited hereunder, the Escrow Agent shall be
entitled to refuse to comply with any and all claims, demands or instructions
with respect to such funds or property, and the Escrow Agent shall not be or
become liable for its failure or refusal to comply with conflicting claims,
demands or instructions. The Escrow Agent shall be entitled to refuse to act
until either any conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by agreement
between the conflicting claimants as evidenced in a writing, satisfactory to
-12-
<PAGE> 13
the Escrow Agent, or the Escrow Agent shall have received security or an
indemnity satisfactory to the Escrow Agent sufficient to save the Escrow Agent
harmless from and against any and all loss, liability or expense which the
Escrow Agent may incur by reason of its acting. The Escrow Agent may in addition
elect in its sole option to commence an interpleader action or seek other
judicial relief or orders as the Escrow Agent may deem necessary.
No provision of this Agreement shall require the Escrow Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
5. Indemnity. The Leasing Company shall indemnify, hold harmless and
defend the Escrow Agent and its directors, officers, agents, employees and
controlling persons, from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative fees and costs,
legal fees, and claims for damages, arising from the Escrow Agent's performance
under this Agreement, except to the extent that such liability, expense or claim
is directly attributable to the negligence or willful misconduct of any of the
foregoing persons. The provisions of this Section shall survive any termination,
satisfaction or discharge of this Agreement as well as the resignation or
removal of the Escrow Agent. The provisions of this paragraph 5 shall survive
the termination of this Agreement.
6. Grant of Liens and Security Interest; Instructions to Escrow Agent.
(a) The Leasing Company hereby irrevocably grants a first priority
security interest in and Lien on, and pledges, assigns and sets over to the
Senior Note Trustee for the equal and ratable benefit of the Holders of the
Senior Notes, and to the Convertible Note Trustee, acting for its benefit and
the equal and ratable benefit of the Holders of the Convertible Notes, all of
the Leasing Company's right, title and interest in the Leasing Company Escrow
Account, and all property now or hereafter placed or deposited in, or delivered
to the Escrow Agent for placement or deposit in, the Leasing Company Escrow
Account, including, without limitation, all funds held therein, all Eligible
Cash Equivalents held by (or otherwise maintained in the name of) the Escrow
Agent pursuant to Section 2, and all proceeds thereof as well as all rights of
the Leasing Company under this Agreement (collectively, the "Collateral"), in
order to secure all obligations and indebtedness of the Leasing Company under
the Senior Notes and any other obligation, now or hereafter arising, of every
kind and nature, owed by the Leasing Company or the Senior Note Guarantors under
the Senior Note Indenture, the related guarantees thereunder or the Senior Note
Collateral Documents to the Holders of the Senior Notes or to the Senior Note
Trustee and all obligations and indebtedness of the Leasing Company under the
Convertible Notes and
-13-
<PAGE> 14
any other obligation, now or hereafter arising, of every kind and nature, owed
by the Leasing Company or the Convertible Note Guarantors under the Convertible
Note Indenture, the related guarantees thereunder or the Convertible Note
Collateral Documents to the Holders of the Convertible Notes or to the
Convertible Note Trustee. The Escrow Agent hereby acknowledges the Trustees'
security interest and Lien as set forth above. The Leasing Company shall take
all actions necessary on its part to insure the continuance of a first priority
security interest in and Lien on the Collateral in favor of the Trustees in
order to secure all such obligations and indebtedness.
(b) The Leasing Company and the Trustees hereby irrevocably instruct
the Escrow Agent to, and the Escrow Agent shall (i) (A) at all times maintain
sole dominion and control over funds and Eligible Cash Equivalents in the
Leasing Company Escrow Account, acting for the benefit of the Trustees to the
extent specifically required herein, (B) maintain, or cause its agent within the
State of New York to maintain, possession of all certificated Eligible Cash
Equivalents purchased hereunder that are physically possessed by the Escrow
Agent in order for the Trustees to enjoy a continuous perfected first priority
security interest therein under the law of the State of New York (the Leasing
Company hereby agreeing that in the event any certificated Eligible Cash
Equivalents are in the possession of the Leasing Company or a third party, the
Leasing Company shall use its best efforts to deliver all such certificates to
the Escrow Agent), (C) take all steps specified by the Leasing Company pursuant
to paragraph (a) above to cause the Trustees to enjoy a continuous perfected
first priority security interest and Liens under the New York Uniform Commercial
Code and any applicable law of the State of New York in all Eligible Cash
Equivalents purchased hereunder that are not certificated and (D) maintain the
Collateral free and clear of all Liens, security interests, safekeeping or other
charges, demands and claims against the Escrow Agent of any nature now or
hereafter existing in favor of anyone other than the Trustees; (ii) promptly
notify the Trustees if the Escrow Agent receives written notice that any Person
other than the Trustees has or claims to have a Lien on or security interest in
any portion of the Collateral and (iii) in addition to disbursing amounts held
in escrow pursuant to any Disbursement Requests given to it by the Senior Note
Trustee pursuant to Section 3(a)(iv), upon receipt of written notice from the
Trustee of the acceleration of the maturity of the Senior Notes, and direction
from the Senior Note Trustee to disburse all Available Funds to the Senior Note
Trustee, as promptly as practicable disburse all funds held in the Leasing
Company Escrow Account to the Senior Note Trustee and transfer title to all
Eligible Cash Equivalents held by the Escrow Agent hereunder to the Senior Note
Trustee. The Escrow Agent shall not have any right to receive compensation from
either Trustee and is without any authority to obligate either Trustee or to
compromise or pledge its security interest and Lien hereunder. Accordingly, the
Escrow
-14-
<PAGE> 15
Agent is hereby directed to cooperate with the Trustees in the exercise of their
respective rights in the Collateral provided for herein.
(c) Any money and Eligible Cash Equivalents collected by the Senior
Note Trustee pursuant to Section 6(b)(iii) shall be applied as provided in
Section 6.9 of the Senior Note Indenture.
(d) Upon demand, the Leasing Company will execute and deliver to either
Trustee such instruments and documents as such Trustee may reasonably deem
necessary or advisable to confirm or perfect the rights of the Trustees under
this Agreement and the Trustees' interest in the Collateral. The Trustees shall
be entitled to take all necessary action to preserve and protect the security
interest created hereby as a Lien and encumbrance upon the Collateral.
(e) The Leasing Company hereby appoints each Trustee as its
attorney-in-fact with full power of substitution, exercisable upon the
occurrence and during the continuance of a Default or Event of Default, to do
any act which the Leasing Company is obligated hereto to do, and each Trustee
may, but shall not be obligated to, exercise such rights as the Leasing Company
might exercise with respect to the Collateral and take any action in the Leasing
Company's name to protect the Trustees' Liens and security interest hereunder.
In addition to the rights provided under Section 6(b)(iii) hereof, upon an Event
of Default as defined in the Senior Note Indenture and for so long as such Event
of Default continues, the Senior Note Trustee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party under
the New York Uniform Commercial Code or other applicable law, and the Senior
Note Trustee may also upon obtaining possession of the Collateral as set forth
herein, without notice to the Leasing Company except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Senior Note Trustee's
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Senior Note Trustee may deem commercially reasonable. The
Leasing Company acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale. The Leasing Company agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days' notice to the Leasing Company of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. If the Senior Notes
are no longer outstanding
-15-
<PAGE> 16
and the Senior Note Indenture has been satisfied and discharged, the foregoing
rights and remedies may be exercised by the Convertible Note Trustee.
7. Termination. This Agreement shall terminate automatically ten (10)
days following disbursement of all funds remaining in the Leasing Company Escrow
Account (including Eligible Cash Equivalents) and the payment in full of the
Senior Notes and all other Obligations then due and owing under the Senior Note
Indenture, the related guarantees thereunder, the Senior Note Collateral
Documents, the Convertible Note Indenture, Convertible Note Guarantees and the
Convertible Note Collateral Documents, unless sooner terminated by agreement of
the parties hereto (in accordance with the terms hereof, not in violation of the
Senior Note Indenture or the Convertible Note Indenture; neither the Senior Note
Trustee nor the Convertible Note Trustee may agree to terminate this Agreement
unless the Senior Note Trustee has received the consent of 100% of the Holders
of all of the Senior Notes outstanding or the Convertible Note Trustee has
received the consent of 100% of the Holders of all of the Convertible Notes
outstanding); provided, however, that the obligations of the Leasing Company
under Section 2(d) and Section 5 (and any existing claims thereunder) shall
survive termination of this Agreement or the resignation of the Escrow Agent;
provided, further, however, that until such tenth day, the Leasing Company will
cause this Agreement (or any permitted successor agreement) to remain in effect
and will cause there to be an Escrow Agent (including any permitted successor
thereto) acting hereunder (or under any such permitted successor agreement).
8. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of this
Agreement by any other party, but no such waiver shall be deemed to have been
given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties hereto, and
the rights and duties of any party hereunder shall not be assignable except with
the prior written consent of
-16-
<PAGE> 17
the other parties. Notwithstanding the foregoing, this Agreement shall inure to
and be binding upon the parties and their successors and permitted assigns.
Nothing herein shall restrict the Escrow Agent from performing its duties
through a sub-agent.
(d) Benefit. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; provided, however, that the holders of the Senior Notes and their
permitted assigns shall be entitled to the benefits hereof and to enforce this
Agreement.
(e) Time. Time is of the essence with respect to each provision of this
Agreement.
(f) Entire Agreement; Amendments. This Agreement and the Senior Note
Indenture and the Convertible Note Indenture contain the entire agreement among
the parties with respect to the subject matter hereof and supersede any and all
prior agreements, understandings and commitments, whether oral or written. This
Agreement may be amended only in accordance with Article IX of the Senior Note
Indenture and Article IX of the Convertible Note Indenture and further by a
writing signed by a duly authorized representative of each party hereto.
(g) Notices. All notices and other communications required or permitted
to be given or made under this Agreement shall be in writing and shall be deemed
to have been duly given and received, regardless of when and whether received,
either: (a) on the day of hand delivery; (b) three Business Days following the
day sent, when sent by United States certified mail, postage and certification
fee prepaid, return receipt requested, addressed as set forth below; (c) when
transmitted by telecopy with verbal confirmation of receipt by the telecopy
operator to the telecopy number set forth below; or (d) one business day
following the day timely delivered to a next-day air courier addressed as set
forth below:
To Escrow Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
-17-
<PAGE> 18
To each Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Telecopy: 212-815-5915 or 5917
To the Leasing Company:
PLD Capital Limited
c/o Phoebus, Christos Clerides,
N. Pirilides & Associates
Stassinos Court
Corner of Stassinos Ave.
& Ayias Elenis 2
3rd Floor, P.O. Box 1884
Nicosia, CYPRUS
Attention: Dr. Christos Clerides
Telecopy: 02-443015
Telephone: 02-366065
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only and
shall not be considered or referred to in resolving questions of interpretation
of this Agreement.
(j) Choice of Law; Waiver of Jury Trial. The existence, validity,
construction, operation and effect of any and all terms and provisions of this
Agreement shall be determined in accordance with and governed by the laws of the
State of New York, without regard to principles of conflicts of law. The parties
to this Agreement hereby agree that jurisdiction over such parties and over the
subject matter of any action or proceeding arising under this Agreement may be
exercised by a competent Court of the State of New York, or by a United States
Court, sitting in New York City. The Leasing Company hereby submits to the
personal jurisdiction of such courts, hereby waives personal service of process
upon it and hereby waives, to the extent permitted by applicable law, the right
to a trial by jury in any action or proceeding with the Escrow Agent. All
actions and proceedings brought by the Leasing Company
-18-
<PAGE> 19
against the Escrow Agent relating to or arising from, directly or indirectly,
this Agreement shall be litigated only in courts within the State of New York.
The Leasing Company waives any objection that it may have to the location of the
court in which the Escrow Agent has commenced a proceeding described in this
paragraph including, without limitation, any objection to the laying of venue or
based on the grounds of forum non conveniens.
(k) Authority of the Leasing Company; Valid and Binding Agreement. The
Leasing Company hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered on its behalf and constitutes the legal,
valid and binding obligation of the Leasing Company. The execution, delivery and
performance of this Agreement by the Leasing Company does not violate any
applicable law or regulation to which the Leasing Company is subject and does
not require the consent of any governmental or other regulatory body to which
the Leasing Company is subject, except for such consents and approvals as have
been obtained and are in full force and effect.
(l) Authority of the Escrow Agent and the Trustees; Valid and Binding
Agreement. Each of the Escrow Agent and the Trustees hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered on
its behalf and constitutes its legal, valid and binding obligation.
(m) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Leasing Company
(i) acknowledges that it has, by separate written instrument, irrevocably
designated and appointed CT Corporation System, 1633 Broadway, New York, New
York 10019 (or any successor), as its authorized agent upon which process may be
served in any suit or proceeding arising out of or relating to this Agreement
that may be instituted in any federal or state court in the State of New York,
or brought under federal or state securities laws, and acknowledges that CT
Corporation System has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding, and (iii) agrees
that service of process upon CT Corporation System (or any successor) and
written notice of said service to the Leasing Company (mailed or delivered to
Messrs. Morgan, Lewis & Bockius LLP, 2000 One Logan Square, Philadelphia, PA
19103, Attention: E. Clive Anderson, Esq. shall be deemed in every respect
effective service of process upon the Leasing Company in any such suit or
proceeding. The Leasing Company further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such destination and appointment of
CT Corporation System (or any successor) in full force and effect so long as any
of the Senior Notes shall be outstanding.
To the extent that the Leasing Company has or hereafter may acquire any
immunity from jurisdiction of any court or from any
-19-
<PAGE> 20
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.
IN WITNESS WHEREOF, the parties have executed and delivered this
Leasing Company Escrow Account Agreement as of the day first above written.
ESCROW AGENT: THE BANK OF NEW YORK,
as Escrow Agent
By: /s/ Steven D. Torgeson
----------------------------------
Name: STEVEN D. TORGESON
Title: Assistant Treasurer
SENIOR NOTE TRUSTEE: THE BANK OF NEW YORK,
as Senior Note Trustee
By: /s/ Steven D. Torgeson
----------------------------------
Name: STEVEN D. TORGESON
Title: Assistant Treasurer
CONVERTIBLE NOTE TRUSTEE: THE BANK OF NEW YORK,
as Convertible Note Trustee
By: /s/ Steven D. Torgeson
----------------------------------
Name: STEVEN D. TORGESON
Title: Assistant Treasurer
Leasing Company: PLD Capital Limited
By: /s/ Clayton A. Waite
----------------------------------
Name: CLAYTON A. WAITE
Title: Director
-20-
<PAGE> 21
EXHIBIT A
Form of Disbursement Request
[Letterhead of PLD Capital Limited]
[Date]
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Re: Disbursement Request No.
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Leasing Company Escrow Agreement, dated as of May 31,
1996 (the "Leasing Company Escrow Agreement") among you (the "Escrow Agent"),
The Bank of New York as Senior Note Trustee, The Bank of New York as Convertible
Note Trustee, and PLD Capital Limited, a Cypriot corporation (the "Leasing
Company"). Capitalized terms used herein shall have the meaning given in the
Leasing Company Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement Request under
the Leasing Company Escrow Agreement.
The undersigned hereby notifies you that the Leasing Company has
requested, and has satisfied the conditions contained in Section 11.4 of the
Senior Note Indenture for, the release of $______, from the Leasing Company
Escrow Account of PLD Capital Limited which was deposited on ________ as a
result of [specify source of deposit, e.g., asset sale of specified assets] for
Net Cash Proceeds of $______ which amount will be invested or used as follows:
_____________.
In connection with the requested disbursement, the undersigned hereby
notifies you that:
1. The Senior Notes have [not], as a result of an Event of
Default (as defined in the Senior Note Indenture), been accelerated and
become due and payable.
2. An Opinion of Counsel as required by the Senior Note
Indenture is delivered herewith.
-21-
<PAGE> 22
3. The Collateral Documents have been delivered to the Trustee.
4. [add wire instructions].
The Escrow Agent is entitled to rely on the foregoing in disbursing
funds relating to this Disbursement Request.
PLD CAPITAL LIMITED
By:
---------------------------
Name:
Title:
The Senior Note Trustee hereby certifies to the Escrow Agent that it
has received the applicable Officers' Certificate described in Section 11.4 of
the Senior Note Indenture for the release of the funds to be disbursed pursuant
to the foregoing Disbursement Request.
THE BANK OF NEW YORK, as Senior
Note Trustee
By:
---------------------------
Name:
Title:
If applicable:
The Convertible Note Trustee hereby certifies to the Escrow Agent that
it has received the applicable Officers' Certificate described in Section 11.8
of the Convertible Note Indenture for the release of the funds to be disbursed
pursuant to the foregoing Disbursement Request.
THE BANK OF NEW YORK, as
Convertible Note Trustee
By:
---------------------------
Name:
Title:
-22-
<PAGE> 1
EXHIBIT 4.15
COMPANY SENIOR NOTE SECURITY AND PLEDGE AGREEMENT
THIS COMPANY SENIOR NOTE SECURITY AND PLEDGE AGREEMENT (the "Security
Agreement") is made and entered into as of May 31, 1996 by PETERSBURG LONG
DISTANCE INC., an Ontario corporation (the "Company"), in favor of THE BANK OF
NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Senior Note Trustee") under the Senior Note Indenture (as defined herein), for
the holders of the Senior Notes (as hereinafter defined), THE BANK OF NEW YORK,
a New York banking corporation, as trustee (in such capacity, the "Convertible
Note Trustee") under the Convertible Note Indenture (as defined herein) for the
holders of the Convertible Notes (as hereinafter defined), and THE BANK OF NEW
YORK, as collateral agent (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company, as issuer, the Senior Note Trustee, and NWE Capital
(Cyprus) Limited, a Cypriot corporation ("NWE Cyprus"), PLD Asset Leasing
Limited, a Cypriot corporation ("PLD Leasing"), PLD Capital Limited, a Cypriot
corporation ("PLD Capital", together with PLD Leasing, the "Leasing Companies"),
Wireless Technology Corporations Limited, a British Virgin Islands company
("WTC"), and Baltic Communications Limited, a Russian joint stock company of the
closed type ("BCL"), as guarantors (the "Senior Note Guarantors"), have entered
into an indenture dated as of May 31, 1996 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Senior Note
Indenture") pursuant to which the Company is issuing $123,000,000 in aggregate
principal amount at Stated Maturity of its 14% Senior Discount Notes due 2004
(the "Senior Notes"); and
WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Convertible Note
Guarantors" and, together with the Senior Note Guarantor, the "Guarantors"),
have entered into an indenture dated as of May 31, 1996 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Convertible
Note Indenture") pursuant to which the Company is issuing $26,500,000 in
aggregate principal amount of its 9% Convertible Subordinated Notes due 2006
(the "Convertible Notes"); and
WHEREAS, to secure its obligations under the Senior Note Indenture and the
Senior Notes and the other Senior Note Collateral Documents (as defined in the
Convertible Note Indenture) (together with the Senior Note Guarantors'
obligations under the Senior Note Indenture, the Guarantees contained therein
(the "Senior Note Guarantees") and the Senior Note Collateral Documents, the
"Senior Note Obligations") and to secure its obligations under the Convertible
Note Indenture and the Convertible Notes and the other Convertible Note
Collateral Documents (as defined in the Senior Note Indenture) (together with
the Convertible Note Guarantors' obligations under the Convertible Note
Indenture, the guarantees contained therein (the "Convertible Note Guarantees")
and the Convertible Note Collateral Documents, the "Convertible Note
Obligations"), the Company has agreed (i) to grant to the Collateral Agent for
the benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the
<PAGE> 2
Senior Notes and for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of the Holders of the Convertible Notes Liens and
security interests in and to the Collateral (as defined herein) and (ii) to
execute and deliver this Security Agreement in order to secure the payment and
performance by the Company and the Guarantors of the Senior Note Obligations and
the Convertible Note Obligations (collectively, the "Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Senior Notes to purchase the Senior Notes and the Holders of
the Convertible Notes to purchase the Convertible Notes, the Company hereby
agrees with the Collateral Agent, with the Senior Note Trustee for its benefit
and the equal and ratable benefit of the Holders of the Senior Notes and with
the Convertible Note Trustee for its benefit and the equal and ratable benefit
of the Holders of the Convertible Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Senior Note
Indenture. In addition to any other defined terms used herein, the following
terms shall constitute defined terms for the purposes of this Security
Agreement:
"Default" means a "Default" as defined in Section 1.1 of the Senior
Note Indenture until the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged, in which case a
"Default" means a "Default" as defined in Section 1.1 of the Convertible
Note Indenture.
"Event of Default" means an "Event of Default" as defined in Section
1.1 of the Senior Note Indenture until the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case "Event of Default" means an "Event of Default"
as defined in Section 1.1 of the Convertible Note Indenture.
"Permitted Liens" means "Permitted Liens" as defined in Section 1.1
of the Senior Note Indenture until the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case "Permitted Liens" means "Permitted Liens" as
defined in Section 1.1 of the Convertible Note Indenture.
"Trustees" means, collectively, the Senior Note Trustee and the
Convertible Note Trustee.
SECTION 2. CREATION OF SECURITY INTEREST. The Company hereby grants to the
Collateral Agent for the benefit of the Senior Note Trustee and for the equal
and ratable benefit of the Holders of the Senior Notes and for the benefit of
the Convertible Note Trustee and for the equal and ratable benefit of the
Holders of the Convertible Notes Liens and a continuing security interest in and
to the collateral described in Section 3 hereof (the "Collateral") in order to
secure the payment and performance of all Obligations.
- 2 -
<PAGE> 3
SECTION 3. COLLATERAL. The Collateral is:
(a) Qualified Investments. All Qualified Investments, whether now or
hereafter acquired by the Company, including those Qualified Investments listed
on Schedule A attached hereto (or substitutions, replacements and proceeds
thereof) but excluding any Qualified Investments made with the dividends,
distributions, payments and products and proceeds of Technocom Preferred Stock
and the funds and Eligible Cash Equivalents in the Company Convertible Note
Escrow Account (collectively, the "Excluded Qualified Investments"), and the
certificates, agreements, documents, notes, collateral documents and instruments
representing or relating to such Qualified Investments, all contract rights,
instruments, general intangibles and other obligations or other receivables of
any kind relating to such Qualified Investments, all Liens relating to or
securing such Qualified Investments and the related collateral documents which
grant such Liens and all products and proceeds of such Qualified Investments,
including, without limitation, all dividends, options, warrants, rights,
subscriptions, all interest and principal payments, and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Qualified Investments;
(b) Pledged Stock. All Capital Stock of NWE Cyprus, the Leasing Companies,
BCL and any other future Wholly-Owned Subsidiary of the Company or any future
Guarantor (the "Issuers"), whether now owned or hereafter acquired, including
those shares of Capital Stock of NWE Cyprus, the Leasing Companies, and BCL
listed on Schedule B attached hereto (the "Pledged Stock"), and the certificates
representing the Pledged Stock, and, except as otherwise provided herein, all
products and proceeds of any of the Pledged Stock, including, without
limitation, all dividends, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Stock; and all additional shares of, and all securities
convertible into, and warrants, options or other rights to purchase, stock of,
or equity interest in, any of the Issuers from time to time acquired by the
Company in any manner, and the certificates representing such additional shares
(any such additional shares shall constitute part of the Pledged Stock under and
as defined in this Security Agreement), and, except as otherwise provided in
Section 7(c) or elsewhere herein, all products and proceeds of any of such
additional Pledged Stock, including, without limitation, all dividends, cash,
options, warrants, rights, instruments, subscriptions, and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such additional Pledged Stock
including all proceeds received or receivable by the Company from any
recapitalization, reclassification, merger, dissolution, liquidation or other
termination of the existence of the Issuers;
(c) Company Senior Note Escrow Account. The Company Senior Note Escrow
Account and all funds contained therein and all Investments made by the Escrow
Agent (as defined in the Company Senior Note Escrow Account Agreement) therewith
(whether or not constituting Eligible Cash Equivalents) and all proceeds
thereto;
- 3 -
<PAGE> 4
(d) Intercompany Notes. All Intercompany Notes, whether executed on the
Issue Date or thereafter, from any Restricted Subsidiary, excluding, however,
any Intercompany Notes (or substitutes, replacements and proceeds thereof,
including the funds and Eligible Cash Equivalents in the Company Convertible
Note Escrow Agreement) evidencing loans or advances made by the Company with
dividends, distributions, payments and products or proceeds of Technocom
Preferred Stock (the "Excluded Intercompany Notes"), all Liens securing such
Intercompany Notes and the related collateral documents (including, with regard
to any Intercompany Notes representing loans or advances to, or other
Investments in, any Leasing Company of any proceeds of the Senior Notes, the
related collateral documents which grant Liens on the Telecommunications Asset
Leases and Qualified Investments securing such Intercompany Notes and such
Liens), and the instruments representing such Intercompany Notes, and, except as
otherwise provided herein, all products and proceeds of such Intercompany Notes,
including, without limitation, all interest and principal payments, instruments,
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for the Intercompany Notes; and
(e) After-acquired Collateral and Proceeds. All items described in this
Section 3 (other than those items specifically excluded), whether now owned or
hereafter at any time acquired by the Company and wherever located, including
(except as otherwise provided herein) all replacements, additions, accessions,
substitutions, repairs, proceeds and products relating thereto or therefrom, and
all documents, ledger sheets, files, books and records of the Company relating
thereto. Proceeds hereunder include (i) whatever is now or hereafter received by
the Company upon the sale, exchange, collection or other disposition of any item
of Collateral; (ii) any property of the type or types described in subsections
(a), (b) or (d) now or hereafter acquired by the Company with any proceeds of
Collateral hereunder; and (iii) any payments under any insurance or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Company, but subject to its compliance with the
requirements of applicable law, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
but subject to its compliance with the requirements of applicable law, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Qualified Investments or Pledged Stock
for certificates or instruments of smaller or larger denominations.
- 4 -
<PAGE> 5
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company hereby represents
and warrants to the Collateral Agent and the Trustees that, except as specified
in Schedule C attached hereto:
(a) Legal Power. The execution, delivery and performance by the Company of
this Security Agreement are within the Company's legal powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with (except for any filings provided for hereunder), any
governmental authority, require no consent of any other Person and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the articles of incorporation or bylaws of the Company or of
any agreement (after giving effect to the use of proceeds of the issuance of the
Senior Notes), judgment, injunction, order, decree or other instrument binding
upon the Company or result in the creation or imposition of any Lien on any
asset of the Company (other than the Liens created by this Security Agreement,
the Company Senior Note Escrow Account Agreement and the other Senior Note
Collateral Documents) and the Liens created by the Convertible Note Indenture
and the Convertible Note Collateral Documents.
(b) Capital Stock; Enforceability of Collateral. All of the Capital Stock
of NWE Cyprus, the Leasing Companies and BCL (the "Existing Pledged Stock") has
been duly authorized and validly issued and is fully paid and non-assessable.
The Existing Pledged Stock represents 100% of the issued and outstanding Capital
Stock of NWE Cyprus, the Leasing Companies and BCL. The Pledged Stock
constitutes and will at all times constitute all of the authorized issued and
outstanding capital stock of the respective Issuers beneficially owned by the
Company.
(c) Title to Collateral. The Company is the legal, record and beneficial
owner of the Existing Pledged Stock, and any Intercompany Notes existing on the
Issue Date (the "Existing Collateral"), free and clear of any Lien or claims of
any person except for the Liens listed on Schedule D attached hereto and the
Liens created by this Security Agreement, the Company Senior Note Escrow Account
Agreement and any of the other Senior Note Collateral Documents.
(d) Enforceability. This Security Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or general principles of equity and
commercial reasonableness and except that a Canadian court will only render
judgment in Canadian currency.
(e) Perfection; Priority. Upon the execution and delivery of the Company
Senior Note Escrow Account Agreement, which is being done contemporaneously with
the execution and delivery of this Security Agreement, the delivery to the
Collateral Agent of the Existing Collateral and the filing of the Senior Note
Collateral Documents relating to the Existing
- 5 -
<PAGE> 6
Collateral and the documents listed on Schedule E attached hereto, to the extent
such security interests are created under applicable federal and New York laws,
the security interests in the Collateral created pursuant to this Security
Agreement and the Company Senior Note Escrow Account Agreement are valid and
perfected first priority security interests, subject to the Liens listed on
Schedule D attached hereto in the Existing Collateral, securing the payment of
the Obligations for the benefit of the Senior Note Trustee and the Holders of
the Senior Notes and the Convertible Note Trustee and the Holders of the
Convertible Notes, and enforceable as such against all creditors of the Company
and any Persons purporting to purchase any of the Existing Collateral from the
Company other than as permitted by the Senior Note Indenture; as of the date
hereof (and after giving effect to the use of proceeds of the issuance of the
Senior Notes), there are no other security interests in or Liens on the Existing
Collateral or any portion thereof, and no financing statement, pledge, notice of
Lien, assignment or collateral assignment, mortgage or deed of trust covering
the Existing Collateral or any portion thereof ("Lien Notice") exists or is on
file in any public office, except with respect to Liens listed on Schedule D
attached hereto, the Liens created by this Security Agreement and the other
Senior Note Collateral Documents and Liens to be released in connection with the
use of proceeds of the issuance of the Senior Notes.
(f) Offices. The Company's chief executive offices are located at the
address shown as the chief executive office in Schedule F attached hereto
("Chief Executive Office"), and the Company has no places of business other than
those set forth in such Schedule F, except as permitted hereafter by Section
6(c) hereof.
(g) Business Names. The Company has not conducted its businesses under any
corporate, partnership or fictitious name during the five (5) years preceding
the date hereof, other than those names set forth on Schedule G attached hereto.
(h) No Consents. No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
granting of the Liens by the Company on the Collateral pursuant to this Security
Agreement or for the execution, delivery or performance of this Security
Agreement by the Company (except for filings listed on Schedule E attached
hereto, the filings and/or other actions necessary to maintain the perfection of
the Liens on the Existing Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case, as may be required in connection with any such
disposition by laws affecting the offering and sale of the Pledged Stock and the
Qualified Investments constituting Collateral.
(i) Litigation. No litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Security
Agreement or any of the transactions contemplated hereby.
- 6 -
<PAGE> 7
(j) Accurate Information. As of the date hereof, all information set forth
herein relating to the Existing Collateral is accurate and complete in all
respects.
SECTION 6. COVENANTS.
(a) Lien Notices. The Company will defend its interest in the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein, and the Company will not permit any Lien Notices with
respect to the Collateral or any portion thereof to exist or be on file in any
public office for more than 30 days after the Company shall have notice thereof,
except with respect to Permitted Liens or Liens otherwise permitted by Section
4.11 of the Senior Note Indenture. The Company will advise the Collateral Agent
and the Trustees promptly, in reasonable detail, at the addresses as specified
in Section 17(a) of this Agreement, of any Lien (other than Permitted Liens) on,
or claim asserted against, any of the Collateral.
(b) Location of Collateral. The Company will keep all of its Collateral
now held or subsequently acquired by it at the locations specified on Schedule H
hereto, or at locations hereafter established in compliance with Section 6(c)
hereof (except for Collateral held by the Collateral Agent, a Trustee or the
Escrow Agent), unless the Company shall have given the Collateral Agent and the
Trustees prior written notice thereof and shall have in advance executed and
caused to be filed and/or delivered to the Collateral Agent and the Trustees any
financing statements or other documents required by the Trustees or the
Collateral Agent in order to perfect, protect and preserve the Liens and
security interest created hereby, all in form and substance satisfactory to the
Collateral Agent and the Trustees.
(c) Location of Offices; Corporation Name; Legal Structure. The Company
will not change the location of its chief executive office or establish any
place of business other than those set forth on Schedule F attached hereto, or
voluntarily or involuntarily change its name, identity or legal structure,
including without limitation any continuance, amalgamation, merger,
consolidation or sale of substantially all of its assets, unless the Company
shall have given the Collateral Agent and the Trustees at least 30 days prior
written notice thereof and shall have in advance executed and caused to be filed
and or delivered to the Collateral Agent and the Trustees any financing
statements or other Senior Note Collateral Documents required by the Collateral
Agent and the Trustees in order to perfect, protect and preserve the Liens and
security interest created hereby, all in form and substance satisfactory to the
Trustees and the Collateral Agent. Each Trustee and the Collateral Agent waives
such notice of the proposed name change of the Company to PLD Telekom Inc. to be
put to a vote of shareholders on June 26, 1996. The Company will promptly give
notice to the Trustees and the Collateral Agent of a favorable vote of its
shareholders to such proposed name change.
(d) Additional Collateral; Further Assurances. The Company agrees that
immediately upon becoming the beneficial owner of any additional shares of
Capital Stock of any of the Issuers, additional Qualified Investments
constituting Collateral or additional Intercompany Notes constituting
Collateral, it will pledge and deliver to the Collateral Agent for
- 7 -
<PAGE> 8
the benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and for the equal and ratable benefit of the Holders of the Convertible Notes,
the certificates, instruments and documents representing such Capital Stock,
Qualified Investments and Intercompany Notes (as well as duly executed
instruments of transfer or assignment in blank), and grant to the Collateral
Agent for the benefit of the Senior Note Trustee and the equal and ratable
benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes pursuant to appropriate and necessary Senior Note
Collateral Documents, a continuing first priority security interest in and Liens
on such Capital Stock, Qualified Investments or Intercompany Notes, all in form
and substance satisfactory to the Trustees. The Company shall also promptly (and
in any event within five (5) Business Days after receipt thereof), subject to
its compliance with the requirements of applicable law, deliver to the
Collateral Agent any other documents of title, promissory notes, certificates or
instruments representing Collateral which it holds. The Company further agrees
that it will promptly (and in any event within 5 Business Days after such
acquisition) deliver to the Collateral Agent and the Trustees an amendment, duly
executed by the Company, in substantially the form of Schedule I hereto (an
"Additional Collateral Amendment"), with respect to the additional Collateral
that is to be pledged pursuant to this Security Agreement. The Company hereby
authorizes the Collateral Agent and the Trustees to attach each Additional
Collateral Amendment to this Security Agreement and agrees that any stock, notes
or other forms of Investment listed on any Additional Collateral Amendment
delivered to the Collateral Agent or the Trustees shall for all purposes
hereunder be considered Collateral. The Company will promptly (i) execute and
deliver, cause to be executed and filed, or use its best efforts to give any
notices, in all appropriate jurisdictions (including Canada, Cyprus, the Russian
Federation and Kazakstan) or procure any financing statements, assignments,
pledges or other documents, (ii) mark any chattel paper constituting Collateral
and deliver any certificates, chattel paper or instruments constituting
Collateral to the Collateral Agent or the Trustees, (iii) execute and deliver or
cause to be executed and delivered all stock powers, proxies, assignments,
instruments and other documents, and (iv) take any other actions, in each such
case as necessary or, in the reasonable opinion of the Collateral Agent and the
Trustees, desirable to perfect or continue the perfection and the priority of
the Collateral Agent's security interest and Liens in the Collateral, to protect
the Collateral against the rights, claims, or interests of third Persons other
than holders of Permitted Liens or Liens otherwise permitted by Section 4.11 of
the Senior Note Indenture or to effect the purposes of this Security Agreement.
The Company also hereby authorizes the Collateral Agent to file any financing or
continuation statements with respect to the Collateral without the signature of
the Company to the extent permitted by applicable law.
(e) Disposition of Collateral. The Company will not sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of, or grant
any option or warrant with respect to, any of the Collateral except as permitted
by the Senior Note Indenture and the Convertible Note Indenture. If the proceeds
of any sale of any Collateral are notes, instruments, documents of title,
standby letters of credit or chattel paper, such proceeds shall be promptly
delivered to the Collateral Agent to be held as Collateral hereunder. If the
Collateral, or any part thereof, is sold, transferred, assigned, exchanged, or
otherwise disposed of in violation of these
- 8 -
<PAGE> 9
provisions, the security interest and Liens of the Collateral Agent shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and the Company will hold the
proceeds thereof in an separate account for the benefit of the Senior Note
Trustee and the Holders of the Senior Notes and the benefit of the Convertible
Note Trustee and the Holders of the Convertible Notes and transfer such proceeds
to the Collateral Agent or the applicable Trustee in kind to be held as
Collateral hereunder.
(f) Restrictive Agreements. The Company agrees that, except for existing
agreements set forth on Schedule J attached hereto, it will not (i) enter into
any agreement or understanding that purports to or may restrict or inhibit the
Collateral Agent's or the Trustees' rights or remedies hereunder, including,
without limitation, the Collateral Agent's or the Trustees' right to sell or
otherwise dispose of the Collateral or amend or modify in any manner materially
adverse to the Trustees the existing agreements set forth as Schedule J attached
hereto, (ii) permit any Issuer to continue, merge, amalgamate or consolidate,
unless all outstanding Capital Stock owned by the Company of the surviving
corporation is, upon such continuance, merger, amalgamation or consolidation,
pledged hereunder to the Collateral Agent or (iii) fail to pay or discharge any
tax, assessment or levy of any nature not later than five days prior to the date
of any proposed sale under any judgment, writ or warrant of attachment with
regard to the Collateral.
(g) Rights of Collateral Agent and Trustees. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent and the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) shall have the right at any time to make any payments and do any
other acts as the Collateral Agent or the applicable Trustee may deem necessary
to protect the Liens and security interest of the Collateral Agent in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any Lien which, in the judgment of the Collateral Agent or such
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Company hereby agrees to
reimburse the Collateral Agent and the Trustees for all payments made and
expenses incurred under this Security Agreement including reasonable fees,
expenses and disbursements of attorneys and paralegals acting for the Trustees,
including any of the foregoing payments under or acts taken to perfect or
protect its Liens and security interest in the Collateral, which amounts shall
be secured under this Security Agreement, and agrees that it shall be bound by
any payment made or act taken by the Collateral Agent or the Trustees hereunder.
Neither the Collateral Agent nor the Trustees shall have any obligation to make
any of the foregoing payments or perform any of the foregoing acts.
(h) Records. The Company will keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral.
(i) Access. On reasonable notice to the Company, except at any time during
the continuation of a Default or an Event of Default, both the Collateral Agent
and the Trustees shall
- 9 -
<PAGE> 10
at all times have full and free access during normal business hours to all the
books, correspondence and records of the Company relating to the Collateral, and
the Collateral Agent and its representatives, and the Trustees and their
respective representatives, may examine the same, take extracts therefrom and
make photocopies thereof, and the Company agrees to render to the Collateral
Agent and/or the applicable Trustee, at the Company's cost and expense, such
clerical and other assistance, at all times and in such manner as may be
requested with regard thereto. On reasonable notice to the Company, except at
any time during the continuation of a Default or an Event of Default, the
Collateral Agent and its representatives, and the Trustees and their respective
representatives, shall at all times also have the right to enter, during normal
business hours, into and upon any premises where any of the Collateral is
located for the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
(j) Taxes. The Company shall pay all taxes, assessments and government
charges and all claims as and to the extent required by Section 4.6 of each of
the Senior Note Indenture and the Convertible Note Indenture; provided that the
Company shall in any event pay such taxes, assessments or levies not later than
five days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with regard to any Collateral of the Company entered or
filed against the Company as a result of the failure to make such payment.
(k) Demand Obligations. The Company agrees that it will cause each of the
Restricted Subsidiaries that is obligated on any Intercompany Note constituting
Collateral that constitutes a demand obligation, within the meaning of Section
3-108 of the Uniform Commercial Code of the State of New York, to execute and
deliver to the Collateral Agent and/or either Trustee a new instrument
extending, renewing and replacing such demand obligation not later than the
second anniversary of the date of original issue thereon and on each succeeding
second anniversary thereof.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be continuing,
the Company shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Stock and the Qualified Investments
constituting Collateral or any part thereof for any purpose not inconsistent
with the terms of this Security Agreement, the Senior Note Indenture or any
other Senior Note Collateral Document or the Convertible Note Indenture or any
Convertible Note Collateral Document; provided that the Company shall not
exercise or shall refrain from exercising any such right if such action would be
inconsistent with or violate any provisions of this Security Agreement, the
Senior Note Indenture or any other Senior Note Collateral Document or the
Convertible Note Indenture or any Convertible Note Collateral Document.
(b) All payments made from time to time on, or with respect to, Pledged
Stock constituting Capital Stock of Leasing Companies and Qualified Investments
constituting Collateral and Intercompany Notes constituting a loan or advance
made by the Company from the net proceeds of the Senior Notes and any other
Intercompany Notes constituting loans or
- 10 -
<PAGE> 11
advances made by the Company to the Leasing Companies and constituting
Collateral, whether interest, principal, dividends, distributions or otherwise,
shall be delivered to the applicable Trustee for deposit in the Company Senior
Note Escrow Account or the Convertible Note Escrow Account if the Company Senior
Note Escrow Account Agreement has been terminated.
(c) So long as no Event of Default shall have occurred and be continuing,
and subject to the other terms and conditions hereof and of the Senior Note
Indenture or of the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged, the
Company shall be entitled to receive, and to utilize free and clear of the
security interest and Liens of this Security Agreement, all payments
("Unrestricted Payments") made from time to time on or with respect to Pledged
Stock not described in Section 7(b) above and Intercompany Notes not described
in Section 7(b) above ("Unrestricted Collateral"), whether interest, principal,
dividends, distributions or otherwise.
(d) The Collateral Agent and/or the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) shall execute and
deliver (or cause to be executed and delivered) to the Company all such proxies
and other instruments as the Company may reasonably request for the purpose of
enabling the Company to exercise the voting and other rights that it is entitled
to exercise pursuant to Sections 7(a) and (c) above.
(e) Upon the occurrence and during the continuance of an Event of Default,
(i) all rights of the Company to exercise the voting and other consensual rights
that it would otherwise be entitled to exercise pursuant to Section 7(a) shall
cease, and all such rights shall thereupon become vested in the Collateral Agent
on behalf of, or if necessary, directly in, the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged), which shall thereupon
have the sole right to exercise such voting and other consensual rights, and
(ii) all Unrestricted Payments shall constitute Collateral and shall be paid
directly to the Collateral Agent and the Company's right to receive such
payments pursuant to Section 7(c) hereof shall immediately cease and all such
Unrestricted Payments shall be deposited in the Company Senior Note Escrow
Account or the Convertible Note Escrow Account, if the Company Senior Note
Escrow Account Agreement has been terminated.
(f) Upon the occurrence and during the continuance of an Event of Default,
the Company shall execute and deliver (or cause to be executed and delivered) to
the Collateral Agent and/or the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) all such proxies and other
instruments as the Collateral Agent and/or the applicable Trustee may reasonably
request for the purpose of enabling the Collateral Agent and/or the applicable
Trustee to exercise or cause the exercise of the voting and other rights that it
is entitled to exercise pursuant to Section 7(e) above.
- 11 -
<PAGE> 12
(g) All interest and principal payments, all dividends and distributions
and all other payments that are received by the Company contrary to the
provisions of this Section 7 shall be received in trust for the Collateral Agent
for the benefit of the Senior Note Trustee and the equal and ratable benefit of
the Holders of the Senior Notes and for the benefit of the Convertible Note
Trustee and the equal and ratable benefit of the Holders of the Convertible
Notes, shall be segregated from the other property or funds of the Company and
be forthwith delivered to the Collateral Agent as Collateral in the same form as
so received (with any necessary endorsements or other instruments of transfer or
assignment in blank), and all such payments shall be deposited in the Company
Senior Note Escrow Account or the Company Convertible Note Escrow Account if the
Company Senior Note Escrow Account Agreement has been terminated.
(h) So long as no Event of Default shall have occurred and be continuing,
neither the Collateral Agent nor the Trustees shall be under any obligation to
collect, attempt to collect, protect or enforce the Collateral, which the
Company agrees and undertakes to do at the Company's expense; provided that the
Collateral Agent and the Trustees shall cooperate with the Company and take all
such action as the Company may reasonably request to permit the Company to
collect, protect or enforce the Collateral. All reasonable expenses (including,
without limitation, attorneys' fees and legal expenses) actually incurred or
paid by the Collateral Agent and the Trustees in connection with or incident to
any such collection or attempt to collect, protect or enforce the Collateral
shall be borne by the Company or reimbursed by the Company to the Collateral
Agent or the applicable Trustee upon demand.
(i) At the Collateral Agent's or the applicable Trustee's option,
exercisable upon and during the continuance of any Event of Default, either the
Collateral Agent or the Senior Note Trustee (or the Convertible Note Trustee if
the Senior Notes are no longer outstanding and the Senior Note Indenture has
been satisfied and discharged) may notify the obligors of the Intercompany Notes
constituting Collateral (including Unrestricted Collateral), the Issuers and the
issuers or other obligors of the Qualified Investments constituting Collateral
that any and all payments and distributions to be made on such Intercompany
Notes, the Pledged Stock and such Qualified Investments, whether constituting
Unrestricted Collateral or otherwise, shall be made directly to the Collateral
Agent or the applicable Trustee, and the Company hereby directs the obligors of
such Intercompany Notes, the issuers or other obligors of such Qualified
Investments to pay and deliver over to the Collateral Agent or the Senior Note
Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged) all
payments and distributions to be made on such Intercompany Notes, the Pledged
Stock and such Qualified Investments, until such obligors or issuers are
notified in writing by the applicable Trustee or the Collateral Agent to
discontinue making such payments to it; and such obligors and issuers shall not
be required to see to the application of said proceeds by the Trustees or the
Collateral Agent. All such payments shall be deposited by such Trustee or the
Collateral Agent into the Company Senior Note Escrow Account (or the Company
Convertible Note Escrow Account if the Company Senior Note Escrow Account
Agreement has been terminated) and held as additional Collateral for the
Obligations. If at any time the Collateral Agent or a Trustee shall have
notified the obligors of the Intercompany Notes constituting Unrestricted
Collateral or the Issuers of Pledged Stock constituting Unrestricted
- 12 -
<PAGE> 13
Collateral to make all payments directly to the Collateral Agent and if any at
any time thereafter all Events of Default shall have been cured or waived in
accordance with the terms of the Senior Note Indenture (or the Convertible Note
Indenture if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged), the Collateral Agent or a Trustee
shall notify such obligors and issuers to make all such payments directly to the
Company or as the Company may otherwise direct.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted to
the Senior Note Trustee pursuant to Article VI of the Senior Note Indenture and
to the Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indenture, the Company hereby appoints and constitutes the Collateral Agent and
the Trustees, whether acting separately or jointly, as the Company's
attorneys-in-fact to exercise all of the following powers upon and at any time
after the occurrence and during the continuance of an Event of Default: (i)
collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Company to the
Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Company, to execute and give receipt for any
certificate of ownership or any document constituting Collateral, to transfer
title to any item of Collateral, to sign the Company's name on all financing
statements (to the extent permitted by applicable law) or any other Senior Note
Collateral Documents or other documents deemed necessary or appropriate by the
Collateral Agent to preserve, protect or perfect the Liens in the Collateral and
to file the same, to prepare, file and sign the Company's name on any notice of
Lien, and to prepare, file and sign the Company's name on a proof of claim in
bankruptcy or similar document against any customer of, or person obligated upon
any Collateral to, the Company, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Security
Agreement. This power of attorney is coupled with an interest in the Trustees
and in the Collateral Agent as agent on behalf of the Trustees, and is
irrevocable by the Company.
SECTION 9. COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Company fails
to perform any covenant or agreement contained herein, the Collateral Agent or
either Trustee may, but shall not be obligated to, itself perform, or cause
performance of, such covenant or agreement, and the reasonable expenses of the
Collateral Agent or the Trustees incurred in connection therewith shall be
payable by the Company under Section 17(p) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral
- 13 -
<PAGE> 14
Agent or the Trustees in connection therewith. Each of the Collateral Agent and
the Trustees shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Collateral Agent or
such Trustee accords similar property in similar situations, it being understood
that the Collateral Agent and the Trustees shall not have any responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee has or is deemed to have knowledge of
such matters, (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (iii) inquiring into or verifying
that the Company has complied or will comply with its duty to furnish additional
items of Collateral to the Collateral Agent and/or the Trustees pursuant to
Section 6(d) hereof. Absent knowledge to the contrary, the Collateral Agent and
the Trustees may assume that the items of Collateral actually delivered to it
are all items required to be so delivered and may assume that no other such
items need be so delivered.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Company
represents to the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes that the Company has made its own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, payments of interest and/or principal, reorganization or other
exchanges, tender offers and voting rights), and the Company agrees that the
Collateral Agent, the Senior Note Trustee and the Holders of the Senior Notes,
and the Convertible Note Trustee and the Holders of the Convertible Notes shall
have no responsibility or liability for informing the Company of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereof. Except as not prohibited by the Senior Note
Indenture or, if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged, the Convertible Note Indenture, the
Company covenants that it will not, without the prior written consent of the
applicable Trustee, vote to enable, or take any other action to permit, any
Issuer to issue any Capital Stock or other securities or to sell or otherwise
dispose of, or grant any option with respect to, any of the Collateral or create
or permit to exist any Lien upon or with respect to any of the Collateral,
except for Liens permitted by Section 4.11 of the Senior Note Indenture,
Permitted Liens and the Liens granted under this Security Agreement and the
other Senior Note Collateral Documents. The Company will defend the right, title
and interest of the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes in and to the Collateral against the claims and demands of all
persons.
- 14 -
<PAGE> 15
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent may, subject to the provisions of the Senior Note Indenture
(or of the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged),
this Security Agreement, and the Collateral Agent's and the Trustees' compliance
with any requirements of law (including, without limitation, the applicable
Uniform Commercial Code and the Personal Property Security Act (Ontario))
applicable to the action to be taken, without notice to or demand upon the
Company except as required by the Senior Note Indenture, the Convertible Note
Indenture, this Agreement or applicable law, do any one or more of the
following:
(i) exercise any or all of the rights and remedies provided for by
the applicable Uniform Commercial Code and the Personal Property Security Act
(Ontario), specifically including, without limitation, the right to recover the
reasonable fees and expenses incurred by the Collateral Agent or the Trustees in
the enforcement of this Security Agreement or in connection with the Company's
redemption of the Collateral, including reasonable fees, expenses and
disbursements of attorneys, paralegals and agents;
(ii) at its option, transfer or register, and the Company shall
register or cause to be registered upon request therefor by the Collateral Agent
or the Trustees, the Collateral or any part thereof on the books of the
Restricted Subsidiaries to which an intercompany loan evidenced by an
Intercompany Note has been made, the Issuers or the Persons in whom Qualified
Investments are made, into the name of the Collateral Agent or the Collateral
Agent's nominee(s);
(iii) personally, or by agents or attorneys, immediately retake
possession of the Collateral, or any part thereof, from the Company or any other
Person who then has possession of any part thereof with or without notice or
process of law, and for that purpose may enter upon the Company's premises where
any of the Collateral is located and remove the same and use in connection with
such removal any and all services, supplies, aids and other facilities of the
Company;
(iv) sell, assign or otherwise liquidate, or direct the Company to
sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
(v) require the Company to assemble the Collateral or any part
thereof and make it available at one or more places as the Collateral Agent or
the Trustees may designate and to deliver possession of the Collateral or any
part thereof to the Collateral Agent or the Trustees;
- 15 -
<PAGE> 16
(vi) use, in connection with any assembly, use or disposition of the
Collateral, any intellectual property, intangibles or other technical knowledge
or process used or utilized from time to time by the Company;
(vii) sell or cause the same to be sold at any broker's board or at
public or private sale, in one or more sales or lots, at such price or prices as
the Collateral Agent may deem best, for cash or on credit or for future
delivery, without assumption of any credit; and the purchaser of any or all
Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;
(viii) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may have,
and any repossession or retaking or sale of the Collateral pursuant to the terms
hereof shall not operate to release the Company until full and final payment of
any deficiency has been made in cash;
(ix) in connection with any public or private sale under the
applicable Uniform Commercial Code, the Personal Property Security Act (Ontario)
or other applicable legislation, the Collateral Agent shall give the Company at
least fifteen (15) Business Days' prior written notice of the time and place of
any public sale of its Collateral or of the time after which any private sale or
other intended disposition thereof may be made, which shall be deemed to be
reasonable notice of such sale or other disposition. Such notice may be given to
the Company in accordance with the provisions of Section 17(a) hereof;
(x) proceed by an action or actions at law or in equity to recover
the Obligations or to foreclose this Security Agreement and sell the Collateral,
or any portion thereof, pursuant to a judgment or decree of a court or courts of
competent jurisdiction;
(xi) exercise any other rights and remedies provided by applicable
law and the other Senior Note Collateral Documents; and
(xii) if the Collateral Agent recovers possession of all or any part
of the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, the Collateral Agent may thereafter retain,
sell or otherwise dispose of such Collateral in accordance with this Security
Agreement or the applicable Uniform Commercial Code, the Personal Property
Security Act (Ontario) or other applicable legislation, and following such
retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Company hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Company further consents to the exoneration of any bond that the Collateral
Agent files in such action.
(b) If the Collateral Agent shall determine, or shall be directed by the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the
- 16 -
<PAGE> 17
Senior Note Indenture has been satisfied and discharged), to exercise its right
to sell any or all of the Pledged Stock or Qualified Investments constituting
Collateral pursuant to Section 12(a) above, and if in the opinion of counsel for
the Collateral Agent it is necessary, or if in the opinion of the Collateral
Agent or such Trustee it is advisable, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them, as the Collateral
Agent or such Trustee deems advisable or appropriate, to have the Pledged Stock
or Qualified Investments constituting Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), the Company will (i) use its best efforts to cause such
Issuer or other issuer or obligor to execute and deliver, and to cause such
Person's directors and officers to execute and deliver, all at the Company's own
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary or, in the opinion of the
Collateral Agent or such Trustee, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them as the Collateral
Agent or such Trustee deems advisable or appropriate, advisable to register such
Pledged Stock or Qualified Investments constituting Collateral under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of 180 days from the date of the first public offering of
such Pledged Shares or Qualified Investments, or that portion thereof to be sold
and (iii) make all amendments thereto and/or to the related prospectus that are
necessary or, in the opinion of the Collateral Agent or such Trustee, advisable,
all in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Company agrees to use its best efforts to cause the applicable Issuer or other
issuer or obligor to comply with the provisions of the securities or "Blue Sky"
laws of any jurisdiction that the Collateral Agent or the Senior Note Trustee
(or the Convertible Note Trustee if the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged) shall designate
for the sale of such Pledged Stock or Qualified Investments and to make
available to the security holders of such Issuer such issuer or obligor, as the
case by be, as soon as practicable, an earnings statement (which need not be
audited) that will satisfy the provisions of Section 11(a) of the Securities
Act. The Company will cause the Issuer or other issuer or obligor, as the case
may be, to furnish to the Collateral Agent and the Trustees such number of
copies as the Collateral Agent and the Trustees may reasonably request of each
preliminary prospectuses and prospectuses, to notify promptly the Collateral
Agent and the Trustees of the happening of any event as a result of which any
then effective prospectus includes an untrue statement of any material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of then existing
circumstances and cause the Collateral Agent and the Trustees to be furnished
with such number of copies as the Collateral Agent or the Trustees may request
of such supplement to or amendment of such prospectus as is necessary to
eliminate such untrue statement or supply such omission. The Company will cause
the Issuer or such other issuer or obligor, as the case may be, to the extent
permitted by law, to indemnify, defend and hold harmless the Collateral Agent
and the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes from and
against all losses, liabilities, expenses or claims (including reasonable costs
of investigation) that the Collateral Agent, the Senior Note Trustee and the
Holders of the Senior Notes, and the
- 17 -
<PAGE> 18
Convertible Note Trustee and the Holders of the Convertible Notes may incur
under the Securities Act or otherwise, insofar as such losses, liabilities,
expenses or claims arise out of or are based upon any alleged untrue statement
of a material fact contained in such registration statement (or any amendment
thereto) or in any preliminary prospectus or prospectus (or any amendment or
supplement thereto), or arise out of or are based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, except to the extent that any such losses,
liabilities, expenses or claims arise solely out of or are based solely upon any
such alleged untrue statement made or such alleged omission to state a material
fact included or excluded on the written direction of the Collateral Agent or
such Trustee. The Company will bear, or will cause the Issuer or such other
issuer or obligor, as the case may be, to bear, all costs and expenses of
carrying out its or their obligations hereunder. The provisions of this Section
12(b) shall in no way impose upon the Trustee or the Collateral Agent any duty
to execute any registration statement under the Securities Act with respect to
any Pledged Stock or Qualified Investments.
(c) In view of the fact that federal, state and foreign securities laws
may impose certain restrictions on the method by which a sale of the Collateral
may be effected after an Event of Default, the Company agrees that upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may cause, from time to time, the sale of all or any part of the
Collateral by means of a private placement, restricting the prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, the Collateral Agent may
solicit, or may cause an investment manager to solicit, offers to buy the
Collateral, or any part of it, for cash, from a limited number of investors who
might be interested in purchasing the Collateral. The Company acknowledges and
agrees that any such private sale may result in prices and terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Collateral for the period of time
necessary to permit the Company to cause an applicable Issuer or other such
issuer or obligor to register such securities for public sale under the
Securities Act, or under applicable state or foreign securities laws, even if
the Company could cause the Issuer or such other issuer or obligor, as the case
may be, to do so.
(d) The Company further agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Collateral pursuant to this Section 12 valid and
binding and in compliance with any and all other applicable requirements of
applicable law. The Company further agrees that a breach of any of the covenants
contained in this Section 12 will cause irreparable injury to the Senior Note
Trustee and the Holders of the Senior Notes, and the Convertible Note Trustee
and the Holders of the Convertible Notes, that the Collateral Agent, the Senior
Note Trustee and the Holders of the Senior Notes, and the Convertible Note
Trustee and the Holders of the Convertible Notes have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 12 shall be specifically enforceable against the
Company, and the Company hereby waives and agrees not to assert any defenses
against an
- 18 -
<PAGE> 19
action for specific performance of such covenants except for a defense that no
Event of Default has occurred and is continuing.
(e) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral shall be
applied by the Collateral Agent:
First, to the payment of the costs and expenses of such sale,
including, without limitation, reasonable expenses of the Collateral Agent
and its agents including the fees and expenses of its counsel, and all
expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith or pursuant to Section 17(p) hereof;
Next, to the Senior Note Trustee, for the payment in full of all
amounts due under Section 7.7 of the Senior Note Indenture;
Next, to the Senior Note Trustee, for distribution to the Holders of
the Senior Notes for the payment in full of the remaining Senior Note
Obligations;
Next, to the Convertible Note Trustee, for the payment in full of
all amounts due under Section 7.7 of the Convertible Note Indenture;
Next, to the Convertible Note Trustee, for distribution to the
Holders of the Convertible Notes for the payment in full of the remaining
Convertible Note Obligations; and
Finally, after payment in full of all of the Obligations, to the
payment to the Company, or its successors or assigns, or to whomsoever may
be lawfully entitled to receive the same as a court of competent
jurisdiction may direct.
(f) If any sale or other disposition of Collateral by the Collateral Agent
or any other action of the Collateral Agent or the Trustees hereunder results in
reduction of the Obligations, such action will not release the Company from its
liability for any unpaid Obligations, including costs, charges and expenses
incurred in the liquidation of Collateral, together with interest thereon, and
the same shall be immediately due and payable to the Collateral Agent, the
Senior Note Trustee and the Holders of the Senior Notes as provided for in the
Senior Note Indenture, or, if applicable, the Convertible Note Trustee and the
Holders of the Convertible Notes as provided for in the Convertible Note
Indenture.
(g) The Collateral Agent may enforce its rights hereunder without prior
judicial process or judicial hearing, and to the extent permitted by law the
Company expressly waives any and all legal rights which might otherwise require
the Collateral Agent to enforce its right by judicial process.
- 19 -
<PAGE> 20
(h) The existence and/or exercise of any or all of the rights and remedies
given to the Collateral Agent and/or either Trustee under this Section 12 shall
be subject in all cases to compliance with any mandatory requirements of
applicable law, particularly the laws of jurisdictions other than the United
States.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO THE APPLICABLE
ISSUER. The Company hereby authorizes and instructs the Issuers or other
applicable issuer or obligor to comply with any instructions received by the
Issuers or such other issuer or obligor, as the case may be, from the Collateral
Agent or the Senior Note Trustee (or the Convertible Note Trustee if the Senior
Notes are no longer outstanding and the Senior Note Indenture has been satisfied
and discharged) that (i) states than an Event of Default has occurred and (ii)
is otherwise in accordance with the terms of this Security Agreement, without
any other or further instructions from the Company, and the Company agrees that
the Issuers and the other applicable issuers and obligors shall be fully
protected in so complying.
SECTION 14. ESCROW ACCOUNTS. All money received by the Company and
required to be deposited in the Company Senior Note Escrow Account, or the
Convertible Note Escrow Account if the Company Senior Note Escrow Account
Agreement has been terminated, shall be promptly and without commingling
remitted to the Collateral Agent or the Senior Note Trustee (or the Convertible
Note Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) for deposit therein. Amounts held
in the Company Senior Note Escrow Account shall be applied or disposed of only
in a manner not prohibited by the Senior Note Indenture.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and the Liens
or security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Senior Note Indenture,
any Senior Note Collateral Document, any Senior Note Guarantee, the Convertible
Note Indenture, any Convertible Note Collateral Document, any Convertible Note
Guarantee or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from the Senior Note Indenture or the Senior Note
Collateral Documents or from the Convertible Note Indenture or the Convertible
Note Collateral Documents;
(c) any exchange, surrender, release or non-perfection of any Liens on any
other collateral, or any release or amendment or waiver of or consent to
departure from any Senior Note Guarantee, any Convertible Note Guarantee or
other guarantee, for all or any of the Obligations; or
- 20 -
<PAGE> 21
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Company in respect of the Obligations or of
this Security Agreement.
SECTION 16. WAIVERS.
(a) Except as may be required under the provisions of the Senior Note
Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) and to the fullest extent permitted under applicable law, neither
the Collateral Agent nor the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) shall be under any duty whatsoever
to make or give any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Collateral or
the Obligations, or to take any steps reasonably necessary to preserve any
rights against any Obligor or other Person. The Company waives to the fullest
extent permitted under applicable law any right of marshalling in respect of any
and all Collateral, and waives to the fullest extent permitted under applicable
law any right to require the Collateral Agent or the applicable Trustee to
proceed against any Obligor or other Person, exhaust any Collateral or enforce
any other remedy which the Collateral Agent or the applicable Trustee now has or
may hereafter have against any Obligor or other Person.
(b) The Company waives to the fullest extent permitted under applicable
law (i) any and all notices of acceptance, creation, modification,
rearrangement, renewal or extension for any period of any instrument executed by
any obligor in connection with the Obligations and (ii) any defense of any
Obligor by reason of disability, lack of authorization, cessation of the
liability of any Obligor or for any other reason. The Company authorizes the
Collateral Agent to the fullest extent permitted under applicable law, without
notice or demand and without any reservation of rights against the Company and
without affecting the Company's liability hereunder or on the Obligations, from
time to time to (w) take and hold other Property, other than the Collateral, as
security for the Obligations, and exchange, enforce, waive and release any or
all of the Collateral, (x) after the occurrence and during the continuance of an
Event of Default and the acceleration of the Senior Notes, apply the Collateral
in the manner permitted by this Security Agreement or the Senior Note Indenture,
(y) after the occurrence and during the continuance of an Event of Default and
the acceleration of the Convertible Notes if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged,
apply the Collateral in the manner permitted by this Security Agreement or the
Convertible Note Indenture and (z) after the occurrence and during the
continuance of an Event of Default renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or release the
obligations of any obligor on, or any instrument or agreement of such other
Person with respect to any or all of, the Collateral.
- 21 -
<PAGE> 22
SECTION 17. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other communications
required or desired to be given hereunder shall be in the form and manner, and
delivered to the Company at its address as set forth in Section 13.2 of the
Senior Note Indenture and Section 15.2 of the Convertible Note Indenture, to the
Senior Note Trustee at its address as set forth in Section 13.2 of the Senior
Note Indenture, to the Convertible Note Trustee at its address as set forth in
Section 15.2 of the Convertible Note Indenture and to the Collateral Agent at
The Bank of New York, 101 Barclay Street, Floor 21 West, New York, New York
10286.
(b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Senior Note Indenture or the Convertible Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Senior Note
Trustee for deposit in the Company Senior Note Escrow Account or the Convertible
Note Trustee for deposit in the Company Convertible Note Escrow Account, if the
Company Senior Note Escrow Account Agreement has been terminated.
(c) No Adverse Interpretation of Other Agreements. This Security Agreement
may not be used to interpret another pledge, security or debt agreement of the
Company or any Subsidiary of the Company. No such pledge, security or debt
agreement may be used to interpret this Security Agreement.
(d) Severability. The provisions of this Security Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(e) Headings. The headings in this Security Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
(f) Counterpart Originals. This Security Agreement may be signed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same agreement.
(g) Benefits of Security Agreement. Nothing in this Security Agreement,
express or implied, shall give to any person, other than the parties hereto and
their successors hereunder and the Holders of the Senior Notes and the Senior
Note Guarantors and the Holders of the Convertible Notes and the Convertible
Note Guarantors, any benefit or any legal or equitable right, remedy or claim
under this Security Agreement.
- 22 -
<PAGE> 23
(h) Amendments, Waivers and Consents. Any amendment or waiver of any
provision of this Security Agreement and any consent to any departure by the
Company from any provision of this Security Agreement shall be effective only if
made or given in compliance with all of the terms and provisions of the Senior
Note Indenture and the Convertible Note Indenture and neither the Collateral
Agent or the Senior Note Trustee nor any Holder of any Senior Note or the
Convertible Note Trustee or any Holder of a Convertible Note shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. Failure of the Collateral
Agent or the Trustees to exercise, or delay in exercising, any right, power or
privilege hereunder shall not operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note or the Convertible Note Trustee or any Holder of a Convertible Note
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that the Collateral Agent, either Trustee or any such
Holder would otherwise have on any future occasion. The right and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
(i) Interpretation of Security Agreement. All terms not defined herein or
in the Senior Note Indenture shall have the meaning set forth in the applicable
Uniform Commercial Code of the State of New York, except where the context
otherwise requires. To the extent a term or provision of this Security Agreement
conflicts with the Senior Note Indenture, the Senior Note Indenture shall
control with respect to the subject matter of such term or provision. Acceptance
of or acquiescence in a course of performance rendered under this Security
Agreement shall not be relevant in determining the meaning of this Security
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
(j) Continuing Security Interest; Transfer of Collateral. This Security
Agreement shall create a continuing Lien and security interest in the Collateral
and shall (i) unless otherwise provided in the Senior Note Indenture, the
Convertible Note Indenture or this Security Agreement, remain in full force and
effect until payment in full of (A) the Senior Notes under the terms of the
Senior Note Indenture, (B) all Obligations then due and owing under the Senior
Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents; provided, however, that after receipt from the Company by the
Collateral Agent of a request for a release of any Collateral permitted under
the Senior Note Indenture and the Convertible Note Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Senior Note Indenture and the Convertible Note Indenture and
upon receipt by the Collateral Agent of all proceeds of such sale, transfer,
assignment, exchange or other disposition required to be remitted to the
Collateral Agent or the Senior Note Trustee (or the Convertible Note Trustee if
the Senior
- 23 -
<PAGE> 24
Notes are no longer outstanding and the Senior Note Indenture has been satisfied
and discharged) or the Collateral constituting the proceeds of such sale,
transfer, assignment, exchange or other disposition being made subject to a Lien
and security interest in favor of the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, which Lien has the
same priority as had the Lien on the Collateral being sold, assigned or
otherwise disposed of, such Collateral shall be released from the Lien and
security interest created hereunder and no longer constitute Collateral. Upon
the payment in full of (A) the Senior Notes under the terms of the Senior Note
Indenture, (B) all Obligations then due and owing under the Senior Note
Indenture, the Senior Note Guarantees and the Senior Note Collateral Documents,
(C) the Convertible Notes under the terms of the Convertible Note Indenture and
(D) all Obligations then due and owing under the Convertible Note Indenture, the
Convertible Note Guarantees and the Convertible Note Collateral Documents, the
Company shall be entitled to the return, upon its request and at its expense, of
such of the Collateral pledged by it as shall not have been sold or otherwise
applied pursuant to the terms hereof. This Security Agreement shall be binding
upon the Company, its successors and assigns, and inure, together with the
rights and remedies of the Trustees hereunder, to the benefit of the Collateral
Agent, the Senior Note Trustee, and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and their
respective successors, transferees and assigns.
(k) Reinstatement. This Security Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by the
Collateral Agent, the Senior Note Trustee or any Holder of a Senior Note or the
Convertible Note Trustee or any Holder of a Convertible Note in respect of the
Obligations is rescinded or must otherwise be restored or returned by the
Collateral Agent, the Senior Note Trustee or any Holder of a Senior Note or the
Convertible Note Trustee or any Holder of a Convertible Note upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization or the
Company or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Company or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Company
or any substantial part of its assets, or otherwise, all as though such payments
had not been made.
(l) Survival of Provisions. All representations, warranties and covenants
of the Company contained herein shall survive the execution and delivery of this
Security Agreement, and shall terminate only upon the full and final payment and
performance by the Company of the Obligations.
(m) Authority of Collateral Agent and Trustees. Both the Collateral Agent
and the Trustees shall have and be entitled to exercise all powers hereunder
that are specifically granted to the Collateral Agent and the Trustees by the
terms hereof, together with such powers as are reasonably incident thereto. The
Collateral Agent and the Trustees may perform any of their respective duties
hereunder or in connection with the Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of
- 24 -
<PAGE> 25
counsel concerning all such matters. None of the Collateral Agent, any director,
officer, any attorney or agent of the Collateral Agent, the Senior Note Trustee,
any director, officer, employee, attorney or agent of the Senior Note Trustee,
the Holders of the Senior Notes, the Convertible Note Trustee, any director,
officer, employee, attorney or agent of the Convertible Note Trustee and the
Holders of the Convertible Notes shall be liable to the Company for any action
taken or omitted to be taken by it or them hereunder, except for its or their
own negligence or willful misconduct, nor shall the Collateral Agent or the
Trustees be responsible for the validity, effectiveness or sufficiency hereof or
of any document or security furnished pursuant hereto. The Collateral Agent and
its directors, officers, employees, attorneys and agents, the Senior Note
Trustee and its directors, officers, employees, attorneys and agents and the
Convertible Note Trustee and its directors, officers, employees, attorneys and
agents shall be entitled to rely on any communication, instrument or document
believed by it or them to be genuine and correct and to have been signed or sent
by the proper person or persons. Neither the Collateral Agent nor the Trustees
shall be required to, and shall not, expend or risk any of its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder.
The Company acknowledges that the rights and responsibilities of the
Collateral Agent and the Trustees under this Security Agreement with respect to
any action taken by the Collateral Agent and the Trustees or the exercise or
non-exercise by the Collateral Agent and/or the Trustees of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall, as among the Collateral Agent, the
Senior Note Trustee, the Holders of the Senior Notes, the Convertible Note
Trustee and the Holders of the Convertible Notes, be governed by the Senior Note
Indenture or the Convertible Note Indenture, as applicable, and by such other
applicable agreements with respect thereto as may exist from time to time among
them, but, as among the Collateral Agent, the Trustees and the Company, the
Collateral Agent and the Trustees shall be conclusively presumed to be acting as
agent for the Holders of the Senior Notes or Holders of the Convertible Notes,
as the case may be, with full and valid authority so to act or refrain from
acting, and the Company shall not be obligated or entitled to make any inquiry
respecting such authority.
In any case in which the Collateral Agent shall be required or
permitted to make any determination as to the extent to which the security
interest or Liens under this Security Agreement secures any obligations, the
Collateral Agent is authorized, without any direction from, or requirement for
consent of or authorization by, the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged), to institute proceedings in a
court of competent jurisdiction for the obtaining of any authoritative
determination of such matter. If the Collateral Agent institutes any such
proceeding, it shall give prompt written notice thereof to the Trustees and
shall afford each of them the opportunity to participate in such proceeding.
(n) Limitation by Law. All rights, remedies and powers provided herein may
be exercised only to the extent that they will not render this Security
Agreement not entitled to be recorded, registered or filed under provisions of
any applicable law.
- 25 -
<PAGE> 26
(o) Release; Termination of Security Agreement.
(i) Subject to the provisions of Section 17(k) hereof, this Security
Agreement shall terminate upon payment in full of (A) the Senior Notes under the
terms of the Senior Note Indenture, (B) all Obligations then due and owing under
the Senior Note Indenture, the Senior Note Guarantees, and the Senior Note
Collateral Documents, (C) the Convertible Notes under the terms of the
Convertible Note Indenture and (D) all Obligations then due and owing under the
Convertible Note Indenture, the Convertible Note Guarantees and the Convertible
Note Collateral Documents, except that the provisions of Section 17(p) hereof
shall survive.
(ii) The Company agrees that it will not sell or dispose of any of
the Collateral in violation of the Senior Note Indenture or the Convertible Note
Indenture; provided, however, that if the Company shall sell or otherwise
dispose of any of the Collateral in accordance with the terms of the Senior Note
Indenture and/or the Convertible Note Indenture, the Collateral Agent shall, and
the Trustees shall cause, at the request of the Company, release or cause to be
released the Collateral subject to such sale or disposition free and clear of
the Liens and security interest under this Security Agreement.
(iii) Upon any termination of this Security Agreement or release of
any Collateral as permitted by the Senior Note Indenture (or the Convertible
Note Indenture if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged), the Collateral Agent and the
Trustees will, at the expense of the Company, execute and deliver to the Company
such documents and take such other actions as the Company shall reasonably
request to evidence the termination of this Security Agreement or the release of
such Collateral, as the case may be. Any such action taken by the Collateral
Agent or the Trustees shall be without warranty by or recourse to the Collateral
Agent or the Trustees, except as to the absence of any prior assignments by the
Collateral Agent or the Trustees of its interests in the Collateral, and shall
be at the expense of the Company. The Collateral Agent and the Trustees may
conclusively rely on any certificate delivered to it by the Company stating that
the execution of such documents and release of the Collateral is in accordance
with and permitted by the terms of this Security Agreement and the Senior Note
Indenture (or the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged).
(p) Payment of Fees and Expenses and Indemnity. The Company will upon
demand pay to the Collateral Agent and the Trustees, without duplication, the
amount of any and all fees and expenses, including, without duplication, the
fees and disbursements of its counsel and of any experts and agents, that the
Collateral Agent and the Trustees may incur in connection with (i)
administration of this Security Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent and the Trustees hereunder or (iv) the failure by the Company
to perform or observe any of the provisions hereof. The Company shall be liable
for and shall reimburse and indemnify both Trustees and the Collateral Agent and
hold both Trustees and the Collateral Agent harmless from and against any
- 26 -
<PAGE> 27
and all claims, losses, liabilities, costs, damages or expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") arising from
or in connection with or related to this Agreement or being a Trustee and
Collateral Agent hereunder (including but not limited to Losses incurred by such
Trustees and Collateral Agent in connection with its successful defense, in
whole or in part, of any claim of negligence or willful misconduct on its part),
provided, however, that nothing contained herein shall require the Trustees and
the Collateral Agent to be indemnified for Losses caused by their respective
negligence or willful misconduct.
(q) Final Expression. This Security Agreement, together with the Senior
Note Indenture, the Convertible Note Indenture and any other agreement executed
in connection herewith or therewith, is intended by the parties as a final
expression of this Security Agreement and is intended as a complete and
exclusive statement of the terms and conditions hereof.
(r) Company Remain Liable. Anything herein to the contrary
notwithstanding, (a) the Company shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Company from any of its duties or obligations under the contracts
and agreements included in the Collateral and (c) the Collateral Agent and the
Trustees shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Security Agreement, nor
shall the Collateral Agent or the Trustees be obligated to perform any of the
obligations or duties of the Company thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
(s) Indentures. This Security Agreement is subject to the terms,
conditions and provisions of the Senior Note Indenture or, if the Senior Notes
are no longer outstanding and the Senior Note Indenture has been satisfied and
discharged, of the Convertible Note Indenture. Where there is a conflict between
the provisions of this Security Agreement and the Senior Note Indenture, the
provisions of the Senior Note Indenture shall prevail; and if the Senior Note
Indenture has been satisfied and discharged, where there is a conflict between
the provisions of this Security Agreement and the Convertible Note Indenture,
the provisions of the Convertible Note Indenture shall prevail.
(t) Rights of Holders. No Holder of a Senior Note or of a Convertible Note
shall have any independent rights hereunder other than those rights granted to
individual Holders pursuant to Section 6.7 of the Senior Note Indenture or
Section 6.7 of the Convertible Note Indenture, as the case may be; provided that
nothing in this subsection (t) shall limit any rights granted to the Senior Note
Trustee under the Senior Notes, the Senior Note Indenture or the Senior Note
Collateral Documents or the Convertible Note Trustee under the Convertible
Notes, the Convertible Note Indenture or the Convertible Note Collateral
Documents.
(u) No Personal Liability of Directors, Officers, Employees and
Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company
- 27 -
<PAGE> 28
or of any subsidiary of the Company, as such, shall have any liability for any
obligations of the Company under this Security Agreement or for any claim based
on, in respect of, or by reason of, such obligations or their creation.
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE AND THE
HOLDERS OF THE SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE AND THE HOLDERS OF
THE CONVERTIBLE NOTES IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND
DECISIONS OF THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN ITS
CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE SENIOR NOTE
TRUSTEE AND ANY HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE AND ANY
HOLDERS OF CONVERTIBLE NOTES, AND THE SENIOR NOTE TRUSTEE SHALL, IN ITS CAPACITY
AS SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF SENIOR
NOTES AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS CAPACITY AS CONVERTIBLE
NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF CONVERTIBLE NOTES,
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE TRUSTEES TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
COLLATERAL AGENT OR EITHER TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT
ANY COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE
COLLATERAL AGENT OR EITHER TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT OR SUCH TRUSTEE.
THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH EITHER TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
- 28 -
<PAGE> 29
(iii) TO, THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY, THE
COLLATERAL AGENT AND THE TRUSTEES EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SECURITY
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF THE COLLATERAL AGENT, THE
SENIOR NOTE TRUSTEE, ANY HOLDER OF A SENIOR NOTE, THE CONVERTIBLE NOTE TRUSTEE
AND ANY HOLDER OF A CONVERTIBLE NOTE SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS SECURITY
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE COLLATERAL AGENT, SUCH TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE
MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR SUCH HOLDER OF A SENIOR NOTE, OR
THE CONVERTIBLE NOTE TRUSTEE OR SUCH HOLDER OF A CONVERTIBLE NOTE AS THE CASE
MAY BE, CONSTITUTING NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE
OR THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE OF ITS
RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL
WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER
SECURITY FOR THE OBLIGATIONS. THE COMPANY WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR ANY
HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OR
THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE, OR TO ENFORCE
BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS SECURITY AGREEMENT OR ANY
- 29 -
<PAGE> 30
OTHER AGREEMENT OR DOCUMENT AMONG THE COMPANY ON THE ONE HAND AND THE COLLATERAL
AGENT, THE SENIOR NOTE TRUSTEE AND/OR THE HOLDERS OF THE SENIOR NOTES OR THE
CONVERTIBLE NOTE TRUSTEE AND/OR ANY HOLDER OF A CONVERTIBLE NOTE ON THE OTHER
HAND.
(w) Appointment of Collateral Agent. Pursuant to, and subject to the
provisions of, Section 7.12 of the Senior Note Indenture and of Section 7.12 of
the Convertible Note Indenture, the Trustees hereby appoint the Collateral
Agent, and the Collateral Agent accepts appointment, as collateral agent under
the terms of this Security Agreement. The Collateral Agent may resign at any
time by giving written notice thereof to the Trustees and may be removed at any
time with or without cause by the Trustees acting together. Prior to the
effectiveness of any such resignation or removal, the Trustees acting together
shall have the right to appoint a successor Collateral Agent which shall be a
commercial bank organized or chartered under the laws of the United States of
America or any state thereof having combined capital and surplus of at least
$50,000,000. If no successor Collateral Agent shall have been so appointed by
the Trustees acting together, and shall have accepted such appointment within 30
days after the retiring Collateral Agent's giving of notice of resignation or
the Trustees' removal of the retiring Collateral Agent, then the retiring
Collateral Agent shall, prior to the effectiveness of its resignation or
removal, on behalf of the Senior Note Trustee, the Holders of the Senior Notes,
the Convertible Note Trustee and the Holders of the Convertible Notes, appoint a
successor Collateral Agent, which shall be a commercial bank organized under the
laws of the United States of America or any State thereof having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent, and
the retiring Collateral Agent shall be discharged from its duties and
obligations under this Security Agreement. After any retiring Collateral Agent's
resignation or removal hereunder as Collateral Agent, the provisions of this
Security Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Collateral Agent under this Security Agreement.
Any corporation into which the Collateral Agent may be merged, or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Agent shall be a party, shall be
Collateral Agent under this Security Agreement without the execution or filing
of any paper or any further act on the part of the parties hereto.
[SIGNATURE PAGE FOLLOWS]
- 30 -
<PAGE> 31
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
duly executed and delivered as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
-------------------------
Name: James Hatt
Title: Chairman
The undersigned, as nominee of the Company to hold as of record the
Company's beneficial interest in one share of CY (pound)1 each of NWE Capital
(Cyprus) Limited (the "Nominee Collateral") for the sole purpose of compliance
with the requirement under Cypriot law that a corporation have two shareholders
of record, does hereby join in this Security Agreement solely for the purpose of
pledging the Nominee Collateral as security in order to secure the payment and
performance of all Obligations by the Company.
The undersigned hereby grants to the Collateral Agent for the benefit of
the Senior Note Trustee and for the equal and ratable benefit of the Holders of
the Senior Notes and for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of the Holders of the Convertible Notes (i) Liens and
a continuing security interest in and to the Nominee Collateral in order to
secure the payment and performance of all Obligations by the Company and (ii)
all rights and remedies, whether arising before or after an Event of Default,
with respect to the Nominee Collateral as otherwise granted in this Security
Agreement with respect to the Collateral; provided, however, that the Collateral
Agent, the Senior Note Trustee and the Convertible Note Trustee agree that,
notwithstanding anything contained in this Security Agreement to the contrary,
the undersigned shall have no personal liability under, arising out of or
related to this Security Agreement beyond the Nominee Collateral pledged
hereunder.
/s/ Clayton A. Waite
------------------------
Clayton A. Waite
<PAGE> 32
The undersigned, as nominee of the Company to hold as of record the
Company's beneficial interest in one share of CY (pound)1 each of PLD Asset
Leasing Limited and one share of CY (pound)1 each of PLD Capital Limited
(collectively, the "Nominee Collateral") for the sole purpose of compliance with
the requirement under Cypriot law that a corporation have two shareholders of
record, does hereby join in this Security Agreement solely for the purpose of
pledging the Nominee Collateral as security in order to secure the payment and
performance of all Obligations by the Company.
The undersigned hereby grants to the Collateral Agent for the benefit of
the Senior Note Trustee and for the equal and ratable benefit of the Holders of
the Senior Notes and for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of the Holders of the Convertible Notes (i) Liens and
a continuing security interest in and to the Nominee Collateral in order to
secure the payment and performance of all Obligations by the Company and (ii)
all rights and remedies, whether arising before or after an Event of Default,
with respect to the Nominee Collateral as otherwise granted in this Security
Agreement with respect to the Collateral; provided, however, that the Collateral
Agent, the Senior Note Trustee and the Convertible Note Trustee agree that,
notwithstanding anything contained in this Security Agreement to the contrary,
the undersigned shall have no liability under, arising out of or related to this
Security Agreement beyond the Nominee Collateral pledged hereunder.
APROPOS INVESTMENTS LTD.
By: /s/ Clayton A. Waite
---------------------
Name: Clayton A. Waite
Title: Director
- 32 -
<PAGE> 33
By its acceptance hereof, as of the day and year first above written, the
Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee agree
to be bound by the provisions hereof.
THE BANK OF NEW YORK, as Collateral Agent,
Senior Note Trustee and Convertible Note Trustee
By: /s/ Steven D. Torgeson
--------------------------
Name: Steven D. Torgeson
Title: Assistant Treasurer
<PAGE> 34
SCHEDULE A
to Company Senior
Note Security and
Pledge Agreement
QUALIFIED INVESTMENTS
None.
<PAGE> 35
SCHEDULE B
to Company Senior
Note Security and
Pledge Agreement
PLEDGED STOCK
1. 999 shares of CY(pound)1 each of NWE Capital (Cyprus) Limited.
2. 999 shares of CY(pound)1 each of PLD Asset Leasing Limited.
3. 999 shares of CY(pound)1 each of PLD Capital Limited.
4. 72,540 shares with a nominal value of 100 rubles of Baltic Communications
Limited.
5. Clayton Waite, as the Company's nominee, has pledged 1 share of CY
(pound)1 each of NWE Capital (Cyprus) Limited pursuant to the terms of a
joinder to this Security Agreement contained in the signature pages
hereto.
6. Apropos Investments Ltd., as the Company's nominee, has pledged 1 share of
CY (pound)1 each of PLD Asset Leasing Limited pursuant to the terms of a
joinder to this Security Agreement contained in the signature pages
hereto.
7. Apropos Investments Ltd., as the Company's nominee, has pledged 1 share of
CY (pound)1 each of PLD Capital Limited pursuant to the terms of a joinder
to this Security Agreement contained in the signature pages hereto.
<PAGE> 36
SCHEDULE C
to Company Senior
Note Security and
Pledge Agreement
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
None.
<PAGE> 37
SCHEDULE D
to Company Senior
Note Security and
Pledge Agreement
LIENS ON EXISTING COLLATERAL
None.
<PAGE> 38
SCHEDULE E
to Company Senior
Note Security and
Pledge Agreement
FILINGS
1. UCC-1 financing statements filed with the Secretary of State of the State
of New York.
2. UCC-1 financing statements filed with the City Registers Office, New York
County, New York.
3. Financing statements filed in Ontario under the Personal Property Security
Act (Ontario).
4. Each of the following agreements will, within seven days of the Issue
Date, be registered with both the Secretary of the Companies of Cyprus and
the Cyprus Official Register:
a. This Security Agreement.
b. Leasing Company Security and Pledge Agreement of even date herewith
entered into by PLD Asset Leasing Limited in favor of the Senior
Note Trustee, the Convertible Note Trustee and the collateral agent
named therein.
c. Leasing Company Security and Pledge Agreement of even date herewith
entered into by PLD Capital Limited in favor of the Senior Note
Trustee, the Convertible Note Trustee and the collateral agent named
therein.
d. NWE Cyprus Senior Note Security and Pledge Agreement of even date
herewith entered into by NWE Capital (Cyprus) Limited in favor of
the Senior Note Trustee, the Convertible Note Trustee and the
collateral agent named therein.
e. Leasing Company Escrow Account Agreement of even date herewith among
The Bank of New York, as escrow agent, the Senior Note Trustee, the
Convertible Note Trustee and PLD Asset Leasing Limited.
f. Leasing Company Escrow Account Agreement of even date herewith among
The Bank of New York, as escrow agent, the Senior Note Trustee, the
Convertible Note Trustee and PLD Capital Limited.
5. The Pledge Agreement governing shares of BCL pledged hereunder must be
duly noted on the shareholders' register of BCL.
<PAGE> 39
SCHEDULE F
to Company Senior
Note Security and
Pledge Agreement
CHIEF EXECUTIVE OFFICES
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario M5H 1L3
CANADA
<PAGE> 40
SCHEDULE G
to Company Senior
Note Security and
Pledge Agreement
BUSINESS NAMES
1. Ventech Healthcare Corporation Inc.
2. NWE Capital Corp.
<PAGE> 41
SCHEDULE H
to Company Senior
Note Security and
Pledge Agreement
LOCATION OF COLLATERAL
The Company's chief executive offices (see Schedule F).
<PAGE> 42
SCHEDULE I
to Company Senior
Note Security and
Pledge Agreement
FORM OF ADDITIONAL COLLATERAL AMENDMENT
This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, and grants to the
Collateral Agent for the benefit of the Senior Note Trustee and the equal and
ratable benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the Holders of the
Convertible Notes, continuing Liens and security interest in all of its rights,
title and interest in the Collateral listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Company Senior Note Security and Pledge Agreement, dated
as of May 31, 1996, between the undersigned and The Bank of New York, as Senior
Note Trustee, as Convertible Note Trustee and as Collateral Agent (the "Security
Agreement"); capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in the Security Agreement; and the
Collateral listed on this Additional Collateral Amendment shall be deemed to be
part of the Collateral, and shall become part of the Collateral and shall secure
all Obligations.
PETERSBURG LONG DISTANCE INC.
By:
Name:
Title:
<PAGE> 43
INTERCOMPANY NOTES:
Description Name of Restricted Original
Item of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
======== ============== ==================== ====== ===========
PLEDGED STOCK:
Number of Share Percentage
Name of Shares Certificate of Shares
Guarantor Pledged Number Outstanding
=========== ========== ============ ============
<PAGE> 44
OTHER COLLATERAL:
Description of
Qualified Investment
or other Collateral Evidenced By Obligor Date
====================== ============== ========= ======
<PAGE> 45
SCHEDULE J
to Company Senior
Note Security and
Pledge Agreement
RESTRICTIVE AGREEMENTS
1. The BECET charter and joint venture agreement provide that a joint venture
partner may not sell, assign, pledge or otherwise transfer its shares
without the written consent of the other partner prior to February 4,
1999. After February 4, 1999, such interest may be transferred provided
that the transferee agrees to be bound by the terms of the joint venture
agreement creating BECET.
2. The BECET charter provides that dividends may be established at a meeting
of the General Assembly (as defined therein). To the extent that WTC owns
a 50 percent equity interest in BECET, its ability to cause BECET to
declare dividends may be restricted.
3. The BECET charter provides a right of first refusal for newly issued
shares.
4. The PeterStar charter and foundation agreement provide a right of first
refusal on newly issued shares and a right of first refusal in the event
of a transfer of shares.
<PAGE> 1
EXHIBIT 4.16
COMPANY CONVERTIBLE NOTE SECURITY AND PLEDGE AGREEMENT
THIS COMPANY CONVERTIBLE NOTE SECURITY AND PLEDGE AGREEMENT (the
"Security Agreement") is made and entered into as of May 31, 1996 by PETERSBURG
LONG DISTANCE INC., an Ontario corporation (the "Company"), in favor of THE BANK
OF NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Convertible Note Trustee") under the Convertible Note Indenture (as defined
herein) for the holders of the Convertible Notes (as hereinafter defined), THE
BANK OF NEW YORK, a New York banking corporation, as trustee (in such capacity,
the "Senior Note Trustee") under the Senior Note Indenture (as defined herein)
for the holders of the Senior Notes (as defined herein), and THE BANK OF NEW
YORK, as collateral agent (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Capital (Cyprus) Limited, a Cypriot corporation ("NWE Cyprus"), PLD Asset
Leasing Limited, a Cypriot corporation ("PLD Leasing"), PLD Capital Limited, a
Cypriot corporation ("PLD Capital", together with PLD Leasing, the "Leasing
Companies"), Wireless Technology Corporations Limited, a British Virgin Islands
company ("WTC"), and Baltic Communications Limited, a Russian joint stock
company of the closed type ("BCL"), as guarantors (the "Convertible Note
Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture") pursuant to which the Company is issuing
$26,500,000 in aggregate principal amount of its 9% Convertible Subordinated
Notes due 2006 (the "Convertible Notes"); and
WHEREAS, the Company, as issuer, the Senior Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Senior Note
Guarantors" and, together with the Convertible Note Guarantors, the
"Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Senior Note Indenture") pursuant to which the Company is issuing
$123,000,000 in aggregate principal amount at Stated Maturity of its 14% Senior
Discount Notes due 2004 (the "Senior Notes"); and
WHEREAS, to secure its obligations under the Convertible Note Indenture
and the Convertible Notes and the other Convertible Note Collateral Documents
(as defined in the Senior Note Indenture) (together with the Convertible Note
Guarantors' obligations under the Convertible Note Indenture, the Guarantees
contained therein (the "Convertible Note Guarantees") and the Convertible Note
Collateral Documents, the "Convertible Note Obligations") and to secure its
obligations under the Senior Note Indenture and the Senior Notes and the other
Senior Collateral Documents (as defined in the Convertible Note Indenture)
(together with the Senior Note Guarantors' obligations under the Senior Note
Indenture, the guarantees contained therein (the "Senior Note Guarantees") and
the Senior Note Collateral Documents, the "Senior Note Obligations"), the
Company has agreed (i) to grant to the
<PAGE> 2
Collateral Agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Senior Note Trustee and for the equal and ratable benefit of the Holders
of the Senior Notes, Liens and security interests in and to the Collateral (as
defined herein) and (ii) to execute and deliver this Security Agreement in order
to secure the payment and performance by the Company and the Guarantors of the
Convertible Note Obligations and the Senior Note Obligations (collectively, the
"Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Convertible Notes to purchase the Convertible Notes and the
Holders of the Senior Notes to purchase the Senior Notes, the Company hereby
agrees with the Collateral Agent, with the Convertible Note Trustee for its
benefit and the equal and ratable benefit of the Holders of the Convertible
Notes and with the Senior Note Trustee for its benefit and the equal and ratable
benefit of the Holders of the Senior Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Convertible
Note Indenture. In addition to any other defined terms used herein, the
following terms shall constitute defined terms for the purposes of this Security
Agreement:
"Default" means a "Default" as defined in Section 1.1 of the
Convertible Note Indenture until the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged, in which case a "Default" means a "Default" as defined in
Section 1.1 of the Senior Note Indenture.
"Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Convertible Note Indenture until the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has
been satisfied and discharged, in which case "Event of Default" means
an "Event of Default" as defined in Section 1.1 of the Senior Note
Indenture.
"Permitted Liens" means "Permitted Liens" as defined in
Section 1.1 of the Convertible Note Indenture until the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has
been satisfied and discharged, in which case "Permitted Liens" means
"Permitted Liens" as defined in Section 1.1 of the Senior Note
Indenture.
"Trustees" means, collectively, the Senior Note Trustee and
the Convertible Note Trustee.
SECTION 2. CREATION OF SECURITY INTEREST. The Company hereby grants to
the Collateral Agent for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of the Holders of the Convertible Notes and for the
benefit of the Senior Note Trustee and for the equal and ratable benefit of the
Holders of the Senior Notes, Liens and a
2
<PAGE> 3
continuing security interest in and to the collateral described in Section 3
hereof (the "Collateral") in order to secure the payment and performance of all
Obligations.
SECTION 3. COLLATERAL. The Collateral is:
(a) Technocom Preferred Stock. (i) All Technocom Preferred Stock,
whether now owned or hereafter acquired, including those shares of Capital Stock
of Technocom listed on Schedule A attached hereto, (ii) all other securities
that the Company may, with the prior written approval of the Convertible Note
Trustee and the Holders of the Convertible Notes, unless specifically permitted
by the Convertible Note Indenture, substitute for any and all of the shares
referred to in clause (i) of this Section 3(a) or any securities substituted for
any substituted securities; (iii) all other securities, warrants, options,
rights to purchase securities, instruments, rights, moneys, proceeds and
property whatsoever, including without limitation, all dividends or other
distributions and interest paid or payable thereon, which may at any time be,
derived from, accrue on or be offered in respect of, any of the Technocom
Preferred Stock and the securities referred to in clause (ii) above, whether by
way of sale, transfer, assignment, redemption, exchange, conversion, option,
rights, bonus, preference, capital reorganization, merger, combination,
dissolution, liquidation or other termination of existence or otherwise
howsoever; and references to Technocom Preferred Stock and the securities
referred to in clause (ii) above shall include references to all existing and
future certificates evidencing title and relating thereto; and references to
Technocom Preferred Stock and the securities referred to in clause (ii) above
include references to any part or kind thereof, provided, that the Technocom
Preferred Stock and the securities referred to in clause (ii) above shall not
include the single Ordinary Share of Technocom into which the Technocom
Preferred Stock held by the Company may be converted under the terms existing on
the Issue Date governing such Technocom Preferred Stock;
(b) Qualified Investments. All Qualified Investments, whether now
or hereafter acquired by the Company, including those Qualified Investments
listed on Schedule B attached hereto, made with dividends, distributions and
payments constituting Technocom Preferred Stock, including all products and
proceeds thereof, and with all funds or Eligible Cash Equivalents in the Company
Convertible Note Escrow Account, and the certificates, agreements, documents,
notes, collateral documents and instruments representing or relating to such
Qualified Investments, all contract rights, instruments, general intangibles and
other obligations or other receivables of any kind relating to such Qualified
Investments, all Liens relating to or securing such Qualified Investments and
the related collateral documents which grant such Liens and all products and
proceeds of such Qualified Investments, including without limitation, all
dividends, options, warrants, rights, subscriptions, all interest and principal
payments, and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the
Qualified Investments;
(c) Company Convertible Note Escrow Account. The Company
Convertible Note Escrow Account and all funds contained therein and all
Investments made by the Escrow Agent
3
<PAGE> 4
(as defined in the Company Convertible Note Escrow Account Agreement) therewith
(whether or not constituting Eligible Cash Equivalents) and all proceeds
thereof;
(d) Intercompany Notes. All Intercompany Notes, whether executed on
the Issue Date or thereafter, from any Restricted Subsidiary (or substitutes,
replacements and proceeds thereof) evidencing loans or advances made by the
Company with dividends, distributions, payments on or otherwise with Technocom
Preferred Stock, including all products and payments thereof, and all funds and
Eligible Cash Equivalents in the Company Convertible Note Escrow Account or
other Collateral, all Liens securing such Intercompany Notes and the related
collateral documents, and the instruments representing such Intercompany Notes,
and, except as otherwise provided herein, all products and proceeds of such
Intercompany Notes, including, without limitation, all interest and principal
payments, instruments, and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for the Intercompany
Notes; and
(e) After-acquired Collateral and Proceeds. All items described in
this Section 3 (other than those items specifically excluded), whether now owned
or hereafter at any time acquired by the Company and wherever located, including
(except as otherwise provided herein) all replacements, additions, accessions,
substitutions, repairs, proceeds and products relating thereto or therefrom, and
all documents, ledger sheets, files, books and records of the Company relating
thereto. Proceeds hereunder include (i) whatever is now or hereafter received by
the Company upon the sale, exchange, collection or other disposition of any item
of Collateral; (ii) any property of the type or types described in subsections
(a), (b) or (d) now or hereafter acquired by the Company with any proceeds of
Collateral hereunder; and (iii) any payments under any insurance or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Company, but subject to its compliance with the
requirements of applicable law, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
but subject to its compliance with the requirements of applicable law, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Technocom Preferred Stock or Qualified
Investments constituting Collateral for certificates or instruments of smaller
or larger denominations.
4
<PAGE> 5
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Collateral Agent and the Trustees that, except as
specified in Schedule C attached hereto:
(a) Legal Power. The execution, delivery and performance by the
Company of this Security Agreement are within the Company's legal powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with (except for any filings provided for hereunder),
any governmental authority, require no consent of any other Person and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the articles of incorporation or bylaws of the Company or of
any agreement (after giving effect to the use of proceeds of the issuance of the
Convertible Notes), judgment, injunction, order, decree or other instrument
binding upon the Company or result in the creation or imposition of any Lien on
any asset of the Company (other than the Liens created by this Security
Agreement, the Company Convertible Note Escrow Account Agreement and the other
Convertible Note Collateral Documents) and the Liens created by the Senior Note
Indenture and the Senior Note Collateral Documents.
(b) Technocom Preferred Stock. The Technocom Preferred Stock has
been duly authorized and validly issued and is fully paid and non-assessable.
The Technocom Preferred Stock represents and will at all times represent all of
the Preferred Stock of Technocom owned by the Company.
(c) Title to Collateral. The Company is the legal, record and
beneficial owner of the Technocom Preferred Stock, and any Intercompany Notes
existing on the Issue Date (the "Existing Collateral"), free and clear of any
Lien or claims of any person except for the Liens listed on Schedule D attached
hereto and the Liens created by this Security Agreement, the Company Convertible
Note Escrow Account Agreement and any of the other Convertible Note Collateral
Documents.
(d) Enforceability. This Security Agreement has been duly executed
and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or general principles of equity and
commercial reasonableness and except that a Canadian court will only render
judgment in Canadian currency.
(e) Perfection; Priority. Upon the execution and delivery of the
Company Convertible Note Escrow Account Agreement, which is being done
contemporaneously with the execution and delivery of this Security Agreement,
the delivery to the Collateral Agent of the Existing Collateral and the filing
of the Convertible Note Collateral Documents relating to the Existing Collateral
and the documents listed on Schedule E attached hereto, to the extent such
security interests are created under applicable federal and New York laws, the
security interest in the Collateral created pursuant to this Security Agreement
and the Company Convertible Note
5
<PAGE> 6
Escrow Account Agreement are valid and perfected first priority Liens and
security interests, subject to the Liens listed on Schedule D attached hereto in
the Existing Collateral, securing the payment of the Obligations for the benefit
of the Convertible Note Trustee and for the equal and ratable benefit of the
Holders of the Convertible Notes and for the benefit of the Senior Note Trustee
and for the equal and ratable benefit of the Holders of the Senior Notes, and
enforceable as such against all creditors of the Company and any Persons
purporting to purchase any of the Existing Collateral from the Company other
than as permitted by the Convertible Note Indenture; as of the date hereof (and
after giving effect to the use of proceeds of the issuance of the Convertible
Notes), there are no other security interests in or Liens on the Existing
Collateral or any portion thereof, and no financing statement, pledge, notice of
Lien, assignment or collateral assignment, mortgage or deed of trust covering
the Existing Collateral or any portion thereof ("Lien Notice") exists or is on
file in any public office, except with respect to Liens listed on Schedule E
attached hereto, the Liens created by this Security Agreement and the other
Convertible Note Collateral Documents and Liens to be released in connection
with the use of proceeds of the issuance of the Convertible Notes.
(f) Offices. The Company's chief executive offices are located at
the address shown as the chief executive office in Schedule F attached hereto
("Chief Executive Office"), and the Company has no places of business other than
those set forth in such Schedule F, except as permitted hereafter by Section
6(c) hereof.
(g) Business Names. The Company has not conducted its businesses
under any corporate, partnership or fictitious name during the five (5) years
preceding the date hereof, other than those names set forth on Schedule G
attached hereto.
(h) No Consents. No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
granting of the Liens by the Company on the Collateral pursuant to this Security
Agreement or for the execution, delivery or performance of this Security
Agreement by the Company (except for filings listed on Schedule E attached
hereto, the filings and/or other actions necessary to maintain the perfection of
the Liens on the Existing Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case,as may be required in connection with any such
disposition by laws affecting the offering and sale of the Technocom Preferred
Stock and the Qualified Investments constituting Collateral.
(i) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the knowledge
of the Company, threatened by or against the Company with respect to this
Security Agreement or any of the transactions contemplated hereby.
6
<PAGE> 7
(j) Accurate Information. As of the date hereof, all information
set forth herein relating to the Existing Collateral is accurate and complete in
all respects.
SECTION 6. COVENANTS.
(a) Lien Notices. The Company will defend its interest in the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein, and the Company will not permit any Lien
Notices with respect to the Collateral or any portion thereof to exist or be on
file in any public office for more than 30 days after the Company shall have
notice thereof, except with respect to Permitted Liens or if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged, Liens otherwise permitted by Section 4.11 of the
Senior Note Indenture. The Company will advise the Collateral Agent and the
Trustees promptly, in reasonable detail, at the addresses specified in Section
17(a) of this Agreement, of any Lien (other than Permitted Liens) on, or claim
asserted against, any of the Collateral.
(b) Location of Collateral. The Company will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
Schedule H hereto, or at locations hereafter established in compliance with
Section 6(c) hereof (except for Collateral held by the Collateral Agent, a
Trustee or the Escrow Agent), unless the Company shall have given the Collateral
Agent and the Trustees prior written notice thereof and shall have in advance
executed and caused to be filed and/or delivered to the Collateral Agent and the
Trustees any financing statements or other documents required by the Trustees or
the Collateral Agent in order to perfect, protect and preserve the Liens and
security interest created hereby, all in form and substance satisfactory to the
Collateral Agent and the Trustees.
(c) Location of Offices; Corporation Name; Legal Structure. The
Company will not change the location of its chief executive office or establish
any place of business other than those set forth on Schedule F attached hereto,
or voluntarily or involuntarily change its name, identity or legal structure,
including without limitation any continuance, amalgamation, merger,
consolidation or sale of substantially all of its assets, unless the Company
shall have given the Collateral Agent and the Trustees at least 30 days prior
written notice thereof and shall have in advance executed and caused to be filed
and or delivered to the Collateral Agent and the Trustees any financing
statements or other Convertible Note Collateral Documents required by the
Collateral Agent and the Trustees in order to perfect, protect and preserve the
Liens and security interest created hereby, all in form and substance
satisfactory to the Trustees and the Collateral Agent. Each Trustee and the
Collateral Agent waives such notice of the proposed name change of the Company
to PLD Telekom Inc. to be put to a vote of shareholders on June 26, 1996. The
Company will promptly give notice to the Trustees and the Collateral Agent of a
favorable vote of its shareholders to such proposed name change.
(d) Additional Collateral; Further Assurances. The Company agrees
that immediately upon becoming the beneficial owner of any additional securities
constituting Collateral (whether or not constituting Technocom Preferred Stock),
additional Qualified
7
<PAGE> 8
Investments constituting Collateral or additional Intercompany Notes
constituting Collateral, it will pledge and deliver to the Collateral Agent for
the benefit of the Convertible Note Trustee and the equal and ratable benefit of
the Holders of the Convertible Notes and for the benefit of the Senior Note
Trustee and for the equal and ratable benefit of the Holders of the Senior
Notes, the certificates, instruments and documents representing such Technocom
Preferred Stock, Qualified Investments and Intercompany Notes (as well as duly
executed instruments of transfer or assignment in blank), and grant to the
Collateral Agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Senior Note Trustee and for the equal and ratable benefit of the Holders
of the Senior Notes pursuant to appropriate and necessary Convertible Note
Collateral Documents, a continuing first priority security interest in and Liens
on such additional securities Technocom Preferred Stock, Qualified Investments
or Intercompany Notes, all in form and substance satisfactory to the Trustees.
The Company shall also promptly (and in any event within five (5) Business Days
after receipt thereof), subject to its compliance with the requirements of
applicable law, deliver to the Collateral Agent any other documents of title,
promissory notes, certificates or instruments representing Collateral which it
holds. The Company further agrees that it will promptly (and in any event within
5 Business Days after such acquisition) deliver to the Collateral Agent and the
Trustees an amendment, duly executed by the Company, in substantially the form
of Schedule I hereto (an "Additional Collateral Amendment"), with respect to the
additional Collateral that is to be pledged pursuant to this Security Agreement.
The Company hereby authorizes the Collateral Agent and the Trustees to attach
each Additional Collateral Amendment to this Security Agreement and agrees that
any stock, notes or other forms of Investment listed on any Additional
Collateral Amendment delivered to the Collateral Agent or the Trustees shall for
all purposes hereunder be considered Collateral. The Company will promptly, (i)
execute and deliver, cause to be executed and filed, or use its best efforts to
give any notices, in all appropriate jurisdictions (including Canada, Ireland,
Cyprus, the Russian Federation and Kazakstan) or procure any financing
statements, assignments, pledges or other documents, (ii) mark any chattel paper
constituting Collateral and deliver any certificates, chattel paper or
instruments constituting Collateral to the Collateral Agent or the Trustees,
(iii) execute and deliver or cause to be executed and delivered all stock
powers, proxies, assignments, instruments and other documents, and (iv) take any
other actions, in each such case as necessary or, in the reasonable opinion of
the Collateral Agent and the Trustees, desirable to perfect or continue the
perfection and the priority of the Collateral Agent's security interest and
Liens in the Collateral, to protect the Collateral against the rights, claims,
or interests of third Persons other than holders of Permitted Liens or Liens
otherwise permitted by Section 4.11 of the Senior Note Indenture or to effect
the purposes of this Security Agreement. The Company also hereby authorizes the
Collateral Agent to file any financing or continuation statements with respect
to the Collateral without the signature of the Company to the extent permitted
by applicable law.
(e) Disposition of Collateral. The Company will not sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of, or grant
any option or warrant with respect to, any of the Collateral except as permitted
by the Convertible Note Indenture and the Senior Note Indenture. If the proceeds
of any sale of any Collateral are notes, instruments, documents of title,
standby letters of credit or chattel paper, such proceeds shall be promptly
delivered to
8
<PAGE> 9
the Collateral Agent to be held as Collateral hereunder. If the Collateral, or
any part thereof, is sold, transferred, assigned, exchanged, or otherwise
disposed of in violation of these provisions, the security interest and Liens of
the Collateral Agent shall continue in such Collateral or part thereof
notwithstanding such sale, transfer, assignment, exchange or other disposition,
and the Company will hold the proceeds thereof in a separate account for the
benefit of the Convertible Note Trustee and further equal and ratable benefit of
the Holders of the Convertible Notes and the benefit of the Senior Note Trustee
and further equal and ratable benefit of the Holders of the Senior Notes and
transfer such proceeds to the Collateral Agent or the Trustee in kind to be held
as Collateral hereunder.
(f) Restrictive Agreements. The Company agrees that, except for
existing agreements set forth on Schedule J attached hereto, it will not (i)
enter into any agreement or understanding that purports to or may restrict or
inhibit the Collateral Agent's or the Trustees' rights or remedies hereunder,
including, without limitation, the Collateral Agent's or the Trustees' right to
sell or otherwise dispose of the Collateral or amend or modify in any manner
materially adverse to the Trustees the existing agreements set forth as Schedule
J attached hereto, (ii) permit Technocom to continue, merge, amalgamate or
consolidate, unless all outstanding Capital Stock owned by the Company of the
surviving corporation is, upon such continuance, merger, amalgamation or
consolidation, pledged hereunder to the Collateral Agent or (iii) fail to pay or
discharge any tax, assessment or levy of any nature not later than five days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with regard to the Collateral.
(g) Rights of Collateral Agent and Trustees. Upon the occurrence
and during the continuance of an Event of Default, the Collateral Agent and the
Convertible Note Trustee (or the Senior Note Trustee, if the Convertible Notes
are no longer outstanding and the Convertible Note Indenture has been satisfied
and discharged) shall have the right at any time to make any payments and do any
other acts as the Collateral Agent or the applicable Trustee may deem necessary
to protect the Liens and security interest of the Collateral Agent in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any Lien which, in the judgment of the Collateral Agent or such
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Company hereby agrees to
reimburse the Collateral Agent and the Trustees for all payments made and
expenses incurred under this Security Agreement including reasonable fees,
expenses and disbursements of attorneys and paralegals acting for the Trustees,
including any of the foregoing payments under or acts taken to perfect or
protect its Liens and security interest in the Collateral, which amounts shall
be secured under this Security Agreement, and agrees that it shall be bound by
any payment made or act taken by the Collateral Agent or the Trustees hereunder.
Neither the Collateral Agent nor the Trustees shall have any obligation to make
any of the foregoing payments or perform any of the foregoing acts.
(h) Records. The Company will keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral.
9
<PAGE> 10
(i) Access. On reasonable notice to the Company, except at any time
during the Continuation of Default in an Event of Default, both the Collateral
Agent and the Trustees shall at all times have full and free access during
normal business hours to all the books, correspondence and records of the
Company relating to the Collateral, and the Collateral Agent and its
representatives, and the Trustees and their respective representatives, may
examine the same, take extracts therefrom and make photocopies thereof, and the
Company agrees to render to the Collateral Agent and/or the applicable Trustee,
at the Company's cost and expense, such clerical and other assistance, at all
times and in such manner as may be requested with regard thereto. On reasonable
notice to the Company, except at any time during the Continuation of Default in
an Event of Default, the Collateral Agent and its representatives, and the
Trustees and their respective representatives, shall at all times also have the
right to enter, during normal business hours, into and upon any premises where
any of the Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(j) Taxes. The Company shall pay all taxes, assessments and
government charges and all claims as and to the extent required by Section 4.6
of each of the Convertible Note Indenture and the Senior Note Indenture;
provided that the Company shall in any event pay such taxes, assessments or
levies not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to any Collateral of the
Company entered or filed against the Company as a result of the failure to make
such payment.
(k) Demand Obligations. The Company agrees that it will cause each
of the Restricted Subsidiaries that is obligated on any Intercompany Note
constituting Collateral that constitutes a demand obligation, within the meaning
of Section 3-108 of the Uniform Commercial Code of the State of New York, to
execute and deliver to the Collateral Agent and/or the Trustee a new instrument
extending, renewing and replacing such demand obligation not later than the
second anniversary of the date of original issue thereon and on each succeeding
second anniversary thereof.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing, the Company shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Technocom Preferred Stock and the
Qualified Investments constituting Collateral or any part thereof for any
purpose not inconsistent with the terms of this Security Agreement, the
Convertible Note Indenture or any other Convertible Note Collateral Document or
the Senior Note Indenture or any Senior Note Collateral Document; provided that
the Company shall not exercise or shall refrain from exercising any such right
if such action would be inconsistent with or violate any provisions of this
Security Agreement, the Convertible Note Indenture or any other Convertible Note
Collateral Document or the Senior Note Indenture or any Senior Note Collateral
Document.
(b) All payments made from time to time on, or with respect to,
Technocom Preferred Stock or other securities constituting Collateral and
Qualified Investments constituting
10
<PAGE> 11
Collateral and Intercompany Notes held by the Company constituting Collateral,
whether interest, principal, dividends, distributions or otherwise, shall be
delivered to the applicable Trustee for deposit in the Company Convertible Note
Escrow Account or the Company Senior Note Escrow Account if the Company
Convertible Note Escrow Account Agreement has been terminated.
(c) The Collateral Agent and/or the Convertible Note Trustee (or
the Senior Note Trustee if the Convertible Notes are no longer outstanding and
the Convertible Note Indenture has been satisfied and discharged) shall execute
and deliver (or cause to be executed and delivered) to the Company all such
proxies and other instruments as the Company may reasonably request for the
purpose of enabling the Company to exercise the voting and other rights that it
is entitled to exercise pursuant to Sections 7(a) through (c) above.
(d) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Company to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 7(a) shall cease, and all such rights shall thereupon become vested in
the Collateral Agent on behalf of, or if necessary, directly in, the Convertible
Note Trustee (or the Senior Note Trustee if the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged), which shall thereupon have the sole right to exercise such voting
and other consensual rights, and (ii) all interest, principal payments,
dividends or other distributions payable or other payments made on or in respect
of the Collateral shall constitute Collateral and shall be paid to the
Collateral Agent and all such payments shall be deposited in the Company
Convertible Note Escrow Account or the Company Senior Note Escrow Account, if
the Company Convertible Note Escrow Account has been terminated.
(e) Upon the occurrence and during the continuance of an Event of
Default, the Company shall execute and deliver (or cause to be executed and
delivered) to the Collateral Agent and/or the Convertible Note Trustee (or the
Senior Note Trustee if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged) all such proxies
and other instruments as the Collateral Agent and/or the applicable Trustee may
reasonably request for the purpose of enabling the Collateral Agent and/or the
applicable Trustee to exercise or cause the exercise of the voting and other
rights that it is entitled to exercise pursuant to Section 7(d) above.
(f) All interest and principal payments, all dividends and
distributions and all other payments that are received by the Company contrary
to the provisions of this Section 7 shall be received in trust for the
Collateral Agent for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes and for the benefit
of the Senior Note Trustee and for the equal and ratable benefit of the Holders
of the Senior Notes, be segregated from the other property or funds of the
Company and be forthwith delivered to the Collateral Agent as Collateral in the
same form as so received (with any necessary endorsements or other instruments
of transfer or assignment in blank), and all such payments shall be deposited in
the Company Convertible Note Escrow Account or the Company Senior
11
<PAGE> 12
Note Escrow Account if the Company Convertible Note Escrow Account Agreement has
been terminated.
(g) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustees shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Company agrees and undertakes to do at the Company's expense; provided
that the Collateral Agent and the Trustees shall cooperate with the Company and
take all such action as the Company may reasonably request to permit the Company
to collect, protect or enforce the Collateral. All reasonable expenses
(including, without limitation, attorneys' fees and legal expenses) actually
incurred or paid by the Collateral Agent and the Trustees in connection with or
incident to any such collection or attempt to collect, protect or enforce the
Collateral shall be borne by the Company or reimbursed by the Company to the
Collateral Agent or the applicable Trustee upon demand.
(h) At the Collateral Agent's or the applicable Trustee's option,
exercisable upon and during the continuance of any Event of Default, either the
Collateral Agent or the Convertible Note Trustee (or the Senior Note Trustee if
the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged) may notify the obligors of the
Intercompany Notes constituting Collateral, Technocom and the issuers or other
obligors of the Qualified Investments constituting Collateral that any and all
payments and distributions to be made on such Intercompany Notes, the Technocom
Preferred Stock and such Qualified Investments shall be made directly to the
Collateral Agent or the applicable Trustee, and the Company hereby directs the
obligors of such Intercompany Notes, Technocom and the issuers or other obligors
of such Qualified Investments to pay and deliver over to the Collateral Agent or
the Convertible Note Trustee (or the Senior Note Trustee if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged) all payments and distributions to be made on such
Intercompany Notes, the Technocom Preferred Stock and such Qualified
Investments, until Technocom and such obligors or issuers are notified in
writing by the Collateral Agent or the applicable Trustee, as the case may be,
to discontinue making such payments to it; and such obligors and issuers shall
not be required to see to the application of said proceeds by the Trustees or
the Collateral Agent. All such payments shall be deposited by such Trustee or
the Collateral Agent into the Company Convertible Note Escrow Account (or the
Company Senior Note Escrow Account if the Company Convertible Note Escrow
Account Agreement has been terminated) and held as additional Collateral for the
Obligations. If at any time the Collateral Agent or a Trustee shall have
notified Technocom, the obligors of the Intercompany Notes constituting
Collateral or the issuers or other obligors of Qualified Investments
constituting Collateral to make all payments directly to the Collateral Agent
and if any at any time thereafter all Events of Default shall have been cured or
waived in accordance with the terms of the Convertible Note Indenture (or the
Senior Note Indenture if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged), the Collateral
Agent or a Trustee may notify such obligors to make all payments directly to the
Company or as the Company may otherwise direct.
12
<PAGE> 13
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted
to the Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indenture and the Senior Note Trustee pursuant to Article VI of the Senior Note
Indenture, the Company hereby appoints and constitutes the Collateral Agent and
the Trustees, whether acting separately or jointly, as the Company's
attorneys-in-fact to exercise all of the following powers upon and at any time
after the occurrence and during the continuance of an Event of Default: (i)
collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Company to the
Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Company, to execute and give receipt for any
certificate of ownership or any document constituting Collateral, to transfer
title to any item of Collateral, to sign the Company's name on all financing
statements (to the extent permitted by applicable law) or any other Convertible
Note Collateral Documents or other documents deemed necessary or appropriate by
the Collateral Agent to preserve, protect or perfect the Liens in the Collateral
and to file the same, to prepare, file and sign the Company's name on any notice
of Lien, and to prepare, file and sign the Company's name on a proof of claim in
bankruptcy or similar document against any customer of, or person obligated upon
any Collateral to, the Company, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Security
Agreement. This power of attorney is coupled with an interest in the Trustees
and in the Collateral Agent as agent on behalf of the Trustees and is
irrevocable by the Company.
SECTION 9. COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Company
fails to perform any covenant or agreement contained herein, the Collateral
Agent or either Trustee may, but shall not be obligated to, itself perform, or
cause performance of, such covenant or agreement, and the reasonable expenses of
the Collateral Agent or the Trustees incurred in connection therewith shall be
payable by the Company under Section 17(p) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustees in connection therewith. Each of the Collateral Agent and the Trustees
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent or such Trustee
accords similar property in similar situations, it being understood that the
Collateral Agent and the Trustees shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee
13
<PAGE> 14
has or is deemed to have knowledge of such matters, (ii) taking any necessary
steps to preserve rights against any parties with respect to any Collateral, or
(iii) inquiring into or verifying that the Company has complied or will comply
with its duty to furnish additional items of Collateral to the Collateral Agent
and/or the Trustees pursuant to Section 6(d) hereof. Absent knowledge to the
contrary, the Collateral Agent and the Trustees may assume that the items of
Collateral actually delivered to it are all items required to be so delivered
and may assume that no other such items need be so delivered.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Company
represents to the Collateral Agent, the Convertible Note Trustee and the Holders
of the Convertible Notes, and the Senior Note Trustee and the Holders of the
Senior Notes that the Company has made its own arrangements for keeping informed
of changes or potential changes affecting the Collateral (including, but not
limited to, rights to convert, rights to subscribe, payment of dividends,
payments of interest and/or principal, reorganization or other exchanges, tender
offers and voting rights), and the Company agrees that the Collateral Agent, the
Convertible Note Trustee and the Holders of the Convertible Notes, and the
Senior Note Trustee and the Holders of the Senior Notes shall have no
responsibility or liability for informing the Company of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereof. Except as not prohibited by the Convertible Note Indenture or,
if the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged, the Senior Note Indenture, the
Company covenants that it will not, without the prior written consent of the
applicable Trustee, vote to enable, or take any other action to permit,
Technocom to issue any Capital Stock or other securities or to sell or otherwise
dispose of, or grant any option with respect to, any of the Collateral or create
or permit to exist any Lien upon or with respect to any of the Collateral,
except for Liens permitted by Section 4.11 of the Senior Note Indenture,
Permitted Liens, and the Liens granted under this Agreement and the other
Convertible Note Collateral Documents. The Company will defend the right, title
and interest of the Collateral Agent, the Convertible Note Trustee and the
Holders of the Convertible Notes, and the Senior Note Trustee and the Holders of
the Senior Notes in and to the Collateral against the claims and demands of all
persons.
14
<PAGE> 15
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, subject to the provisions of the Convertible
Note Indenture or of the Senior Note Indenture if the Convertible Notes are no
longer outstanding and the Convertible Note Indenture has been satisfied and
discharged, this Agreement, and the Collateral Agent's and the Trustee's
compliance with any requirements of law (including, without limitation, the
applicable Uniform Commercial Code and the Personal Property Security Act
(Ontario)) applicable to the action to be taken, without notice to or demand
upon the Company except as required by the Convertible Note Indenture, the
Senior Note Indenture, this Agreement or applicable law, do any one or more of
the following:
(i) exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code and the Personal Property Security
Act (Ontario), specifically including, without limitation, the right to recover
the reasonable fees and expenses incurred by the Collateral Agent or the
Trustees in the enforcement of this Security Agreement or in connection with the
Company's redemption of the Collateral, including reasonable fees, expenses and
disbursements of attorneys, paralegals and agents;
(ii) at its option, transfer or register, and the Company
shall register or cause to be registered upon request therefor by the Collateral
Agent or the Trustees, the Collateral or any part thereof on the books of the
Restricted Subsidiaries to which an intercompany loan evidenced by an
Intercompany Note has been made, the Issuers or the Persons in whom Qualified
Investments are made, into the name of the Collateral Agent or the Collateral
Agent's nominee(s);
(iii) personally, or by agents or attorneys, immediately
retake possession of the Collateral, or any part thereof, from the Company or
any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Company's
premises where any of the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of the Company;
(iv) sell, assign or otherwise liquidate, or direct the
Company to sell, assign or otherwise liquidate, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation;
(v) require the Company to assemble the Collateral or any part
thereof and make it available at one or more places as the Collateral Agent or
the Trustees may designate and to deliver possession of the Collateral or any
part thereof to the Collateral Agent or the Trustees;
15
<PAGE> 16
(vi) use, in connection with any assembly, use or disposition
of the Collateral, any intellectual property, intangibles or other technical
knowledge or process used or utilized from time to time by the Company;
(vii) sell or cause the same to be sold at any broker's board
or at public or private sale, in one or more sales or lots, at such price or
prices as the Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit; and the purchaser of any or
all Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;
(viii) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may have,
and any repossession or retaking or sale of the Collateral pursuant to the terms
hereof shall not operate to release the Company until full and final payment of
any deficiency has been made in cash;
(ix) in connection with any public or private sale under the
applicable Uniform Commercial Code, the Personal Property Security Act (Ontario)
or other applicable legislation, the Collateral Agent shall give the Company at
least fifteen (15) Business Days' prior written notice of the time and place of
any public sale of its Collateral or of the time after which any private sale or
other intended disposition thereof may be made, which shall be deemed to be
reasonable notice of such sale or other disposition. Such notice may be given to
the Company in accordance with the provisions of Section 17(a) hereof;
(x) proceed by an action or actions at law or in equity to
recover the Obligations or to foreclose this Security Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction;
(xi) exercise any other rights and remedies provided by
applicable law and the other Convertible Note Collateral Documents; and
(xii) if the Collateral Agent recovers possession of all or
any part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, the Collateral Agent may thereafter
retain, sell or otherwise dispose of such Collateral in accordance with this
Security Agreement or the applicable Uniform Commercial Code, the Personal
Property Security Act (Ontario) or other applicable legislation, and following
such retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Company hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Company further consents to the exoneration of any bond that the Collateral
Agent files in such action.
(b) If the Collateral Agent shall determine, or shall be directed
by the Convertible Note Trustee (or the Senior Note Trustee if the Convertible
Notes are no longer outstanding and
16
<PAGE> 17
the Convertible Note Indenture has been satisfied and discharged), to exercise
its right to sell any or all of the Technocom Preferred Stock or the Qualified
Investments constituting Collateral pursuant to Section 12(a) above, and if in
the opinion of counsel for the Collateral Agent it is necessary, or if in the
opinion of the Collateral Agent or such Trustee it is advisable, after such
consultation with investment bank(s), broker-dealer(s) or other experts selected
by them, as the Collateral Agent or such Trustee deems advisable or appropriate,
to have the Technocom Preferred Stock, Qualified Investments constituting
Collateral or other securities constituting Collateral or that portion thereof
to be sold, registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Company will (i) use its best efforts to
cause Technocom or other issuer or obligor to execute and deliver, and to cause
such Person's directors and officers to execute and deliver, all at the
Company's own expense, all such instruments and documents, and to do or cause to
be done all such other acts and things as may be necessary or, in the opinion of
the Collateral Agent or such Trustee, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them, as the Collateral
Agent or such Trustee deems advisable or appropriate, advisable to register such
Technocom Preferred Stock, Qualified Investments constituting Collateral or
other securities constituting Collateral under the provisions of the Securities
Act, (ii) use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of 180 days
from the date of the first public offering of such Technocom Preferred Shares or
Qualified Investments or other securities constituting Collateral, or that
portion thereof to be sold and (iii) make all amendments thereto and/or to the
related prospectus that are necessary, in the opinion of the Collateral Agent or
such Trustee, are advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Company agrees to use its best efforts to
cause Technocom or other issuer or obligor to comply with the provisions of the
securities or "Blue Sky" laws of any jurisdiction that the Collateral Agent or
the Convertible Note Trustee (or the Senior Note Trustee if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged) shall designate for the sale of such Technocom
Preferred Stock or Qualified Investments and to make available to the security
holders of Technocom or such issuer or obligor, as the case may be, as soon as
practicable, an earnings statement (which need not be audited) that will satisfy
the provisions of Section 11(a) of the Securities Act. The Company will cause
Technocom or other issuer or obligor, as the case may be, to furnish to the
Collateral Agent and the Trustees such number of copies as the Collateral Agent
and the Trustees may reasonably request of each preliminary prospectuses and
prospectuses, to notify promptly the Collateral Agent and the Trustees of the
happening of any event as a result of which any then effective prospectus
includes an untrue statement of any material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of then existing circumstances and cause the
Collateral Agent and the Trustees to be furnished with such number of copies as
the Collateral Agent or the Trustees may request of such supplement to or
amendment of such prospectus as is necessary to eliminate such untrue statement
or supply such omission. The Company will cause Technocom or such other issuer
or obligor, as the case may be, to the extent permitted by law, to indemnify,
defend and hold harmless the Collateral Agent, the Convertible Note Trustee and
the Holders of the Convertible Notes, and the Senior Note Trustee and the
Holders of the Senior Notes from and
17
<PAGE> 18
against all losses, liabilities, expenses or claims (including reasonable costs
of investigation) that the Collateral Agent, the Convertible Note Trustee and
the Holders of the Convertible Notes, and the Senior Note Trustee and the
Holders of the Senior Notes may incur under the Securities Act or otherwise,
insofar as such losses, liabilities, expenses or claims arise out of or are
based upon any alleged untrue statement of a material fact contained in such
registration statement (or any amendment thereto) or in any preliminary
prospectus or prospectus (or any amendment or supplement thereto), or arise out
of or are based upon any alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except to the extent that any such losses, liabilities, expenses or claims arise
solely out of or are based solely upon any such alleged untrue statement made or
such alleged omission to state a material fact included or excluded on the
written direction of the Collateral Agent or the Convertible Note Trustee. The
Company will bear, or will cause Technocom or such other issuer or obligor, as
the case may be, to bear, all costs and expenses of carrying out its or their
obligations hereunder. The provisions of this Section 12(b) shall in no way
impose upon either Trustee or the Collateral Agent any duty to execute any
Registration Statement under the Securities Act with respect to the Technocom
Preferred Stock or any Qualified Investment.
(c) In view of the fact that federal, state and foreign securities
laws may impose certain restrictions on the method by which a sale of the
Collateral may be effected after an Event of Default, the Company agrees that
upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may cause, from time to time, the sale of all or any part of
the Collateral by means of a private placement, restricting the prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, the Collateral Agent may
solicit, or may cause an investment manager to solicit, offers to buy the
Collateral, or any part of it, for cash, from a limited number of investors who
might be interested in purchasing the Collateral. The Company acknowledges and
agrees that any such private sale may result in prices and terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Collateral for the period of time
necessary to permit the Company to cause Technocom or other such issuer or
obligor to register such securities for public sale under the Securities Act, or
under applicable state or foreign securities laws, even if the Company could
cause Technocom or such other issuer or obligor, as the case may be, to do so.
(d) The Company further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Section 12 valid
and binding and in compliance with any and all other applicable requirements of
applicable law. The Company further agrees that a breach of any of the covenants
contained in this Section 12 will cause irreparable injury to the Convertible
Note Trustee and the Holders of the Convertible Notes, and the Senior Note
Trustee and the Holders of the Senior Notes, that the Collateral Agent, the
Convertible Note Trustee and the Holders of the Convertible Notes, and the
Senior Note Trustee and the Holders of the Senior Notes, have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
18
<PAGE> 19
covenant contained in this Section 12 shall be specifically enforceable against
the Company, and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing.
(e) Any cash held by the Collateral Agent as Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of such sale,
including, without limitation, reasonable expenses of the
Collateral Agent and its agents including the fees and expenses of
its counsel, and all expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith or
pursuant to Section 17(p) hereof;
Next, to the Convertible Note Trustee for the payment in full
of all amounts due under Section 7.7 of the Convertible Note
Indenture;
Next, to the Convertible Note Trustee, for distribution to the
Holders of the Convertible Notes, for the payment in full of the
remaining Convertible Note Obligations;
Next, to the Senior Note Trustee for the payment of all
amounts due under Section 7.7 of the Senior Note Indenture;
Next, to the Senior Note Trustee, for the distribution to the
Holders of the Senior Notes for the payment in full of the
remaining Senior Note Obligations; and
Finally, after payment in full of all of the Obligations, to
the payment to the Company, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same as a court
of competent jurisdiction may direct.
(f) If any sale or other disposition of Collateral by the
Collateral Agent or any other action of the Collateral Agent or the Trustees
hereunder results in reduction of the Obligations, such action will not release
the Company from its liability for any unpaid Obligations, including costs,
charges and expenses incurred in the liquidation of Collateral, together with
interest thereon, and the same shall be immediately due and payable to the
Collateral Agent, the Convertible Note Trustee and the Holders of the
Convertible Notes as provided for in the Convertible Note Indenture, or if
applicable, the Senior Note Trustee and the Holders of the Senior Notes as
provided for in the Senior Note Indenture.
(g) The Collateral Agent may enforce its rights hereunder without
prior judicial process or judicial hearing, and to the extent permitted by law
the Company expressly waives
19
<PAGE> 20
any and all legal rights which might otherwise require the Collateral Agent to
enforce its right by judicial process.
(h) The existence and/or exercise of any or all of the rights and
remedies given to the Collateral Agent and/or either Trustee under this Section
12 shall be subject in all cases to compliance with any mandatory requirements
of applicable law, particularly the laws of jurisdictions other than the United
States.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO TECHNOCOM.
The Company hereby authorizes and instructs Technocom or other applicable issuer
or obligor to comply with any instructions received by it or such other issuer
or obligor, as the case may be, from the Collateral Agent or the Convertible
Note Trustee (or the Senior Note Trustee if the Convertible Notes are no longer
outstanding and the Convertible Note Indenture has been satisfied and
discharged) that (i) states that an Event of Default has occurred and (ii) is
otherwise in accordance with the terms of this Security Agreement, without any
other or further instructions from the Company, and the Company agrees that
Technocom and the other applicable issuers and obligors shall be fully protected
in so complying.
SECTION 14. ESCROW ACCOUNTS. All money received by the Company and
required to be deposited in the Company Convertible Note Escrow Account, or the
Company Senior Note Escrow Account if the Company Convertible Note Escrow
Account Agreement has been terminated, shall be promptly and without commingling
remitted to the Collateral Agent or the Convertible Note Trustee (or the Senior
Note Trustee if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged) for deposit
therein. Amounts held in the Company Convertible Note Escrow Account shall be
applied or disposed of only in a manner not prohibited by the Convertible Note
Indenture.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Convertible Note Trustee and the Holders of the Convertible Notes,
and the Senior Note Trustee and the Holders of the Senior Notes and the Liens or
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Convertible Note
Indenture, any Convertible Note Collateral Document, any Convertible Note
Guarantee, the Senior Note Indenture, any Senior Note Collateral Document, any
Senior Note Guarantee or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any department from the Convertible Note Indenture
or the Convertible Note Collateral Documents or from the Senior Note Indenture
or the Senior Note Collateral Documents;
(c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral, or any release or amendment or waiver of or consent to
departure from any
20
<PAGE> 21
Convertible Note Guarantee, any Senior Note Guarantee or other guarantee, for
all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Obligations or of this Security Agreement.
SECTION 16. WAIVERS.
(a) Except as may be required under the provisions of the
Convertible Note Indenture or of the Senior Note Indenture if the Convertible
Notes are no longer outstanding and the Convertible Note Indenture has been
satisfied and discharged, and to the fullest extent permitted under applicable
law, neither the Collateral Agent nor the Convertible Note Trustee (or the
Senior Note Trustee if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged) shall be under any
duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps reasonably necessary to
preserve any rights against any Obligor or other Person. The Company waives to
the fullest extent permitted under applicable law any right of marshalling in
respect of any and all Collateral, and waives to the fullest extent permitted
under applicable law any right to require the Collateral Agent or the applicable
Trustee to proceed against any Obligor or other Person, exhaust any Collateral
or enforce any other remedy which the Collateral Agent or the applicable Trustee
now has or may hereafter have against any Obligor or other Person.
(b) The Company waives to the fullest extent permitted under
applicable law (i) any and all notices of acceptance, creation, modification,
rearrangement, renewal or extension for any period of any instrument executed by
any obligor in connection with the Obligations and (ii) any defense of any
Obligor by reason of disability, lack of authorization, cessation of the
liability of any Obligor or for any other reason. The Company authorizes the
Collateral Agent to the fullest extent permitted under applicable law, without
notice or demand and without any reservation of rights against the Company and
without affecting the Company's liability hereunder or on the Obligations, from
time to time to (w) take and hold other Property, other than the Collateral, as
security for the Obligations, and exchange, enforce, waive and release any or
all of the Collateral, (x) after the occurrence and during the continuance of an
Event of Default and the acceleration of the Convertible Notes, apply the
Collateral in the manner permitted by this Security Agreement or the Convertible
Note Indenture, (y) after the occurrence and during the continuance of an Event
of Default and the acceleration of the Senior Notes if the Convertible Notes are
no longer outstanding and the Convertible Note Indenture has been satisfied and
discharged, apply the Collateral in the manner permitted by this Security
Agreement or the Senior Note Indenture and (z) after the occurrence and during
the continuance of an Event of Default renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or release the
obligations of any obligor on, or any instrument or agreement of such other
Person with respect to any or all of, the Collateral.
21
<PAGE> 22
SECTION 17. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Company at its address as set forth in Section
15.2 of the Convertible Note Indenture and Section 13.2 of the Senior Note
Indenture and the Convertible Note Trustee at its address, as set forth in
Section 15.2 of the Convertible Note Indenture, to the Senior Note Trustee at
its address as set forth in Section 13.2 of the Senior Note Indenture and to the
Collateral Agent at The Bank of New York, 101 Barclay Street, Floor 21 West, New
York, New York 10286.
(b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Convertible Note Indenture or the Senior Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Convertible Note
Trustee for deposit in the Company Convertible Note Escrow Account or to the
Collateral Agent or the Senior Note Trustee for deposit in the Company Senior
Note Escrow Account if the Company Convertible Note Escrow Account Agreement has
been terminated.
(c) No Adverse Interpretation of Other Agreements. This Security
Agreement may not be used to interpret another pledge, security or debt
agreement of the Company or any Subsidiary of the Company. No such pledge,
security or debt agreement may be used to interpret this Security Agreement.
(d) Severability. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(e) Headings. The headings in this Security Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
(f) Counterpart Originals. This Security Agreement may be signed in
two or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
(g) Benefits of Security Agreement. Nothing in this Security
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Holders of the Convertible Notes
and the Convertible Note Guarantors and the Holders of the Senior Notes and the
Senior Note Guarantors, any benefit or any legal or equitable right, remedy or
claim under this Security Agreement.
22
<PAGE> 23
(h) Amendments, Waivers and Consents. Any amendment or waiver of
any provision of this Security Agreement and any consent to any departure by the
Company from any provision of this Security Agreement shall be effective only if
made or given in compliance with all of the terms and provisions of the
Convertible Note Indenture and the Senior Note Indenture and neither the
Collateral Agent or the Convertible Note Trustee nor any Holder of any
Convertible Note or the Senior Note Trustee or any Holder of any Senior Note
shall be deemed, by any act, delay, indulgence, omission or otherwise, to have
waived any right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and conditions hereof.
Failure of the Collateral Agent or the Trustees to exercise, or delay in
exercising, any right, power or privilege hereunder shall not operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent, the
Convertible Note Trustee or any Holder of any Convertible Note or the Senior
Note Trustee or any Holder of any Senior Note of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that
the Collateral Agent, either Trustee or any such Holder would otherwise have on
any future occasion. The right and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
(i) Interpretation of Security Agreement. All terms not defined
herein or in the Convertible Note Indenture shall have the meaning set forth in
the applicable Uniform Commercial Code of the State of New York, except where
the context otherwise requires. To the extent a term or provision of this
Security Agreement conflicts with the Convertible Note Indenture, the
Convertible Note Indenture shall control with respect to the subject matter of
such term or provision. Acceptance of or acquiescence in a course of performance
rendered under this Security Agreement shall not be relevant in determining the
meaning of this Security Agreement even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
(j) Continuing Security Interest; Transfer of Collateral. This
Security Agreement shall create a continuing Lien and security interest in the
Collateral and shall (i) unless otherwise provided in the Convertible Note
Indenture, the Senior Note Indenture or this Security Agreement, remain in full
force and effect until payment in full of (A) the Convertible Notes under the
terms of the Convertible Note Indenture, (B) all Obligations then due and owing
under the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, (C) the Senior Notes under the terms of
the Senior Note Indenture and (D) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents; provided, however, that after receipt from the Company by the
Collateral Agent of a request for a release of any Collateral permitted under
the Convertible Note Indenture and the Senior Note Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Convertible Note Indenture and the Senior Note Indenture and
(upon receipt by the Collateral Agent of all proceeds of such sale, transfer,
assignment, exchange or other disposition required to be remitted to the
Collateral Agent or the Convertible Note Trustee (or the Senior Note Trustee if
the
23
<PAGE> 24
Convertible Notes are no longer outstanding and the Convertible Note Indenture
has been satisfied and discharged) and any such Collateral constituting the
proceeds of such sale, transfer, assignment, exchange or other disposition being
made subject to a Lien and security interest in favor of the Collateral Agent
for the benefit of the Senior Note Trustee and the equal and ratable benefit of
the Holders of the Senior Notes and for the benefit of the Convertible Note
Trustee and the equal and ratable benefit of the Holders of the Convertible
Notes, which Lien has the same priority as had the Lien on such Collateral being
sold, assigned or otherwise disposed of, such Collateral shall be released from
the Lien and security interest created hereunder and no longer constitute
Collateral. Upon the payment in full of (A) the Convertible Notes under the
terms of the Convertible Note Indenture, (B) all Obligations then due and owing
under the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, (C) the Senior Notes under the terms of
the Senior Note Indenture and (D) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, the Company shall be entitled to the return, upon its request and at
its expense, of such of the Collateral pledged by it as shall not have been sold
or otherwise applied pursuant to the terms hereof. This Security Agreement shall
be binding upon the Company, its successors and assigns, and inure, together
with the rights and remedies of the Trustees hereunder, to the benefit of the
Collateral Agent, the Convertible Note Trustee and the Holders of the
Convertible Notes, and the Senior Note Trustee and the Holders of the Senior
Notes and their respective successors, transferees and assigns.
(k) Reinstatement. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Convertible Note Trustee or any Holder of
a Convertible Note or the Senior Note Trustee or any Holder of a Senior Note in
respect of the Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent, the Convertible Note Trustee or any Holder of
a Convertible Note or the Senior Note Trustee or any Holder of a Senior Note
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization or
the Company or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Company or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Company
or any substantial part of its assets, or otherwise, all as though such payments
had not been made.
(l) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Security Agreement, and shall terminate only upon the full and
final payment and performance by the Company of the Obligations.
(m) Authority of Collateral Agent and Trustees. Both the Collateral
Agent and the Trustees shall have and be entitled to exercise all powers
hereunder that are specifically granted to the Collateral Agent and the Trustees
by the terms hereof, together with such powers as are reasonably incident
thereto. The Collateral Agent and the Trustees may perform any of their
respective duties hereunder or in connection with the Collateral by or through
agents or employees and shall be entitled to retain counsel and to act in
reliance upon the advice of
24
<PAGE> 25
counsel concerning all such matters. None of the Collateral Agent, any director,
officer, any attorney or agent of the Collateral Agent, the Convertible Note
Trustee, any director, officer, employee, attorney or agent of the Convertible
Note Trustee, the Holders of the Convertible Notes, the Senior Note Trustee, any
director, officer, employee, attorney or agent of the Senior Note Trustee and
the Holders of the Senior Notes shall be liable to the Company for any action
taken or omitted to be taken by it or them hereunder, except for its or their
own negligence or willful misconduct, nor shall the Collateral Agent or the
Trustees be responsible for the validity, effectiveness or sufficiency hereof or
of any document or security furnished pursuant hereto. The Collateral Agent and
its directors, officers, employees, attorneys and agents, the Convertible Note
Trustee and its directors, officers, employees, attorneys and agents and the
Senior Note Trustee and its directors, officers, employees, attorneys and agents
shall be entitled to rely on any communication, instrument or document believed
by it or them to be genuine and correct and to have been signed or sent by the
proper person or persons. Neither the Collateral Agent nor the Trustees shall be
required to, and shall not, expend or risk any of its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.
The Company acknowledges that the rights and responsibilities
of the Collateral Agent and/or the Trustees under this Security Agreement with
respect to any action taken by the Collateral Agent and/or the Trustees or the
exercise or non-exercise by the Collateral Agent and/or the Trustees of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as among the
Collateral Agent and/or the Convertible Note Trustee and the Holders of the
Convertible Notes and/or the Senior Note Trustee and the Holders of the Senior
Notes, be governed by the Convertible Note Indenture or the Senior Note
Indenture, as applicable, and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Collateral Agent
and/or the Trustees and the Company, the Collateral Agent and/or the Trustees
shall be conclusively presumed to be acting as agent for the Holders of the
Convertible Notes or the Holders of the Senior Notes, as the case may be, with
full and valid authority so to act or refrain from acting, and the Company shall
not be obligated or entitled to make any inquiry respecting such authority.
In any case in which the Collateral Agent shall be required or
permitted to make any determination as to the extent to which the security
interest or Liens under their Security Agreement secures any obligations, the
Collateral Agent is authorized, without any direction from, or requirement for
consent of or authorization by, the Convertible Note Trustee (or the Senior Note
Trustee if the Convertible Notes are no longer outstanding and the Convertible
Note Indenture has been satisfied and discharged), to institute proceedings in a
court of competent jurisdiction for the obtaining of any authoritative
determination of such matter. If the Collateral Agent institutes any such
proceeding, it shall give prompt written notice thereof to the Trustees and
shall afford each of them the opportunity to participate in such proceeding.
(n) Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that they will not render this
Security Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.
25
<PAGE> 26
(o) Release; Termination of Security Agreement.
(i) Subject to the provisions of Section 17(k) hereof, this
Security Agreement shall terminate upon payment in full of (A) the Convertible
Notes under the terms of the Convertible Note Indenture, (B) all Obligations
then due and owing under the Convertible Note Indenture, the Convertible Note
Guarantees and the Convertible Note Collateral Documents, (C) the Senior Notes
under the terms of the Senior Note Indenture and (D) all Obligations then due
and owing under the Senior Note Indenture, the Senior Note Guarantees and the
Senior Note Collateral Documents, except that the provisions of Section 17(p)
hereof shall survive.
(ii) The Company agrees that it will not sell or dispose of
any of the Collateral in violation of the Convertible Note Indenture or the
Senior Note Indenture; provided, however, that if the Company shall sell or
otherwise dispose of any of the Collateral in accordance with the terms of the
Convertible Note Indenture and/or the Senior Note Indenture, the Collateral
Agent shall, and the Trustees shall cause, at the request of the Company,
release or cause to be released the Collateral subject to such sale or
disposition free and clear of the Liens and security interest under this
Security Agreement.
(iii) Upon any termination of this Security Agreement or
release of any Collateral as permitted by the Convertible Note Indenture (or the
Senior Note Indenture if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged), the Collateral
Agent and the Trustees will, at the expense of the Company, execute and deliver
to the Company such documents and take such other actions as the Company shall
reasonably request to evidence the termination of this Security Agreement or the
release of such Collateral, as the case may be. Any such action taken by the
Collateral Agent or the Trustees shall be without warranty by or recourse to the
Collateral Agent or the Trustees, except as to the absence of any prior
assignments by the Collateral Agent or the Trustees of its interests in the
Collateral, and shall be at the expense of the Company. The Collateral Agent and
the Trustees may conclusively rely on any certificate delivered to it by the
Company stating that the execution of such documents and release of the
Collateral is in accordance with and permitted by the terms of this Security
Agreement and the Convertible Note Indenture (or the Senior Note Indenture if
the Convertible Notes are no longer outstanding and the Convertible Note
Indenture has been satisfied and discharged).
(p) Payment of Fees and Expenses and Indemnity. The Company will
upon demand pay to the Collateral Agent and the Trustees, without duplication,
the amount of any and all fees and expenses, including, without duplication, the
fees and disbursements of its counsel and of any experts and agents, that the
Collateral Agent and the Trustees may incur in connection with (i)
administration of this Security Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent and the Trustees hereunder or (iv) the failure by the Company
to perform or observe any of the provisions hereof. The Company shall be liable
for and shall reimburse and indemnify both Trustees and the Collateral Agent and
hold both Trustees and the Collateral Agent harmless from and against any
26
<PAGE> 27
and all claims, losses, liabilities, costs, damages or expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") arising from
or in connection with or related to this Agreement or being a Trustee or
Collateral Agent hereunder (including but not limited to Losses incurred by such
Trustee or Collateral Agent in connection with its successful defense, in whole
or in part, of any claim of negligence or willful misconduct on its part),
provided, however, that nothing contained herein shall require the Trustees and
the Collateral Agent to be indemnified for Losses caused by their respective
negligence or willful misconduct.
(q) Final Expression. This Security Agreement, together with the
Convertible Note Indenture, the Senior Note Indenture and any other agreement
executed in connection herewith or therewith, is intended by the parties as a
final expression of this Security Agreement and is intended as a complete and
exclusive statement of the terms and conditions hereof.
(r) Company Remain Liable. Anything herein to the contrary
notwithstanding, (a) the Company shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Company from any of its duties or obligations under the contracts
and agreements included in the Collateral and (c) the Collateral Agent and the
Trustees shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Security Agreement, nor
shall the Collateral Agent or the Trustees be obligated to perform any of the
obligations or duties of the Company thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
(s) Indentures. This Security Agreement is subject to the terms,
conditions and provisions of the Convertible Note Indenture or, if the
Convertible Notes are no longer outstanding and the Convertible Note Indenture
has been satisfied and discharged, of the Senior Note Indenture. When the
provisions of this Security Agreement are inconsistent with the provisions of
the Convertible Note Indenture, the provisions of the Convertible Note Indenture
shall prevail; and if the Convertible Notes are no longer outstanding and the
Convertible Note Indenture has been satisfied and discharged, when the
provisions of this Security Agreement are inconsistent with the provisions of
the Senior Note Indenture, the provisions of the Senior Note Indenture shall
prevail.
(t) Rights of Holders. No Holder of a Convertible Note or of a
Senior Note shall have any independent rights hereunder other than those rights
granted to individual Holders pursuant to Section 6.7 of the Convertible Note
Indenture or Section 6.7 of the Senior Note Indenture, as the case may be;
provided that nothing in this subsection (t) shall limit any rights granted to
the Convertible Note Trustee under the Convertible Notes, the Convertible Note
Indenture or the Convertible Note Collateral Documents or the Senior Note
Trustee under the Senior Notes, the Senior Note Indenture or the Senior Note
Collateral Documents.
27
<PAGE> 28
(u) No Personal Liability of Directors, Officers, Employees and
Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company or of any subsidiary of the Company,
as such, shall have any liability for any obligations of the Company under this
Security Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation.
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE COLLATERAL AGENT, THE CONVERTIBLE NOTE TRUSTEE AND THE
HOLDERS OF THE CONVERTIBLE NOTES AND THE SENIOR NOTE TRUSTEE AND THE HOLDERS OF
THE SENIOR NOTES IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN
ITS CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE CONVERTIBLE
NOTE TRUSTEE AND ANY HOLDERS OF CONVERTIBLE NOTES AND THE SENIOR NOTE TRUSTEE
AND ANY HOLDERS OF SENIOR NOTES, AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS
CAPACITY AS CONVERTIBLE NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS
OF CONVERTIBLE NOTES AND THE SENIOR NOTE TRUSTEE SHALL, IN ITS CAPACITY AS
SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF SENIOR NOTES,
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE TRUSTEES TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
COLLATERAL AGENT OR EITHER TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT
ANY COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE
COLLATERAL AGENT OR SUCH TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT OR SUCH TRUSTEE.
THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH EITHER TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
28
<PAGE> 29
(iii) TO, THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY,
THE COLLATERAL AGENT AND THE TRUSTEES EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SECURITY
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF THE COLLATERAL AGENT, THE
CONVERTIBLE NOTE TRUSTEE, ANY HOLDER OF A CONVERTIBLE NOTE, THE SENIOR NOTE
TRUSTEE AND ANY HOLDER OF A SENIOR NOTE SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS SECURITY
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE COLLATERAL AGENT, SUCH TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE
MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
COLLATERAL AGENT, THE CONVERTIBLE NOTE TRUSTEE OR SUCH HOLDER OF A CONVERTIBLE
NOTE OR THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE, AS THE CASE MAY
BE, CONSTITUTING NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE OR THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OF
ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE COMPANY WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE CONVERTIBLE NOTE
TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE OR THE SENIOR NOTE TRUSTEE OR ANY
HOLDER OF A SENIOR NOTE IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF THE COLLATERAL AGENT, THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE OR THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE, OR
TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY
OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT OR ANY
29
<PAGE> 30
OTHER AGREEMENT OR DOCUMENT AMONG THE COMPANY ON THE ONE HAND AND THE COLLATERAL
AGENT, THE CONVERTIBLE NOTE TRUSTEE AND/OR THE HOLDERS OF THE CONVERTIBLE NOTES
OR THE SENIOR NOTE TRUSTEE AND/OR ANY HOLDER OF A SENIOR NOTE ON THE OTHER HAND.
(w) Appointment of Collateral Agent. Pursuant to, and subject to
the provisions of, Section 7.12 of the Convertible Note Indenture and of Section
7.12 of the Senior Note Indenture, the Trustees hereby appoint the Collateral
Agent, and the Collateral Agent accepts appointment, as collateral agent under
the terms of this Security Agreement. The Collateral Agent may resign at any
time by giving written notice thereof to the Trustees and may be removed at any
time with or without cause by the Trustees acting together. Prior to the
effectiveness of any such resignation or removal, the Trustees acting together
shall have the right to appoint a successor Collateral Agent which shall be a
commercial bank organized or chartered under the laws of the United States of
America or any state thereof having combined capital and surplus of at least
$50,000,000. If no successor Collateral Agent shall have been so appointed by
the Trustees acting together, and shall have accepted such appointment within 30
days after the retiring Collateral Agent's giving of notice of resignation or a
Trustees' removal of the retiring Collateral Agent, then the retiring Collateral
Agent shall, prior to the effectiveness of its resignation or removal, on behalf
of the Senior Note Trustee, the Holders of the Senior Notes, the Convertible
Note Trustee and the Holders of the Convertible Notes, appoint a successor
Collateral Agent, which shall be a commercial bank organized under the laws of
the United States of America or any State thereof having a combined capital and
surplus of at least $50,000,000. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations
under this Security Agreement. After any retiring Collateral Agent's resignation
or removal hereunder as Collateral Agent, the provisions of this Security
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent under this Security Agreement. Any
corporation into which the Collateral Agent may be merged, or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Collateral Agent shall be a party, shall be Collateral Agent under
this Security Agreement without the execution or filing of any paper or any
further act on the part of the parties hereto.
[SIGNATURE PAGE FOLLOWS]
30
<PAGE> 31
IN WITNESS WHEREOF, the Company has caused this Security Agreement to
be duly executed and delivered as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ James Hatt
--------------------------------
Name: James Hatt
Title: Chairman
By its acceptance hereof, as of the day and year first above written,
the Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee
agree to be bound by the provisions hereof.
THE BANK OF NEW YORK, as Collateral Agent,
Senior Note Trustee and Convertible Note Trustee
By: /s/ Steven D. Torgeson
--------------------------------
Name: STEVEN D. TORGESON
Title: Assistant Treasurer
<PAGE> 32
SCHEDULE A
to Company
Convertible Note
Security and
Pledge Agreement
PLEDGED STOCK
1. 1000 shares of Preferred Stock of US $1 per share, of Technocom
Limited.
<PAGE> 33
SCHEDULE B
to Company
Convertible Note
Security and
Pledge Agreement
QUALIFIED INVESTMENTS
None.
<PAGE> 34
SCHEDULE C
to Company
Convertible Note
Security and
Pledge Agreement
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
See Schedule D.
<PAGE> 35
SCHEDULE D
to Company
Convertible Note
Security and
Pledge Agreement
LIENS ON EXISTING COLLATERAL
The consent of Mark Klabin is required for the pledge of Technocom Preferred
Stock, which consent has been obtained pursuant to Written Resolutions of the
Shareholders of Technocom Limited dated June 12, 1996.
<PAGE> 36
SCHEDULE E
to Company
Convertible Note
Security and
Pledge Agreement
FILINGS
1. UCC-1 financing statements filed with the Secretary of State of the
State of New York.
2. UCC-1 financing statements filed with the City Registers Office, New
York County, New York.
3. Financing statements filed in Ontario under the Personal Property
Security Act (Ontario).
4. The Agreement Accompanying Legal Mortgage of Shares dated June 12th,
1996 between Petersburg Long Distance Inc. and Bavalla Limited and
Share Transfer Form create, on their terms, a security interest upon
notation of such in the Technocom share register.
<PAGE> 37
SCHEDULE F
to Company
Convertible Note
Security and
Pledge Agreement
CHIEF EXECUTIVE OFFICES
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Canada M5H 1L3
CANADA
<PAGE> 38
SCHEDULE G
to Company
Convertible Note
Security and
Pledge Agreement
BUSINESS NAMES
1. Ventech Healthcare Corporation Inc.
2. NWE Capital Corp.
<PAGE> 39
SCHEDULE H
to Company
Convertible Note
Security and
Pledge Agreement
LOCATION OF COLLATERAL
The Company's chief executive offices (see Exhibit F).
<PAGE> 40
SCHEDULE I
to Company
Convertible Note
Security and
Pledge Agreement
FORM OF ADDITIONAL COLLATERAL AMENDMENT
This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Convertible Note Trustee and the equal and ratable benefit of the Holders of the
Convertible Notes and for the benefit of the Senior Note Trustee and the equal
and ratable benefit of the Holders of the Senior Notes, and grants to the
Convertible Note Trustee for its benefit and the equal and ratable benefit of
the Holders of the Convertible Notes and for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior Notes,
continuing Liens and security interest in all of its rights, title and interest
in the Collateral listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Company Security and Pledge Agreement, dated as of May
31, 1996, between the undersigned and The Bank of New York, as Convertible Note
Trustee, Senior Note Trustee and as Collateral Agent (the "Security Agreement");
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Security Agreement; and the Collateral
listed on this Additional Collateral Amendment shall be deemed to be part of the
Collateral, and shall become part of the Collateral and shall secure all
Obligations.
PETERSBURG LONG DISTANCE INC.
By:
Name:
Title:
<PAGE> 41
INTERCOMPANY NOTES:
<TABLE>
<S> <C> <C> <C> <C>
Description Name of Restricted Original
Item of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
</TABLE>
OTHER COLLATERAL:
<TABLE>
<S> <C> <C> <C>
Description of
Qualified Investment
or other Collateral Evidenced By Obligor Date
</TABLE>
<PAGE> 42
SCHEDULE J
to Company
Convertible Note
Security and
Pledge Agreement
RESTRICTIVE AGREEMENTS
1. Unanimous shareholder approval of Technocom is required to effect major
dispositions of assets of Technocom. Ordinary share transfers are
subject to approval of 75% of the shareholders and a right of first
refusal of the non-transferring shareholders, except for transfers to a
"holding company" (as defined therein), a subsidiary of a shareholder
or any subsidiary of such holding company.
2. Pursuant to the Subscription and Shareholder Agreement Relating to
Technocom Limited, the approval of Elite International Limited and
Plicom Limited is required before Technocom may make any distribution
or pay any dividend other than dividends payable to holders of
Technocom Preferred Stock.
3. The By-Laws of MTR-Sviaz require that, subject to certain procedures, a
majority of equity holders of the joint venture present at a meeting
must approve any transfer of equity interests in the joint venture.
4. The Teleport-TP charter and foundation agreement provide a right of
first refusal for the issuance of new shares and a right of first
refusal in the event of a transfer of shares.
<PAGE> 1
EXHIBIT 4.17
LEASING COMPANY SECURITY AND PLEDGE AGREEMENT
[PLD Asset Leasing Limited]
THIS LEASING COMPANY SECURITY AND PLEDGE AGREEMENT (the "Security
Agreement") is made and entered into as of May 31, 1996 by PLD Asset Leasing
Limited, a Cypriot corporation (the "Leasing Company"), in favor of THE BANK OF
NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Senior Note Trustee") under the Senior Note Indenture (as defined herein) for
the holders of the Senior Notes (as hereinafter defined), THE BANK OF NEW YORK,
a New York banking corporation, as trustee (in such capacity, the "Convertible
Note Trustee") under the Convertible Note Indenture (as defined herein) for the
holders of the Convertible Notes (as hereinafter defined) and THE BANK OF NEW
YORK as collateral agent (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, Petersburg Long Distance Inc., an Ontario corporation (the
"Company"), as issuer, the Senior Note Trustee, and NWE Capital (Cyprus)
Limited, a Cypriot corporation ("NWE Cyprus"), the Leasing Company, PLD Capital
Limited, a Cypriot corporation ("PLD Capital" and, together with the Leasing
Company, the "Leasing Companies"), Wireless Technology Corporations Limited, a
British Virgin Islands Company ("WTC"), and Baltic Communications Limited, a
Russian joint stock company of the closed type ("BCL"), as guarantors (the
"Senior Note Guarantors"), have entered into an indenture dated as of May 31,
1996 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Senior Note Indenture") pursuant to which the Company is
issuing $123,000,000 in aggregate principal amount at Stated Maturity of its 14%
Senior Discount Notes due 2004 (the "Senior Notes"); and
WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Convertible Note
Guarantors") have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture") pursuant to which the Company is issuing
$26,500,000 in aggregate principal amount of its 9% Convertible Subordinated
Notes due 2006 (the "Convertible Notes"): and
WHEREAS, to secure its obligations under the Senior Note Indenture, its
Senior Note Guarantee and the other Collateral Documents (as defined in the
Senior Note Indenture) (together with the Company's obligations under the Senior
Note Indenture and the Senior Note Collateral Documents and the Senior Note
Guarantors' obligations under the Senior Note Indenture, the guarantees
contained therein (the "Senior Note Guarantees") and the Senior Note Collateral
Documents, the "Senior Note Obligations") and to secure its obligations under
the Convertible Note Indenture and the Convertible Notes and the other
Convertible Note Collateral Documents (as defined in the Convertible Note
<PAGE> 2
Indenture) (together with the Convertible Note Guarantors obligations under the
Convertible Note Indenture, the guarantees contained therein (the "Convertible
Note Guarantees") and the Convertible Note Collateral Documents, the
"Convertible Note Obligations"), the Leasing Company has agreed (i) to grant to
the Collateral Agent for the benefit of the Senior Note Trustee and the equal
and ratable benefit of the Holders of the Senior Notes and for the benefit of
the Convertible Note Trustee and for the equal and ratable benefit of the
Holders of the Convertible Notes, Liens and security interests in and to the
Collateral (as defined herein) and (ii) to execute and deliver this Security
Agreement in order to secure the payment and performance by the Leasing Company
and the Guarantors of the Senior Note Obligations and the Convertible Note
Obligations (collectively, the "Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Senior Notes to purchase the Senior Notes and the Holders of
the Convertible Notes to purchase the Convertible Notes, the Leasing Company
hereby agrees with the Collateral Agent, with the Senior Note Trustee for its
benefit and the equal and ratable benefit of the Holders of the Senior Notes and
for the Convertible Note Trustee for its benefit and the equal and ratable
benefit of the Holders of the Convertible Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Senior Note
Indenture. In addition to any other defined terms used herein, the following
terms shall constitute defined terms for the purposes of this Security
Agreement:
"Default" means a "Default" as defined in Section 1.1 of the
Senior Note Indenture until the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged, in
which case a "Default" means a "Default" as defined in Section 1.1 of
the Convertible Note Indenture.
"Permitted Liens" means "Permitted Liens" as defined in
Section 1.1 of the Senior Note Indenture until the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case "Permittee Liens" means "Permitted Liens" as
defined in Section 1.1 of the Convertible Note Indenture.
"Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Senior Note Indenture until the Senior Notes are no
longer outstanding and the Senior Note Indenture and the Senior Note
Collateral Documents have been satisfied, discharged and released, in
which case "Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Convertible Note Indenture.
2
<PAGE> 3
"Trustees" means, collectively, the Senior Note Trustee and the
Convertible Note Trustee.
SECTION 2. CREATION OF SECURITY INTEREST. The Leasing Company hereby
grants to the Collateral Agent for the benefit of the Senior Note Trustee and
for the equal and ratable benefit of the Holders of the Senior Notes and for the
benefit of the Convertible Note Trustee and for the equal and ratable benefit of
the Holders of the Convertible Notes, Liens and a continuing security interest
in and to the collateral described in Section 3 hereof (the "Collateral") in
order to secure the payment and performance of all Obligations.
SECTION 3. COLLATERAL. The Collateral is:
(a) Qualified Investments. All Qualified Investments, whether
now or hereafter acquired by the Leasing Company, including those Qualified
Investments listed on Schedule A attached hereto (or substitutions, replacements
and proceeds thereof) but excluding any Qualified Investments made with the
dividends, distributions, payments and products and proceeds of Technocom
Preferred Stock (as defined in the Company Convertible Note Security Agreement)
and the funds and Eligible Cash Equivalents in the Company Convertible Note
Escrow Account (collectively, the "Excluded Qualified Investments"), and the
certificates, agreements, documents, notes, collateral documents and instruments
representing or relating to such Qualified Investments, all contract rights,
instruments, general intangibles and other obligations or other receivables of
any kind relating to such Qualified Investments, all Liens relating to or
securing such Qualified Investments and the related collateral documents which
grant such Liens and all products and proceeds of the Qualified Investments,
including, without limitation, all dividends, options, warrants, rights,
subscriptions, all interest and principal payments, and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Qualified Investments;
(b) Telecommunications Asset Leases. All Telecommunications
Asset Leases of the Leasing Company, whether now existing or hereinafter
acquired and entered into, including those Telecommunications Asset Leases
listed on Schedule B attached hereto, and all proceeds and products relating
thereto or therefrom, including all payments (including all time payments and
rental payments) and all other payments thereunder, all cash, property or
proceeds from time to time received, receivable or otherwise distributed or paid
in connection therewith, and all documents, documents of title, certificates of
title, letters of credit, letters of credit proceeds, collateral and liens
securing or relating to such Telecommunications Asset Leases and all books,
records, ledger sheets and files of the Leasing Company relating to any of the
foregoing;
(c) Asset Sale Proceeds of Telecommunications Assets. All
proceeds or products of an Asset Sale of Telecommunications Assets subject to a
Telecommunications
3
<PAGE> 4
Asset Lease, whether now existing or hereafter acquired, including all Cash
Proceeds, Eligible Cash Equivalents, Investments and Property;
(d) Leasing Company Escrow Account. The Leasing Company Escrow
Account and all funds contained therein and all Investments made by the Escrow
Agent (as defined in the Leasing Company Escrow Account Agreement) therewith
(whether or not constituting Eligible Cash Equivalents) and all proceeds thereto
and including income therefrom;
(e) Intercompany Notes. All Intercompany Notes, whether
executed on the Issue Date or thereafter, from any Restricted Subsidiary,
excluding, however, any Intercompany Notes (or substitutes, replacements and
proceeds thereof, including the funds and Eligible Cash Equivalents in the
Company Convertible Note Escrow Account) evidencing loans or advances made by
the Leasing Company with dividends, distributions, payments and products or
proceeds of Technocom Preferred Stock or otherwise constituting Collateral under
the Company Convertible Note Security Agreement (as defined therein)
(collectively, the "Excluded Intercompany Notes"), all Liens securing such
Intercompany Notes and the related collateral documents, and the instruments
representing such Intercompany Notes, and, except as otherwise provided
elsewhere herein, all products and proceeds of such Intercompany Notes,
including, without limitation, all interest and principal payments, instruments,
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for such Intercompany Notes; and
(f) After-acquired Collateral and Proceeds. All items
described in this Section 3 (other than those items specifically excluded),
whether now owned or hereafter, at any time acquired by the Leasing Company and
wherever located, including (except as otherwise provided herein) all
replacements, additions, accessions, substitutions, repairs, proceeds and
products relating thereto or therefrom, and all documents, ledger sheets, files,
books and records of the Leasing Company relating thereto. Proceeds hereunder
include (i) whatever is now or hereafter received by the Leasing Company upon
the sale, exchange, collection or other disposition of any item of Collateral;
(ii) any property of the type or types described in subsections (a), (b), (c) or
(e) now or hereafter acquired by the Leasing Company with any proceeds of
Collateral hereunder; and (iii) any payments under any insurance or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Leasing Company, but subject to its compliance with the
requirements
4
<PAGE> 5
of applicable law, to transfer to or to register in the name of the Collateral
Agent or any of its nominees any or all of the Collateral. In addition, upon the
occurrence and during the continuance of an Event of Default, but subject to its
compliance with the requirements of applicable law, the Collateral Agent shall
have the right at any time to exchange certificates or instruments representing
or evidencing Qualified Investments constituting Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Leasing Company hereby
represents and warrants to the Collateral Agent and the Trustees that, except as
specified in Schedule C attached hereto:
(a) Legal Power. The execution, delivery and performance by
the Leasing Company of this Security Agreement are within the Leasing Company's
legal powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with (except for any filings
provided for hereunder), any governmental authority, require no consent of any
other Person and do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the articles of incorporation or bylaws,
or comparable organizational documents of, the Leasing Company or of any
agreement (after giving effect to the use of proceeds of the issuance of the
Senior Notes), judgment, injunction, order, decree or other instrument binding
upon the Leasing Company or result in the creation or imposition of any Lien on
any asset of the Leasing Company (other than the Liens created by this Security
Agreement, the Leasing Company Escrow Account Agreement and the other Senior
Note Collateral Documents to which the Leasing Company is a party) and the Liens
created by the Convertible Note Indenture and the Convertible Note Collateral
Documents;
(b) Title to Collateral. The Leasing Company is the legal,
record and beneficial owner of the Collateral existing on the Issue Date (the
"Existing Collateral"), free and clear of any Lien or claims of any person
except for the Liens listed on Schedule D attached hereto and the Liens created
by this Security Agreement, the Leasing Company Escrow Account Agreement and any
of the other Senior Note Collateral Documents.
(c) Enforceability. This Security Agreement has been duly
executed and delivered by the Leasing Company and constitutes a legal, valid and
binding obligation of the Leasing Company, enforceable against the Leasing
Company in accordance with its terms, except as such enforceability may be
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or
general principles of equity and commercial reasonableness.
(d) Perfection; Priority. Upon the execution and delivery of
the Leasing Company Escrow Account Agreement, which is being done
contemporaneously with the execution and delivery of this Security Agreement,
the delivery to the Collateral Agent of the Collateral and the filing of the
Senior Note Collateral Documents relating to the Existing Collateral and the
documents listed on Schedule E attached hereto, to the extent
5
<PAGE> 6
such security interest is created under applicable federal and New York laws,
the security interest and Liens in the Collateral created pursuant to this
Security Agreement and the Leasing Company Escrow Account Agreement create a
valid and perfected first priority security interest, subject to the Liens
listed on Schedule D attached hereto in the Existing Collateral, securing the
payment of the Obligations for the benefit of the Senior Note Trustee and the
Holders of the Senior Notes and the Convertible Note Trustee and the Holders of
the Convertible Notes, and enforceable as such against all creditors of the
Leasing Company and any Persons purporting to purchase any of the Existing
Collateral from the Leasing Company other than as permitted by the Senior Note
Indenture; as of the date hereof (and after giving effect to the use of proceeds
of the issuance of the Senior Notes), there are no other security interests in
or Liens on the Existing Collateral or any portion thereof, and no financing
statement, pledge, notice of Lien, assignment or collateral assignment, mortgage
or deed of trust covering the Existing Collateral or any portion thereof ("Lien
Notice") exists or is on file in any public office, except with respect to Liens
listed on Schedule E attached hereto, the Liens created by this Security
Agreement and the other Senior Note Collateral Documents and any junior Liens on
Telecommunications Asset Leases or Qualified Investments constituting Collateral
securing Intercompany Notes evidencing loans or advances made by the Company to
the Leasing Company.
(e) Offices. The Leasing Company's chief executive offices are
located at the address shown as the chief executive office in Schedule F
attached hereto ("Chief Executive Office"), and the Leasing Company has no
places of business other than those set forth in such Schedule F, except as
permitted hereafter by Section 6(c) hereof.
(f) Business Names. The Leasing Company has not conducted its
businesses under any corporate, partnership or fictitious name during the five
(5) years preceding the date hereof, other than those names set forth on
Schedule G attached hereto.
(g) No Consents. No consent of any other person and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (i) for
the granting of the Liens by the Leasing Company on the Collateral pursuant to
this Security Agreement or for the execution, delivery or performance of this
Security Agreement by the Leasing Company (except for filings listed on Schedule
D attached hereto, the filings and/or other actions necessary to maintain the
perfection of the Liens on the Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case,as may be required in connection with any such
disposition by laws affecting the offering and sale of the Qualified Investments
constituting Collateral.
(h) Litigation. No litigation, investigation or proceeding of
or before any arbitrator or governmental authority is pending or, to the
knowledge of the Leasing
6
<PAGE> 7
Company, threatened by or against the Leasing Company with respect to this
Security Agreement or any of the transactions contemplated hereby.
(i) Accurate Information. As of the date hereof, all
information set forth herein relating to the Collateral is accurate and complete
in all respects.
SECTION 6. COVENANTS.
(a) Lien Notices. The Leasing Company will defend its interest
in the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein and the Leasing Company will not
permit any Lien Notices with respect to the Collateral or any portion thereof to
exist or be on file in any public office for more than 30 days after the Leasing
Company shall have notice thereof, except with respect to Permitted Liens or
Liens otherwise permitted by Section 4.11 of the Senior Note Indenture. The
Leasing Company will advise the Collateral Agent and the Trustees promptly, in
reasonable detail, at the addresses as specified in Section 17(a) of this
Agreement, of any Lien (other than Permitted Liens) on, or claim asserted
against, any of the Collateral.
(b) Location of Collateral. The Leasing Company will keep all
of its Collateral now held or subsequently acquired by it at the locations
specified on Schedule H hereto, or at locations hereafter established in
compliance with Section 6(c) hereof (except for Collateral held by the
Collateral Agent, a Trustee or the Escrow Agent), unless the Leasing Company
shall have given the Collateral Agent and the Trustees prior written notice
thereof and shall have in advance executed and caused to be filed and/or
delivered to the Collateral Agent and the Trustees any financing statements or
other documents required by the Trustees or the Collateral Agent in order to
perfect, protect and preserve the Liens and security interest created hereby,
all in form and substance satisfactory to the Collateral Agent and the Trustees.
(c) Location of Offices; Corporation Name; Legal Structure.
The Leasing Company will not change the location of its chief executive office
or establish any place of business other than those set forth on Schedule F
attached hereto, or voluntarily or involuntarily change its name, identity or
legal structure, including without limitation any continuance, amalgamation,
merger, consolidation or sale of substantially all of its assets, unless the
Leasing Company shall have given the Collateral Agent and the Trustees at least
30 days prior written notice thereof and shall have in advance executed and
caused to be filed and or delivered to the Collateral Agent and the Trustees any
financing statements or other Senior Note Collateral Documents required by the
Collateral Agent and the Trustees in order to perfect, protect and preserve the
Liens and security interest created hereby, all in form and substance
satisfactory to the Trustees and the Collateral Agent.
(d) Additional Collateral; Further Assurances. The Leasing
Company agrees that immediately upon becoming the beneficial owner of any
additional Telecommunications Asset Leases and proceeds of Asset Sales of
Telecommunications
7
<PAGE> 8
Assets subject to a Telecommunications Asset Lease, any Qualified Investments
constituting Collateral or Intercompany Notes constituting Collateral, it will
pledge and deliver to the Collateral Agent for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior Notes and
for the benefit of the Convertible Note Trustee and the equal and ratable
benefit of the Holders of the Convertible Notes, the certificates, instruments
and documents representing such proceeds of Asset Sales of Telecommunications
Assets subject to a Telecommunications Asset Lease, such Qualified Investments
and such Intercompany Notes (as well as duly executed instruments of transfer or
assignment in blank), and grant to the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of the Holders of the Convertible Notes pursuant to
appropriate and necessary Senior Note Collateral Documents, a continuing first
priority security interest in and Liens on such proceeds of Telecommunications
Assets, such Qualified Investments or such Intercompany Notes, all in form and
substance satisfactory to the Collateral Agent and the Trustees. The Leasing
Company shall also promptly (and in any event within five (5) Business Days
after receipt thereof), subject to its compliance with the requirements of
applicable law, deliver to the Collateral Agent any other documents of title,
promissory notes, certificates or instruments representing Collateral which it
holds. The Leasing Company further agrees that it will promptly (and in any
event within 5 Business Days after such acquisition) deliver to the Collateral
Agent and the Trustees an amendment, duly executed by the Leasing Company, in
substantially the form of Schedule I hereto (an "Additional Collateral
Amendment"), with respect to the additional Collateral that is to be pledged
pursuant to this Security Agreement. The Leasing Company hereby authorizes the
Collateral Agent and the Trustees to attach each Additional Collateral Amendment
to this Security Agreement and agrees that any stock, notes or other forms of
Investment listed on any Additional Collateral Amendment delivered to the
Collateral Agent or the Trustees shall for all purposes hereunder be considered
Collateral. The Leasing Company will, promptly upon request by the Trustee, (i)
execute and deliver, cause to be executed and filed, or use its best efforts to
give any notices, in all appropriate jurisdictions (including Canada, Cyprus,
the Russian Federation and Kazakstan) or procure any financing statements,
assignments, pledges or other documents, all in form and substance satisfactory
to the Collateral Agent and the Trustee, (ii) mark any chattel paper
constituting Collateral, and deliver any certificates, chattel paper or
instruments constituting Collateral to the Collateral Agent or the Trustees,
(iii) execute and deliver or cause to be executed and delivered all stock
powers, proxies, assignments, instruments and other documents, all in form and
substance satisfactory to the Collateral Agent and the Trustee, and (iv) take
any other actions that are necessary or, in the reasonable opinion of the
Collateral Agent and the Trustees, desirable to perfect or continue the
perfection and the priority of the Collateral Agent's security interest and
Liens in the Collateral, to protect the Collateral against the rights, claims,
or interests of third Persons other than holders of Permitted Liens or Liens
otherwise permitted by Section 4.11 of the Senior Note Indenture or to effect
the purposes of this Security Agreement. The Leasing Company also hereby
authorizes the Collateral Agent to file any financing or
8
<PAGE> 9
continuation statements with respect to the Collateral without the signature of
the Leasing Company to the extent permitted by applicable law.
(e) Disposition of Collateral. The Leasing Company will not
sell, transfer, assign, pledge, collaterally assign, exchange or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or any Telecommunications Assets subject to a Telecommunications
Asset Lease except as permitted by the Senior Note Indenture and the Convertible
Note Indenture. If the proceeds of any sale of any Collateral are notes,
instruments, documents of title, standby letters of credit or chattel paper,
such proceeds shall be promptly delivered to the Collateral Agent to be held as
Collateral hereunder. If the Collateral, or any part thereof, is sold,
transferred, assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest and Liens of the Collateral Agent shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and the Leasing Company will hold the
proceeds thereof in an separate account for the benefit of the Senior Note
Trustee and for the equal and ratable benefit of the Holders of the Senior Notes
and the benefit of the Convertible Note Trustee and for the equal and ratable
benefit of the Holders of the Convertible Notes and transfer such proceeds to
the Collateral Agent or the applicable Trustee in kind to be held as Collateral
hereunder.
(f) Restrictive Agreements. The Leasing Company agrees that,
except for existing agreements set forth on Schedule J attached hereto, it will
not (i) enter into any agreement or understanding that purports to or may
restrict or inhibit the Collateral Agent's or the Trustees' rights or remedies
hereunder, including, without limitation, the Collateral Agent's or the
Trustees' right to sell or otherwise dispose of the Collateral or amend or
modify in any manner materially adverse to the Trustees the existing agreements
set forth as Schedule J attached hereto, (ii) permit any issuer to continue,
merge, amalgamate or consolidate, unless all outstanding Capital Stock owned by
the Leasing Company of the surviving corporation is, upon such continuation,
merger, amalgamation or consolidation, pledged hereunder to the Collateral Agent
or (iii) fail to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with regard to the Collateral.
(g) Rights of Collateral Agent and Trustees. Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent and the Trustees shall have the right at any time to make any payments and
do any other acts as the Collateral Agent or either Trustee may deem necessary
to protect the Liens and security interest of the Collateral Agent in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any Lien which, in the judgment of the Collateral Agent or such
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Leasing Company hereby
agrees to reimburse the Collateral Agent and the Trustees for all payments made
and expenses incurred under this Security Agreement including reasonable fees,
expenses and disbursements of attorneys and
9
<PAGE> 10
paralegals acting for the Trustees, including any of the foregoing payments
under or acts taken to perfect or protect its Liens and security interest in the
Collateral, which amounts shall be secured under this Security Agreement, and
agrees that it shall be bound by any payment made or act taken by the Collateral
Agent or the Trustees hereunder. Neither the Collateral Agent nor the Trustees
shall have any obligation to make any of the foregoing payments or perform any
of the foregoing acts.
(h) Records. The Leasing Company will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral.
(i) Access. On reasonable notice to the Leasing Company,
except at any time during the continuation of Default or an Event of Default,
both the Collateral Agent and the Trustees shall at all times have full and free
access during normal business hours to all the books, correspondence and records
of the Leasing Company relating to the Collateral, and the Collateral Agent and
its representatives, and the Trustees and their respective representatives, may
examine the same, take extracts therefrom and make photocopies thereof, and the
Leasing Company agrees to render to the Collateral Agent and/or the applicable
Trustee, at the Leasing Company's cost and expense, such clerical and other
assistance, at all times and in such manner as may be requested with regard
thereto. On reasonable notice to the Leasing Company, except at any time during
the continuation of a Default or an Event of Default, the Collateral Agent and
its representatives, and the Trustees and their respective representatives,
shall at all times also have the right to enter, during normal business hours,
into and upon any premises where any of the Collateral is located for the
purpose of inspecting the same, observing its use or otherwise protecting its
interests therein.
(j) Taxes. The Leasing Company shall pay all taxes,
assessments and government charges and all claims as and to the extent required
by Section 4.6 of each of the Senior Note Indenture and the Convertible Note
Indenture; provided that the Leasing Company shall in any event pay such taxes,
assessments or levies not later than five days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment with regard to any
Collateral of the Leasing Company entered or filed against the Leasing Company
as a result of the failure to make such payment.
(k) Demand Obligations. The Leasing Company agrees that it
will cause each of the Restricted Subsidiaries that is obligated on any
Intercompany Note constituting Collateral that constitutes a demand obligation,
within the meaning of Section 3-108 of the Uniform Commercial Code of the State
of New York, to execute and deliver to the Collateral Agent and/or the Trustees
a new instrument extending, renewing and replacing such demand obligation not
later than the second anniversary of the date of original issue thereon and on
each succeeding second anniversary thereof.
10
<PAGE> 11
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing, the Leasing Company shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Collateral, including amending,
modifying, supplementing or replacing any Telecommunications Asset Lease, or any
part thereof for any purpose not inconsistent with the terms of this Security
Agreement, the Senior Note Indenture or any other Senior Note Collateral
Document or the Convertible Note Indenture or any Convertible Note Collateral
Documents; provided that the Leasing Company shall not exercise or shall refrain
from exercising any such right if such action would be inconsistent with or
violate any provisions of this Security Agreement, the Senior Note Indenture or
any other Senior Note Collateral Document or the Convertible Note Indenture or
any Convertible Note Collateral Documents.
(b) All payments made from time to time on, or with respect to
Telecommunications Asset Leases, Intercompany Notes constituting Collateral or,
Qualified Investments (other than Excluded Qualified Investments) constituting
Collateral, whether lease payments and rents, interest or principal payments,
dividends, distributions or otherwise, shall be delivered to the applicable
Trustee for deposit in the Leasing Company Escrow Account or the Convertible
Note Escrow Account if the Company Senior Note Escrow Account Agreement has been
terminated.
(c) The Collateral Agent and/or the Senior Note Trustee (or
the Convertible Note Trustee if the Senior Notes are no longer outstanding and
the Senior Note Indenture has been satisfied and discharged) shall execute and
deliver (or cause to be executed and delivered) to the Leasing Company all such
proxies and other instruments as the Leasing Company may reasonably request for
the purpose of enabling the Leasing Company to exercise the voting and other
rights that it is entitled to exercise pursuant to Section 7(a) above.
(d) Upon the occurrence and during the continuance of an Event
of Default, (i) all rights of the Leasing Company to exercise the voting and
other consensual rights that it would otherwise be entitled to exercise pursuant
to Section 7(a) shall cease, and all such rights shall thereupon become vested
in the Collateral Agent on behalf of, or if necessary, directly in, the Senior
Note Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged),
which shall thereupon have the sole right to exercise such voting and other
consensual rights.
(e) Upon the occurrence and during the continuance of an Event
of Default, the Leasing Company shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent and/or the Senior Note Trustee
(or the Convertible Note Trustee if the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged) all such
proxies and other instruments as the Collateral Agent
11
<PAGE> 12
and/or the applicable Trustee may reasonably request for the purpose of enabling
the Collateral Agent and/or the applicable Trustee to exercise the voting and
other rights that it is entitled to exercise pursuant to Section 7(c) above.
(f) All lease payments and rents, all interest and principal
payments, all dividends and distributions and all other payments that are
received by the Leasing Company contrary to the provisions of this Section 7
shall be received in trust for the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, shall be segregated
from the other property or funds of the Leasing Company and be forthwith
delivered to the Collateral Agent as Collateral in the same form as so received
(with any necessary endorsements or other instruments of transfer or assignment
in blank), and all such payments shall be deposited in the Leasing Company
Escrow Account.
(g) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustees shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Leasing Company agrees and undertakes to do at the Leasing Company's
expense; provided that the Collateral Agent and the Trustees shall cooperate
with the Leasing Company and take all such action as the Leasing Company may
reasonably request to permit the Leasing Company to collect, protect or enforce
the Collateral. All reasonable expenses (including, without limitation,
attorneys' fees and legal expenses) actually incurred or paid by the Collateral
Agent and the Trustees in connection with or incident to any such collection or
attempt to collect, protect or enforce the Collateral shall be borne by the
Leasing Company or reimbursed by the Leasing Company to the Collateral Agent or
the applicable Trustee upon demand.
(h) At the Collateral Agent's or the applicable Trustee's
option, exercisable upon and during the continuance of any Event of Default,
either the Collateral Agent or the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) may notify the lessees and other
obligors under the Telecommunications Asset Leases, the issuers or other
obligors of the Intercompany Notes constituting Collateral, the issuers and the
obligors of the Qualified Investments constituting Collateral that any and all
payments and distributions to be made on such Telecommunications Asset Leases,
such Intercompany Notes and such Qualified Investments shall be made directly to
the Collateral Agent or the applicable Trustee, and the Leasing Company hereby
directs the obligors and lessees of such Telecommunications Asset Leases, the
obligors of such Intercompany Notes, the issuers or other obligors of such
Qualified Investments to pay and deliver over to the Collateral Agent or the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) all payments and distributions to be made on such Intercompany
Notes, and such Qualified Investments, until such obligors or issuers are
notified in writing by the applicable Trustee or the Collateral Agent to
discontinue making such payments to it; and such obligors and
12
<PAGE> 13
issuers shall not be required to see to the application of said proceeds by the
Trustee or the Collateral Agents. All such payments shall be deposited by such
Trustee or the Collateral Agent into the Leasing Company Escrow Account and held
as additional Collateral for the Obligations. If at any time the Collateral
Agent or a Trustee shall have notified such lessees, issuers and obligors to
make all payments directly to the Collateral Agent and if any at any time
thereafter all Events of Default shall thereafter have been cured or waived in
accordance with the terms of the Senior Note Indenture (or the Convertible Note
Indenture if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged), the Collateral Agent or a Trustee
may notify such lessees, issuers and obligors to make all such payments directly
to the Leasing Company or as the Leasing Company may otherwise direct.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted to the
Senior Note Trustee pursuant to Article VI of the Senior Note Indenture and the
Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indenture, the Leasing Company hereby appoints and constitutes the Collateral
Agent and the Trustees, whether acting separately or jointly, as the Leasing
Company's attorneys-in-fact to exercise all of the following powers upon and at
any time after the occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Leasing Company to
the Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Leasing Company, to execute and give receipt for
any certificate of ownership or any document constituting Collateral, to
transfer title to any item of Collateral, to sign the Leasing Company's name on
all financing statements (to the extent permitted by applicable law) or any
other Senior Note Collateral Documents or other documents deemed necessary or
appropriate by the Collateral Agent to preserve, protect or perfect the Liens in
the Collateral and to file the same, to prepare, file and sign the Leasing
Company's name on any notice of Lien, and to prepare, file and sign the Leasing
Company's name on a proof of claim in bankruptcy or similar document against any
customer of, or person obligated upon any Collateral to, the Leasing Company,
and to take any other actions arising from or incident to the powers granted to
the Collateral Agent in this Security Agreement. This power of attorney is
coupled with an interest in the Trustees and in the Collateral Agent as agent on
behalf of the Trustees and is irrevocable by the Leasing Company.
SECTION 9. COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Leasing
Company fails to perform any covenant or agreement contained herein, the
13
<PAGE> 14
Collateral Agent or either Trustee may, but shall not be obligated to, itself
perform, or cause performance of, such covenant or agreement, and the reasonable
expenses of the Collateral Agent or the Trustees incurred in connection
therewith shall be payable by the Leasing Company under Section 17(p) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustees in connection therewith. Each of the Collateral Agent and the Trustees
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent or such Trustee
accords similar property in similar situations, it being understood that the
Collateral Agent and the Trustees shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee has or is deemed to have knowledge of
such matters, (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (iii) inquiring into or verifying
that the Leasing Company has complied or will comply with its duty to furnish
additional items of Collateral to the Collateral Agent and/or the Trustees
pursuant to Section 6(d) hereof. Absent knowledge to the contrary, the
Collateral Agent and both Trustees may assume that the items of Collateral
actually delivered to it are all items required to be so delivered and may
assume that no other such items need be so delivered.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Leasing
Company represents to the Collateral Agent, the Senior Note Trustee and the
Holders of the Senior Notes, and the Convertible Note Trustee and the Holders of
the Convertible Notes that the Leasing Company has made its own arrangements for
keeping informed of changes or potential changes affecting the Collateral
(including, but not limited to, compliance with the covenants and the occurrence
of events of default under Telecommunications Asset Leases and the status of the
related leased Telecommunications Assets, rights to convert, rights to
subscribe, payment of dividends, payments of interest and/or principal,
reorganization or other exchanges, tender offers and voting rights), and the
Leasing Company agrees that the Collateral Agent, the Senior Note Trustee and
the Holders of the Senior Notes, and the Convertible Note Trustee and the
Holders of the Convertible Notes shall have no responsibility or liability for
informing the Leasing Company of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereof. The
Leasing Company will defend the right, title and interest of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes in and to the
Collateral against the claims and demands of all persons.
14
<PAGE> 15
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, subject to the provisions of the Senior Note
Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), this Security Agreement, and the Collateral Agent's and the
Trustees' compliance with any requirements of law (including, without
limitation, the applicable Uniform Commercial Code and the Personal Property
Security Act (Ontario)) applicable to the action to be taken, without notice to
or demand upon the Leasing Company except as required by the Senior Note
Indenture, the Convertible Note Indenture, this Agreement or applicable law, do
any one or more of the following:
(i) exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code and the Personal Property
Security Act (Ontario), specifically including, without limitation, the right to
recover the reasonable fees and expenses incurred by the Collateral Agent or the
Trustees in the enforcement of this Security Agreement or in connection with the
Leasing Company's redemption of the Collateral, including reasonable fees,
expenses and disbursements of attorneys, paralegals and agents;
(ii) at its option, transfer or register, and the Leasing
Company shall register or cause to be registered upon request therefor by the
Collateral Agent or the Trustees, the Collateral or any part thereof on the
books of the Restricted Subsidiary or Qualified Joint Venture which is a lessee
under a Telecommunications Asset Lease, the Persons in whom Qualified
Investments are made or the Restricted Subsidiaries to which an intercompany
loan evidenced by an Intercompany Note has been made, into the name of the
Collateral Agent or the Collateral Agent's nominee(s);
(iii) personally, or by agents or attorneys, immediately
retake possession of the Collateral or the Telecommunications Assets subject to
a Telecommunications Asset Lease, or any part thereof, from the Leasing Company
or any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Leasing
Company's premises where any of the Collateral is located and remove the same
and use in connection with such removal any and all services, supplies, aids and
other facilities of the Leasing Company;
(iv) sell, assign or otherwise liquidate, or direct the
Leasing Company to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of any such
sale or liquidation;
(v) require the Leasing Company to assemble the
Collateral or the Telecommunications Assets subject to a Telecommunications
Asset Lease or any part thereof and make it available at one or more places as
the Collateral Agent or the Trustees
15
<PAGE> 16
may designate and to deliver possession of the Collateral or any part thereof to
the Collateral Agent or the Trustees;
(vi) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by the Leasing
Company;
(vii) sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at such price
or prices as the Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit; and the purchaser of any or
all Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;
(viii) enforce one or more remedies hereunder, successively
or concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may have,
and any repossession or retaking or sale of the Collateral pursuant to the terms
hereof shall not operate to release the Leasing Company until full and final
payment of any deficiency has been made in cash;
(ix) in connection with any public or private sale under
the applicable Uniform Commercial Code, the Personal Property Act (Ontario) or
other applicable legislation, the Collateral Agent shall give the Leasing
Company at least fifteen (15) Business Days' prior written notice of the time
and place of any public sale of its Collateral or of the time after which any
private sale or other intended disposition thereof may be made, which shall be
deemed to be reasonable notice of such sale or other disposition. Such notice
may be given to the Leasing Company in accordance with the provisions of Section
17(a) hereof;
(x) proceed by an action or actions at law or in equity
to recover the Obligations or to foreclose this Security Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction;
(xi) exercise any other rights and remedies provided by
applicable law and the other Senior Note Collateral Documents; and
(xii) if the Collateral Agent recovers possession of all or
any part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, the Collateral Agent may thereafter
retain, sell or otherwise dispose of such Collateral in accordance with this
Security Agreement or the applicable Uniform Commercial Code, the Personal
Property Act (Ontario) or other applicable legislation, and following such
retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Leasing Company hereby consents to the
voluntary
16
<PAGE> 17
dismissal by the Collateral Agent of such judicial action, and the Leasing
Company further consents to the exoneration of any bond that the Collateral
Agent files in such action.
(b) If the Collateral Agent shall determine, or shall be
directed by the Senior Note Trustee (or the Convertible Note Trustee if the
Senior Notes are no longer outstanding and the Senior Note Indenture has been
satisfied and discharged), to exercise its right to sell any or all of the
Qualified Investments pursuant to Section 12(a) above, and if in the opinion of
counsel for the Collateral Agent it is necessary, or if in the opinion of the
Collateral Agent or such Trustee it is advisable, after such consultation with
investment bank(s), broker-dealer(s) or other experts selected by them, as the
Collateral Agent or such Trustee deems advisable or appropriate, to have the
Qualified Investments constituting Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), the Leasing Company will (i) use its best efforts to
cause the issuer or obligor to execute and deliver, and to cause such Person's
directors and officers to execute and deliver, all at the Leasing Company's own
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary or, in the opinion of the
Collateral Agent or such Trustee, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them, as the Collateral
Agent or such Trustee deems advisable or appropriate, advisable to register such
Qualified Investments constituting Collateral under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of 180
days from the date of the first public offering of such Qualified Investments,
or that portion thereof to be sold and (iii) make all amendments thereto and/or
to the related prospectus that are necessary or, in the opinion of the
Collateral Agent or such Trustee, are advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Leasing Company
agrees to use its best efforts to cause the applicable issuer or obligor to
comply with the provisions of the securities or "Blue Sky" laws of any
jurisdiction that the Collateral Agent or the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) shall designate for the
sale of such Qualified Investments and to make available to the security holders
of such issuer or obligor, as the case may be, as soon as practicable, an
earnings statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act. The Leasing Company will cause the
issuer or obligor, as the case may be, to furnish to the Collateral Agent and
the Trustees such number of copies as the Collateral Agent and the Trustees may
reasonably request of each preliminary prospectuses and prospectuses, to notify
promptly the Collateral Agent and the Trustees of the happening of any event as
a result of which any then effective prospectus includes an untrue statement of
any material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of then existing circumstances and cause the Collateral Agent and the Trustees
to be furnished with such number of copies as the Collateral Agent or the
Trustees may request of such supplement to or amendment of such prospectus as is
necessary to eliminate such untrue statement or supply such omission. The
17
<PAGE> 18
Leasing Company will cause the issuer or obligor, as the case may be, to the
extent permitted by law, to indemnity, defend and hold harmless the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes from and
against all losses, liabilities, expenses or claims (including reasonable costs
of investigation) that the Collateral Agent, the Senior Note Trustee and the
Holders of the Senior Notes, and the Convertible Note Trustee and the Holders of
the Convertible Notes may incur under the Securities Act or otherwise, insofar
as such losses, liabilities, expenses or claims arise out of or are based upon
any alleged untrue statement of a material fact contained in such registration
statement (or any amendment thereto) or in any preliminary prospectus or
prospectus (or any amendment or supplement thereto), or arise out of or are
based upon any alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, except to
the extent that any such losses, liabilities, expenses or claims arise solely
out of or are based solely upon any such alleged untrue statement made or such
alleged omission to state a material fact included or excluded on the written
direction of the Collateral Agent or such Trustee. The Leasing Company will
bear, or will cause the issuer or obligor, as the case may be, to bear, all
costs and expenses of carrying out its or their obligations hereunder. The
provisions of this Section 12(b) shall in no way impose upon either Trustee or
the Collateral Agent any duty to execute any registration statement under the
Securities Act with respect to any Qualified Investment.
(c) In view of the fact that federal, state and foreign
securities laws may impose certain restrictions on the method by which a sale of
the Collateral may be effected after an Event of Default, the Leasing Company
agrees that upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, from time to time, attempt to sell all or any
part of the Collateral by means of a private placement, restricting the
prospective purchasers to those who will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, the
Collateral Agent may solicit, or may cause an investment manager to solicit,
offers to buy the Collateral, or any part of it, for cash, from a limited number
of investors who might be interested in purchasing the Collateral. The Leasing
Company acknowledges and agrees that any such private sale may result in prices
and terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Collateral for
the period of time necessary to permit the Leasing Company to cause the issuer
or obligor to register such securities for public sale under the Securities Act,
or under applicable state or foreign securities laws, even if the Leasing
Company could cause the issuer or obligor, as the case may be, to do so.
(d) The Leasing Company further agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this Section
12 valid and binding and in compliance with any and all other applicable
requirements of applicable law. The Leasing
18
<PAGE> 19
Company further agrees that a breach of any of the covenants contained in this
Section 12 will cause irreparable injury to the Senior Note Trustee and the
Holders of the Senior Notes, and the Convertible Note Trustee and the Holders of
the Convertible Notes and that the Collateral Agent, the Senior Note Trustee and
the Holders of the Senior Notes and the Convertible Note Trustee and the Holders
of the Convertible Notes have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section 12 shall be specifically enforceable against the Leasing Company, and
the Leasing Company hereby waives and agrees not to assert any defenses against
an action for specific performance of such covenants except for a defense that
no Event of Default has occurred and is continuing.
(e) Any cash held by the Collateral Agent as Collateral
and all cash proceeds received by the Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of
such sale, including, without limitation, reasonable expenses
of the Collateral Agent and its agents including the fees and
expenses of its counsel, and all expenses, liabilities and
advances made or incurred by the Collateral Agent in
connection therewith or pursuant to Section 17(p) hereof:
Next, to the Senior Note Trustee for the payment in
full of all amounts due under Section 7.7 of the Senior Note
Indenture;
Next, to the Senior Note Trustee, for distribution to
the Holders of the Senior Notes for the payment in full of the
remaining Senior Note Obligations;
Next, to the Convertible Note Trustee for the payment
in full of all amounts due under Section 7.7 of the
Convertible Note Indenture.
Next, to the Convertible Note Trustee, for
distribution to the Holders of the Convertible Notes, for the
payment in full of the remaining Convertible Note Obligations;
and
Finally, after payment in full of all of the
Obligations, to the Company, or its successors or assigns, or
to whomsoever may be lawfully entitled to receive the same as
a court of competent jurisdiction may direct.
(f) If any sale or other disposition of Collateral by the
Collateral Agent or any other action of the Collateral Agent or the Trustees
hereunder results in reduction of the Obligations, such action will not release
the Leasing Company from its liability for any unpaid Obligations, including
costs, charges and expenses incurred in the liquidation of Collateral, together
with interest thereon, and the same shall be immediately due and
19
<PAGE> 20
payable to the Collateral Agent, the Senior Note Trustee and the Holders of the
Senior Notes as provided for in the Senior Note Indenture, or, if applicable,
the Convertible Note Trustee and the Holders of the Convertible Notes as
provided for in the Convertible Note Indenture.
(g) The Collateral Agent may enforce its rights hereunder
without prior judicial process or judicial hearing, and to the extent permitted
by law the Leasing Company expressly waives any and all legal rights which might
otherwise require the Collateral Agent to enforce its right by judicial process.
(h) The existence and/or exercise of any or all of the rights
and remedies given to the Collateral Agent and/or either Trustee under this
Section 12 shall be subject in all cases to compliance with any mandatory
requirements of applicable law, particularly the laws of jurisdictions other
than the United States.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO THE
APPLICABLE ISSUER. The Leasing Company hereby authorizes and instructs the
lessees, issuers and obligors to comply with any instructions received by a
lessee, issuer or obligor, as the case may be, from the Collateral Agent or the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) that (i) states that an Event of Default has occurred and (ii) is
otherwise in accordance with the terms of this Security Agreement, without any
other or further instructions from the Leasing Company, and the Leasing Company
agrees that the lessees, issuers and obligors shall be fully protected in so
complying.
SECTION 14. ESCROW ACCOUNT. All money received by the Leasing Company
and required to be deposited in the Leasing Company Escrow Account, shall be
promptly and without commingling remitted to the Collateral Agent or the Senior
Note Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged) for
deposit therein. Amounts held in the Leasing Company Escrow Account shall be
applied or disposed of only in a manner not prohibited by the Senior Note
Indenture or the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and the Liens
or security interests hereunder, and all obligations of the Leasing Company
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Senior Note
Indenture, any Senior Note Collateral Document, any Senior Note Guarantee, the
Convertible Note
20
<PAGE> 21
Indenture, any Convertible Note Collateral Document, any Convertible Note
Guarantee or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Senior Note Indenture or the
Senior Note Collateral Documents or from the Convertible Note Indenture or the
Convertible Note Collateral Documents;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral, or any release or amendment or waiver of or
consent to departure from any Senior Note Guarantee, any Convertible Note
Guarantee or other guarantee, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Leasing Company in respect of the
Obligations or of this Security Agreement.
SECTION 16. WAIVERS.
(a) Except as may be required under the provisions of the
Senior Note Indenture (or of the Convertible Note Indenture if the Senior Notes
are no longer outstanding and the Senior Note Indenture has been satisfied and
discharged) and to the fullest extent permitted under applicable law, neither
the Collateral Agent nor the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) shall be under any duty whatsoever
to make or give any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Collateral or
the Obligations, or to take any steps reasonably necessary to preserve any
rights against any Obligor or other Person. The Leasing Company waives to the
fullest extent permitted under applicable law any right of marshalling in
respect of any and all Collateral, and waives to the fullest extent permitted
under applicable law any right to require the Collateral Agent or the applicable
Trustee to proceed against any Obligor or other Person, exhaust any Collateral
or enforce any other remedy which the Collateral Agent or the applicable Trustee
now has or may hereafter have against any Obligor or other Person.
(b) The Leasing Company waives to the fullest extent permitted
under applicable law (i) any and all notices of acceptance, creation,
modification, rearrangement, renewal or extension for any period of any
instrument executed by any obligor in connection with the Obligations and (ii)
any defense of any Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. The Leasing
Company authorizes the Collateral Agent to the fullest extent permitted under
applicable law, without notice or demand and without any reservation of rights
against the Leasing Company and without affecting the Leasing Company's
liability hereunder or on the
21
<PAGE> 22
Obligations, from time to time to (w) take and hold other Property, other than
the Collateral, as security for the Obligations, and exchange, enforce, waive
and release any or all of the Collateral, (x) after the occurrence and during
the continuance of an Event of Default and the acceleration of the Senior Notes,
apply the Collateral in the manner permitted by this Security Agreement or the
Senior Note Indenture, (y) after the occurrence and during the continuance of an
Event of Default and the acceleration of the Convertible Notes if the Senior
Notes are no longer outstanding and the Senior Note Indenture has been satisfied
and discharged, apply the Collateral in the manner permitted by this Security
Agreement or the Convertible Note Indenture and (z) after the occurrence and
during the continuance of an Event of Default renew, extend for any period,
accelerate, amend or modify, supplement, enforce, compromise, settle, waive or
release the obligations of any obligor on, or any instrument or agreement of
such other Person with respect to any or all of, the Collateral.
SECTION 17. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Leasing Company, at its address as set forth in
Section 13.2 of the Senior Note Indenture, to the Senior Note Trustee at its
address as set forth in Section 13.2 of the Senior Note Indenture, to the
Convertible Note Trustee at its address as set forth in Section 13.2 of the
Convertible Note Indenture and to the Collateral Agent at The Bank of New York,
101 Barclay Street, Floor 21 West, New York, New York 10286.
(b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Senior Note Indenture or the Convertible Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Senior Note
Trustee for deposit in the Leasing Company Escrow Account.
(c) No Adverse Interpretation of Other Agreements. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of the Leasing Company or any Subsidiary of the Leasing Company. No
such pledge, security or debt agreement may be used to interpret this Security
Agreement.
(d) Severability. The provisions of this Security Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
22
<PAGE> 23
(e) Headings. The headings in this Security Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
(f) Counterpart Originals. This Security Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
(g) Benefits of Security Agreement. Nothing in this Security
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Holders of the Senior Notes and
the Senior Note Guarantors and the Holders of the Convertible Notes and the
Convertible Note Guarantors, any benefit or any legal or equitable right, remedy
or claim under this Security Agreement.
(h) Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Security Agreement and any consent to any departure by
the Leasing Company from any provision of this Security Agreement shall be
effective only if made or given in compliance with all of the terms and
provisions of the Senior Note Indenture and the Convertible Note Indenture and
neither the Collateral Agent or the Senior Note Trustee nor any Holder of any
Senior Note or the Convertible Note Trustee or any Holder of any Convertible
Note shall be deemed, by any act, delay, indulgence, omission or otherwise, to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
Failure of the Collateral Agent or the Trustees to exercise, or delay in
exercising, any right, power or privilege hereunder shall not operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent, the
Senior Note Trustee or any Holder of any Senior Note or the Convertible Note
Trustee or any Holder of any Convertible Note of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that
the Collateral Agent, either Trustee or any such Holder would otherwise have on
any future occasion. The right and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
(i) Interpretation of Security Agreement. All terms not
defined herein or in the Senior Note Indenture shall have the meaning set forth
in the applicable Uniform Commercial Code of the State of New York, except where
the context otherwise requires. To the extent a term or provision of this
Security Agreement conflicts with the Senior Note Indenture, the Senior Note
Indenture shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Security Agreement shall not be relevant in determining the meaning
of this Security Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
23
<PAGE> 24
(j) Continuing Security Interest; Transfer of Collateral. This
Security Agreement shall create a continuing Lien and security interest in the
Collateral and shall (i) unless otherwise provided in the Senior Note Indenture,
the Convertible Note Indenture or this Security Agreement, remain in full force
and effect until payment in full of (A) the Senior Notes under the terms of the
Senior Note Indenture, (B) all Obligations then due and owing under the Senior
Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents; provided, however, that after receipt from the Leasing Company by the
Collateral Agent of a request for a release of any Collateral permitted under
the Senior Note Indenture and the Convertible Note Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Senior Note Indenture and the Convertible Note Indenture and
upon receipt by the Collateral Agent of all proceeds of such sale, transfer,
assignment, exchange or other disposition required to be remitted to the
Collateral Agent or the Senior Note Trustee (or the Convertible Note Trustee if
the Senior Notes are no longer outstanding and the Senior Note Indenture has
been satisfied and discharged) or the Collateral constituting the proceeds of
such sale, transfer, assignment, exchange or other disposition being made
subject to a Lien and security interest in favor of the Collateral Agent for the
benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and the equal and ratable benefit of the Holders of the Convertible Notes, which
Lien has the same priority as had the Lien on the Collateral being sold,
assigned or otherwise disposed of, such Collateral shall be released from the
Lien and security interest created hereunder and no longer constitute
Collateral. Upon the payment in full of (A) the Senior Notes under the terms of
the Senior Note Indenture, (B) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents, the Leasing Company shall be entitled to the return, upon its request
and at its expense, of such of the Collateral pledged by it as shall not have
been sold or otherwise applied pursuant to the terms hereof. This Security
Agreement shall be binding upon the Leasing Company, its successors and assigns,
and inure, together with the rights and remedies of the Trustees hereunder, to
the benefit of the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes and their respective successors, transferees and assigns.
(k) Reinstatement. This Security Agreement shall continue to
be effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note or the Convertible Note Trustee or any Holder of a Convertible Note
in respect of the Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent, the Senior Note Trustee
24
<PAGE> 25
or any Holder of a Senior Note, or the Convertible Note Trustee or any Holder of
a Convertible Note upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization or the Leasing Company or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Leasing Company or
upon the appointment of any receiver, intervenor, conservator, trustee or
similar official for the Leasing Company or any substantial part of its assets,
or otherwise, all as though such payments had not been made.
(l) Survival of Provisions. All representations, warranties
and covenants of the Leasing Company contained herein shall survive the
execution and delivery of this Security Agreement, and shall terminate only upon
the full and final payment and performance by the Leasing Company of the
Obligations.
(m) Authority of Collateral Agent and Trustees. Both the
Collateral Agent and the Trustees shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent and the
Trustees by the terms hereof, together with such powers as are reasonably
incident thereto. The Collateral Agent and the Trustees may perform any of their
respective duties hereunder or in connection with the Collateral by or through
agents or employees and shall be entitled to retain counsel and to act in
reliance upon the advice of counsel concerning all such matters. None of the
Collateral Agent, any director, officer, any attorney or agent of the Collateral
Agent, the Senior Note Trustee, any director, officer, employee, attorney or
agent of the Senior Note Trustee, the Holders of the Senior Notes, the
Convertible Note Trustee, any director, officer, employee, attorney or agent of
the Convertible Note Trustee and the Holders of the Convertible Notes shall be
liable to the Leasing Company for any action taken or omitted to be taken by it
or them hereunder, except for its or their own negligence or willful misconduct,
nor shall the Collateral Agent or the Trustees be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents, the Senior Note Trustee and its directors, officers,
employees, attorneys and agents, the Convertible Note Trustee, any director,
officer, employee, attorney or agent of the Convertible Note Trustee, the
Holders of the Senior Notes and the Holders of the Convertible Notes shall be
entitled to rely on any communication, instrument or document believed by it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons. Neither the Collateral Agent nor the Trustees shall be
required to, and shall not, expend or risk any of its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.
The Leasing Company acknowledges that the rights and
responsibilities of the Collateral Agent and the Trustees under this Security
Agreement with respect to any action taken by the Collateral Agent and the
Trustees or the exercise or non-exercise by the Collateral Agent and the
Trustees of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Security Agreement
shall, as among the Collateral Agent, the Senior Note Trustee, the Holders of
the Senior Notes, the Convertible Note Trustee and the Holders of the
Convertible Notes, be governed by the
25
<PAGE> 26
Senior Note Indenture or the Convertible Note Indenture, as applicable and by
such other agreements with respect thereto as may exist from time to time among
them, but, as among the Collateral Agent, the Trustees and the Leasing Company,
the Collateral Agent and the Trustees shall be conclusively presumed to be
acting as agent for the Holders of the Senior Notes or Holders of the
Convertible Notes, as the case may be, with full and valid authority so to act
or refrain from acting, and the Leasing Company shall not be obligated or
entitled to make any inquiry respecting such authority.
In any case in which the Collateral Agent shall be
required or permitted to make any determination as to the extent to which the
security interest or Liens under this Security Agreement secures any
obligations, the Collateral Agent is authorized, without any direction from, or
requirement for consent of or authorization by, the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged), to institute
proceedings in a court of competent jurisdiction for the obtaining of any
authoritative determination of such matter. If the Collateral Agent institutes
any such proceeding, it shall give prompt written notice thereof to the Trustees
and shall afford each of them the opportunity to participate in such proceeding.
(n) Limitation by Law. All rights, remedies and powers
provided herein may be exercised only to the extent that they will not render
this Security Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.
(o) Release; Termination of Security Agreement.
(i) Subject to the provisions of Section 17(k)
hereof, this Security Agreement shall terminate upon payment in full of (A) the
Senior Notes under the terms of the Senior Note Indenture and (B) all
Obligations then due and owing under the Senior Note Indenture, the Senior Note
Guarantees, and the Senior Note Collateral Documents, (C) the Convertible Notes
under the terms of the Convertible Note Indenture and (D) all Obligations then
due and owing under the Convertible Note Indenture, the Convertible Note
Guarantees and the Convertible Note Collateral Documents, except that the
provisions of Section 17(p) hereof shall survive.
(ii) The Leasing Company agrees that it will not
sell or dispose of any of the Collateral in violation of the Senior Note
Indenture or the Convertible Note Indenture; provided, however, that if the
Leasing Company shall sell or otherwise dispose of any of the Collateral in
accordance with the terms of the Senior Note Indenture and of the Convertible
Note Indenture, the Collateral Agent shall, and the Trustees shall cause, at the
request of the Leasing Company, release or cause to be released the Collateral
subject to such sale or disposition free and clear of the Liens and security
interest under this Security Agreement.
26
<PAGE> 27
(iii) Upon any termination of this Security
Agreement or release of any Collateral as permitted by the Senior Note Indenture
(or the Convertible Note Indenture if the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged) the Collateral
Agent and the Trustees will, at the expense of the Leasing Company, execute and
deliver to the Leasing Company such documents and take such other actions as the
Leasing Company shall reasonably request to evidence the termination of this
Security Agreement or the release of such Collateral, as the case may be. Any
such action taken by the Collateral Agent or the Trustees shall be without
warranty by or recourse to the Collateral Agent or the Trustees, except as to
the absence of any prior assignments by the Collateral Agent or the Trustees of
its interests in the Collateral, and shall be at the expense of the Leasing
Company. The Collateral Agent and the Trustees may conclusively rely on any
certificate delivered to it by the Leasing Company stating that the execution of
such documents and release of the Collateral is in accordance with and permitted
by the terms of this Security Agreement and the Senior Note Indenture (or of the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged).
(p) Payment of Fees and Expenses. The Leasing Company
will upon demand pay to the Collateral Agent and the Trustees, without
duplication, the amount of any and all expenses, including, without duplication,
the fees and disbursements of its counsel and of any experts and agents, that
the Collateral Agent and the Trustees may incur in connection with (i)
administration of this Security Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent and the Trustees hereunder or (iv) the failure by the Leasing
Company to perform or observe any of the provisions hereof. The Leasing Company
shall be liable for and shall reimburse and indemnify both Trustees and the
Collateral Agent and hold both Trustees and the Collateral Agent harmless from
and against any and all claims, losses, liabilities, costs, damages or expenses
(including reasonable attorneys' fees and expenses) (collectively, "Losses")
arising from or in connection with or related to this Agreement or being a
Trustee or Collateral Agent hereunder (including but not limited to Losses
incurred by such Trustee or Collateral Agent in connection with its successful
defense, in whole or in part, of any claim of negligence or willful misconduct
in its part), provided, however, that nothing contained herein shall require the
Trustees and the Collateral Agent to be indemnified for their respective
negligence or willful misconduct.
(q) Final Expression. This Security Agreement, together
with the Senior Note Indenture, the Convertible Note Indenture and any other
agreement executed in connection herewith or therewith, is intended by the
parties as a final expression of this Security Agreement and is intended as a
complete and exclusive statement of the terms and conditions hereof.
(r) Leasing Company Remain Liable. Anything herein to the
contrary notwithstanding, (a) the Leasing Company shall remain liable under any
contracts and
27
<PAGE> 28
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Leasing Company from any of its duties or obligations under the
contracts and agreements included in the Collateral and (c) the Collateral Agent
and the Trustees shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Security Agreement,
nor shall the Collateral Agent or the Trustees be obligated to perform any of
the obligations or duties of the Leasing Company thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
(s) Indentures. This Security Agreement is subject to the
terms, conditions and provisions of the Senior Note Indenture, or of the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged.
(t) Where there is a conflict between the provisions of this
Security Agreement and the Senior Note Indenture, as the case may be, the
provisions of the Senior Note Indenture or the Convertible Note Indenture shall
prevail; and if the Senior Note Indenture has been satisfied and discharged,
where there is a conflict between the provisions of this Security Agreement and
the Convertible Note Indenture, the provisions of the Convertible Note Indenture
shall prevail.
(u) Rights of Holders. No Holder of a Senior Note or of a
Convertible Note shall have any independent rights hereunder other than those
rights granted to individual Holders pursuant to Section 6.7 of the Senior Note
Indenture or Section 6.7 of the Convertible Note Indenture, as the case may be;
provided that nothing in this subsection (t) shall limit any rights granted to
the Senior Note Trustee under the Senior Notes, the Senior Note Indenture or the
Senior Note Collateral Documents or the Convertible Note Trustee under the
Convertible Notes, the Convertible Note Indenture or the Convertible Note
Collateral Documents.
(v) No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Leasing Company or of any subsidiary of the
Leasing Company, as such, shall have any liability for any obligations of the
Leasing Company under this Security Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
(w) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK,
28
<PAGE> 29
AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THE LEASING COMPANY, THE COLLATERAL AGENT, THE
SENIOR NOTE TRUSTEE AND THE HOLDERS OF THE SENIOR NOTES AND THE CONVERTIBLE NOTE
TRUSTEE AND THE HOLDERS OF THE CONVERTIBLE NOTES IN CONNECTION WITH THIS
SECURITY AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) THE LEASING COMPANY AGREES THAT THE COLLATERAL AGENT
SHALL, IN ITS CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE
SENIOR NOTE TRUSTEE AND ANY HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE
TRUSTEE AND ANY HOLDERS OF CONVERTIBLE NOTES, AND THE SENIOR NOTE TRUSTEE SHALL,
IN ITS CAPACITY AS SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY
HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS CAPACITY
AS CONVERTIBLE NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF
CONVERTIBLE NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE LEASING COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE TRUSTEES
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE COLLATERAL AGENT OR EITHER TRUSTEE. THE LEASING COMPANY
AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS- CLAIMS IN
ANY PROCEEDING BROUGHT BY THE COLLATERAL AGENT OR EITHER TRUSTEE TO REALIZE ON
SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
COLLATERAL AGENT OR SUCH TRUSTEE. THE LEASING COMPANY WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH EITHER TRUSTEE HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(iii) TO, THE EXTENT PERMITTED BY APPLICABLE LAW, THE LEASING
COMPANY, THE COLLATERAL AGENT AND THE TRUSTEES EACH WAIVE ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SECURITY
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
29
<PAGE> 30
(iv) THE LEASING COMPANY AGREES THAT NONE OF THE
COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE, ANY HOLDER OF A SENIOR NOTE, THE
CONVERTIBLE NOTE TRUSTEE AND ANY HOLDER OF A CONVERTIBLE NOTE SHALL HAVE ANY
LIABILITY TO THE LEASING COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) FOR LOSSES SUFFERED BY THE LEASING COMPANY IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE COLLATERAL AGENT, SUCH
TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT
OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT, THE SENIOR NOTE
TRUSTEE OR SUCH HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY
HOLDER OF A CONVERTIBLE NOTE, AS THE CASE MAY BE, CONSTITUTING NEGLIGENCE OR
WILLFUL MISCONDUCT.
(v) THE LEASING COMPANY WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE SENIOR NOTE TRUSTEE OR ANY
HOLDER OF A SENIOR NOTE OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH
OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE LEASING
COMPANY WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL
AGENT, THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE
NOTE TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE IN CONNECTION WITH ANY JUDICIAL
PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT, THE SENIOR NOTE
TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY
HOLDER OF A CONVERTIBLE NOTE, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT
OR ANY OTHER AGREEMENT OR DOCUMENT AMONG THE LEASING COMPANY ON THE ONE HAND AND
THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE AND/OR THE HOLDERS OF THE SENIOR
NOTES ON THE OTHER HAND.
(x) Appointment of Collateral Agent. Pursuant to, and subject to
the provisions of, Section 7.12 of the Senior Note Indenture and of Section 7.12
of the Convertible Note Indenture, the Trustees hereby appoint the Collateral
Agent, and the
30
<PAGE> 31
Collateral Agent accepts appointment, as collateral agent under the terms of
this Security Agreement. The Collateral Agent may resign at any time by giving
written notice thereof to the Trustees and may be removed at any time with or
without cause by the Trustees acting together. Prior to the effectiveness of any
such resignation or removal, the Trustees acting together shall have the right
to appoint a successor Collateral Agent which shall be a commercial bank
organized or chartered under the laws of the United States of America or any
state thereof having combined capital and surplus of at least $50,000,000. If no
successor Collateral Agent shall have been so appointed by the Trustees acting
together, and shall have accepted such appointment within 30 days after the
retiring Collateral Agent's giving of notice of resignation or the Trustee's
removal of the retiring Collateral Agent, then the retiring Collateral Agent
shall, prior to the effectiveness of its resignation or removal, on behalf of
the Convertible Note Trustee, the Holders of the Convertible Notes, the Senior
Note Trustee and the Holders of the Senior Notes appoint a successor Collateral
Agent, which shall be a commercial bank organized under the laws of the United
States of America or any state thereof having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations under this Security
Agreement. After any retiring Collateral Agent's resignation or removal
hereunder as Collateral Agent, the provisions of this Security Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Collateral Agent under this Security Agreement. Any corporation into
which the Collateral Agency may be merged, or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Collateral Agent shall be a party, shall be Collateral Agent under this Security
Agreement without the execution or filing of any paper or any further act on the
part of the parties hereto.
[SIGNATURE PAGE FOLLOWS]
31
<PAGE> 32
IN WITNESS WHEREOF, the Leasing Company has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
PLD ASSET LEASING LIMITED
By: /s/ CLAYTON A. WAITE
------------------------------
Name: Clayton A. Waite
---------------------------
Title: Director
--------------------------
By its acceptance hereof, as of the day and year first above written,
the Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee
agree to be bound by the provisions hereof.
THE BANK OF NEW YORK, as Collateral
Agent, Senior Note Trustee and Convertible
Note Trustee
By: /s/ STEVEN D. TORGESON
------------------------------
Name: Steven D. Torgeson
------------------------------
Title: Assistant Treasurer
-----------------------------
<PAGE> 33
SCHEDULE A
to Leasing Company
Security and
Pledge Agreement
QUALIFIED INVESTMENTS
None.
33
<PAGE> 34
SCHEDULE B
to Leasing Company
Security and
Pledge Agreement
TELECOMMUNICATIONS ASSET LEASES
None.
34
<PAGE> 35
SCHEDULE C
to Leasing Company
Security and
Pledge Agreement
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
None.
35
<PAGE> 36
SCHEDULE D
to Leasing Company
Security and
Pledge Agreement
LIENS ON EXISTING COLLATERAL
None.
36
<PAGE> 37
SCHEDULE E
to Leasing Company
Security and
Pledge Agreement
FILINGS
1. UCC-1 financing statements filed with the Secretary of State of the
State of New York.
2. UCC-1 financing statements filed with the City Registers Office, New
York County, New York.
3. Each of the following agreements will, within seven days of the Issue
Date, be registered with both the Secretary of the Companies of Cyprus
and the Cyprus Official Register:
a. This Security Agreement.
b. Leasing Company Escrow Account Agreement of even date herewith
among The Bank of New York, as escrow agent, the Senior Note
Trustee, the Convertible Note Trustee and PLD Asset Leasing
Limited.
37
<PAGE> 38
SCHEDULE F
to Leasing Company
Security and
Pledge Agreement
CHIEF EXECUTIVE OFFICES
IRIS Tower, Off. 602
58 Arch. Makarios III Avenue
Nicosia, CYPRUS
38
<PAGE> 39
SCHEDULE G
to Leasing Company
Security and
Pledge Agreement
BUSINESS NAMES
None.
39
<PAGE> 40
SCHEDULE H
to Leasing Company
Security and
Pledge Agreement
LOCATION OF COLLATERAL
The Company's chief executive offices (see Schedule F).
40
<PAGE> 41
SCHEDULE I
to Leasing Company
Security and
Pledge Agreement
FORM OF ADDITIONAL COLLATERAL AMENDMENT
This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, and grants to the
Senior Note Trustee for its benefit and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and the equal and ratable benefit of the Holders of the Convertible Notes,
continuing Liens and security interest in all of its rights, title and interest
in the Collateral listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Leasing Company Security and Pledge Agreement, dated as
of May 31, 1996, between the undersigned and The Bank of New York, as Senior
Note Trustee, as Convertible Note Trustee and as Collateral Agent (the "Security
Agreement"); capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in the Security Agreement; and the
Collateral listed on this Additional Collateral Amendment shall be deemed to be
part of the Collateral, and shall become part of the Collateral and shall secure
all Obligations.
PLD ASSET LEASING LIMITED
By:
Name:
Title:
41
<PAGE> 42
INTERCOMPANY NOTES:
<TABLE>
<CAPTION>
================================================================================
Description Name of Restricted Original
Item of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
------ ------------ --------- ---- ------
<S> <C> <C> <C> <C>
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
TELECOMMUNICATIONS ASSET LEASES:
<TABLE>
<CAPTION>
================================================================================
General
Description of Description of
Telecommunications Leased
Name of Asset Telecommunications
Lessee Lease Assets Date
------ ----- ------ ----
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
42
<PAGE> 43
INTERCOMPANY NOTES:
<TABLE>
<CAPTION>
================================================================================
Name of
Restricted Original
Item Description of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
------ ------------ --------- ---- ------
<S> <C> <C> <C> <C>
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
OTHER COLLATERAL:
<TABLE>
<CAPTION>
================================================================================
Description of
Qualified Investment
or other Collateral Evidenced By Obligor Date
------------------- ------------ ------- ----
<S> <C> <C> <C>
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
43
<PAGE> 44
SCHEDULE J
to Leasing Company
Security and
Pledge Agreement
RESTRICTIVE AGREEMENTS
None.
44
<PAGE> 1
EXHIBIT 4.18
LEASING COMPANY SECURITY AND PLEDGE AGREEMENT
[PLD Capital Limited]
THIS LEASING COMPANY SECURITY AND PLEDGE AGREEMENT (the "Security
Agreement") is made and entered into as of May 31, 1996 by PLD Capital
Limited, a Cypriot corporation (the "Leasing Company"), in favor of THE BANK OF
NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Senior Note Trustee") under the Senior Note Indenture (as defined herein) for
the holders of the Senior Notes (as hereinafter defined), THE BANK OF NEW YORK,
a New York banking corporation, as trustee (in such capacity, the "Convertible
Note Trustee") under the Convertible Note Indenture (as defined herein) for the
holders of the Convertible Notes (as hereinafter defined) and THE BANK OF NEW
YORK as collateral agent (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, Petersburg Long Distance Inc., an Ontario corporation (the
"Company"), as issuer, the Senior Note Trustee, and NWE Capital (Cyprus)
Limited, a Cypriot corporation ("NWE Cyprus"), the Leasing Company, PLD Capital
Limited, a Cypriot corporation ("PLD Capital" and, together with the Leasing
Company, the "Leasing Companies"), Wireless Technology Corporations Limited, a
British Virgin Islands Company ("WTC"), and Baltic Communications Limited, a
Russian joint stock company of the closed type ("BCL"), as guarantors (the
"Senior Note Guarantors"), have entered into an indenture dated as of May 31,
1996 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Senior Note Indenture") pursuant to which the Company is
issuing $123,000,000 in aggregate principal amount at Stated Maturity of its 14%
Senior Discount Notes due 2004 (the "Senior Notes"); and
WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Convertible Note
Guarantors") have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture") pursuant to which the Company is issuing
$26,500,000 in aggregate principal amount of its 9% Convertible Subordinated
Notes due 2006 (the "Convertible Notes"): and
WHEREAS, to secure its obligations under the Senior Note Indenture, its
Senior Note Guarantee and the other Collateral Documents (as defined in the
Senior Note Indenture) (together with the Company's obligations under the Senior
Note Indenture and the Senior Note Collateral Documents and the Senior Note
Guarantors' obligations under the Senior Note Indenture, the guarantees
contained therein (the "Senior Note Guarantees") and the Senior Note Collateral
Documents, the " Senior Note Obligations") and to secure its obligations under
the Convertible Note Indenture and the Convertible Notes and the other
Convertible Note Collateral Documents (as defined in the Convertible Note
Indenture) (together with the Convertible Note Guarantors obligations under the
Convertible Note Indenture, the guarantees contained therein (the "Convertible
Note Guarantees") and the Convertible Note Collateral Documents, the
"Convertible
<PAGE> 2
Note Obligations"), the Leasing Company has agreed (i) to grant to the
Collateral Agent for the benefit of the Senior Note Trustee and the equal and
ratable benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes, Liens and security interests in and to the Collateral (as
defined herein) and (ii) to execute and deliver this Security Agreement in order
to secure the payment and performance by the Leasing Company and the Guarantors
of the Senior Note Obligations and the Convertible Note Obligations
(collectively, the "Obligations"").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Senior Notes to purchase the Senior Notes and the Holders of
the Convertible Notes to purchase the Convertible Notes, the Leasing Company
hereby agrees with the Collateral Agent, with the Senior Note Trustee for its
benefit and the equal and ratable benefit of the Holders of the Senior Notes and
for the Convertible Note Trustee for its benefit and the equal and ratable
benefit of the Holders of the Convertible Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Senior Note
Indenture. In addition to any other defined terms used herein, the following
terms shall constitute defined terms for the purposes of this Security
Agreement:
"Default" means a "Default" as defined in Section 1.1 of the
Senior Note Indenture until the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged, in
which case a "Default" means a "Default" as defined in Section 1.1 of
the Convertible Note Indenture.
"Permitted Liens" means "Permitted Liens" as defined in
Section 1.1 of the Senior Note Indenture until the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case "Permittee Liens" means "Permitted Liens" as
defined in Section 1.1 of the Convertible Note Indenture.
"Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Senior Note Indenture until the Senior Notes are no
longer outstanding and the Senior Note Indenture and the Senior Note
Collateral Documents have been satisfied, discharged and released, in
which case "Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Convertible Note Indenture.
"Trustees" means, collectively, the Senior Note Trustee and
the Convertible Note Trustee.
SECTION 2. CREATION OF SECURITY INTEREST. The Leasing Company hereby
grants to the Collateral Agent for the benefit of the Senior Note Trustee and
for the equal and ratable benefit of the Holders of the Senior Notes and for the
benefit of the Convertible Note
2
<PAGE> 3
Trustee and for the equal and ratable benefit of the Holders of the Convertible
Notes, Liens and a continuing security interest in and to the collateral
described in Section 3 hereof (the "Collateral") in order to secure the payment
and performance of all Obligations.
SECTION 3. COLLATERAL. The Collateral is:
(a) Qualified Investments. All Qualified Investments, whether
now or hereafter acquired by the Leasing Company, including those Qualified
Investments listed on Schedule A attached hereto (or substitutions, replacements
and proceeds thereof) but excluding any Qualified Investments made with the
dividends, distributions, payments and products and proceeds of Technocom
Preferred Stock (as defined in the Company Convertible Note Security Agreement)
and the funds and Eligible Cash Equivalents in the Company Convertible Note
Escrow Account (collectively, the "Excluded Qualified Investments"), and the
certificates, agreements, documents, notes, collateral documents and instruments
representing or relating to such Qualified Investments, all contract rights,
instruments, general intangibles and other obligations or other receivables of
any kind relating to such Qualified Investments, all Liens relating to or
securing such Qualified Investments and the related collateral documents which
grant such Liens and all products and proceeds of the Qualified Investments,
including, without limitation, all dividends, options, warrants, rights,
subscriptions, all interest and principal payments, and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Qualified Investments;
(b) Telecommunications Asset Leases. All Telecommunications
Asset Leases of the Leasing Company, whether now existing or hereinafter
acquired and entered into, including those Telecommunications Asset Leases
listed on Schedule B attached hereto, and all proceeds and products relating
thereto or therefrom, including all payments (including all time payments and
rental payments) and all other payments thereunder, all cash, property or
proceeds from time to time received, receivable or otherwise distributed or paid
in connection therewith, and all documents, documents of title, certificates of
title, letters of credit, letters of credit proceeds, collateral and liens
securing or relating to such Telecommunications Asset Leases and all books,
records, ledger sheets and files of the Leasing Company relating to any of the
foregoing;
(c) Asset Sale Proceeds of Telecommunications Assets. All
proceeds or products of an Asset Sale of Telecommunications Assets subject to a
Telecommunications Asset Lease, whether now existing or hereafter acquired,
including all Cash Proceeds, Eligible Cash Equivalents, Investments and
Property;
(d) Leasing Company Escrow Account. The Leasing Company Escrow
Account and all funds contained therein and all Investments made by the Escrow
Agent (as defined in the Leasing Company Escrow Account Agreement) therewith
(whether or not constituting Eligible Cash Equivalents) and all proceeds thereto
and including income therefrom;
(e) Intercompany Notes. All Intercompany Notes, whether
executed on the Issue Date or thereafter, from any Restricted Subsidiary,
excluding, however, any Intercompany
3
<PAGE> 4
Notes (or substitutes, replacements and proceeds thereof, including the funds
and Eligible Cash Equivalents in the Company Convertible Note Escrow Account)
evidencing loans or advances made by the Leasing Company with dividends,
distributions, payments and products or proceeds of Technocom Preferred Stock or
otherwise constituting Collateral under the Company Convertible Note Security
Agreement (as defined therein) (collectively, the "Excluded Intercompany
Notes"), all Liens securing such Intercompany Notes and the related collateral
documents, and the instruments representing such Intercompany Notes, and, except
as otherwise provided elsewhere herein, all products and proceeds of such
Intercompany Notes, including, without limitation, all interest and principal
payments, instruments, and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for such Intercompany
Notes; and
(f) After-acquired Collateral and Proceeds. All items
described in this Section 3 (other than those items specifically excluded),
whether now owned or hereafter, at any time acquired by the Leasing Company and
wherever located, including (except as otherwise provided herein) all
replacements, additions, accessions, substitutions, repairs, proceeds and
products relating thereto or therefrom, and all documents, ledger sheets, files,
books and records of the Leasing Company relating thereto. Proceeds hereunder
include (i) whatever is now or hereafter received by the Leasing Company upon
the sale, exchange, collection or other disposition of any item of Collateral;
(ii) any property of the type or types described in subsections (a), (b), (c) or
(e) now or hereafter acquired by the Leasing Company with any proceeds of
Collateral hereunder; and (iii) any payments under any insurance or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Leasing Company, but subject to its compliance with the
requirements of applicable law, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
but subject to its compliance with the requirements of applicable law, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Qualified Investments constituting
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Leasing Company hereby
represents and warrants to the Collateral Agent and the Trustees that, except as
specified in Schedule C attached hereto:
4
<PAGE> 5
(a) Legal Power. The execution, delivery and performance by
the Leasing Company of this Security Agreement are within the Leasing Company's
legal powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with (except for any filings
provided for hereunder), any governmental authority, require no consent of any
other Person and do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the articles of incorporation or bylaws,
or comparable organizational documents of, the Leasing Company or of any
agreement (after giving effect to the use of proceeds of the issuance of the
Senior Notes), judgment, injunction, order, decree or other instrument binding
upon the Leasing Company or result in the creation or imposition of any Lien on
any asset of the Leasing Company (other than the Liens created by this Security
Agreement, the Leasing Company Escrow Account Agreement and the other Senior
Note Collateral Documents to which the Leasing Company is a party) and the Liens
created by the Convertible Note Indenture and the Convertible Note Collateral
Documents;
(b) Title to Collateral. The Leasing Company is the legal,
record and beneficial owner of the Collateral existing on the Issue Date (the
"Existing Collateral"), free and clear of any Lien or claims of any person
except for the Liens listed on Schedule D attached hereto and the Liens created
by this Security Agreement, the Leasing Company Escrow Account Agreement and any
of the other Senior Note Collateral Documents.
(c) Enforceability. This Security Agreement has been duly
executed and delivered by the Leasing Company and constitutes a legal, valid and
binding obligation of the Leasing Company, enforceable against the Leasing
Company in accordance with its terms, except as such enforceability may be
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or
general principles of equity and commercial reasonableness.
(d) Perfection; Priority. Upon the execution and delivery of
the Leasing Company Escrow Account Agreement, which is being done
contemporaneously with the execution and delivery of this Security Agreement,
the delivery to the Collateral Agent of the Collateral and the filing of the
Senior Note Collateral Documents relating to the Existing Collateral and the
documents listed on Schedule E attached hereto, to the extent such security
interest is created under applicable federal and New York laws, the security
interest and Liens in the Collateral created pursuant to this Security Agreement
and the Leasing Company Escrow Account Agreement create a valid and perfected
first priority security interest, subject to the Liens listed on Schedule D
attached hereto in the Existing Collateral, securing the payment of the
Obligations for the benefit of the Senior Note Trustee and the Holders of the
Senior Notes and the Convertible Note Trustee and the Holders of the Convertible
Notes, and enforceable as such against all creditors of the Leasing Company and
any Persons purporting to purchase any of the Existing Collateral from the
Leasing Company other than as permitted by the Senior Note Indenture; as of the
date hereof (and after giving effect to the use of proceeds of the issuance of
the Senior Notes), there are no other security interests in or Liens on the
Existing Collateral or any portion thereof, and no financing statement, pledge,
notice of Lien, assignment or collateral assignment, mortgage or deed of trust
covering the Existing Collateral or any portion thereof
5
<PAGE> 6
("Lien Notice") exists or is on file in any public office, except with respect
to Liens listed on Schedule E attached hereto, the Liens created by this
Security Agreement and the other Senior Note Collateral Documents and any junior
Liens on Telecommunications Asset Leases or Qualified Investments constituting
Collateral securing Intercompany Notes evidencing loans or advances made by the
Company to the Leasing Company.
(e) Offices. The Leasing Company's chief executive offices are
located at the address shown as the chief executive office in Schedule F
attached hereto ("Chief Executive Office"), and the Leasing Company has no
places of business other than those set forth in such Schedule F, except as
permitted hereafter by Section 6(c) hereof.
(f) Business Names. The Leasing Company has not conducted its
businesses under any corporate, partnership or fictitious name during the five
(5) years preceding the date hereof, other than those names set forth on
Schedule G attached hereto.
(g) No Consents. No consent of any other person and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (i) for
the granting of the Liens by the Leasing Company on the Collateral pursuant to
this Security Agreement or for the execution, delivery or performance of this
Security Agreement by the Leasing Company (except for filings listed on Schedule
D attached hereto, the filings and/or other actions necessary to maintain the
perfection of the Liens on the Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case,as may be required in connection with any such
disposition by laws affecting the offering and sale of the Qualified Investments
constituting Collateral.
(h) Litigation. No litigation, investigation or proceeding of
or before any arbitrator or governmental authority is pending or, to the
knowledge of the Leasing Company, threatened by or against the Leasing Company
with respect to this Security Agreement or any of the transactions contemplated
hereby.
(i) Accurate Information. As of the date hereof, all
information set forth herein relating to the Collateral is accurate and complete
in all respects.
SECTION 6. COVENANTS.
(a) Lien Notices. The Leasing Company will defend its interest
in the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein and the Leasing Company will not
permit any Lien Notices with respect to the Collateral or any portion thereof to
exist or be on file in any public office for more than 30 days after the Leasing
Company shall have notice thereof, except with respect to Permitted Liens or
Liens otherwise permitted by Section 4.11 of the Senior Note Indenture. The
Leasing Company
6
<PAGE> 7
will advise the Collateral Agent and the Trustees promptly, in reasonable
detail, at the addresses as specified in Section 17(a) of this Agreement, of any
Lien (other than Permitted Liens) on, or claim asserted against, any of the
Collateral.
(b) Location of Collateral. The Leasing Company will keep all
of its Collateral now held or subsequently acquired by it at the locations
specified on Schedule H hereto, or at locations hereafter established in
compliance with Section 6(c) hereof (except for Collateral held by the
Collateral Agent, a Trustee or the Escrow Agent), unless the Leasing Company
shall have given the Collateral Agent and the Trustees prior written notice
thereof and shall have in advance executed and caused to be filed and/or
delivered to the Collateral Agent and the Trustees any financing statements or
other documents required by the Trustees or the Collateral Agent in order to
perfect, protect and preserve the Liens and security interest created hereby,
all in form and substance satisfactory to the Collateral Agent and the Trustees.
(c) Location of Offices; Corporation Name; Legal Structure.
The Leasing Company will not change the location of its chief executive office
or establish any place of business other than those set forth on Schedule F
attached hereto, or voluntarily or involuntarily change its name, identity or
legal structure, including without limitation any continuance, amalgamation,
merger, consolidation or sale of substantially all of its assets, unless the
Leasing Company shall have given the Collateral Agent and the Trustees at least
30 days prior written notice thereof and shall have in advance executed and
caused to be filed and or delivered to the Collateral Agent and the Trustees any
financing statements or other Senior Note Collateral Documents required by the
Collateral Agent and the Trustees in order to perfect, protect and preserve the
Liens and security interest created hereby, all in form and substance
satisfactory to the Trustees and the Collateral Agent.
(d) Additional Collateral; Further Assurances. The Leasing
Company agrees that immediately upon becoming the beneficial owner of any
additional Telecommunications Asset Leases and proceeds of Asset Sales of
Telecommunications Assets subject to a Telecommunications Asset Lease, any
Qualified Investments constituting Collateral or Intercompany Notes constituting
Collateral, it will pledge and deliver to the Collateral Agent for the benefit
of the Senior Note Trustee and the equal and ratable benefit of the Holders of
the Senior Notes and for the benefit of the Convertible Note Trustee and the
equal and ratable benefit of the Holders of the Convertible Notes, the
certificates, instruments and documents representing such proceeds of Asset
Sales of Telecommunications Assets subject to a Telecommunications Asset Lease,
such Qualified Investments and such Intercompany Notes (as well as duly executed
instruments of transfer or assignment in blank), and grant to the Collateral
Agent for the benefit of the Senior Note Trustee and the equal and ratable
benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes pursuant to appropriate and necessary Senior Note
Collateral Documents, a continuing first priority security interest in and Liens
on such proceeds of Telecommunications Assets, such Qualified Investments or
such Intercompany Notes, all in form and substance satisfactory to the
Collateral Agent and the Trustees. The Leasing Company shall also promptly (and
in any event within five (5) Business Days after receipt thereof), subject to
7
<PAGE> 8
its compliance with the requirements of applicable law, deliver to the
Collateral Agent any other documents of title, promissory notes, certificates or
instruments representing Collateral which it holds. The Leasing Company further
agrees that it will promptly (and in any event within 5 Business Days after such
acquisition) deliver to the Collateral Agent and the Trustees an amendment, duly
executed by the Leasing Company, in substantially the form of Schedule I hereto
(an "Additional Collateral Amendment"), with respect to the additional
Collateral that is to be pledged pursuant to this Security Agreement. The
Leasing Company hereby authorizes the Collateral Agent and the Trustees to
attach each Additional Collateral Amendment to this Security Agreement and
agrees that any stock, notes or other forms of Investment listed on any
Additional Collateral Amendment delivered to the Collateral Agent or the
Trustees shall for all purposes hereunder be considered Collateral. The Leasing
Company will, promptly upon request by the Trustee, (i) execute and deliver,
cause to be executed and filed, or use its best efforts to give any notices, in
all appropriate jurisdictions (including Canada, Cyprus, the Russian Federation
and Kazakstan) or procure any financing statements, assignments, pledges or
other documents, all in form and substance satisfactory to the Collateral Agent
and the Trustee, (ii) mark any chattel paper constituting Collateral, and
deliver any certificates, chattel paper or instruments constituting Collateral
to the Collateral Agent or the Trustees, (iii) execute and deliver or cause to
be executed and delivered all stock powers, proxies, assignments, instruments
and other documents, all in form and substance satisfactory to the Collateral
Agent and the Trustee, and (iv) take any other actions that are necessary or, in
the reasonable opinion of the Collateral Agent and the Trustees, desirable to
perfect or continue the perfection and the priority of the Collateral Agent's
security interest and Liens in the Collateral, to protect the Collateral against
the rights, claims, or interests of third Persons other than holders of
Permitted Liens or Liens otherwise permitted by Section 4.11 of the Senior Note
Indenture or to effect the purposes of this Security Agreement. The Leasing
Company also hereby authorizes the Collateral Agent to file any financing or
continuation statements with respect to the Collateral without the signature of
the Leasing Company to the extent permitted by applicable law.
(e) Disposition of Collateral. The Leasing Company will not
sell, transfer, assign, pledge, collaterally assign, exchange or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or any Telecommunications Assets subject to a Telecommunications
Asset Lease except as permitted by the Senior Note Indenture and the Convertible
Note Indenture. If the proceeds of any sale of any Collateral are notes,
instruments, documents of title, standby letters of credit or chattel paper,
such proceeds shall be promptly delivered to the Collateral Agent to be held as
Collateral hereunder. If the Collateral, or any part thereof, is sold,
transferred, assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest and Liens of the Collateral Agent shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and the Leasing Company will hold the
proceeds thereof in an separate account for the benefit of the Senior Note
Trustee and for the equal and ratable benefit of the Holders of the Senior Notes
and the benefit of the Convertible Note Trustee and for the equal and ratable
benefit of the Holders of the Convertible Notes and transfer such proceeds to
the Collateral Agent or the applicable Trustee in kind to be held as Collateral
hereunder.
8
<PAGE> 9
(f) Restrictive Agreements. The Leasing Company agrees that,
except for existing agreements set forth on Schedule J attached hereto, it will
not (i) enter into any agreement or understanding that purports to or may
restrict or inhibit the Collateral Agent's or the Trustees' rights or remedies
hereunder, including, without limitation, the Collateral Agent's or the
Trustees' right to sell or otherwise dispose of the Collateral or amend or
modify in any manner materially adverse to the Trustees the existing agreements
set forth as Schedule J attached hereto, (ii) permit any issuer to continue,
merge, amalgamate or consolidate, unless all outstanding Capital Stock owned by
the Leasing Company of the surviving corporation is, upon such continuation,
merger, amalgamation or consolidation, pledged hereunder to the Collateral Agent
or (iii) fail to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with regard to the Collateral.
(g) Rights of Collateral Agent and Trustees. Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent and the Trustees shall have the right at any time to make any payments and
do any other acts as the Collateral Agent or either Trustee may deem necessary
to protect the Liens and security interest of the Collateral Agent in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any Lien which, in the judgment of the Collateral Agent or such
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Leasing Company hereby
agrees to reimburse the Collateral Agent and the Trustees for all payments made
and expenses incurred under this Security Agreement including reasonable fees,
expenses and disbursements of attorneys and paralegals acting for the Trustees,
including any of the foregoing payments under or acts taken to perfect or
protect its Liens and security interest in the Collateral, which amounts shall
be secured under this Security Agreement, and agrees that it shall be bound by
any payment made or act taken by the Collateral Agent or the Trustees hereunder.
Neither the Collateral Agent nor the Trustees shall have any obligation to make
any of the foregoing payments or perform any of the foregoing acts.
(h) Records. The Leasing Company will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral.
(i) Access. On reasonable notice to the Leasing Company,
except at any time during the continuation of Default or an Event of Default,
both the Collateral Agent and the Trustees shall at all times have full and free
access during normal business hours to all the books, correspondence and records
of the Leasing Company relating to the Collateral, and the Collateral Agent and
its representatives, and the Trustees and their respective representatives, may
examine the same, take extracts therefrom and make photocopies thereof, and the
Leasing Company agrees to render to the Collateral Agent and/or the applicable
Trustee, at the Leasing Company's cost and expense, such clerical and other
assistance, at all times and in such manner as may be requested with regard
thereto. On reasonable notice to the Leasing Company, except at any time during
the continuation of a Default or an Event of Default, the Collateral Agent and
its representatives, and the Trustees and their respective representatives,
shall at all times also have
9
<PAGE> 10
the right to enter, during normal business hours, into and upon any premises
where any of the Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(j) Taxes. The Leasing Company shall pay all taxes,
assessments and government charges and all claims as and to the extent required
by Section 4.6 of each of the Senior Note Indenture and the Convertible Note
Indenture; provided that the Leasing Company shall in any event pay such taxes,
assessments or levies not later than five days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment with regard to any
Collateral of the Leasing Company entered or filed against the Leasing Company
as a result of the failure to make such payment.
(k) Demand Obligations. The Leasing Company agrees that it
will cause each of the Restricted Subsidiaries that is obligated on any
Intercompany Note constituting Collateral that constitutes a demand obligation,
within the meaning of Section 3-108 of the Uniform Commercial Code of the State
of New York, to execute and deliver to the Collateral Agent and/or the Trustees
a new instrument extending, renewing and replacing such demand obligation not
later than the second anniversary of the date of original issue thereon and on
each succeeding second anniversary thereof.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing, the Leasing Company shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Collateral, including amending,
modifying, supplementing or replacing any Telecommunications Asset Lease, or any
part thereof for any purpose not inconsistent with the terms of this Security
Agreement, the Senior Note Indenture or any other Senior Note Collateral
Document or the Convertible Note Indenture or any Convertible Note Collateral
Documents; provided that the Leasing Company shall not exercise or shall refrain
from exercising any such right if such action would be inconsistent with or
violate any provisions of this Security Agreement, the Senior Note Indenture or
any other Senior Note Collateral Document or the Convertible Note Indenture or
any Convertible Note Collateral Documents.
(b) All payments made from time to time on, or with respect to
Telecommunications Asset Leases, Intercompany Notes constituting Collateral or,
Qualified Investments (other than Excluded Qualified Investments) constituting
Collateral, whether lease payments and rents, interest or principal payments,
dividends, distributions or otherwise, shall be delivered to the applicable
Trustee for deposit in the Leasing Company Escrow Account or the Convertible
Note Escrow Account if the Company Senior Note Escrow Account Agreement has been
terminated.
(c) The Collateral Agent and/or the Senior Note Trustee (or
the Convertible Note Trustee if the Senior Notes are no longer outstanding and
the Senior Note Indenture has been satisfied and discharged) shall execute and
deliver (or cause to be executed and delivered)
10
<PAGE> 11
to the Leasing Company all such proxies and other instruments as the Leasing
Company may reasonably request for the purpose of enabling the Leasing Company
to exercise the voting and other rights that it is entitled to exercise pursuant
to Section 7(a) above.
(d) Upon the occurrence and during the continuance of an Event
of Default, (i) all rights of the Leasing Company to exercise the voting and
other consensual rights that it would otherwise be entitled to exercise pursuant
to Section 7(a) shall cease, and all such rights shall thereupon become vested
in the Collateral Agent on behalf of, or if necessary, directly in, the Senior
Note Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged),
which shall thereupon have the sole right to exercise such voting and other
consensual rights.
(e) Upon the occurrence and during the continuance of an Event
of Default, the Leasing Company shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent and/or the Senior Note Trustee
(or the Convertible Note Trustee if the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged) all such
proxies and other instruments as the Collateral Agent and/or the applicable
Trustee may reasonably request for the purpose of enabling the Collateral Agent
and/or the applicable Trustee to exercise the voting and other rights that it is
entitled to exercise pursuant to Section 7(c) above.
(f) All lease payments and rents, all interest and principal
payments, all dividends and distributions and all other payments that are
received by the Leasing Company contrary to the provisions of this Section 7
shall be received in trust for the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, shall be segregated
from the other property or funds of the Leasing Company and be forthwith
delivered to the Collateral Agent as Collateral in the same form as so received
(with any necessary endorsements or other instruments of transfer or assignment
in blank), and all such payments shall be deposited in the Leasing Company
Escrow Account.
(g) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustees shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Leasing Company agrees and undertakes to do at the Leasing Company's
expense; provided that the Collateral Agent and the Trustees shall cooperate
with the Leasing Company and take all such action as the Leasing Company may
reasonably request to permit the Leasing Company to collect, protect or enforce
the Collateral. All reasonable expenses (including, without limitation,
attorneys' fees and legal expenses) actually incurred or paid by the Collateral
Agent and the Trustees in connection with or incident to any such collection or
attempt to collect, protect or enforce the Collateral shall be borne by the
Leasing Company or reimbursed by the Leasing Company to the Collateral Agent or
the applicable Trustee upon demand.
11
<PAGE> 12
(h) At the Collateral Agent's or the applicable Trustee's
option, exercisable upon and during the continuance of any Event of Default,
either the Collateral Agent or the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) may notify the lessees and other
obligors under the Telecommunications Asset Leases, the issuers or other
obligors of the Intercompany Notes constituting Collateral, the issuers and the
obligors of the Qualified Investments constituting Collateral that any and all
payments and distributions to be made on such Telecommunications Asset Leases,
such Intercompany Notes and such Qualified Investments shall be made directly to
the Collateral Agent or the applicable Trustee, and the Leasing Company hereby
directs the obligors and lessees of such Telecommunications Asset Leases, the
obligors of such Intercompany Notes, the issuers or other obligors of such
Qualified Investments to pay and deliver over to the Collateral Agent or the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) all payments and distributions to be made on such Intercompany
Notes, and such Qualified Investments, until such obligors or issuers are
notified in writing by the applicable Trustee or the Collateral Agent to
discontinue making such payments to it; and such obligors and issuers shall not
be required to see to the application of said proceeds by the Trustee or the
Collateral Agents. All such payments shall be deposited by such Trustee or the
Collateral Agent into the Leasing Company Escrow Account and held as additional
Collateral for the Obligations. If at any time the Collateral Agent or a Trustee
shall have notified such lessees, issuers and obligors to make all payments
directly to the Collateral Agent and if any at any time thereafter all Events of
Default shall thereafter have been cured or waived in accordance with the terms
of the Senior Note Indenture (or the Convertible Note Indenture if the Senior
Notes are no longer outstanding and the Senior Note Indenture has been satisfied
and discharged), the Collateral Agent or a Trustee may notify such lessees,
issuers and obligors to make all such payments directly to the Leasing Company
or as the Leasing Company may otherwise direct.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted
to the Senior Note Trustee pursuant to Article VI of the Senior Note Indenture
and the Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indenture, the Leasing Company hereby appoints and constitutes the Collateral
Agent and the Trustees, whether acting separately or jointly, as the Leasing
Company's attorneys-in-fact to exercise all of the following powers upon and at
any time after the occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Leasing Company to
the Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Leasing Company, to execute and give receipt for
any certificate
12
<PAGE> 13
of ownership or any document constituting Collateral, to transfer title to any
item of Collateral, to sign the Leasing Company's name on all financing
statements (to the extent permitted by applicable law) or any other Senior Note
Collateral Documents or other documents deemed necessary or appropriate by the
Collateral Agent to preserve, protect or perfect the Liens in the Collateral and
to file the same, to prepare, file and sign the Leasing Company's name on any
notice of Lien, and to prepare, file and sign the Leasing Company's name on a
proof of claim in bankruptcy or similar document against any customer of, or
person obligated upon any Collateral to, the Leasing Company, and to take any
other actions arising from or incident to the powers granted to the Collateral
Agent in this Security Agreement. This power of attorney is coupled with an
interest in the Trustees and in the Collateral Agent as agent on behalf of the
Trustees and is irrevocable by the Leasing Company.
SECTION 9. COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Leasing
Company fails to perform any covenant or agreement contained herein, the
Collateral Agent or either Trustee may, but shall not be obligated to, itself
perform, or cause performance of, such covenant or agreement, and the reasonable
expenses of the Collateral Agent or the Trustees incurred in connection
therewith shall be payable by the Leasing Company under Section 17(p) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustees in connection therewith. Each of the Collateral Agent and the Trustees
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent or such Trustee
accords similar property in similar situations, it being understood that the
Collateral Agent and the Trustees shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee has or is deemed to have knowledge of
such matters, (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (iii) inquiring into or verifying
that the Leasing Company has complied or will comply with its duty to furnish
additional items of Collateral to the Collateral Agent and/or the Trustees
pursuant to Section 6(d) hereof. Absent knowledge to the contrary, the
Collateral Agent and both Trustees may assume that the items of Collateral
actually delivered to it are all items required to be so delivered and may
assume that no other such items need be so delivered.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Leasing
Company represents to the Collateral Agent, the Senior Note Trustee and the
Holders of the Senior Notes, and the Convertible Note Trustee and the Holders of
the Convertible Notes that the Leasing Company has made its own arrangements for
keeping informed of changes or potential changes affecting the Collateral
(including, but not limited to, compliance with the covenants and the occurrence
of events of default under Telecommunications Asset Leases and the status of the
13
<PAGE> 14
related leased Telecommunications Assets, rights to convert, rights to
subscribe, payment of dividends, payments of interest and/or principal,
reorganization or other exchanges, tender offers and voting rights), and the
Leasing Company agrees that the Collateral Agent, the Senior Note Trustee and
the Holders of the Senior Notes, and the Convertible Note Trustee and the
Holders of the Convertible Notes shall have no responsibility or liability for
informing the Leasing Company of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereof. The
Leasing Company will defend the right, title and interest of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes in and to the
Collateral against the claims and demands of all persons.
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent may, subject to the provisions of the Senior
Note Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), this Security Agreement, and the Collateral Agent's and the
Trustees' compliance with any requirements of law (including, without
limitation, the applicable Uniform Commercial Code and the Personal Property
Security Act (Ontario)) applicable to the action to be taken, without notice to
or demand upon the Leasing Company except as required by the Senior Note
Indenture, the Convertible Note Indenture, this Agreement or applicable law, do
any one or more of the following:
(i) exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code and the Personal Property
Security Act (Ontario), specifically including, without limitation, the right to
recover the reasonable fees and expenses incurred by the Collateral Agent or the
Trustees in the enforcement of this Security Agreement or in connection with the
Leasing Company's redemption of the Collateral, including reasonable fees,
expenses and disbursements of attorneys, paralegals and agents;
(ii) at its option, transfer or register, and the Leasing
Company shall register or cause to be registered upon request therefor by the
Collateral Agent or the Trustees, the Collateral or any part thereof on the
books of the Restricted Subsidiary or Qualified Joint Venture which is a lessee
under a Telecommunications Asset Lease, the Persons in whom Qualified
Investments are made or the Restricted Subsidiaries to which an intercompany
loan evidenced by an Intercompany Note has been made, into the name of the
Collateral Agent or the Collateral Agent's nominee(s);
(iii) personally, or by agents or attorneys, immediately
retake possession of the Collateral or the Telecommunications Assets subject to
a Telecommunications Asset Lease, or any part thereof, from the Leasing Company
or any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Leasing
Company's premises where any of the Collateral is located and remove the same
and
14
<PAGE> 15
use in connection with such removal any and all services, supplies, aids and
other facilities of the Leasing Company;
(iv) sell, assign or otherwise liquidate, or direct the
Leasing Company to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of any such
sale or liquidation;
(v) require the Leasing Company to assemble the
Collateral or the Telecommunications Assets subject to a Telecommunications
Asset Lease or any part thereof and make it available at one or more places as
the Collateral Agent or the Trustees may designate and to deliver possession of
the Collateral or any part thereof to the Collateral Agent or the Trustees;
(vi) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by the Leasing
Company;
(vii) sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at such price
or prices as the Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit; and the purchaser of any or
all Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;
(viii) enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to estop or
prevent the Collateral Agent from pursuing any other or further remedy which it
may have, and any repossession or retaking or sale of the Collateral pursuant to
the terms hereof shall not operate to release the Leasing Company until full and
final payment of any deficiency has been made in cash;
(ix) in connection with any public or private sale under
the applicable Uniform Commercial Code, the Personal Property Act (Ontario) or
other applicable legislation, the Collateral Agent shall give the Leasing
Company at least fifteen (15) Business Days' prior written notice of the time
and place of any public sale of its Collateral or of the time after which any
private sale or other intended disposition thereof may be made, which shall be
deemed to be reasonable notice of such sale or other disposition. Such notice
may be given to the Leasing Company in accordance with the provisions of Section
17(a) hereof;
(x) proceed by an action or actions at law or in equity
to recover the Obligations or to foreclose this Security Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction;
(xi) exercise any other rights and remedies provided by
applicable law and the other Senior Note Collateral Documents; and
15
<PAGE> 16
(xii) if the Collateral Agent recovers possession of all
or any part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, the Collateral Agent may thereafter
retain, sell or otherwise dispose of such Collateral in accordance with this
Security Agreement or the applicable Uniform Commercial Code, the Personal
Property Act (Ontario) or other applicable legislation, and following such
retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Leasing Company hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Leasing Company further consents to the exoneration of any bond that the
Collateral Agent files in such action.
(b) If the Collateral Agent shall determine, or shall be
directed by the Senior Note Trustee (or the Convertible Note Trustee if the
Senior Notes are no longer outstanding and the Senior Note Indenture has been
satisfied and discharged), to exercise its right to sell any or all of the
Qualified Investments pursuant to Section 12(a) above, and if in the opinion of
counsel for the Collateral Agent it is necessary, or if in the opinion of the
Collateral Agent or such Trustee it is advisable, after such consultation with
investment bank(s), broker-dealer(s) or other experts selected by them, as the
Collateral Agent or such Trustee deems advisable or appropriate, to have the
Qualified Investments constituting Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), the Leasing Company will (i) use its best efforts to
cause the issuer or obligor to execute and deliver, and to cause such Person's
directors and officers to execute and deliver, all at the Leasing Company's own
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary or, in the opinion of the
Collateral Agent or such Trustee, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them, as the Collateral
Agent or such Trustee deems advisable or appropriate, advisable to register such
Qualified Investments constituting Collateral under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of 180
days from the date of the first public offering of such Qualified Investments,
or that portion thereof to be sold and (iii) make all amendments thereto and/or
to the related prospectus that are necessary or, in the opinion of the
Collateral Agent or such Trustee, are advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Leasing Company
agrees to use its best efforts to cause the applicable issuer or obligor to
comply with the provisions of the securities or "Blue Sky" laws of any
jurisdiction that the Collateral Agent or the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) shall designate for the
sale of such Qualified Investments and to make available to the security holders
of such issuer or obligor, as the case may be, as soon as practicable, an
earnings statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act. The Leasing Company will cause the
issuer or obligor, as the case may be, to furnish to the Collateral Agent and
the Trustees such number of copies as the Collateral Agent and the Trustees may
reasonably request of each preliminary prospectuses and prospectuses, to notify
promptly the Collateral Agent and the Trustees of the happening of any event as
a result of which any then effective
16
<PAGE> 17
prospectus includes an untrue statement of any material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of then existing circumstances and cause the
Collateral Agent and the Trustees to be furnished with such number of copies as
the Collateral Agent or the Trustees may request of such supplement to or
amendment of such prospectus as is necessary to eliminate such untrue statement
or supply such omission. The Leasing Company will cause the issuer or obligor,
as the case may be, to the extent permitted by law, to indemnity, defend and
hold harmless the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes from and against all losses, liabilities, expenses or claims
(including reasonable costs of investigation) that the Collateral Agent, the
Senior Note Trustee and the Holders of the Senior Notes, and the Convertible
Note Trustee and the Holders of the Convertible Notes may incur under the
Securities Act or otherwise, insofar as such losses, liabilities, expenses or
claims arise out of or are based upon any alleged untrue statement of a material
fact contained in such registration statement (or any amendment thereto) or in
any preliminary prospectus or prospectus (or any amendment or supplement
thereto), or arise out of or are based upon any alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except to the extent that any such losses, liabilities,
expenses or claims arise solely out of or are based solely upon any such alleged
untrue statement made or such alleged omission to state a material fact included
or excluded on the written direction of the Collateral Agent or such Trustee.
The Leasing Company will bear, or will cause the issuer or obligor, as the case
may be, to bear, all costs and expenses of carrying out its or their obligations
hereunder. The provisions of this Section 12(b) shall in no way impose upon
either Trustee or the Collateral Agent any duty to execute any registration
statement under the Securities Act with respect to any Qualified Investment.
(c) In view of the fact that federal, state and foreign
securities laws may impose certain restrictions on the method by which a sale of
the Collateral may be effected after an Event of Default, the Leasing Company
agrees that upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, from time to time, attempt to sell all or any
part of the Collateral by means of a private placement, restricting the
prospective purchasers to those who will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, the
Collateral Agent may solicit, or may cause an investment manager to solicit,
offers to buy the Collateral, or any part of it, for cash, from a limited number
of investors who might be interested in purchasing the Collateral. The Leasing
Company acknowledges and agrees that any such private sale may result in prices
and terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Collateral for
the period of time necessary to permit the Leasing Company to cause the issuer
or obligor to register such securities for public sale under the Securities Act,
or under applicable state or foreign securities laws, even if the Leasing
Company could cause the issuer or obligor, as the case may be, to do so.
17
<PAGE> 18
(d) The Leasing Company further agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this Section
12 valid and binding and in compliance with any and all other applicable
requirements of applicable law. The Leasing Company further agrees that a breach
of any of the covenants contained in this Section 12 will cause irreparable
injury to the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and that the
Collateral Agent, the Senior Note Trustee and the Holders of the Senior Notes
and the Convertible Note Trustee and the Holders of the Convertible Notes have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 12 shall be specifically
enforceable against the Leasing Company, and the Leasing Company hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred and
is continuing.
(e) Any cash held by the Collateral Agent as Collateral and
all cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of
such sale, including, without limitation, reasonable expenses
of the Collateral Agent and its agents including the fees and
expenses of its counsel, and all expenses, liabilities and
advances made or incurred by the Collateral Agent in
connection therewith or pursuant to Section 17(p) hereof:
Next, to the Senior Note Trustee for the payment in
full of all amounts due under Section 7.7 of the Senior Note
Indenture;
Next, to the Senior Note Trustee, for distribution to
the Holders of the Senior Notes for the payment in full of the
remaining Senior Note Obligations;
Next, to the Convertible Note Trustee for the payment
in full of all amounts due under Section 7.7 of the
Convertible Note Indenture.
Next, to the Convertible Note Trustee, for
distribution to the Holders of the Convertible Notes, for the
payment in full of the remaining Convertible Note Obligations;
and
Finally, after payment in full of all of the
Obligations, to the Company, or its successors or assigns, or
to whomsoever may be lawfully entitled to receive the same as
a court of competent jurisdiction may direct.
(f) If any sale or other disposition of Collateral by the
Collateral Agent or any other action of the Collateral Agent or the Trustees
hereunder results in reduction of the Obligations, such action will not release
the Leasing Company from its liability for any unpaid
18
<PAGE> 19
Obligations, including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall be immediately
due and payable to the Collateral Agent, the Senior Note Trustee and the Holders
of the Senior Notes as provided for in the Senior Note Indenture, or, if
applicable, the Convertible Note Trustee and the Holders of the Convertible
Notes as provided for in the Convertible Note Indenture.
(g) The Collateral Agent may enforce its rights hereunder
without prior judicial process or judicial hearing, and to the extent permitted
by law the Leasing Company expressly waives any and all legal rights which might
otherwise require the Collateral Agent to enforce its right by judicial process.
(h) The existence and/or exercise of any or all of the rights
and remedies given to the Collateral Agent and/or either Trustee under this
Section 12 shall be subject in all cases to compliance with any mandatory
requirements of applicable law, particularly the laws of jurisdictions other
than the United States.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO THE
APPLICABLE ISSUER. The Leasing Company hereby authorizes and instructs the
lessees, issuers and obligors to comply with any instructions received by a
lessee, issuer or obligor, as the case may be, from the Collateral Agent or the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) that (i) states that an Event of Default has occurred and (ii) is
otherwise in accordance with the terms of this Security Agreement, without any
other or further instructions from the Leasing Company, and the Leasing Company
agrees that the lessees, issuers and obligors shall be fully protected in so
complying.
SECTION 14. ESCROW ACCOUNT. All money received by the Leasing Company
and required to be deposited in the Leasing Company Escrow Account, shall be
promptly and without commingling remitted to the Collateral Agent or the Senior
Note Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged) for
deposit therein. Amounts held in the Leasing Company Escrow Account shall be
applied or disposed of only in a manner not prohibited by the Senior Note
Indenture or the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged.
SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and the Liens
or security interests hereunder, and all obligations of the Leasing Company
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Senior Note
Indenture, any Senior Note Collateral Document, any Senior Note Guarantee, the
Convertible Note Indenture,
19
<PAGE> 20
any Convertible Note Collateral Document, any Convertible Note Guarantee or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Senior Note Indenture or the
Senior Note Collateral Documents or from the Convertible Note Indenture or the
Convertible Note Collateral Documents;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral, or any release or amendment or waiver of or
consent to departure from any Senior Note Guarantee, any Convertible Note
Guarantee or other guarantee, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Leasing Company in respect of the
Obligations or of this Security Agreement.
SECTION 16. WAIVERS.
(a) Except as may be required under the provisions of the
Senior Note Indenture (or of the Convertible Note Indenture if the Senior Notes
are no longer outstanding and the Senior Note Indenture has been satisfied and
discharged) and to the fullest extent permitted under applicable law, neither
the Collateral Agent nor the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) shall be under any duty whatsoever
to make or give any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Collateral or
the Obligations, or to take any steps reasonably necessary to preserve any
rights against any Obligor or other Person. The Leasing Company waives to the
fullest extent permitted under applicable law any right of marshalling in
respect of any and all Collateral, and waives to the fullest extent permitted
under applicable law any right to require the Collateral Agent or the applicable
Trustee to proceed against any Obligor or other Person, exhaust any Collateral
or enforce any other remedy which the Collateral Agent or the applicable Trustee
now has or may hereafter have against any Obligor or other Person.
(b) The Leasing Company waives to the fullest extent permitted
under applicable law (i) any and all notices of acceptance, creation,
modification, rearrangement, renewal or extension for any period of any
instrument executed by any obligor in connection with the Obligations and (ii)
any defense of any Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. The Leasing
Company authorizes the Collateral Agent to the fullest extent permitted under
applicable law, without notice or demand and without any reservation of rights
against the Leasing Company and without affecting the Leasing Company's
liability hereunder or on the Obligations, from time to time to (w) take and
hold other Property, other than the Collateral, as security for the Obligations,
and
20
<PAGE> 21
exchange, enforce, waive and release any or all of the Collateral, (x) after the
occurrence and during the continuance of an Event of Default and the
acceleration of the Senior Notes, apply the Collateral in the manner permitted
by this Security Agreement or the Senior Note Indenture, (y) after the
occurrence and during the continuance of an Event of Default and the
acceleration of the Convertible Notes if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged,
apply the Collateral in the manner permitted by this Security Agreement or the
Convertible Note Indenture and (z) after the occurrence and during the
continuance of an Event of Default renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or release the
obligations of any obligor on, or any instrument or agreement of such other
Person with respect to any or all of, the Collateral.
SECTION 17. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Leasing Company, at its address as set forth in
Section 13.2 of the Senior Note Indenture, to the Senior Note Trustee at its
address as set forth in Section 13.2 of the Senior Note Indenture, to the
Convertible Note Trustee at its address as set forth in Section 13.2 of the
Convertible Note Indenture and to the Collateral Agent at The Bank of New York,
101 Barclay Street, Floor 21 West, New York, New York 10286.
(b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Senior Note Indenture or the Convertible Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Senior Note
Trustee for deposit in the Leasing Company Escrow Account.
(c) No Adverse Interpretation of Other Agreements. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of the Leasing Company or any Subsidiary of the Leasing Company. No
such pledge, security or debt agreement may be used to interpret this Security
Agreement.
(d) Severability. The provisions of this Security Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(e) Headings. The headings in this Security Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
21
<PAGE> 22
(f) Counterpart Originals. This Security Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
(g) Benefits of Security Agreement. Nothing in this Security
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Holders of the Senior Notes and
the Senior Note Guarantors and the Holders of the Convertible Notes and the
Convertible Note Guarantors, any benefit or any legal or equitable right, remedy
or claim under this Security Agreement.
(h) Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Security Agreement and any consent to any departure by
the Leasing Company from any provision of this Security Agreement shall be
effective only if made or given in compliance with all of the terms and
provisions of the Senior Note Indenture and the Convertible Note Indenture and
neither the Collateral Agent or the Senior Note Trustee nor any Holder of any
Senior Note or the Convertible Note Trustee or any Holder of any Convertible
Note shall be deemed, by any act, delay, indulgence, omission or otherwise, to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
Failure of the Collateral Agent or the Trustees to exercise, or delay in
exercising, any right, power or privilege hereunder shall not operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent, the
Senior Note Trustee or any Holder of any Senior Note or the Convertible Note
Trustee or any Holder of any Convertible Note of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that
the Collateral Agent, either Trustee or any such Holder would otherwise have on
any future occasion. The right and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
(i) Interpretation of Security Agreement. All terms not
defined herein or in the Senior Note Indenture shall have the meaning set forth
in the applicable Uniform Commercial Code of the State of New York, except where
the context otherwise requires. To the extent a term or provision of this
Security Agreement conflicts with the Senior Note Indenture, the Senior Note
Indenture shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Security Agreement shall not be relevant in determining the meaning
of this Security Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
(j) Continuing Security Interest; Transfer of Collateral. This
Security Agreement shall create a continuing Lien and security interest in the
Collateral and shall (i) unless otherwise provided in the Senior Note Indenture,
the Convertible Note Indenture or this Security Agreement, remain in full force
and effect until payment in full of (A) the Senior Notes under the terms of the
Senior Note Indenture, (B) all Obligations then due and owing under the
22
<PAGE> 23
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents; provided, however, that after receipt from the Leasing Company by the
Collateral Agent of a request for a release of any Collateral permitted under
the Senior Note Indenture and the Convertible Note Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Senior Note Indenture and the Convertible Note Indenture and
upon receipt by the Collateral Agent of all proceeds of such sale, transfer,
assignment, exchange or other disposition required to be remitted to the
Collateral Agent or the Senior Note Trustee (or the Convertible Note Trustee if
the Senior Notes are no longer outstanding and the Senior Note Indenture has
been satisfied and discharged) or the Collateral constituting the proceeds of
such sale, transfer, assignment, exchange or other disposition being made
subject to a Lien and security interest in favor of the Collateral Agent for the
benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and the equal and ratable benefit of the Holders of the Convertible Notes, which
Lien has the same priority as had the Lien on the Collateral being sold,
assigned or otherwise disposed of, such Collateral shall be released from the
Lien and security interest created hereunder and no longer constitute
Collateral. Upon the payment in full of (A) the Senior Notes under the terms of
the Senior Note Indenture, (B) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents, the Leasing Company shall be entitled to the return, upon its request
and at its expense, of such of the Collateral pledged by it as shall not have
been sold or otherwise applied pursuant to the terms hereof. This Security
Agreement shall be binding upon the Leasing Company, its successors and assigns,
and inure, together with the rights and remedies of the Trustees hereunder, to
the benefit of the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes and their respective successors, transferees and assigns.
(k) Reinstatement. This Security Agreement shall continue to
be effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note or the Convertible Note Trustee or any Holder of a Convertible Note
in respect of the Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note, or the Convertible Note Trustee or any Holder of a Convertible Note
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization or
the Leasing Company or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for the Leasing Company or upon the
appointment of any receiver, intervenor, conservator, trustee or similar
official for the Leasing Company or any substantial part of its assets, or
otherwise, all as though such payments had not been made.
23
<PAGE> 24
(l) Survival of Provisions. All representations, warranties
and covenants of the Leasing Company contained herein shall survive the
execution and delivery of this Security Agreement, and shall terminate only upon
the full and final payment and performance by the Leasing Company of the
Obligations.
(m) Authority of Collateral Agent and Trustees. Both the
Collateral Agent and the Trustees shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent and the
Trustees by the terms hereof, together with such powers as are reasonably
incident thereto. The Collateral Agent and the Trustees may perform any of their
respective duties hereunder or in connection with the Collateral by or through
agents or employees and shall be entitled to retain counsel and to act in
reliance upon the advice of counsel concerning all such matters. None of the
Collateral Agent, any director, officer, any attorney or agent of the Collateral
Agent, the Senior Note Trustee, any director, officer, employee, attorney or
agent of the Senior Note Trustee, the Holders of the Senior Notes, the
Convertible Note Trustee, any director, officer, employee, attorney or agent of
the Convertible Note Trustee and the Holders of the Convertible Notes shall be
liable to the Leasing Company for any action taken or omitted to be taken by it
or them hereunder, except for its or their own negligence or willful misconduct,
nor shall the Collateral Agent or the Trustees be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents, the Senior Note Trustee and its directors, officers,
employees, attorneys and agents, the Convertible Note Trustee, any director,
officer, employee, attorney or agent of the Convertible Note Trustee, the
Holders of the Senior Notes and the Holders of the Convertible Notes shall be
entitled to rely on any communication, instrument or document believed by it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons. Neither the Collateral Agent nor the Trustees shall be
required to, and shall not, expend or risk any of its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.
The Leasing Company acknowledges that the rights and
responsibilities of the Collateral Agent and the Trustees under this Security
Agreement with respect to any action taken by the Collateral Agent and the
Trustees or the exercise or non-exercise by the Collateral Agent and the
Trustees of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Security Agreement
shall, as among the Collateral Agent, the Senior Note Trustee, the Holders of
the Senior Notes, the Convertible Note Trustee and the Holders of the
Convertible Notes, be governed by the Senior Note Indenture or the Convertible
Note Indenture, as applicable and by such other agreements with respect thereto
as may exist from time to time among them, but, as among the Collateral Agent,
the Trustees and the Leasing Company, the Collateral Agent and the Trustees
shall be conclusively presumed to be acting as agent for the Holders of the
Senior Notes or Holders of the Convertible Notes, as the case may be, with full
and valid authority so to act or refrain from acting, and the Leasing Company
shall not be obligated or entitled to make any inquiry respecting such
authority.
In any case in which the Collateral Agent shall be
required or permitted to make any determination as to the extent to which the
security interest or Liens under this Security
24
<PAGE> 25
Agreement secures any obligations, the Collateral Agent is authorized, without
any direction from, or requirement for consent of or authorization by, the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), to institute proceedings in a court of competent jurisdiction for
the obtaining of any authoritative determination of such matter. If the
Collateral Agent institutes any such proceeding, it shall give prompt written
notice thereof to the Trustees and shall afford each of them the opportunity to
participate in such proceeding.
(n) Limitation by Law. All rights, remedies and powers
provided herein may be exercised only to the extent that they will not render
this Security Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.
(o) Release; Termination of Security Agreement.
(i) Subject to the provisions of Section 17(k) hereof,
this Security Agreement shall terminate upon payment in full of (A) the Senior
Notes under the terms of the Senior Note Indenture and (B) all Obligations then
due and owing under the Senior Note Indenture, the Senior Note Guarantees, and
the Senior Note Collateral Documents, (C) the Convertible Notes under the terms
of the Convertible Note Indenture and (D) all Obligations then due and owing
under the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, except that the provisions of Section
17(p) hereof shall survive.
(ii) The Leasing Company agrees that it will not sell or
dispose of any of the Collateral in violation of the Senior Note Indenture or
the Convertible Note Indenture; provided, however, that if the Leasing Company
shall sell or otherwise dispose of any of the Collateral in accordance with the
terms of the Senior Note Indenture and of the Convertible Note Indenture, the
Collateral Agent shall, and the Trustees shall cause, at the request of the
Leasing Company, release or cause to be released the Collateral subject to such
sale or disposition free and clear of the Liens and security interest under this
Security Agreement.
(iii) Upon any termination of this Security Agreement or
release of any Collateral as permitted by the Senior Note Indenture (or the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) the Collateral Agent
and the Trustees will, at the expense of the Leasing Company, execute and
deliver to the Leasing Company such documents and take such other actions as the
Leasing Company shall reasonably request to evidence the termination of this
Security Agreement or the release of such Collateral, as the case may be. Any
such action taken by the Collateral Agent or the Trustees shall be without
warranty by or recourse to the Collateral Agent or the Trustees, except as to
the absence of any prior assignments by the Collateral Agent or the Trustees of
its interests in the Collateral, and shall be at the expense of the Leasing
Company. The Collateral Agent and the Trustees may conclusively rely on any
certificate delivered to it by the Leasing Company stating that the execution of
such documents and release of the Collateral is in accordance with and permitted
by the terms of this Security Agreement and the Senior Note
25
<PAGE> 26
Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged).
(p) Payment of Fees and Expenses. The Leasing Company will
upon demand pay to the Collateral Agent and the Trustees, without duplication,
the amount of any and all expenses, including, without duplication, the fees and
disbursements of its counsel and of any experts and agents, that the Collateral
Agent and the Trustees may incur in connection with (i) administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
and the Trustees hereunder or (iv) the failure by the Leasing Company to perform
or observe any of the provisions hereof. The Leasing Company shall be liable for
and shall reimburse and indemnify both Trustees and the Collateral Agent and
hold both Trustees and the Collateral Agent harmless from and against any and
all claims, losses, liabilities, costs, damages or expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") arising from
or in connection with or related to this Agreement or being a Trustee or
Collateral Agent hereunder (including but not limited to Losses incurred by such
Trustee or Collateral Agent in connection with its successful defense, in whole
or in part, of any claim of negligence or willful misconduct in its part),
provided, however, that nothing contained herein shall require the Trustees and
the Collateral Agent to be indemnified for their respective negligence or
willful misconduct.
(q) Final Expression. This Security Agreement, together with
the Senior Note Indenture, the Convertible Note Indenture and any other
agreement executed in connection herewith or therewith, is intended by the
parties as a final expression of this Security Agreement and is intended as a
complete and exclusive statement of the terms and conditions hereof.
(r) Leasing Company Remain Liable. Anything herein to the
contrary notwithstanding, (a) the Leasing Company shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Security Agreement had not been executed, (b) the exercise by
the Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Leasing Company from any of its duties or obligations under the
contracts and agreements included in the Collateral and (c) the Collateral Agent
and the Trustees shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Security Agreement,
nor shall the Collateral Agent or the Trustees be obligated to perform any of
the obligations or duties of the Leasing Company thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
(s) Indentures. This Security Agreement is subject to the
terms, conditions and provisions of the Senior Note Indenture, or of the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged.
(t) Where there is a conflict between the provisions of this
Security Agreement and the Senior Note Indenture, as the case may be, the
provisions of the Senior Note Indenture
26
<PAGE> 27
or the Convertible Note Indenture shall prevail; and if the Senior Note
Indenture has been satisfied and discharged, where there is a conflict between
the provisions of this Security Agreement and the Convertible Note Indenture,
the provisions of the Convertible Note Indenture shall prevail.
(u) Rights of Holders. No Holder of a Senior Note or of a
Convertible Note shall have any independent rights hereunder other than those
rights granted to individual Holders pursuant to Section 6.7 of the Senior Note
Indenture or Section 6.7 of the Convertible Note Indenture, as the case may be;
provided that nothing in this subsection (t) shall limit any rights granted to
the Senior Note Trustee under the Senior Notes, the Senior Note Indenture or the
Senior Note Collateral Documents or the Convertible Note Trustee under the
Convertible Notes, the Convertible Note Indenture or the Convertible Note
Collateral Documents.
(v) No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Leasing Company or of any subsidiary of the
Leasing Company, as such, shall have any liability for any obligations of the
Leasing Company under this Security Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
(w) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE LEASING COMPANY, THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE AND
THE HOLDERS OF THE SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE AND THE HOLDERS
OF THE CONVERTIBLE NOTES IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND
DECISIONS OF THE STATE OF NEW YORK.
(ii) THE LEASING COMPANY AGREES THAT THE COLLATERAL AGENT
SHALL, IN ITS CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE
SENIOR NOTE TRUSTEE AND ANY HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE
TRUSTEE AND ANY HOLDERS OF CONVERTIBLE NOTES, AND THE SENIOR NOTE TRUSTEE SHALL,
IN ITS CAPACITY AS SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY
HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS CAPACITY
AS CONVERTIBLE NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF
CONVERTIBLE NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE LEASING COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN
27
<PAGE> 28
GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE TRUSTEES TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
COLLATERAL AGENT OR EITHER TRUSTEE. THE LEASING COMPANY AGREES THAT IT WILL NOT
ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS- CLAIMS IN ANY PROCEEDING BROUGHT BY
THE COLLATERAL AGENT OR EITHER TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT OR SUCH
TRUSTEE. THE LEASING COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH EITHER TRUSTEE HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) TO, THE EXTENT PERMITTED BY APPLICABLE LAW, THE
LEASING COMPANY, THE COLLATERAL AGENT AND THE TRUSTEES EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SECURITY
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) THE LEASING COMPANY AGREES THAT NONE OF THE
COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE, ANY HOLDER OF A SENIOR NOTE, THE
CONVERTIBLE NOTE TRUSTEE AND ANY HOLDER OF A CONVERTIBLE NOTE SHALL HAVE ANY
LIABILITY TO THE LEASING COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) FOR LOSSES SUFFERED BY THE LEASING COMPANY IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE COLLATERAL AGENT, SUCH
TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT
OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT, THE SENIOR NOTE
TRUSTEE OR SUCH HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY
HOLDER OF A CONVERTIBLE NOTE, AS THE CASE MAY BE, CONSTITUTING NEGLIGENCE OR
WILLFUL MISCONDUCT.
(v) THE LEASING COMPANY WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE SENIOR NOTE TRUSTEE OR ANY
HOLDER OF A SENIOR NOTE OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH
OR LEVY UPON THE COLLATERAL
28
<PAGE> 29
OR OTHER SECURITY FOR THE OBLIGATIONS. THE LEASING COMPANY WAIVES THE POSTING OF
ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR
ANY HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OR
THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE, OR TO ENFORCE
BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS SECURITY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT AMONG THE
LEASING COMPANY ON THE ONE HAND AND THE COLLATERAL AGENT, THE SENIOR NOTE
TRUSTEE AND/OR THE HOLDERS OF THE SENIOR NOTES ON THE OTHER HAND.
(x) Appointment of Collateral Agent. Pursuant to, and
subject to the provisions of, Section 7.12 of the Senior Note Indenture and of
Section 7.12 of the Convertible Note Indenture, the Trustees hereby appoint the
Collateral Agent, and the Collateral Agent accepts appointment, as collateral
agent under the terms of this Security Agreement. The Collateral Agent may
resign at any time by giving written notice thereof to the Trustees and may be
removed at any time with or without cause by the Trustees acting together. Prior
to the effectiveness of any such resignation or removal, the Trustees acting
together shall have the right to appoint a successor Collateral Agent which
shall be a commercial bank organized or chartered under the laws of the United
States of America or any state thereof having combined capital and surplus of at
least $50,000,000. If no successor Collateral Agent shall have been so appointed
by the Trustees acting together, and shall have accepted such appointment within
30 days after the retiring Collateral Agent's giving of notice of resignation or
the Trustee's removal of the retiring Collateral Agent, then the retiring
Collateral Agent shall, prior to the effectiveness of its resignation or
removal, on behalf of the Convertible Note Trustee, the Holders of the
Convertible Notes, the Senior Note Trustee and the Holders of the Senior Notes
appoint a successor Collateral Agent, which shall be a commercial bank organized
under the laws of the United States of America or any state thereof having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent, and
the retiring Collateral Agent shall be discharged from its duties and
obligations under this Security Agreement. After any retiring Collateral Agent's
resignation or removal hereunder as Collateral Agent, the provisions of this
Security Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Collateral Agent under this Security Agreement.
Any corporation into which the Collateral Agency may be merged, or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Agent shall be a party, shall be
Collateral Agent under this Security Agreement without the execution or filing
of any paper or any further act on the part of the parties hereto.
29
<PAGE> 30
[SIGNATURE PAGE FOLLOWS]
30
<PAGE> 31
IN WITNESS WHEREOF, the Leasing Company has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
PLD CAPITAL LIMITED
By: /s/ Clayton A. Waite
-----------------------------------------
Name: Clayton A. Waite
---------------------------------------
Title: Director
--------------------------------------
By its acceptance hereof, as of the day and year first above written,
the Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee
agree to be bound by the provisions hereof.
THE BANK OF NEW YORK, as Collateral
Agent, Senior Note Trustee and Convertible
Note Trustee
By: /s/ Steven D. Torgeson
-----------------------------------------
Name: Steven D. Torgeson
---------------------------------------
Title: Assistant Treasurer
--------------------------------------
<PAGE> 32
SCHEDULE A
to Leasing Company
Security and
Pledge Agreement
QUALIFIED INVESTMENTS
None.
32
<PAGE> 33
SCHEDULE B
to Leasing Company
Security and
Pledge Agreement
TELECOMMUNICATIONS ASSET LEASES
None.
33
<PAGE> 34
SCHEDULE C
to Leasing Company
Security and
Pledge Agreement
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
None.
34
<PAGE> 35
SCHEDULE D
to Leasing Company
Security and
Pledge Agreement
LIENS ON EXISTING COLLATERAL
None.
35
<PAGE> 36
SCHEDULE E
to Leasing Company
Security and
Pledge Agreement
FILINGS
1. UCC-1 financing statements filed with the Secretary of State of the
State of New York.
2. UCC-1 financing statements filed with the City Registers Office, New
York County, New York.
3. Each of the following agreements will, within seven days of the Issue
Date, be registered with both the Secretary of the Companies of Cyprus
and the Cyprus Official Register:
a. This Security Agreement.
b. Leasing Company Escrow Account Agreement of even date herewith
among The Bank of New York, as escrow agent, the Senior Note
Trustee, the Convertible Note Trustee and PLD Asset Leasing
Limited.
36
<PAGE> 37
SCHEDULE F
to Leasing Company
Security and
Pledge Agreement
CHIEF EXECUTIVE OFFICES
IRIS Tower, Off. 602
58 Arch. Makarios III Avenue
Nicosia, CYPRUS
37
<PAGE> 38
SCHEDULE G
to Leasing Company
Security and
Pledge Agreement
BUSINESS NAMES
None.
38
<PAGE> 39
SCHEDULE H
to Leasing Company
Security and
Pledge Agreement
LOCATION OF COLLATERAL
The Company's chief executive offices (see Schedule F).
39
<PAGE> 40
SCHEDULE I
to Leasing Company
Security and
Pledge Agreement
FORM OF ADDITIONAL COLLATERAL AMENDMENT
This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, and grants to the
Senior Note Trustee for its benefit and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and the equal and ratable benefit of the Holders of the Convertible Notes,
continuing Liens and security interest in all of its rights, title and interest
in the Collateral listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Leasing Company Security and Pledge Agreement, dated as
of May 31, 1996, between the undersigned and The Bank of New York, as Senior
Note Trustee, as Convertible Note Trustee and as Collateral Agent (the "Security
Agreement"); capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in the Security Agreement; and the
Collateral listed on this Additional Collateral Amendment shall be deemed to be
part of the Collateral, and shall become part of the Collateral and shall secure
all Obligations.
PLD ASSET LEASING LIMITED
By:
Name:
Title:
40
<PAGE> 41
INTERCOMPANY NOTES:
<TABLE>
<CAPTION>
Description Name of Restricted Original
Item of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
- ------ ------------ --------- ---- ------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
TELECOMMUNICATIONS ASSET LEASES:
<TABLE>
<CAPTION>
General
Description of Description of
Telecommunications Leased
Name of Asset Telecommunications
Lessee Lease Assets Date
------ ----- ------ ----
<S> <C> <C> <C>
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
41
<PAGE> 42
INTERCOMPANY NOTES:
<TABLE>
<CAPTION>
Name of Restricted
Subsidiary
(Obligor) Original
Item Description of --------- Principal
Number Indebtedness Date Amount
------ ------------ ---- ------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
OTHER COLLATERAL:
<TABLE>
<CAPTION>
Description of
Qualified Investment
or other Collateral Evidenced By Obligor Date
------------------- ------------ ------- ----
<S> <C> <C> <C>
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
42
<PAGE> 43
SCHEDULE J
to Leasing Company
Security and
Pledge Agreement
RESTRICTIVE AGREEMENTS
None.
43
<PAGE> 1
EXHIBIT 4.19
NWE CYPRUS SENIOR NOTE SECURITY AND PLEDGE AGREEMENT
THIS NWE CYPRUS SENIOR NOTE SECURITY AND PLEDGE AGREEMENT (the
"Security Agreement") is made and entered into as of May 31, 1996 by NWE CAPITAL
(CYPRUS), LIMITED, a Cypriot corporation (the "Company"), in favor of THE BANK
OF NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Senior Note Trustee") under the Senior Note Indenture (as defined herein) for
the holders of the Senior Notes (as defined herein), THE BANK OF NEW YORK, a New
York banking corporation, as trustee (in such capacity, the "Convertible Note
Trustee") under the Convertible Note Indenture (as defined herein) for the
holders of the Convertible Notes (as hereinafter defined) and THE BANK OF NEW
YORK, as collateral agent (in such capacity, the "Collateral Agent").
WITNESSETH:
WHEREAS, Petersburg Long Distance Inc., an Ontario corporation, as
issuer (the "Issuer"), the Senior Note Trustee, and the Company, PLD Asset
Leasing Limited, a Cypriot corporation ("PLD Asset"), PLD Capital Limited, a
Cypriot corporation ("PLD Capital together with PLD Asset, the "Leasing
Companies"), Baltic Communications Limited, a Russian joint stock company of the
closed type ("BCL"), and Wireless Technology Corporations Limited, a British
Virgin Islands corporation ("WTC"), as Guarantors (the "Senior Note
Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Senior Note Indenture") pursuant to which the Company is issuing
$123,000,000 in aggregate principal amount at Stated Maturity of its 14% Senior
Discount Notes due 2004 (the "Senior Notes"); and
WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Convertible Note
Guarantors"), have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture") pursuant to which the Company is issuing
$26,500,000 in aggregate principal amount of its 9% Convertible Notes due 2006
(the "Convertible Notes"); and
WHEREAS, to secure its obligations under the Senior Note Indenture and
its Senior Note Guarantee and the other Collateral Documents (as defined in the
Senior Note Indenture) (together with the Issuer's obligations under the Senior
Notes, the Senior Note Indenture, and the Senior Note Collateral Documents and
the other Senior Note Guarantors' obligations under the Senior Note Indenture,
the guarantees contained therein (the "Senior Note Guarantees") and the Senior
Note Collateral Documents, the
<PAGE> 2
"Senior Note Obligations"), and to secure its obligations under the Convertible
Note Indenture and the Convertible Notes and the other Convertible Note
Collateral Documents (as defined in the Senior Note Indenture) (together with
the Convertible Note Guarantors' obligations under the Convertible Note
Indenture, the guarantees contained therein (the "Convertible Note Guarantees")
and the Convertible Note Collateral Documents, the "Convertible Note
Obligations"), the Issuer has agreed to cause the Company (i) to grant to the
Collateral Agent for the benefit of the Senior Note Trustee and the equal and
ratable benefit of the holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes, Liens and security interests in and to the Collateral (as
defined herein) and (ii) to execute and deliver this Security Agreement in order
to secure the payment and performance by the Company of the Senior Note
Obligations and the Convertible Note Obligations (collectively, the
"Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Senior Notes to purchase the Senior Notes and the Holders of
the Convertible Notes to purchase the Convertible Notes, the Company hereby
agrees with the Collateral Agent, with the Senior Note Trustee for its benefit
and the equal and ratable benefit of the Holders of the Senior Notes and with
the Convertible Note Trustee for its benefit and the equal and ratable benefit
of the Holders of the Convertible Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Senior Note
Indenture. In addition to any other defined terms used herein, the following
terms shall constitute defined terms for the purposes of this Security
Agreement:
"Default" means a "Default" as defined in Section 1.1 of the
Senior Note Indenture until the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged, in
which case a "Default" means a "Default" as defined in Section 1.1 of
the Convertible Note Indenture if not then satisfied and discharged.
"Event of Default" means an "Event of Default" as defined in
Section 1.1 of the Senior Note Indenture until the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case "Event of Default" means an "Event of
Default" as defined in Section 1.1 of the Convertible Note Indenture if
not then satisfied and discharged.
2
<PAGE> 3
"Permitted Liens" means "Permitted Liens" as defined in
Section 1.1 of the Senior Note Indenture until the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged, in which case "Permitted Liens" means "Permitted Liens" as
defined in Section 1.1 of the Convertible Note Indenture.
"Trustees" means, collectively, the Senior Note Trustee and
the Convertible Note Trustee.
SECTION 2. CREATION OF SECURITY INTEREST. The Company hereby grants to
the Collateral Agent for the benefit of the Senior Note Trustee and for the
equal and ratable benefit of the Holders of the Senior Notes and for the benefit
of the Convertible Note Trustee and for the equal and ratable benefit of the
Holders of the Convertible Notes, Liens and a continuing security interest in
and to the collateral described in Section 3 hereof (the "Collateral") in order
to secure the payment and performance of all Obligations.
SECTION 3. COLLATERAL. The Collateral is:
(a) WTC Capital Stock. All Capital Stock of WTC, whether now
owned or hereafter acquired ("WTC Capital Stock"), including those shares of
Capital Stock of WTC listed on Schedule A attached hereto, and the certificates
representing the Capital Stock of WTC, and all products and proceeds of any of
the Capital Stock of WTC, including, without limitation, all dividends, cash,
options, warrants, rights, instruments, subscriptions and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the WTC Capital Stock; and all
additional shares of and all securities convertible into, and warrants, options
or other rights to purchase, stock of, or an equity interest in, WTC from time
to time acquired by the Company in any manner, and the certificates representing
such additional shares (any such additional shares shall constitute part of the
WTC Capital Stock under and as defined in this Security Agreement), and all
products and proceeds of any such additional WTC Capital Stock, including,
without limitation, all dividends, cash, options, warrants, rights, instruments,
subscriptions, and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional WTC Capital Stock including all proceeds received or
receivable by the Company from any recapitalization, reclassification, merger,
dissolution, liquidation or other termination of the existence of WTC.
(b) Intercompany Notes. All Intercompany Notes, whether executed
on the Issue Date or thereafter, from any Restricted Subsidiary, evidencing
loans or advances made by the
3
<PAGE> 4
Company, all Liens securing such Intercompany Notes and the related collateral
documents, and the instruments representing such Intercompany Notes, and, except
as otherwise provided elsewhere herein, all products and proceeds of such
Intercompany Notes, including, without limitation, all interest and principal
payments, instruments, and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for such Intercompany
Notes; and
(c) After-acquired Collateral and Proceeds. All items described
in this Section 3 (other than those items specifically excluded), whether now
owned or hereafter, at any time acquired by the Company and wherever located,
including (except as otherwise provided herein) all replacements, additions,
accessions, substitutions, repairs, proceeds and products relating thereto or
therefrom, and all documents, ledger sheets, files, books and records of the
Company relating thereto. Proceeds hereunder include (i) whatever is now or
hereafter received by the Company upon the sale, exchange, collection or other
disposition of any item of Collateral; (ii) any property of the type or types
described in subsection (a) now or hereafter acquired by the Company with any
proceeds of Collateral hereunder; and (iii) any payments under any insurance or
any indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and continuance of an Event of Default, the
Collateral Agent shall have the right, at any time in its discretion and without
notice to the Company but subject to its compliance with the requirements of
applicable law, to transfer to or to register in the name of the Collateral
Agent or any of its nominees any or all of the Collateral. In addition, upon the
occurrence and during the continuance of an Event of Default, but subject to its
compliance with the requirements of applicable law, the Collateral Agent shall
have the right at any time to exchange certificates or instruments representing
or evidencing Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Collateral Agent and the Trustees that, except as
specified in Schedule B attached hereto:
4
<PAGE> 5
(a) Legal Power. The execution, delivery and performance by the
Company of this Security Agreement are within the Company's legal powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with (except for any filings provided for hereunder),
any governmental authority, require no consent of any other Person and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the articles of incorporation or bylaws of the Company or of
any agreement (after giving effect to the use of proceeds of the issuance of the
Senior Notes), judgment, injunction, order, decree or other instrument binding
upon the Company or result in the creation or imposition of any Lien on any
asset of the Company (other than the Liens created by this Security Agreement,
and the Senior Note Collateral Documents.
(b) WTC Capital Stock. The WTC Capital Stock has been duly
authorized and validly issued and is fully paid and non-assessable. The WTC
Capital Stock constitutes and will at all times constitute all of the authorized
issued and outstanding Capital Stock of WTC beneficially owned by the Company.
(c) Title to Collateral. The Company is the legal, record and
beneficial owner of the WTC Capital Stock existing on the Issue Date (the
"Existing Collateral"), free and clear of any Lien or claims of any person
except the Liens created by this Security Agreement and any of the other Senior
Note Collateral Documents.
(d) Enforceability. This Security Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or general principles of equity and
commercial reasonableness and except that a Canadian court will only render
judgment in Canadian currency.
(e) Perfection; Priority. Upon the delivery to the Collateral
Agent of the Existing Collateral and the filing of the Senior Note Collateral
Documents and the documents listed on Schedule C attached hereto, to the extent
such security interest is created under applicable Federal and New York law, the
security interest in the Collateral created pursuant to this Security Agreement
creates a valid and perfected first priority security interest in the Existing
Collateral, securing the payment of the Obligations to the Collateral Agent for
the benefit of the Senior Note Trustee and the Holders of the Senior Notes and
the Convertible Note Trustee and the Holders of the Convertible Notes, and
enforceable as such against all creditors
5
<PAGE> 6
of the Company and any Persons purporting to purchase any of the Collateral from
the Company, other than as permitted by the Senior Note Indenture, as of the
date hereof (and after giving effect to the use of proceeds of the issuance of
the Senior Notes), there are no other security interests in or Liens on the
Existing Collateral or any portion thereof, and no financing statement, pledge,
notice of Lien, assignment or collateral assignment, mortgage or deed of trust
covering the Collateral or any portion thereof ("Lien Notice") exists or is on
file in any public office, except with respect to the Liens created by this
Security Agreement and Liens to be released in connection with the use of
proceeds of the issuance of the Senior Notes.
(f) Offices. The Company's chief executive offices are located at
the address shown as the chief executive office in Schedule D attached hereto
("Chief Executive Office"), and the Company has no places of business other than
those set forth in such Schedule D, except as permitted hereafter by Section
6(c) hereof.
(g) Business Names. The Company has not conducted its businesses
under any corporate, partnership or fictitious name during the five (5) years
preceding the date hereof, other than those names set forth on Schedule E
attached hereto.
(h) No Consents. No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
granting of the Liens by the Company on the Collateral pursuant to this Security
Agreement or for the execution, delivery or performance of this Security
Agreement by the Company (except for filings listed on Schedule C attached
hereto, the filings and/or other actions necessary to maintain the perfection of
the Liens on the Existing Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case, as may be required in connection with any such
disposition by laws affecting the offering and sale of the WTC Capital Stock
constituting Collateral.
(i) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the knowledge
of the Company, threatened by or against the Company with respect to this
Security Agreement or any of the transactions contemplated hereby.
SECTION 6. COVENANTS.
6
<PAGE> 7
(a) Lien Notices. The Company will defend its interest in the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein and the Company will not permit any Lien
Notices with respect to the Collateral or any portion thereof to exist or be on
file in any public office for more than 30 days after the Company shall have
notice thereof, except with respect to Permitted Liens. The Company will advise
the Collateral Agent and the Trustees promptly, in reasonable detail, at the
addresses specified in Section 17(a) of this Security Agreement, of any Lien
(other than Permitted Liens) on, or claim asserted against, any of the
Collateral.
(b) Location of Collateral. The Company will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
Schedule F hereto, or at locations hereafter established in compliance with
Section 6(c) hereof (except for Collateral held by the Collateral Agent, a
Trustee or the Escrow Agent), unless the Company shall have given the Collateral
Agent and the Trustees prior written notice thereof and shall have in advance
executed and caused to be filed and/or delivered to the Collateral Agent and the
Trustees any financing statements or other documents required by the Collateral
Agent and the Trustees in order to perfect, protect and preserve the Liens and
security interest created hereby, all in form and substance satisfactory to the
Collateral Agent and the Trustees.
(c) Location of Offices; Corporation Name; Legal Structure. The
Company will not change the location of its chief executive office or establish
any place of business other than those set forth on Schedule D attached hereto,
or voluntarily or involuntarily change its name, identity or legal structure,
including without limitation any continuances, amalgamation, merger,
consolidation or sale of substantially all of its assets, unless the Company
shall have given the Collateral Agent and the Trustees at least thirty (30) days
prior written notice thereof and shall have in advance executed and caused to be
filed and/or delivered to the Collateral Agent and the Trustees any financing
statements or other Collateral Documents required by the Collateral Agent and
the Trustees in order to perfect, protect and preserve the Liens and security
interest created hereby, all in form and substance satisfactory to the Trustees
and the Collateral Agent.
(d) Additional Collateral; Further Assurances. The Company agrees
that immediately upon becoming the beneficial owner of any additional shares of
WTC Capital Stock constituting Collateral or Intercompany Notes constituting
Collateral, it will pledge and deliver to the Collateral Agent for the benefit
of the Senior Note Trustee and the equal and ratable benefit of the Holders of
the Senior Notes and for the benefit of the Convertible Note Trustee and for the
equal and ratable benefit of
7
<PAGE> 8
the Holders of the Convertible Notes, the certificates, instruments and
documents representing such WTC Capital Stock (as well as duly executed
instruments of transfer or assignment in blank), and grant to the Collateral
Agent for the benefit of the Senior Note Trustee and the equal and ratable
benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes pursuant to appropriate and necessary Collateral
Documents, a continuing first priority security interest in and Liens on, such
WTC Capital Stock and Intercompany Notes, all in form and substance satisfactory
to the Collateral Agent and the Trustees (as well as duly executed instruments
of transfer or assignment in blank), and grant to the Collateral Agent for the
benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and for the equal and ratable benefit of the Holders of the Convertible Notes
pursuant to appropriate and necessary Senior Note Collateral Documents, a
continuing first priority security interest in and Liens on such WTC Capital
Stock or such Intercompany Notes, all in form and substance satisfactory to the
Collateral Agent and the Trustees. The Company shall also promptly (and in any
event within five (5) Business Days after receipt thereof), subject to its
compliance with the requirements of applicable law, deliver to the Collateral
Agent any other documents of title, promissory notes, certificates or
instruments representing Collateral which it holds. The Company further agrees
that it will promptly (and in any event within five (5) Business Days after such
acquisition) deliver to the Collateral Agent and the Trustees an amendment, duly
executed by the Company, in substantially the form of Schedule G hereto an
"Additional Collateral Amendment", with respect to the additional Collateral
that is to be pledged pursuant to this Security Agreement. The Company hereby
authorizes the Collateral Agent and the Trustees to attach each Additional
Collateral Amendment to this Security Agreement and agrees that any stock, notes
or other forms of Investments listed on any Additional Collateral Amendment
delivered to the Collateral Agent or the Trustees shall for all purposes
hereunder be considered Collateral. The Company will, promptly, (i) execute and
deliver, cause to be executed and filed, or use its best efforts to give any
notices, in all appropriate jurisdictions (including British Virgin Islands,
Canada, Cyprus, the Russian Federation, Kazakstan and Ireland) or procure any
financing statements, assignments, pledges or other documents, (ii) mark any
chattel paper constituting Collateral, deliver any certificates, chattel paper
or instruments constituting Collateral to the Collateral Agent or the Trustees,
(iii) to execute and deliver or cause to be executed and delivered all stock
powers, proxies, assignments, instruments and other documents, and (iv) take any
other actions that are necessary or, in the reasonable opinion of Collateral
Agent or the Trustees, desirable to perfect or continue the perfection and the
priority
8
<PAGE> 9
of the Collateral Agent's security interest and Liens in the Collateral, to
protect the Collateral against the rights, claims, or interests of third Persons
other than holders of Permitted Liens or to effect the purposes of this Security
Agreement. The Company also hereby authorizes the Collateral Agent to file any
financing or continuation statements with respect to the Collateral without the
signature of the Company to the extent permitted by applicable law.
(e) Disposition of Collateral. The Company will not sell,
transfer, assign, pledge, collaterally assign, exchange or otherwise dispose of,
or grant any option or warrant with respect to, any of the Collateral except as
permitted by the Senior Note Indenture and the Convertible Note Indenture. If
the proceeds of any sale of any Collateral are notes, instruments, documents of
title, standby letters of credit or chattel paper, such proceeds shall be
promptly delivered to the Collateral Agent to be held as Collateral hereunder.
If the Collateral, or any part thereof, is sold, transferred, assigned,
exchanged, or otherwise disposed of in violation of these provisions, the
security interest and Liens of the Collateral Agent shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange or other disposition, and the Company will hold the proceeds thereof in
a separate account for the benefit of the Senior Note Trustee and the Holders of
the Senior Notes and the benefit of the Convertible Note Trustee and the Holders
of the Convertible Notes and transfer such proceeds to the Collateral Agent or
the applicable Trustee in kind to be held as Collateral hereunder.
(f) Restrictive Agreements. The Company agrees that, except for
existing agreements set forth on Schedule H attached hereto, it will not (i)
enter into any agreement or understanding that purports to or may restrict or
inhibit the Collateral Agent's or the Trustees' rights or remedies hereunder,
including, without limitation, the Trustees' right to sell or otherwise dispose
of the Collateral or amend or modify in any manner materially adverse to the
Trustees the existing agreements set forth as Schedule G attached hereto, (ii)
permit WTC or any other relevant issuer to continue, merge, amalgamate or
consolidate, unless all outstanding Capital Stock owned by the Company of the
surviving corporation is, upon such continuance, merger, amalgamation or
consolidation, pledged hereunder to the Collateral Agent or (iii) fail to pay or
discharge any tax, assessment or levy of any nature not later than five days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with regard to the Collateral.
(g) Rights of Collateral Agent and Trustees. Upon the occurrence
and during the continuance of an Event of Default, the Collateral Agent and the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged)
9
<PAGE> 10
shall have the right at any time to make any payments and do any other acts the
Collateral Agent or the applicable Trustee may deem necessary to protect its
Liens and security interest in the Collateral, including, without limitation,
the rights to pay, purchase, contest or compromise any Lien which, in the
judgment of the Collateral Agent or such Trustee, appears to be prior to or
superior to the Liens and security interest granted hereunder, and challenge any
action or proceeding purporting to affect its Liens and security interest in the
Collateral. The Company hereby agrees to reimburse the Collateral Agent and the
Trustees for all payments made and expenses incurred under this Security
Agreement including reasonable fees, expenses and disbursements of attorneys and
paralegals acting for the Collateral Agent or the Trustees, including any of the
foregoing payments under or acts taken to perfect or protect the Liens and
security interest in the Collateral, which amounts shall be secured under this
Security Agreement, and agrees that it shall be bound by any payment made or act
taken by the Collateral Agent or the Trustees hereunder. Neither the Collateral
Agent nor the Trustees shall have any obligation to make any of the foregoing
payments or perform any of the foregoing acts.
(h) Records. The Company will keep and maintain at its own cost
and expense satisfactory and complete records of the Collateral.
(i) Access. On reasonable notice to the Company, except at any
time during the continuation of Default or an Event of Default, both the
Collateral Agent and the Trustees shall at all times have full and free access
during normal business hours to all the books, correspondence and records of the
Company relating to the Collateral, and the Collateral Agent and its
representatives, and the Trustees and their respective representatives, may
examine the same, take extracts therefrom and make photocopies thereof, and the
Company agrees to render to the Collateral Agent and/or the applicable Trustee,
at the Company's cost and expense, such clerical and other assistance, at all
times and in such manner as may be requested with regard thereto. On reasonable
notice to the Company, except at any time during the continuation of Default or
an Event of Default, the Collateral Agent and its representatives, and the
Trustee and their respective representatives, shall at all times also have the
right to enter, during normal business hours, into and upon any premises where
any of the Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(j) Taxes. The Company shall pay all taxes, assessments and
government charges and all claims as and to the extent required by Section 4.6
of each of the Senior Note Indenture and the Convertible Note Indenture;
provided that the Company shall in any event pay such taxes, assessments or
levies
10
<PAGE> 11
not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to any Collateral of the
Company entered or filed against the Company as a result of the failure to make
such payment.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing, the Company shall be entitled to exercise any and all voting and
other consensual rights pertaining to the WTC Capital Stock or Intercompany
Notes constituting Collateral or any part thereof for any purpose not
inconsistent with the terms of this Security Agreement, the Senior Note
Indenture or any other Senior Note Collateral Document or the Convertible Note
Indenture or any Convertible Note Collateral Document; provided that the Company
shall not exercise or shall refrain from exercising any such right if such
action would be inconsistent with or violate any provisions of this Security
Agreement, the Senior Note Indenture or any other Senior Note Collateral
Document or the Convertible Note Indenture or any Convertible Note Collateral
Document.
(b) So long as no Event of Default shall have occurred and be
continuing, and subject to the other terms and conditions hereof and of the
Senior Note Indenture, or of the Convertible Note Indenture, the Company shall
be entitled to receive, and to utilize free and clear of the Lien of this
Security Agreement, all payments made from time to time in respect of the WTC
Capital Stock or Intercompany Notes, whether dividends, distributions or
otherwise.
(c) The Collateral Agent and/or the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) shall execute and
deliver (or cause to be executed and delivered) to the Company all such proxies
and other instruments as the Company may reasonably request for the purpose of
enabling the Company to exercise the voting and other rights that it is entitled
to exercise pursuant to Section 7(a) above.
(d) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Company to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 7(a) shall cease, and all such rights shall thereupon become vested in
the Collateral Agent on behalf of, or if necessary, directly in, the Senior Note
Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged),
which shall thereupon have the sole right to exercise such voting and other
consensual rights; and (ii) all interest, principal payments, dividends or other
11
<PAGE> 12
distributions payable or other payments made in respect of the Collateral shall
constitute Collateral and shall be paid directly to the Collateral Agent and the
Company's right to receive such payments pursuant to Section 7(d) hereof shall
immediately cease and all such payments shall be deposited in the Company Senior
Note Escrow Account or the Convertible Note Escrow Account, if the Company
Senior Note Escrow Account Agreement has been terminated.
(e) Upon the occurrence and during the continuance of an Event of
Default, the Company shall execute and deliver (or cause to be executed and
delivered) to the Collateral Agent and/or the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) all such proxies and
other instruments as the Collateral Agent and/or the applicable Trustee may
reasonably request for the purpose of enabling the Collateral Agent and/or the
applicable Trustee to exercise the voting and other rights that it is entitled
to exercise pursuant to Section 7(d) above.
(f) All dividends and distributions and all other payments that
are received by the Company contrary to the provisions of this Section 7 shall
be received in trust for the Collateral Agent for the benefit of the Senior Note
Trustee and the equal and ratable benefit of the Holders of the Senior Notes and
for the benefit of the Convertible Note Trustee and the equal and ratable
benefit of the Holders of the Convertible Notes, shall be segregated from the
other property or funds of the Company and be forthwith delivered to the
Collateral Agent as Collateral in the same form as so received (with any
necessary endorsements or other instruments of transfer or assignment in blank),
and all such payments shall be deposited in the Company Senior Note Escrow
Account or the Company Convertible Note Escrow Account if the Company Senior
Note Escrow Account Agreement has been terminated.
(g) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustees shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Company agrees and undertakes to do at the Company's expense; provided
that the Collateral Agent and the Trustees shall cooperate with the Company and
take all such action as the Company may reasonably request, to permit the
Company to collect, protect or enforce the Collateral. All reasonable expenses
(including, without limitation, attorneys' fees and legal expenses) actually
incurred or paid by the Collateral Agent and the Trustees in connection with or
incident to any such collection or attempt to collect, protect or enforce the
Collateral shall be borne by the Company or reimbursed by the Company to the
Collateral Agent or the applicable Trustee upon demand.
12
<PAGE> 13
(h) At the Collateral Agent's or the applicable Trustee's option,
exercisable upon and during the continuance of any Event of Default, either the
Collateral Agent or the Senior Note Trustee (or the Convertible Note Trustee if
the Senior Notes are no longer outstanding and the Senior Note Indenture has
been satisfied and discharged) may notify WTC or other obligors or issuers that
any and all payments and distributions to be made on the WTC Capital Stock or
the Intercompany Notes shall be made directly to the Collateral Agent or the
applicable Trustee, until WTC or other obligors or issuers is notified in
writing by the applicable Trustee to discontinue making such payments to it; and
WTC and such obligors and issuers shall not be required to see to the
application of said proceeds by the Trustees or the Collateral Agent. All such
payments shall be deposited by such Trustee or the Collateral Agent into the
Company Senior Note Escrow Account (or the Company Convertible Note Escrow
Account if the Company Senior Note Escrow Account Agreement has been terminated)
and held as additional Collateral for the Obligations. If at any time the
Collateral agent or a Trustee shall have notified WTC or other obligor or issuer
to make all payments directly to the Company and if at any time thereafter all
Events of Default shall have been cured or waived in accordance with the terms
of the Senior Note Indenture (or the Convertible Note Indenture if the Senior
Notes are no longer outstanding and the Senior Note Indenture has been satisfied
and discharged), the Collateral Agent or such Trustee shall notify WTC or the
other obligors or issuers to make all such payments directly to the Company or
as the Company may otherwise direct.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted
to the Senior Note Trustee pursuant to Article VI of the Senior Note Indenture
and the Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indentures, the Company hereby appoints and constitutes the Collateral Agent and
the Trustees, whether acting separately or jointly, as the Company's
attorney-in-fact to exercise all of the following powers upon and at any time
after the occurrence and during the continuance of an Event of Default: (i)
collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Company to the
Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Company, to execute and give
13
<PAGE> 14
receipt for any certificate of ownership or any document constituting
Collateral, to transfer title to any item of Collateral, to sign the Company's
name on all financing statements (to the extent permitted by applicable law) or
any documents deemed necessary or appropriate by the Collateral Agent to
preserve, protect or perfect the Liens in the Collateral and to file the same,
to prepare, file and sign the Company's name on any notice of Lien, and to
prepare, file and sign the Company's name on a proof of claim in bankruptcy or
similar document against any customer of, or person obligated upon any
Collateral to, the Company, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Security
Agreement. This power of attorney is coupled with an interest in the Trustees
and in the Collateral Agent as agent on behalf of the Trustees and is
irrevocable by the Company.
SECTION 9. COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Company
fails to perform any covenant or agreement contained herein, the Collateral
Agent or either Trustee may, but shall not be obligated to, itself perform, or
cause performance of, such covenant or agreement, and the reasonable expenses of
the Collateral Agent or the Trustees incurred in connection therewith shall be
payable by the Company under Section 16(p) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustees in connection therewith. Each of the Collateral Agent and the Trustees
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent or such Trustee
accords similar property in similar situations, it being understood that the
Collateral Agent and the Trustees shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee has or is deemed to have knowledge of
such matters, (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (iii) inquiring into or verifying
that the Company has complied or will comply with its duty to furnish additional
items of Collateral to the Collateral Agent and/or the Trustees pursuant to
Section 6(d) hereof. Absent knowledge to the contrary, the Collateral Agent and
the Trustees may assume that the items of Collateral actually delivered to it
are all items required to be so delivered and may assume that no other such
items need be so delivered.
14
<PAGE> 15
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Company
represents to the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes and the Convertible Note Trustee and the Holders of the
Convertible Notes, that the Company has made its own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, payments of interest and/or principal, reorganization or other
exchanges, tender offers and voting rights), and the Company agrees that the
Collateral Agent, the Senior Note Trustee and the Holders of the Senior Notes,
and the Convertible Note Trustee and the Holders of the Convertible Notes shall
have no responsibility or liability for informing the Company of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereof. Except as not prohibited by the Senior Note
Indenture (or the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged),
the Company covenants that it will not, without the prior written consent of the
applicable Trustee, vote to enable, or take any other action to permit, any
Issuer to issue any Capital Stock or other securities or to sell or otherwise
dispose of, or grant any option with respect to, any of the Collateral or create
or permit to exist any Lien upon or with respect to any of the Collateral,
except for, Permitted Liens and the Liens granted under this Security Agreement
and the other Senior Note Collateral Documents. The Company will defend the
right, title and interest of the Collateral Agent, the Senior Note Trustee and
the Holders of the Senior Notes and the Convertible Note Trustee and the Holders
of the Convertible Notes in and to the Collateral against the claims and demands
of all persons.
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, subject to the provisions of the Senior Note
Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), this Security Agreement, the Collateral Agent's and the Trustees'
compliance with any requirements of law (including, without limitations, the
applicable Uniform Commercial Code and the Personal Property Security Act
(Ontario)) applicable to the action to be taken, without notice to or demand
upon the Company except as required by the Senior Note Indenture (or the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged), this Agreement or
applicable law, do any one or more of the following:
(i) exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code
15
<PAGE> 16
and the Personal Property Security Act (Ontario), specifically including,
without limitation, the right to recover the reasonable fees and expenses
incurred by the Collateral Agent or the Trustees in the enforcement of this
Security Agreement or in connection with the Company's redemption of the
Collateral, including reasonable fees, expenses and disbursements of attorneys,
paralegals and agents;
(ii) at its option, transfer or register, and the Company
shall register or cause to be registered upon request therefor by the Collateral
Agent or the Trustees, the Collateral or any part thereof on the books of the
Restricted Subsidiaries to which an intercompany loan evidenced by an
Intercompany Note has been made, the Issuers, or the Persons in whom Qualified
Investments are made into the name of the Collateral Agent or the Collateral
Agent's nominee(s);
(iii) personally, or by agents or attorneys, immediately
retake possession of the Collateral, or any part thereof, from the Company or
any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Company's
premises where any of the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of the Company;
(iv) sell, assign or otherwise liquidate, or direct the
Company to sell, assign or otherwise liquidate, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation;
(v) require the Company to assemble the Collateral or any
part thereof and make it available at one or more places as the Collateral Agent
or the Trustees may designate and to deliver possession of the Collateral or any
part thereof to the Collateral Agent or the Trustees;
(vi) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by the
Company;
(vii) sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at such price
or prices as the Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit; and the purchaser of any or
all Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;
(viii) enforce one or more remedies hereunder, successively
or concurrently, and such action shall not operate
16
<PAGE> 17
to estop or prevent the Collateral Agent from pursuing any other or further
remedy which it may have, and any repossession or retaking or sale of the
Collateral pursuant to the terms hereof shall not operate to release the Company
until full and final payment of any deficiency has been made in cash;
(ix) in connection with any public or private sale under the
applicable Uniform Commercial Code, the Personal Property Security Act (Ontario)
or other applicable legislation, the Collateral Agent shall give the Company at
least fifteen (15) Business Days' prior written notice of the time and place of
any public sale of its Collateral or of the time after which any private sale or
other intended disposition thereof may be made, which shall be deemed to be
reasonable notice of such sale or other disposition. Such notice may be given to
the Company in accordance with the provisions of Section 16(a) hereof;
(x) proceed by an action or actions at law or in equity to
recover the Obligations or to foreclose this Security Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction;
(xi) exercise any other rights and remedies provided by
applicable law and the other Senior Note Collateral Documents; and
(xii) if the Collateral Agent recovers possession of all or
any part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, the Collateral Agent may thereafter
retain, sell or otherwise dispose of such Collateral in accordance with this
Security Agreement or the applicable Uniform Commercial Code, the Personal
Property Security Act (Ontario) or other applicable legislation and following
such retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Company hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Company further consents to the exoneration of any bond that the Collateral
Agent files in such action.
(b) If the Collateral Agent shall determine, or shall be directed
by the Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes
are no longer outstanding and the Senior Note Indenture has been satisfied and
discharged), to exercise its right to sell any or all of the WTC Capital Stock
or the Intercompany Notes constituting Collateral pursuant to Section 12(a)
above, and if in the opinion of counsel for the Collateral Agent it is
necessary, or if in the opinion of the Collateral Agent or such Trustee it is
advisable, after such
17
<PAGE> 18
consultation with investment bank(s), broker-dealer(s) or other experts selected
by them, as the Collateral Agent or such Trustee deems advisable or appropriate,
to have the WTC Capital Stock or Intercompany Notes constituting Collateral or
that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), the Company will (i)
use its best efforts to cause WTC or other issuer or obligor to execute and
deliver, and to cause such Person's directors and officers to execute and
deliver, all at the Company's own expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may be necessary
or, in the opinion of the Collateral Agent or such Trustee, after such
consultation with investment bank(s), broker-dealer(s) or other experts selected
by them, as the Collateral Agent or such Trustee deems advisable or appropriate,
advisable to register such, WTC Capital Stock or Intercompany Notes under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of 180 days from the date of the first public offering of
such WTC Capital Stock or Intercompany Notes, or that portion thereof, to be
sold and (iii) make all amendments thereto and/or to the related prospectus that
are necessary or, in the opinion of the Collateral Agent or such Trustee,
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto. The Company agrees to use its best efforts to cause WTC or other issuer
or obligor to comply with the provisions of the securities or "Blue Sky" laws of
any jurisdiction that the Collateral Agent or the Senior Note Trustee or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged shall designate for the
sale of WTC Capital Stock or Intercompany Notes and to make available to the
security holders of WTC or other obligor or issuer as soon as practicable, an
earnings statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act. The Company will cause WTC or other
obligor or issuer to furnish to the Collateral Agent and the Trustees such
number of copies as the Trustee may reasonably request of each preliminary
prospectus and prospectus, to notify promptly the Collateral Agent and the
Trustees of the happening of any event as a result of which any then effective
prospectus includes an untrue statement of any material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of then existing circumstances and cause the
Collateral Agent and the Trustees to be furnished with such number of copies as
the Collateral Agent and the Trustees may request of such supplement to or
amendment of such prospectus as is necessary to eliminate such untrue statement
or supply such omission. The Company will cause WTC or such other issuer or
obligor, as the case may be, to the extent permitted by law, to indemnify,
defend and hold
18
<PAGE> 19
harmless the Collateral Agent, the Senior Note Trustee and the Holders of the
Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes from and against all losses, liabilities, expenses or claims
(including reasonable costs of investigation) that the Collateral Agent, the
Senior Note Trustee or the Holders of the Senior Notes or the Convertible Note
Trustee or the Holders of the Convertible Notes may incur under the Securities
Act or otherwise, insofar as such losses, liabilities, expenses or claims arise
out of or are based upon any alleged untrue statement of a material fact
contained in such registration statement (or any amendment thereto) or in any
preliminary prospectus or prospectus (or any amendment or supplement thereto),
or arise out of or are based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent that any such losses, liabilities, expenses or
claims arise solely out of or are based solely upon any such alleged untrue
statement made or such alleged omission to state a material fact included or
excluded on the written direction of the Collateral Agent or a Trustee. The
Company will bear, or will cause WTC or other issuer or obligor to bear, all
costs and expenses of carrying out its or their obligations hereunder. The
provisions of this Section 12(b) shall in now way impose upon either Trustee or
the Collateral Agent any duty to execute any registration statement under the
Securities Act with respect to any WTC Capital Stock or Intercompany Notes.
(c) In view of the fact that federal, state and foreign
securities laws may impose certain restrictions on the method by which a sale of
the Collateral may be effected after an Event of Default, the Company agrees
that upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may, from time to time, attempt to sell all or any part of the
Collateral by means of a private placement, restricting the prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, the Collateral Agent may
solicit, or may cause an investment manager to solicit, offers to buy the
Collateral, or any part of it, for cash, from a limited number of investors who
might be interested in purchasing the Collateral. The Company acknowledges and
agrees that any such private sale may result in prices and terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Collateral for the period of time
necessary to permit the Company to cause WTC or other issuer or obligor to
register such securities for public sale under the Securities Act, or under
applicable state or foreign securities laws, even if the Company could cause WTC
or other issuer or obligor to do so.
19
<PAGE> 20
(d) The Company further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Section 12 valid
and binding and in compliance with any and all other applicable requirements of
applicable law. The Company further agrees that a breach of any of the covenants
contained in this Section 12 will cause irreparable injury to the Collateral
Agent, the Senior Note Trustee, the Holders of the Senior Notes, the Convertible
Note Trustee or the Holders of the Convertible Notes, that the Collateral Agent,
the Senior Note Trustee, the Holders of the Senior Notes, the Convertible Note
Trustee or the Holders of the Convertible Notes have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 12 shall be specifically enforceable against the
Company, and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing.
(e) Any cash held by the Collateral Agent as Collateral and all
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of such
sale, including, without limitation, reasonable expenses of the
Collateral Agent and its agents including the fees and expenses of
its counsel, and all expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith or
pursuant to Section 16(p) hereof;
Next, to the Senior Note Trustee, for the payment in full
of all amounts due under Section 7.7 of the Senior Note Indenture;
Next, to the Senior Note Trustee, for distribution to the
Holders of the Senior Notes, for the payment in full of the
remaining Senior Note Obligations;
Next, to the Convertible Note Trustee, for the payment in
full of all amounts due under Section 7.7 of the Convertible Note
Indenture;
Next, to the Convertible Note Trustee, for the distribution
to the Holders of the Convertible Notes for payment in full of the
remaining Convertible Note Obligations; and
20
<PAGE> 21
Finally, after payment in full of all of the Obligations,
to the Company, or its successors or assigns, or to whomsoever may
be lawfully entitled to receive the same as a court of competent
jurisdiction may direct.
(f) If any sale or other disposition of Collateral by the
Collateral Agent or any other action of the Collateral Agent or the Trustees
hereunder results in reduction of the Obligations, such action will not release
the Company from its liability for any unpaid Obligations, including costs,
charges and expenses incurred in the liquidation of Collateral, together with
interest thereon, and the same shall be immediately due and payable to the
Collateral Agent, the Senior Note Trustee and the Holders of the Senior Notes as
provided for in the Senior Note Indenture, or, if applicable, the Convertible
Note Trustee and the Holders of the Convertible Notes as provided for in the
Convertible Note Indenture.
(g) The Collateral Agent may enforce its rights hereunder without
prior judicial process or judicial hearing, and to the extent permitted by law
the Company expressly waives any and all legal rights which might otherwise
require the Collateral Agent to enforce its rights by judicial process.
(h) The existence and/or exercise of any or all of the rights and
remedies given to the Collateral Agent and/or the Trustees under this Section 12
shall be subject in all cases to compliance with any mandatory requirements of
applicable law, particularly the laws of jurisdictions other than the Union
States.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO WTC OR
APPLICABLE ISSUER. The Company hereby authorizes and instructs WTC or other
applicable issuer or obligor to comply with any instructions received by WTC or
other issuer or obligor from the Collateral Agent or the Senior Note Trustee (or
the Convertible Note Trustee if the Senior Notes are no longer outstanding and
the Senior Note Indenture has been satisfied and discharged) that (i) states
that an Event of Default has occurred and (ii) is otherwise in accordance with
the terms of this Security Agreement, without any other or further instructions
from the Company, and the Company agrees that WTC and the other applicable
issuers and obligors shall be fully protected in so complying.
SECTION 14. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and the Liens
or security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
21
<PAGE> 22
(a) any lack of validity or enforceability of the Senior Note
Indenture, any Senior Note Collateral Document, any Senior Note Guarantee, the
Convertible Note Indenture, any Convertible Note Collateral Document, any
Convertible Note Guarantee or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Senior Note Indenture or the
Senior Note Collateral Documents or from the Convertible Note Indenture or the
Convertible Note Collateral Documents;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral, or any release or amendment or waiver of or
consent to departure from any Senior Note Guarantee, any Convertible Note
Guarantee or other guarantee, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Obligations or of this Security Agreement.
SECTION 15. WAIVERS.
(a) Except as may be required under the provisions of the Senior
Note Indenture (or of the convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), and to the fullest extent permitted under applicable law, neither
the Collateral Agent nor the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) shall be under any duty whatsoever
to make or give any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Collateral or
the Obligations, or to take any steps reasonably necessary to preserve any
rights against any Obligor or other Person. The Company waives to the fullest
extent permitted under applicable law any right of marshalling in respect of any
and all Collateral, and waives to the fullest extent permitted lender applicable
law any right to require the Collateral Agent or the applicable Trustee to
proceed against any Obligor or other Person, exhaust any Collateral or enforce
any other remedy which the Collateral Agent or the applicable Trustee now has or
may hereafter have against any Obligor or other Person.
(b) The Company waives to the fullest extent permitted under
applicable law (i) any and all notices of acceptance, creation, modification,
rearrangement, renewal or extension for any period of any instrument executed by
any Obligor in
22
<PAGE> 23
connection with the Obligations and (ii) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of any Obligor or
for any other reason. The Company authorizes the Collateral Agent, to the
fullest extent permitted under applicable law without notice or demand and
without any reservation of rights against the Company and without affecting the
Company's liability hereunder or on the Obligations, from time to time to (w)
take and hold other Property, other than the collateral, as security for the
Obligations, and exchange, enforce, waive and release any or all of the
collateral, (x) after the occurrence and during the continuance of an Event of
Default and the acceleration of the Senior Notes, apply the Collateral in the
manner permitted by this Security Agreement or the Senior Note Indenture, (y)
after the occurrence and during the continuance of an Event of Default and the
acceleration of the Convertible Notes, if the Senior notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged,
apply the Collateral in the manner permitted by this Security Agreement or the
Convertible Note Indenture and (z) after the occurrence and during the
continuance of an Event of Default renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or release the
obligations of any obligor on, or any instrument or agreement of such other
Person with respect to any or all of, the Collateral.
SECTION 16. MISCELLANEOUS PROVISIONS.
(a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the Company at its address as set forth in
Section 13.2 of the Senior Note Indenture and Section 15.2 of the Convertible
Note Indenture and the Senior Note Trustee at its address, as set forth in
Section 13.2 of the Senior Note Indenture, and Section 15.2 of the Convertible
Note Indenture and to the Collateral Agent at The Bank of New York, 101 Barclay
Street, Floor 21 West, New York, New York 10296.
(b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Senior Note Indenture or the Convertible Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Trustee for
deposit in the Company Senior Note Escrow Account or to the Collateral Agent or
the Convertible Note Trustee for deposit in the Company Convertible Note Escrow
Account if the Company Senior Note Escrow Account Agreement has been terminated.
(c) No Adverse Interpretation of Other Agreements. This Security
Agreement may not be used to interpret another pledge, security or debt
agreement of the Company or any
23
<PAGE> 24
Subsidiary of the Company. No such pledge, security or debt agreement may be
used to interpret this Security Agreement.
(d) Severability. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(e) Headings. The headings in this Security Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
(f) Counterpart Originals. This Security Agreement may be signed
in two or more counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same agreement.
(g) Benefits of Security Agreement. Nothing in this Security
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Holders of the Senior Notes and
the Senior Note Guarantors, and the Holders of the Convertible Notes and the
Convertible Note Guarantors any benefit or any legal or equitable right, remedy
or claim under this Security Agreement.
(h) Amendments, Waivers and Consents. Any amendment or waiver of
any provision of this Security Agreement and any consent to any departure by the
Company from any provision of this Security Agreement shall be effective only if
made or given in compliance with all of the terms and provisions of the Senior
Note Indenture and the Convertible Note Indenture and neither the Collateral
Agent nor the Senior Note Trustee or any Holder of any Senior Note or the
Convertible Note Trustee or any Holder of Convertible Notes shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. Failure of the Collateral
Agent or the Trustees to exercise, or delay in exercising, any right, power or
privilege hereunder shall not operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Collateral Agent, the Senior Note Trustee or any Holder of any
Senior Note or the Convertible Note Trustee or any Holder of any Convertible
Note of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy that the
24
<PAGE> 25
Collateral Agent, such Trustee or any such Holder would otherwise have on any
future occasion. The right and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
(i) Interpretation of Security Agreement. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
Uniform Commercial Code of the State of New York, except where the context
otherwise requires. To the extent a term or provision of this Security Agreement
conflicts with the Senior Note Indenture, the Senior Note Indenture shall
control with respect to the subject matter of such term or provision. Acceptance
of or acquiescence in a course of performance rendered under this Security
Agreement shall not be relevant in determining the meaning of this Security
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
(j) Continuing Security Interest; Transfer of Notes. This
Security Agreement shall create a continuing Lien and security interest in the
Collateral and shall (i) unless otherwise provided in the Senior Note Indenture
or the Convertible Note Indenture if the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged or this Security
Agreement, remain in full force and effect until payment in full of (A) the
Senior Notes under the terms of the Senior Note Indenture, (B) all Obligations
then due and owing under the Senior Note Indenture, the Senior Note Guarantees
and the Senior Note Collateral Documents, (C) the Convertible Notes under the
terms of the Convertible Note Indenture and (D) all Obligations then due and
owing under the Convertible Note Indenture, the Convertible Note Guarantees and
the Convertible Note Collateral Documents; provided, however, that after receipt
from the Company by the Collateral Agent of a request for a release of any
Collateral permitted under the Senior Note Indenture and the Convertible Note
Indenture upon the sale, transfer, assignment, exchange or other disposition of
such Collateral not prohibited by the Senior Note Indenture and the Convertible
Note Indenture and upon receipt by the Collateral Agent of all proceeds of such
sale, transfer, assignment, exchange or other disposition required to be
remitted to the Collateral Agent or the Senior Note Trustee (or the Convertible
Note Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged), or the Collateral constituting the
proceeds of such sale, transfer, assignment, exchange or other disposition being
made subject to a Lien and security interest in favor of the Collateral Agent
for the benefit of the Senior Note Trustee and the equal and ratable benefit of
the Holders of the Senior Notes and for the benefit of the Convertible Note
Trustee and the equal and ratable benefit of the Holders of the Convertible
Notes, which Lien has the same priority as had the Lien on the Collateral being
sold, assigned
25
<PAGE> 26
or otherwise disposed of, such Collateral shall be released from the Liens and
security interest created hereunder and no longer constitute Collateral. Upon
the payment in full of (A) the Senior Notes under the terms of the Senior Note
Indenture and (B) all Obligations then due and owing under the Senior Note
Indenture, the Senior Note Guarantees and the Senior Note Collateral Documents,
(C) the Convertible Notes under the terms of the Convertible Note Indenture and
(D) all Obligations then due and owing under the Convertible Note Indenture, the
Convertible Note Guarantees and the Convertible Note Collateral Documents, the
Company shall be entitled to the return, upon its request and at its expense, of
such of the Collateral pledged by it as shall not have been sold or otherwise
applied pursuant to the terms hereof. This Security Agreement shall be binding
upon the Company, its successors and assigns, and inure, together with the
rights and remedies of the Trustees hereunder, to the benefit of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and their
respective successors, transferees and assigns.
(k) Reinstatement. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note or the Convertible Note Trustee or any Holder or a Convertible Note
in respect of the Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note or the Convertible Note Trustee or any Holder of a Convertible Note
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Company or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Company or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Company
or any substantial part of their assets, or otherwise, all as though such
payments had not been made.
(l) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Security Agreement, and shall terminate only upon the full and
final payment and performance by the Company of the Obligations.
(m) Authority of the Collateral Agent and the Trustees. Both the
Collateral Agent and the Trustees shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent and the
Trustees by the terms hereof, together with such powers as are reasonably
incident thereto. The Collateral Agent and the Trustees may perform any of their
duties hereunder or in connection with the Collateral by or through agents or
employees and shall be
26
<PAGE> 27
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. None of the Collateral Agent, any director,
officer, employee, attorney or agent of the Collateral Agent, the Senior Note
Trustee, any director, officer, employee, attorney or agent of the Senior Note
Trustee nor the Holders of the Senior Notes, the Convertible Note Trustee, any
director, officer, employee, attorney or agent of the Convertible Note Trustee
and the Holders of the Convertible Notes shall be liable to the Company for any
action taken or omitted to be taken by it or them hereunder, except for its or
their own negligence or willful misconduct, nor shall the Collateral Agent or
the Trustees be responsible for the validity, effectiveness or sufficiency
hereof or of any document or security furnished pursuant hereto. The Collateral
Agent, and its directors, officers, employees, attorneys or agents, and the
Senior Note Trustee and its directors, officers, employees, attorneys and agents
and the Convertible Note Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Collateral Agent nor
the Trustees shall be required to and shall not, expend or risk any of its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder.
The Company acknowledges that the rights and responsibilities
of the Collateral Agent and the Trustees under this Security Agreement with
respect to any action taken by the Collateral Agent and the Trustees or the
exercise or non-exercise by the Collateral Agent and the Trustees of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as among the
Collateral Agent, the Senior Note Trustee, the Holders of the Senior Notes, the
Convertible Note Trustee and the Holders of Convertible Notes, be governed by
the Senior Note Indenture and the Convertible Note Indenture, as applicable, and
by such other agreements with respect thereto as may exist from time to time
among them, but, as among the Collateral Agent, the Trustees and the Company,
the Collateral Agent and the Trustees shall be conclusively presumed to be
acting as agent for the Holders of the Senior Notes or the Holders of the
Convertible Notes, as the case may be, with full and valid authority so to act
or refrain from acting, and the Company shall not be obligated or entitled to
make any inquiry respecting such authority.
In any case in which the Collateral Agent shall be required
or permitted to make any determination as to the extent to which the security
interest or Liens under this Security Agreement secures any obligations, the
Collateral Agent is authorized, without any direction from, or requirement for
consent of or authorization by, the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer
27
<PAGE> 28
outstanding and the Senior Note Indenture has been satisfied and discharged), to
institute proceedings in a court of competent jurisdiction for the obtaining of
any authoritative determination of such matter. If the Collateral Agent
institutes any such proceeding, it shall give prompt written notice thereof to
the Trustees and shall afford each of them the opportunity to participate in
such proceeding.
(n) Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that they will not render this
Security Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.
(o) Release; Termination of Security Agreement.
(i) Subject to the provisions of Section 16(k) hereof, this
Security Agreement shall terminate upon payment in full of (A) the Senior Notes
under the terms of the Senior Note Indenture and (B) all Obligations then due
and owing under the Senior Note Indenture, the Senior Note Guarantees and the
Senior Note Collateral Documents, (C) the Convertible Notes under the terms of
the Convertible Note Indenture and (D) all Obligations then due and owing under
the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, except that the provisions of Section
16(p) hereof shall survive.
(ii) The Company agrees that it will not sell or dispose of
any of the Collateral in violation of the Senior Note Indenture or the
Convertible Note Indenture; provided, however, that if the Company shall sell or
otherwise dispose of any of the Collateral in accordance with the terms of the
Senior Note Indenture and/or the Convertible Note Indenture, the Collateral
Agent shall, and the Trustees shall cause, at the request of the Company,
release or cause to be released the Collateral subject to such sale or
disposition free and clear of the Lien and security interest under this Security
Agreement.
(iii) Upon any termination of this Security Agreement or
release of any Collateral as permitted by the Senior Note Indenture (or the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged), the Collateral Agent
and the Trustees will, at the expense of the Company, execute and deliver to the
Company such documents and take such other actions as the Company shall
reasonably request to evidence the termination of this Security Agreement or the
release of such Collateral, as the case may be. Any such action taken by the
Collateral Agent or the Trustees shall be without warranty by or recourse to the
Collateral Agent or the Trustees, except as to the absence of any prior
assignments by the Collateral Agent or the Trustees of its
28
<PAGE> 29
interests in the Collateral, and shall be at the expense of the Company. The
Collateral Agent and the Trustees may conclusively rely on any certificate
delivered to it by the Company stating that the execution of such documents and
release of the Collateral is in accordance with and permitted by the terms of
this Security Agreement and the Senior Note Indenture (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged).
(p) Payment of Fees and Expenses. The Company will upon demand
pay to the Collateral Agent and the Trustees, without duplication, the amount of
any and all fees and expenses, including, without duplication, the fees and
disbursements of its counsel and of any experts and agents, that the Collateral
Agent and the Trustees may incur in connection with (i) administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
or the Trustees hereunder or (iv) the failure by the Company to perform or
observe any of the provisions hereof. The Company shall be liable for and
reimburse and indemnify both Trustees and the Collateral Agent and hold both
Trustees and the Collateral Agent harmless from and against any and all claims,
losses, liabilities, costs, damages or expenses (including reasonable attorneys'
fees and expenses) (collectively, "Losses") arising from or in connection with
or related to this Agreement or being a Trustee and Collateral Agent hereunder
(including but not limited to Losses incurred by such Trustee and Collateral
Agent in connection with its successful defense, in whole or in part, of any
claim of negligence or willful misconduct on its part, provided, however, that
nothing contained herein shall require Trustees and the Collateral Agent to be
indemnified for Losses caused by their respective negligence or willful
misconduct.
(q) Final Expression. This Security Agreement, together with the
Senior Note Indenture, the Convertible Note Indenture, and any other agreement
executed in connection herewith or therewith, is intended by the parties as a
final expression of this Security Agreement and is intended as a complete and
exclusive statement of the terms and conditions hereof.
(r) Company Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Company shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Company from any of its duties or
29
<PAGE> 30
obligations under the contracts and agreements included in the Collateral and
(c) the Collateral Agent and the Trustees shall not have any obligation or
liability under any contracts and agreements included in the Collateral by
reason of this Security Agreement, nor shall the Collateral Agent or the
Trustees be obligated to perform any of the obligations or duties of the Company
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
(s) Indentures. This Security Agreement is subject to the terms,
conditions and provisions of the Senior Note Indenture or the Convertible Note
Indenture if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged. Where there is a conflict between
the provisions of this Security Agreement and the Senior Note Indenture, the
provisions of the Senior Note Indenture shall prevail, and if the Senior Note
Indenture has been satisfied and discharged, where there is a conflict between
the provisions of this Security Agreement and the Convertible Note Indenture,
the provisions of the Convertible Note Indenture shall prevail.
(t) Rights of Holders. No Holder of a Senior Note or of a
Convertible Note shall have any independent rights hereunder other than those
rights granted to individual Holders pursuant to Section 6.7 of the Senior Note
Indenture or Section 6.7 of the Convertible Note Indenture, as the case may be;
provided that nothing in this subsection (t) shall limit any rights granted to
the Senior Note Trustee under the Senior Notes, the Senior Note Indenture or the
Senior Note Collateral Documents or the Convertible Note Trustee under the
Convertible Notes, the Convertible Note Indenture or the Convertible Note
Collateral Documents.
(u) No Personal Liability of Directors, Officers, Employees and
Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company or of any subsidiary of the Company,
as such, shall have any liability for any obligations of the Company under this
Security Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation.
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE AND THE
HOLDERS OF THE SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE AND THE HOLDERS OF
CONVERTIBLE NOTES IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
30
<PAGE> 31
BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN
ITS CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE SENIOR NOTE
TRUSTEE AND ANY HOLDERS OF SENIOR NOTES, AND THE SENIOR NOTE TRUSTEE SHALL, IN
ITS CAPACITY AS SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS
OF SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS CAPACITY AS
CONVERTIBLE NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF
CONVERTIBLE NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE SENIOR
NOTE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT OR THE SENIOR NOTE TRUSTEE.
THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR
CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE COLLATERAL AGENT OR THE TRUSTEES
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE COLLATERAL AGENT OR EITHER TRUSTEE. THE COMPANY WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE COLLATERAL
AGENT OR SUCH TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY, THE COLLATERAL AGENT AND THE TRUSTEES EACH
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS SECURITY AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF THE COLLATERAL AGENT,
THE SENIOR NOTE TRUSTEE, ANY HOLDER OF A SENIOR NOTE, THE CONVERTIBLE NOTE AND
ANY HOLDER OF A CONVERTIBLE NOTE SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS SECURITY
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE COLLATERAL AGENT, SUCH TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE
MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR SUCH HOLDER OF A SENIOR NOTE OR THE
CONVERTIBLE NOTE TRUSTEE OR ANY
31
<PAGE> 32
HOLDER OF A CONVERTIBLE NOTE, AS THE CASE MAY BE, CONSTITUTING NEGLIGENCE OR
WILLFUL MISCONDUCT.
(v) THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE
OR ANY HOLDER OF A SENIOR NOTE, THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO
REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE COMPANY WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE SENIOR
NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR
ANY HOLDER OF A CONVERTIBLE NOTE IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR
OTHER SECURITY FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR ANY HOLDER
OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A CONVERTIBLE
NOTE, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR
PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT OR ANY OTHER
AGREEMENT OR DOCUMENT AMONG THE COMPANY ON THE ONE HAND AND THE COLLATERAL
AGENT, THE SENIOR NOTE TRUSTEE AND/OR THE HOLDERS OF THE SENIOR NOTES ON THE
OTHER HAND.
(w) Appointment of Collateral Agent. Pursuant to, and subject to
the provisions of, Section 7.12 of the Senior Note Indenture and of Section 7.12
of the Convertible Note Indenture, the Trustees hereby appoint the Collateral
Agent, and the Collateral Agent accepts appointment, as Collateral Agent under
the terms of this Security Agreement.
The Collateral Agent may resign at any time by giving written
notice thereof to the Trustees and may be removed at any time with or without
cause by the Trustees acting together. Prior to the effectiveness of any such
resignation or removal, the Trustees acting together shall have the right to
appoint a successor Collateral Agent which shall be a commercial bank organized
or chartered under the laws of the United States of America or any state thereof
having combined capital and surplus of at least $50,000,000. If no successor
Collateral Agent shall have been so appointed by the Trustees acting together,
and shall have accepted such appointment within 30 days after the retiring
Collateral Agent's giving of notice of resignation or the Trustees' removal of
the retiring Collateral Agent, then the retiring Collateral Agent shall, prior
to the effectiveness of its resignation or removal, on behalf of the Senior Note
Trustee, the Holders of the Senior Notes, the Convertible Note Trustee and the
Holders of the Convertible Notes, appoint a successor Collateral Agent, which
shall be a commercial bank organized under the laws of the United States of
32
<PAGE> 33
America or any State thereof having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations under this Security
Agreement. After any retiring Collateral Agent's resignation or removal
hereunder as Collateral Agent, the provisions of this Security Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Collateral Agent under this Security Agreement. Any corporation into
which the Collateral Agent may be merged, or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Collateral Agent shall be a party, shall be Collateral Agent under this Security
Agreement without the execution or filing of any paper or any further act on the
part of the parties hereto.
[SIGNATURE PAGE FOLLOWS]
33
<PAGE> 34
IN WITNESS WHEREOF, the Company has caused this Security Agreement to
be duly executed and delivered as of the day and year first above written.
NWE CAPITAL (CYPRUS) LIMITED
By: /s/ Clayton A. Waite
-------------------------------------
Name: Clayton A. Waite
-----------------------------------
Title: Director
----------------------------------
The undersigned, as nominee of the Company to hold as of record
the Company's beneficial interest in one share of CY (pound)1 each of NWE
Capital (Cyprus) Limited (the "Nominee Collateral") for the sole purpose of
compliance with the requirement under Cypriot law that a corporation have two
shareholders of record, does hereby join in this Security Agreement solely for
the purpose of pledging the Nominee Collateral as security in order to secure
the payment and performance of all Obligations by the Company.
The undersigned hereby grants to the Collateral Agent for the
benefit of the Senior Note Trustee and for the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and for the equal and ratable benefit of the Holders of the Convertible Notes
(i) Liens and a continuing security interest in and to the Nominee Collateral in
order to secure the payment and performance of all Obligations by the Company
and (ii) all rights and remedies, whether arising before or after an Event of
Default, with respect to the Nominee Collateral as otherwise granted in this
Security Agreement with respect to the Collateral; provided, however, that the
Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee agree
that, notwithstanding anything contained in this Security Agreement to the
contrary, the undersigned shall have no personal liability under, arising out of
or related to this Security Agreement beyond the Nominee Collateral pledged
hereunder.
/s/ Clayton A. Waite
-----------------------------------------
Clayton A. Waite
<PAGE> 35
By its acceptance hereof, as of the day and year first above written,
the Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee
agree to be bound by the provisions hereof.
THE BANK OF NEW YORK, as Collateral
Agent, Senior Note Trustee and
Convertible Note Trustee
By: /s/ Steven D. Torgeson
-------------------------------------
Name: Steven D. Torgeson
-----------------------------------
Title: Assistant Treasurer
----------------------------------
<PAGE> 36
SCHEDULE A to NWE
Cyprus Senior Note
Security and Pledge
Agreement
PLEDGED STOCK
20,000,002 ordinary shares of US $1 each of Wireless Technology Corporations
Limited
<PAGE> 37
SCHEDULE B to NWE
Cyprus Senior Note
Security and Pledge
Agreement
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
None.
<PAGE> 38
SCHEDULE C to NWE
Cyprus Senior Note
Security and Pledge
Agreement
FILINGS
1. UCC-1 financing statements filed with the Secretary of State of the
State of New York.
2. UCC-1 financing statements filed with the City Registers Office, New
York County, New York.
3. The share register of WTC must contain each of the following:
a. A statement that the WTC Capital Stock is pledged
b. The name of the pledgees
c. The date on which the statement and name contained in (a) and
(b) above are entered in the share register
<PAGE> 39
SCHEDULE D to NWE
Cyprus Senior Note
Security and Pledge
Agreement
CHIEF EXECUTIVE OFFICES
Iris Tower, Office 602
58 Arch. Makarios III Avenue
Nicosia, CYPRUS
<PAGE> 40
SCHEDULE E to NWE
Cyprus Senior Note
Security and Pledge
Agreement
BUSINESS NAMES
None.
<PAGE> 41
SCHEDULE F to NWE
Cyprus Senior Note
Security and Pledge
Agreement
LOCATION OF COLLATERAL
See Schedule D.
<PAGE> 42
SCHEDULE G
Additional
Collateral Amendment
This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes, and grants to the Collateral Agent for its benefit and the equal
and ratable benefit of the Holders of the Senior Notes, continuing Liens and
security interest in all of its rights, title and interest in the Collateral
listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Security and Pledge Agreement, dated as of May 31, 1996,
between the undersigned and The Bank of New York, as Senior Note Trustee, as
Convertible Note Trustee and as Collateral Agent (the "Security Agreement");
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Security Agreement; and the Collateral
listed on this Additional Collateral Amendment shall be deemed to be part of the
Collateral, and shall become part of the Collateral and shall secure all
Obligations.
NWE CAPITAL (CYPRUS) LTD.
By:________________________________
Name:______________________________
Title:_____________________________
WTC CAPITAL STOCK:
<TABLE>
<CAPTION>
Number of Share Percentage
Name of Shares Certificate of Shares
Guarantor Pledged Number Outstanding
--------- --------- ----------- -----------
<S> <C> <C> <C>
</TABLE>
3
<PAGE> 43
INTERCOMPANY NOTES:
<TABLE>
<CAPTION>
Description Name of Restricted Original
Item of Subsidiary Principal
Number Indebtedness (Obligor) Date Amount
------ ------------ ------------------ ---- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 44
SCHEDULE H to NWE
Cyprus Senior Note
Security and Pledge
Agreement
RESTRICTIVE AGREEMENTS
1. The BECET charter and joint venture agreement provide that a joint
venture partner may not sell, assign, pledge or otherwise transfer its
shares without the written consent of the other partner prior to
February 4, 1999. After February 4, 1999, such interest may be
transferred provided that the transferee agrees to be bound by the
terms of the joint venture agreement creating BECET.
2. The BECET charter provides that dividends may be established at a
meeting of the General Assembly (as defined therein). To the extent
that WTC owns a 50 percent equity interest in BECET, its ability to
cause BECET to declare dividends may be restricted.
3. The BECET charter provides a right of first refusal for newly issued
shares.
<PAGE> 1
EXHIBIT 10.1
REVISED
PETERSBURG LONG DISTANCE INC.
-----------------------------
STOCK OPTION PLAN
-----------------------------
<PAGE> 2
PETERSBURG LONG DISTANCE INC.
STOCK OPTION PLAN - REVISED
1. PURPOSE
1.1 This Stock Option Plan has been established by the Company to provide
incentives to certain of its key employees, officers and directors.
2. DEFINITIONS
2.1 In this Plan, the following terms have the following meanings:
(a) "Company" means Petersburg Long Distance Inc. and all of its
subsidiaries, its and their respective successors and assigns, and any
reference in the Plan to action by the Company 0means action by or
under the authority of the board of directors of the Company or any
person or committee that has been designated for that purpose by the
Company;
(b) "Date of Grant" of an Option means the date the Option is granted to a
Participant under the Plan;
(c) "Designated Amount" of a Participant's Option means the maximum number
of Shares which the Participant may purchase under the Option, as
designated by the Company at the time the Option is granted;
(d) "Eligible Employee" means a bona fide full-time employee (including,
without limitation, any director or officer) of the Company who has
been designated an Eligible Employee by the Company;
(e) "Option" means a right granted under the Plan to a Participant to
purchase Shares in accordance with the Plan;
(f) "Option Price" in respect of a Participant's Option means the price
designated by the Company at which the Participant may purchase Shares
under the Option;
(g) "Option Year" in respect to an Option means a calendar year commencing
on the Date of Grant of the Option or on any anniversary of the Date of
Grant;
(h) "Participant" means an Eligible Employee who has agreed to participate
in the Plan on such terms as the Company may specify at the time he is
designated as an Eligible Employee;
<PAGE> 3
- 2 -
(i) "Plan" means this Stock Option Plan, as amended and restated from time
to time;
(j) "Shares" means Common Shares of the Company.
2.2. In this Plan, unless the context requires otherwise, references to the
male gender include the female gender, words importing in the singular number
may be construed to extend to and include the plural number, and words importing
the plural number may be construed to extend to and include the singular number.
3. GRANTING OF OPTIONS AND DETERMINATION OF THE OPTION PRICE
3.1 From time to time the Company may designate one or more bona fide
full-time employees of the Company (including, without limitation, any director
or officer) as "Eligible Employees" for the purposes of the Plan. If an employee
agrees to participate in the Plan on such terms as the Company may specify at
the time he is designated as an Eligible Employee, he shall become a Participant
in the Plan.
3.2 From time to time the Company may also grant an Option to a Participant
to acquire Shares in accordance with the Plan. In granting such Option, the
Company shall designate:
(a) the maximum number ("Designated Amount") of Shares which the
Participant may purchase under the Option provided that not more than
1,500,000 Shares shall be reserved for issuance, or issued in any
one-year period, to any Participant and such Participant's associates;
(b) the price ("Option Price") at which the Participant may purchase his
Shares under the Option, which price shall be determined by the Company
in accordance with section 3.3; and
(c) the term ("Option Term") during which the Option may be exercised.
3.3 The Option Price per Share in respect of an Option shall be equal to
not less than the market price of the Company's Shares on the Date of Grant of
the Option, being the closing price of the common shares of the Company on The
Toronto Stock Exchange on the trading day immediately preceding the Date of
Grant.
3.4 Participation in the Plan shall be entirely voluntary and any decision
not to participate shall not affect any Eligible Employee's employment with the
Company or any of its affiliates.
<PAGE> 4
- 3 -
4. EXERCISE OF PARTICIPANT'S OPTIONS
4.1 The exercise of an Option under the Plan shall be made by notice to the
Company in writing specifying and subscribing for the number of Shares in
respect of which the Option is being exercised at that time and accompanied by a
certified cheque or bank draft payable to the Company in the amount of the
aggregate Option Price for such number of Shares. As of the day the Company
receives such notice and such payment, the Participant (or the person claiming
through him, as the case may be) shall be entitled to be entered on the share
register of the Company as the holder of the number of Shares in respect of
which the Option was exercised and as promptly as possible thereafter shall be
delivered a certificate representing that number of Shares.
4.2 Unless the Company otherwise agrees in writing, a Participant's Option
shall terminate and may not be exercised after the earliest of:
(a) 30 days after the Participant's termination of employment with the
Company or his resignation or retirement or early retirement, (as
determined by the Company at its sole discretion) provided that the
Participant has not died prior to the expiry of such 30 day period;
(b) six months after the Participant's death;
(c) the fifth anniversary of the Date of Grant of the Participant's Option;
and
(d) such date as may be imposed by any regulatory authority or body having
jurisdiction over this aspect of the Plan.
5. MAXIMUM NUMBER OF SHARES TO BE ISSUED UNDER THE PLAN
5.1 The maximum number of Shares which may be reserved for issuance, or
issued in any one-year period, under this Plan, together with any other options
and stock purchase plans granted by the Company to all Participants, shall not
at any time exceed 2,500,000 Shares or such other number (not to exceed the
maximum number permitted from time to time under any applicable law or under the
applicable rules of any stock exchange in Canada upon which Shares of the
Company are listed) as may from time to time be approved by the shareholders of
the Company.
5.2 If any Option has terminated or expired without being fully exercised,
any unissued Shares which have been reserved to be issued upon the exercise of
the Option shall become available to be issued upon the exercise of Options
subsequently granted under the Plan.
<PAGE> 5
- 4 -
6. ANTI-DILUTION PROVISIONS
6.1 The number of Shares deliverable upon the exercise of an Option shall
be subject to adjustment in the events and in the manner following:
(a) In the event of any subdivision or subdivisions of the Shares of the
Company as such Shares are constituted on the date of Grant of an
Option, at any time while such Option is in effect into a greater
number of Shares, the Company will thereafter deliver at the time of
purchase of Shares pursuant to an Option, in addition to the number of
Shares in respect of which the right to purchase is then being
exercised, such additional number of Shares as result from said
subdivision or subdivisions without the Participant making any
additional payment or giving any other consideration therefor.
(b) In the event of any consolidation or consolidations of the Shares of
the Company as such Shares are constituted on the date of Grant of an
Option, at any time while such Option is in effect, into a lesser
number of Shares, the Company will thereafter deliver and the
Participant shall accept, at the time of purchase of Shares hereunder,
in lieu of the number of Shares in respect of which the right to
purchase is then being exercised, the lesser number of Shares as result
from such consolidation or consolidations.
(c) In the event of any change of the Shares of the Company as such Shares
are constituted on the date of Grant of an Option, at any time while
such Option is in effect, the Company will thereafter deliver at the
time of purchase of Shares hereunder the number of Shares of the
appropriate class resulting from the said change as the Participant
would have been entitled to receive in respect of the number of Shares
so purchased had the right to purchase been exercised before such
change.
(d) In the event of any capital reorganization, reclassification or change
of outstanding equity shares of the Company or in the event of any
consolidation, merger or amalgamation of the Company with or into any
other company or in the event of any sale of the property of the
Company as or substantially as an entity at any time while any Option
is in effect, the Participant shall thereafter have the right to
purchase and receive, in lieu of the Shares immediately theretofore
purchasable and receivable upon the exercise of such Option, the kind
and amount of Shares and other securities and property receivable upon
such capital reorganization, reclassification, change, consolidation,
merger, amalgamation or sale which the holder of a number of Shares
equal to the number of Shares immediately theretofore purchasable and
receivable upon the exercise of such Option would have received as a
result of such reorganization, reclassification, change, consolidation,
merger, amalgamation
<PAGE> 6
- 5 -
or sale. The subdivision or consolidation of Shares at any time
outstanding into a greater or lesser number of Shares shall not be
deemed to be a capital reorganization or a reclassification of the
capital of the Company for the purposes of this subparagraph (d).
(e) The adjustments provided for in this Paragraph 6.1 are cumulative.
6.2 The Company shall not be required to issue fractional shares in
satisfaction of its obligations hereunder. Any fractional interest in a Share
that would, except for the provisions of this paragraph 6.2, be deliverable upon
the exercise of any Option shall be canceled and not be deliverable by the
Company.
6.3 If any questions shall at any time arise with respect to the exercise
price or number of Shares deliverable upon exercise of any Option, such
questions shall be conclusively determined by the Company's Auditors, or, if
they decline to so act any other firm of chartered accountants that the Company
may designate and who shall have access to all appropriate records and such
determination shall be binding upon the Company and the Participant.
7. ACCOUNTS AND STATEMENTS
7.1 The Company shall maintain records of the details of each Option
granted to each Participant under the Plan, including the Date of Grant,
Designated Amount and the Option Price of each Option, the number of Shares in
respect of which the Option has been exercised and the maximum number of Shares
which the Participant may still purchase under the Option. Upon request therefor
from a Participant and at such other times as the Company shall determine, the
Company shall furnish the Participant with a statement setting forth the details
of his Options. Such statement shall be deemed to have been accepted by the
Participant as correct unless written notice to the contrary is given to the
Company within 30 days after such statement is given to the Participant.
8. NOTICES
8.1 Any payment, notice, statement, certificate or other instrument
required or permitted to be given to a Participant or any person claiming or
deriving any rights through him shall be given by:
(a) delivering it personally to the Participant or to the person claiming
or deriving rights through him, as the case may be, or
(b) mailing it postage paid (provided that the postal service is then in
operation) or delivering it to the address which is maintained for the
Participant in the Company's personnel records.
<PAGE> 7
- 6 -
8.2 Any payment, notice, statement, certificate or instrument required or
permitted to be given to the Company shall be given by mailing it postage
prepaid (provided that the postal service is then in operation) or delivering it
to the Company at the following address:
Petersburg Long Distance Inc.
166 Pearl Street
Toronto, Ontario
M5H 1L3
Attention: Senior Vice-President
8.3 Any payment, notice, statement, certificate or other instrument
referred to in Section 8.1 or 8.2, if delivered, shall be deemed to have been
given or delivered on the date on which it was delivered or, if mailed (provided
that the postal service is then in operation), shall be deemed to have been
given or delivered on the second business day following the date on which it was
mailed.
9. GENERAL
9.1 From time to time the Company may add to or amend any of the provisions
of the Plan or terminate the Plan. Unless a Participant otherwise agrees, any
such addition, amendment or termination shall apply only in respect of Options
granted on or after the date of such addition, amendment or termination.
9.2 The determination by the Company of any question which may arise as to
the interpretation or implementation of the Plan or any of the Options granted
hereunder shall be final and binding on all Eligible Employees, Participants and
other persons claiming or deriving rights through any of them.
9.3 The Plan shall enure to the benefit of and be binding upon the Company,
its successors and assigns. The interest of any Eligible Employee or Participant
under the Plan or in any Option shall not be transferable or alienable by him
either by pledge, assignment or in any other manner whatsoever and, during his
lifetime, shall be vested only in him, but shall thereafter enure to the benefit
of and be binding upon the legal personal representatives of the Eligible
Employee or the Participant, as the case may be.
9.4 The Company's obligation to issue Shares in accordance with the terms
of this Plan and any Options granted hereunder is subject to compliance with the
laws, rules and regulations of all public agencies and authorities applicable to
the issuance and distribution of such Shares and to the listing of such Shares
on any stock exchange on which any of the Shares of the Company may be listed.
As a condition of participating in the Plan, each Eligible Employee agrees to
comply with all such laws, rules and regulations and agrees to
<PAGE> 8
- 7 -
furnish to the Company all information and undertakings as may be required to
permit compliance with such laws, rules and regulations.
9.5 An Eligible Employee shall not have any rights as a shareholder in
respect of Shares subject to an Option until such Shares have been paid for in
full and issued.
9.6 This Plan and any Options granted hereunder shall be governed by and
construed in accordance with the laws of the Province of Ontario.
<PAGE> 9
AMENDMENT 1997-1
TO
PETERSBURG LONG DISTANCE INC.
STOCK OPTION PLAN
The Company has established and maintains the Petersburg Long Distance Inc.
Stock Option Plan (as revised). Pursuant to Section 9.1 of the Plan, the Company
hereby amends the Plan as follows:
1. The name of the Plan is hereby changed to the "PLD TELEKOM INC. STOCK
OPTION PLAN".
2. Section 2.1(a) is amended to read in its entirety as follows:
"Company" means PLD Telekom Inc. and all of its subsidiaries, its and
their respective successors and assigns, and any reference in the Plan
to action by the Company means action by or under the authority of the
board of directors of the Company or any person or committee that has
been designated for that purpose by the Company.
3. Section 2.1(j) is amended to read in its entirety as follows:
"Shares" means shares of Common Stock of the Company, par value $0.01
per share.
4. Section 3.3 is amended to read in its entirety as follows:
"The Option Price per Share in respect of an Option shall be equal to
not less than the per share market price of the Company's Shares on the
Date of Grant of the Option, being the last reported sale price on the
Nasdaq National Market on the Date of Grant or, if there were no trades
on that date, the latest preceding date upon which a sale was
reported."
5. Article 3 is further amended by adding the following new section at the
end thereof:
"3.5 Anything contained in this Article 3 of the Plan to the contrary
notwithstanding, the following provisions shall apply and govern the
administration of the Plan:
(a) The Plan shall be administered and interpreted by a
committee ("the Committee"), which shall consist of two or more persons
appointed by the board of directors of the Company (the "Board"), all
of whom shall be "outside directors" as defined under section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") and related
Treasury regulations and "non-employee directors" as defined
<PAGE> 10
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) The Committee shall have the sole authority to (i)
determine the individuals to whom grants shall be made under the Plan,
(ii) determine the type, size and terms of the grants to be made to
each such individual, (iii) determine the time when the grants will be
made and the duration of any applicable exercise of restriction period,
including the criteria for exercisability and the acceleration of
exercisability, and (iv) deal with any other matters arising under the
Plan."
6. Article 4 is amended by adding the following new section at the end
thereof:
"4.3 The Company may require the Participant or other person receiving
Shares upon exercise of an Option to remit to the Company, together
with payment of the Option Price, an amount equal to the amount of any
federal state or local taxes required to be withheld by the Company
with respect to such Option exercise. If the Company so permits, a
Participant may elect to satisfy the Company's tax withholding
obligation with respect to the Option exercise by having Shares
withheld up to an amount necessary to satisfy such withholding
obligation. Any such election must be in a form and manner prescribed
by the Company and shall be subject to the prior approval of the
Company."
7. Section 5.1 is amended by deleting the parenthetical phrase included
therein and substituting the following therefor:
"(not to exceed the maximum number permitted from time to time under
any applicable law or under the applicable rules of any stock exchange
upon which Shares of the Company are listed or other trading market for
the Company Shares)"
8. Section 9.6 is amended by deleting therefrom the reference to the
"Province of Ontario" and substituting therefor a reference to the "State of
Delaware."
9. This Amendment 1997-1 shall be effective as of February 27, 1997.
2
<PAGE> 1
Exhibit 10.3
Ministry of Communications
of the Russian Federation
LICENCE
NO. 4904
In accordance with the Law on Communications,
the Ministry of Communications of the Russian Federation allows
the conduct of telecommunications operations to the
CLOSED JOINT-STOCK COMPANY
"PETERSTAR"
Registered address:
24 Bolshaya Morskaya Street, St. Petersburg, 191065
Type of activity:
PROVIDING LOCAL, LONG-DISTANCE AND INTERNATIONAL TELEPHONE COMMUNICATIONS VIA A
DEDICATED NETWORK
The terms and conditions for conducting the said type of activity
and territory of operations are contained in an addendum
which is an inalienable part of the present Licence.
Licence Expiry date 20.09.2001
Commencement of operations
(no later than) 20.09.1997
Date of licence registration
in the Unified Register for
Telecoms Licences 20.09.1996
FIRST DEPUTY FEDERAL MINISTER
OF COMMUNICATIONS A.E. KRUPNOV
<PAGE> 2
MINISTRY OF COMMUNICATIONS OF THE RUSSIAN FEDERATION
TERMS AND CONDITIONS FOR CONDUCTING OPERATIONS
UNDER LICENSE NO. 4904
1. The Closed Joint-Stock Company, "PETERSTAR", (Licence Holder), is
authorised by the present Licence to discharge local, long-distance and
international telephone communications services via a dedicated network
within a territory as stated in Clause 30.
The total assembled capacity of the Licence Holder's network is no less
than 30 thousand numbers.
The distribution of the Licence Holder network capacity, region-wise,
is in accordance with Clause 30.
2. The Licence Holder shall, by the end of the third year of
operations, have operational at least 70 percent of the capacity stated
in Clause 1 of the present Licence.
3. The AOZT "PETERSTAR" network is created without interconnection to
the public network of the Russian Federation and to PABXs (official
networks), including the Licence Holder's own networks accessible to
the public network. Discharge of international telephone communications
to the Licence Holder's network subscribers is conducted via dedicated
networks of other operators holding a licence for the discharge of
international telephone services on the territory stated in Clause 30
in accordance with terms and conditions of a co-operation agreement.
The Licence Holder may lease telecommunications circuits and physical
public network lines at tariffs applicable to the given category of
customers.
4. Discharge of telecommunications services using radio-electronic
equipment is allowed subject to a permit from the National
Telecommunications Oversight Agency for the use of working frequencies
and to provision of electromagnetic compatibility with existing
radio-electronic equipment.
5. The use of radio-extensions operating only within the 330 MHz
frequency band is allowed subject to a permit for the use of working
frequencies from the National Telecommunications Oversight Agency.
6. The numbering in the Licence Holder's network shall match the
numbering plan of the public network of the Russian Federation.
7. The Licence Holder shall honour any demands by the Ministry of
Communications
2
<PAGE> 3
MINISTRY OF COMMUNICATIONS OF THE RUSSIAN FEDERATION
of the Russian Federation relating to the procedure of traffic transit
and discharge of services.
In cases stipulated by legislation of the Russian Federation,
centralised management of the Licence Holder's network shall be
conducted directly by the Ministry of Communications of the Russian
Federation.
8. The Licence Holder shall discharge the telecommunications services
provided for under the present Licence twenty-four hours a day, every
day without intervals, except for the duration of essential maintenance
work which shall be planned in advance when minimum damage is likely to
be caused to the customers.
9. The Licence Holder shall discharge to the customers
telecommunications services whose quality meets the standards,
technical norms, certificates and conditions of the agreement for the
discharge of telecommunications services.
10. The Licence Holder is answerable to its customers if it fails to
meet its obligations, or if it meets them unduly, in accordance with
procedure stipulated by the current legislation of the Russian
Federation.
11. The Licence Holder's network may be created subject to the
availability of design documents drafted in accordance with the
construction norms and rules (SNiP) and the Departmental Technological
Design Norms (VNTP) applied in the Russian Federation and co-ordinated
in accordance with established procedure.
12. Tariffs for telecommunications services shall be set on a
negotiable basis. In cases stipulated by the legislation of the Russian
Federation, tariffs for some telecommunications services discharged by
telecommunications enterprises may be regulated by the government.
A subscriber shall not be billed for a call if no connection was
established.
13. All costs connected with the design and construction of the Licence
Holder's network, shall be borne by the Licence Holder.
14. In case of natural calamities, quarantine and other force majeure
situations stipulated by the legislation of the Russian Federation, the
authorised state bodies shall enjoy top priority for use as well as
suspension of the operations of the Licence Holder's network and
equipment.
15. The Licence Holder shall give overriding priority to all messages
concerning the safety of human lives at sea, on land, in the air and in
space, the conduct of emergency
3
<PAGE> 4
MINISTRY OF COMMUNICATIONS OF THE RUSSIAN FEDERATION
measures in the sphere of defence, security and law and order
protection in the Russian Federation, and also to messages of major
accidents, disasters, epidemics, epizootics and natural calamities.
16. Individual categories of civil servants, diplomatic and consulate
representatives of foreign states, representatives of international
organisations and also individual groups of citizens are entitled to
discounts and benefits in terms of priority, procedures and tariffs
when using telecommunications services.
The list of benefits as well as categories of civil servants and
members of the public entitled to discounts and benefits is determined
by the legislation of the Russian Federation and normative acts of its
republics and regions, and also by international agreements and
treaties of the Russian Federation.
17. The Licence Holder shall honour the confidentiality of
communications. Information on any messages passed through the Licence
Holder's telecommunications network as well as the messages themselves,
may be disclosed only to senders or addressees or their legal
representatives. Monitoring of telephone conversations and other
messages, receiving information about them, and also other abridgements
of the confidentiality of telecommunications may be permitted solely in
accordance with the current legislation of the Russian Federation.
18. The Licence Holder shall not obstruct the conduct by the National
Telecommunications Oversight Agency of audits into the technical
parameters of the telecommunications network and, if necessary, shall
grant the Agency access to its measuring equipment with a view to its
use in the said work.
19. In developing, constructing and operating its telecommunications
network, the Licence Holder shall, in accordance with the legislation
of the Russian Federation, assist organs conducting operational and
search activities in conducting such activities inside the network, and
take measures aimed at preventing the divulgence of organisational and
tactical measures in the conduct of the said activities.
In the event of the use of the equipment for criminal purposes
resulting in damage to the interests of the individual, society and the
state, duly authorised government bodies, in accordance with the
legislation of the Russian Federation, may suspend the Licence Holder's
networks and equipment.
The connection of subscribers may go ahead only after the requirements
have been met in accordance with the Law of the Russian Federation On
Operational and Search Activities in the Russian Federation.
20. The Licence Holder shall take all necessary measures to prevent any
unauthorised
4
<PAGE> 5
MINISTRY OF COMMUNICATIONS OF THE RUSSIAN FEDERATION
intervention in the management of the network under construction and
unauthorised control over its operation.
21. The discharge of telecommunications services may commence subject
to the availability of a permit for operating the network from the
National Telecommunications Oversight Agency.
22. The Licence Holder shall make available gratis official
telecommunications in accordance with procedure established by the
Ministry of Communications of the Russian Federation.
23. The Licence Holder shall, upon the Licensor's request, make
available information relating to the network's technical state and
development prospects, the conditions for the discharge of services and
current tariffs.
24. The Licence shall be regulated, interpreted and implemented in
accordance with the current legislation of the Russian Federation.
25. The Licence Holder shall conduct its operations in accordance with
the current legislation of the Russian Federation and the normative
acts issued by the Ministry of Communications of the Russian
Federation.
26. The Licensor reserves the right to introduce amendments to the
present Licence due to changes in the current legislation of the
Russian Federation.
27. The Licence Holder shall provide local statistical bodies and the
Ministry of Communications of the Russian Federation with periodic and
annual statistical reports relating to telecommunications in accordance
with procedure established by the State Committee for Statistics.
Any breach in the procedure of the presentation of the statistical
reports shall entail an administrative penalty in accordance with
current legislation.
28. The Licence is non-transferable.
29. The Licence shall be registered within thirty days of its issue
with the territorial directorate of the National Telecommunications
Oversight Agency.
The Licence Holder shall, in the event of any changes to its postal
address, banking details or telephone number, within seven days advise
the Ministry of Communications of the Russian Federation and the
territorial directorate of the National Telecommunications Oversight
Agency.
5
<PAGE> 6
MINISTRY OF COMMUNICATIONS OF THE RUSSIAN FEDERATION
30. Territory of operations:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Regions Capacity
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Oblasts: Leningradskaya 4000
- ------------------------------------------------------------------------------
2. Archangelskaya 700
- ------------------------------------------------------------------------------
3. Vologodskaya 600
- ------------------------------------------------------------------------------
4. Novgorodskaya 1000
- ------------------------------------------------------------------------------
5. Pskovskaya 600
- ------------------------------------------------------------------------------
6. Murmanskaya 900
- ------------------------------------------------------------------------------
7. Republics: Karelia 900
- ------------------------------------------------------------------------------
8. Komi 400
- ------------------------------------------------------------------------------
9. Cities: St. Petersburg 20,000
- ------------------------------------------------------------------------------
10. Moscow 900
- ------------------------------------------------------------------------------
TOTAL 30,000
- ------------------------------------------------------------------------------
</TABLE>
First Deputy Federal
Minister of Communications A. E. Krupnov
Deputy of Licensing
Department V. D. Altoshin
(Signatures and Ministerial Seal applied)
6
<PAGE> 7
THIS DOCUMENT WAS ORIGINALLY DRAFTED IN RUSSIAN. THE COMPANY REPRESENTS THAT
THIS ENGLISH TRANSLATION REPRESENTS A FAIR AND ACCURATE TRANSLATION OF THE
ORIGINAL.
/S/ CONOR CARROLL
- --------------------------------------------
CONOR CARROLL
VICE PRESIDENT - BUSINESS DEVELOPMENT
7
<PAGE> 1
Exhibit 10.4
A000801 MINISTRY OF COMMUNICATIONS
OF THE RUSSIAN FEDERATION
L I C E N C E
No. 4 2 7 4
The Ministry of Communications of the Russian Federation
in accordance with the Law on Communications in the
Russian Federation authorises the
"PETERSTAR"
PRIVATE JOINT-STOCK COMPANY
Legal address:
191065, St. Petersburg, ul. B.Morskaya, d. 24
to carry out activities relating to communications
Type of activity:
Provision of local and intercity telephone
communications services
The conditions for carrying out the said type of activity and
the territory are given in the addendum, which is an integral
part of this licence.
<TABLE>
<S> <C>
Period of licence to 28.11.2004
Commencement of provision
of services (not later than) 07.06.1996
Date of registration of licence
in Unified Communications
Licence Register 07.06.1996
Deputy Federal Minister
of Communications (signed) N.S. Marder
[Official Stamp]
</TABLE>
Licence No. 4274
<PAGE> 2
RF Ministry of Communications 1
Conditions for performance of activities
in accordance with Licence No. 4274
1. AOZT "PeterStar" (the Licensee) is authorized by the present licence
to provide public communications system local and intercity telephone
communications services in the territory indicated in clause 36.
The total installed capacity of the Licensee's communication
system is to be not less than 106,000 numbers.
The distribution of the Licensee's communication system
capacity by regions of the licence territory is to be in accordance with clause
36.
2. The Licensee is obligated to ensure that not less than 70% of the
capacity indicated in clause 1 of the present licence has been introduced by the
end of the third year of operation.
3. The Licensee must provide services in the licence territory to any
person who requires these, where there are the appropriate technical
capabilities.
Refusal to provide services may be caused by circumstances in
which:
- the provision of a service may create a threat to the safety
and defence capability of the estate, or to the health and safety of people;
- the provision of a service is impossible in view of any
physical, topographical or other natural hindrances;
- the consumer, without any reason, does not agree to the
conditions for provision of a service, does not make payments on time for the
service provided;
- the consumer uses or intends to use the communications
apparatus for any illegal purposes, or obtains communications services by
illegal means, operates the equipment provided with infringement of technical
operating regulations, or uses uncertificated equipment.
A refusal must be substantiated in each specific case.
4. The Licensee's communications system is to be connected to the
public communications system of the Russian Federation at the level of local
telephone systems in accordance with the technical specifications of the
operators of the public communications system, in accordance with clause 36.
Connection to the public communications system of the Russian
Federation in accordance with the technical specifications of other public
communications system operators who have a licence to provide local telephone
communications services in the said territory is permissible, on condition that
they comply with current norms and regulations on carrying traffic.
The connection of other communications systems to the
Licensee's communications system with the object of providing the subscribers of
these systems with an outlet to the public communications system of the Russian
Federation is permissible only in St. Petersburg and the Leningrad Region.
Licence No. 4274
<PAGE> 3
RF Ministry of Communications 2
In St. Petersburg and the Leningrad Region, when the Licensee
is approached by other operators of the public communications system of the
Russian Federation, who have a licence to supply local telephone communications
services in the said territory, he must issue technical specifications for
connection to his system. In this case, current norms and regulations must be
observed, relating to carrying the additional traffic of the system being
connected, and including obligatory clarification of technical specifications
for connection of the Licensee's communications system to the public
communications system of the Russian Federation.
The Licenseee must participate in proportional development of
the public communications system of the Russian Federation. The type, amount and
procedure for transfer of a contribution for this purpose shall be determined
and the client shall be informed after they have been established.
The Licensee has the right to lease communication channels and
physical circuits of the public communications system at the tariffs current for
the given category of consumer.
5. Connection of the technical facilities of the Licensee's
communications system to the public communications system of the Russian
Federation, and also their operation, are to be carried out in accordance with
the current normative documents of the Ministry of Communications of the Russian
Federation.
6. It is permissible to use in the subscriber sector radio extendors
operating solely in the 330 MHz frequency band where there is authorisation from
the State Communications Supervisory Service of the Russian Federation for use
of the operating frequencies.
7. When switching equipment of foreign design is used, its type must be
authorised for use in the public communications system in the particular region.
8. Numbering in the Licensee's communications system must correspond to
the numbering plan of the public communications system of the Russian
Federation.
9. The Licensee is obligated to meet the requirements of the Ministry
of Communications of the Russian Federation on the procedure for carrying
traffic and providing services.
In the cases provided for by the legislation of the Russian
Federation, centralised control of the Licensee's communications
systems is exercised directly by the Ministry of Communications of the
Russian Federation.
10. Subscribers of the Licensee's system are to be provided with
intercity and international telephone communications services solely via the
public communications system.
It is permissible to provide intercity telephone
communications services via the Licensee's communications system if both the
calling and the called subscribers are subscribers of the Licensee's system.
Licence No. 4274
<PAGE> 4
RF Ministry of Communications 3
11. Payphones must be installed in the Licensee's operating area, in a
volume of not less than 2% of the number capacity, and having the right of
outlet to the public telephone communications system.
12. Settlements for traffic are to be made by the Licensee in
accordance with the procedure established by the Ministry of Communications of
the Russian Federation for the public communications system of the Russian
Federation.
13. The Licensee is obligated to provide the communications services
covered by the present licence 24 hours per day every day with the exception of
interruptions for the performance of necessary preventive maintenance and repair
work, which shall be planned for a time when this may cause the least loss to
the user.
14. The Licensee is obligated to provide users with communications
services, the quality of which complies with standards, technical norms,
certificates and conditions of the contract for the provision of communications
services.
15. The Licensee is liable to the users in the event of the
non-fulfilment or inappropriate fulfilment by him of his obligations under the
procedure and in the amounts provided for by the current legislation of the
Russian Federation.
16. Creation of the Licensee's communications system is permitted only
where there is project documentation, prepared in accordance with the
Construction Norms and Regulations and Departmental Technological Design Norms
(SNiP, VNTP) used in the Russian Federation, and agreed under the established
procedure.
17. Tariffs for communications services are set on a contractual basis.
In the cases provided for by the legislation of the Russian
Federation, tariffs may be regulated by the state in respect of individual types
of communications services provided by communications enterprises.
Calls to the emergency services (fire brigade, police,
ambulance, emergency gas service, mine rescue service, etc.) are made free by
all individual persons and legal entities.
Payment for inter-system connections is set on the basis of
contracts, conditions and regulations agreed between the corresponding
communications enterprises. Disputes relating to these matters are to be
considered in a court or arbitration tribunal.
Subscribers are not to be billed for calls if a connection has
not been established.
18. Costs connected with design and construction of the Licensee's data
transmission system, its connection to the public communications system of the
Russian Federation, and settlements with the operators of the public
communications systems of the Russian Federation are paid by the Licensee.
Licence No. 4274
<PAGE> 5
RF Ministry of Communications 4
19. During natural disasters, quarantine and other emergency situations
provided for by the legislation of the Russian Federation, authorised state
bodies have the right to priority use, and also to suspend the activities, of
the Licensee's communications system and facilities.
20. The Licensee must give absolute priority to all messages concerning
the safety of human life at sea, on land, in the air and in space, the
performance of emergency measures in the sphere of defence, safety and the
safeguarding of law and order in the Russian Federation, and also to messages
concerning major accidents, catastrophes, epidemics, epizootics and natural
catastrophes.
21. Preferences and privileges in respect of priority, procedure for
use and amount of payment for communications services may be established for
particular categories of officials of state bodies, diplomatic and consular
representatives of foreign states, representatives of international
organisations, and also individual groups of citizens when using electrical
communications.
A schedule of preferences, and also of the categories of
officials and citizens who have the right to preferences and privileges, is
determined by the legislation of the Russian Federation and by the normative
legal acts of members of the Russian Federation, and also by international
treaties and agreements of the Russian Federation.
22. The Licensee is obligated to ensure observance of the secrecy of
communications.
Information on messages transmitted via the Licensee's
communications system, and also these messages themselves, may be issued only to
the senders and addressees or their legal representatives.
Listening to telephone conversations, examination of
electrical communications messages, obtaining information on these, and also
other limitations on the secrecy of communications are permissible only on the
basis of the current legislation of the Russian Federation.
23. The Licensee must not prevent the performance of checks on the
technical parameters of the communications system by the State Communications
Supervisory Service of the Russian Federation and, where necessary, is obligated
to ensure that this Service has access to its measuring apparatus with the
object of using it in this work.
24. In accordance with the legislation of the Russian Federation, when
developing, creating and operating the communications system the Licensee is
obligated to cooperate with bodies carrying out criminal investigation
activities and to give them the opportunity to carry out criminal investigation
measures in the communications system, and to take steps to prevent disclosure
of the organisational and tactical procedures in carrying out the said measures.
In the event that communications facilities are used for
criminal purposes, causing damage to the interests of the person, society and
the state, the authorised state bodies have the
Licence No. 4274
<PAGE> 6
RF Ministry of Communications 5
right, in accordance with the legislation of the Russian Federation, to suspend
the operations of the Licensee's communications systems and facilities.
The connection of subscribers must be carried out after
meeting requirements in accordance with the Russian Federation Law 'On criminal
investigation activity in the Russian Federation'.
25. The Licensee is obligated to take steps to prevent unsanctioned
interference in control of the system being set up, and unsanctioned monitoring
of its operation.
26. The use of technical communications facilities is permitted when
there is a certificate of the Ministry of Communications of the Russian
Federation.
27. The provision of communications services may commence only when
there is authorisation for system operation from the State Communications
Supervisory Service of the Russian Federation.
28. The Licensee is obligated to provide official electrical
communications free of charge under the procedure defined by the Ministry of
Communications of the Russian Federation.
29. At the request of the Licensor, the Licensee is to submit
information on the technical condition and development prospects of the
technical facilities being created, conditions for provision of communications
services, and current tariffs.
30. The licence shall be regulated, interpreted and implemented in
accordance with the current legislation of the Russian Federation.
31. The Licensee is obligated to carry out his activities in accordance
with the current legislation of the Russian Federation and normative acts passed
by the Ministry of Communications of the Russian Federation.
32. The Licensor retains the right to introduce amendments and addenda
into the present licence in connection with changes in the current legislation
of the Russian Federation.
33. The Licensee is obligated to submit to local statistical bodies and
the Ministry of Communications of the Russian Federation periodic and annual
state statistical reports on communications in accordance with the procedure
established by the State Statistics Committee of the Russian Federation.
Infringement of the procedure for submission of statistical
reports incurs administrative liability in accordance with current legislation.
34. The licence may not be transferred to another party.
Licence No. 4274
<PAGE> 7
RF Ministry of Communications 6
35. The licence must be registered within 30 days of its date of issue
at the territorial office of the State Communications Supervisory Service of the
Russian Federation.
In the event of a change in postal address, banking details and
telephone number, the Licensee is obligated to communicate this within one week
to the Ministry of Communications of the Russian Federation and to the
territorial office of the State Communications Supervisory Service of the
Russian Federation.
36. Effective territory of the licence:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Item Territory Capacity Operator issuing TS
No. for connection
- -------------------------------------------------------------------------
<S> <C> <C> <C>
1 St. Petersburg 90000 AOOT "PTS"
- -------------------------------------------------------------------------
2 Moscow (city) 900 AOOT "MGTS"
- -------------------------------------------------------------------------
3 Leningrad Region 10000 AOOT "Lensvyaz'"
- -------------------------------------------------------------------------
4 Arkhangel'sk Region 700 AOOT "Artelekom"
Arkhangel'sk Region
- -------------------------------------------------------------------------
5 Vologda Region 600 AOOT "Elektrosvyaz'"
Volgograd Region
- -------------------------------------------------------------------------
6 Novgorod Region 1000 AOOT "Novgorodtelekom"
- -------------------------------------------------------------------------
7 Pskov Region 600 AOOT "Elektrosvyaz'"
Pskov Region
- -------------------------------------------------------------------------
8 Murmansk Region 900 AOOT "Murmanelektrosvyaz'"
- -------------------------------------------------------------------------
9 Karelian Republic 900 AOOT "Elektrosvyaz'"
Karelian Republic
- -------------------------------------------------------------------------
10 Komi Republic 400 AOOT "Svyaz'"
Komi Republic
- -------------------------------------------------------------------------
</TABLE>
37. Licence No. 1696 dated 28.11.94 is terminated from the moment of
registration of the present licence.
Deputy Federal Minister
of Communications (signed) N.S. Marder
[Official Stamp]
Head of the Department
Licence No. 4274
<PAGE> 8
RF Ministry of Communications 7
for Organisation of
Licensing Work (signed) N.M. Popov
THIS DOCUMENT WAS ORIGINALLY DRAFTED IN RUSSIAN. THE COMPANY REPRESENTS THAT
THIS ENGLISH TRANSLATION REPRESENTS A FAIR AND ACCURATE TRANSLATION OF THE
ORIGINAL.
/S/ CONOR CARROLL
- -------------------------------------------
CONOR CARROLL
VICE PRESIDENT - BUSINESS DEVELOPMENT
Licence No. 4274
<PAGE> 1
Exhibit 10.5
Ministry of Communications
of the Russian Federation
LICENCE
NO. 4199
In accordance with the Law on Communications,
the Ministry of Communications of the Russian Federation allows
the conduct of telecommunications operations to the
CLOSED JOINT-STOCK COMPANY
TELEPORT-TP
-----------------------------------------------------------------------
Registered address:
VVTs [National Exhibition Centre], Prospekt, Mira, Moscow 129233
Type of activity:
PROVIDING LOCAL AND INTERNATIONAL TELEPHONE COMMUNICATIONS
The terms and conditions for conducting the said type of activity
and territory of operations are contained in an addendum
which is an inalienable part of the present License.
<TABLE>
<S> <C>
Licence Expiry date 17.05.2001
Start of operations
(no later than) 17.05.1997
Date licence registration
in the Unified Register for
Telecoms Licences 17.05.1996
</TABLE>
DEPUTY FEDERAL MINISTER
OF COMMUNICATIONS N S MARDER
<PAGE> 2
TERMS AND CONDITIONS FOR CONDUCTING OPERATIONS
UNDER LICENCE NO. 4199
1. The Closed Joint-Stock Company, Teleport-TP, (Licence Holder), is authorized
by the present Licence to discharge local and long-distance telephone
communications services to [the Russian is ambiguous and can also be interpreted
as: "as part of..."] the public network on a territory stated in Clause 41. The
total assembled capacity of the Licence Holder's network is at least 100
thousand numbers.
The distribution of the Licence Holder network capacity, region-wise, is in
accordance with Clause 41.
2. Licence Holder shall, by the end of the third year of operations, have
operational at least 70 percent of the capacity stated in Clause 1 of the
present Licence.
3. The Licence Holder shall discharge services on the licensed territory to any
person who needs them, subject to appropriate technical capabilities. Refusal to
render a service may be caused by circumstances under which:
- - the discharge of such service may create a threat to the security and
defence capability of the state, to the health and safety of members of
the public;
- - the discharge of such service is impossible due to physical,
topographical or other natural obstacles;
- - the customer unreasonably refuses to accept the terms and conditions
for the rendering of this service or fails to make due payments for the
service;
- - the customer uses or intends to use telecoms equipments for any illegal
purposes of receives telecoms services illegally, operates the
equipment in his care in violation of the rules of technical operation,
or uses uncertified equipment.
Any refusal in each specific case has to be substantiated.
4. The interconnection of the Licence Holder's network to the public network of
the Russian Federation is conducted at the level of local telephone networks
according to the technical regulations of public network operators in accordance
with Clause 41. Interconnection to the public network of the Russian Federation
according to technical regulations of other public network operators holding a
licence for the discharge of local telephone services on the said territory is
permitted on condition that they honour the current norms and rules regulating
the transit of traffic Interconnection of the Licence Holder's network being
created under the present Licence to the Licence Holder's dedicated network is
not permitted. Interconnection the Licence Holder's network
1
<PAGE> 3
of other networks with the purpose of providing these networks' subscribers with
access to the public network of the Russian Federation is not permitted. The
Licence Holder shall participate in the proportional development of the public
network of the Russian Federation. Type, size and procedure for the transfer of
the contribution for this purpose shall be advised tot he Licence Holder once
these have been determined. The Licence Holder may lease telecommunications
circuits and physical public network lines at tariffs applicable to the given
category of customers.
5. Interconnection of the Licence Holder's technical telecommunications
equipment to the public network of the Russian Federation and also its operation
shall be conducted in accordance with current rules and regulations of the
Ministry of Communications of the Russian Federation.
6. Discharge of telecommunications services using radio-electronic equipment is
allowed subject to a permit from the National Telecommunications Oversight
Agency for the use of working frequencies and to provision of electromagnetic
compatibility with existing radio-electronic equipment. The use of frequency
bands for earth stations of the Licence Holder's satellite network is permitted
subject to a decision by the State Radio-Frequency Committee (GKRCh) under the
Ministry of Communications of the Russian Federation.
7. Procedure for gaining access to the space segments of the Intelsat and
Eutelsat satellite communications systems and settlements for their use are
conducted by the Licence Holder independently.
8. Co-ordination of the working modes of the earth stations with the
telecommunications authorities concerned and provision of their electro-magnetic
compatibility is conducted in accordance with the established procedure at the
expense of the Licence Holder.
9. When using the space segments of the international satellite organisations
Intelsat, Eutelsat, Inmarsat and Intersputnik, the Licence Holder shall honour
the rules and regulations stated in the appropriate international agreements
entered into by the Russian Federation relating to the use of the space segments
of these organisations.
10. When using the space segments constructed and operated by organisations
excluding the international satellite organisations Intelsat, Eutelsat, Inmarsat
and Intersputnik, the Licence Holder shall honour the recommendations adopted by
the competent bodies of international satellite organisations within the
framework of co-ordinating the said space segments.
11. The use of radio-extensions operating only within the 330 MHZ frequency band
is allowed subject to a permit for the use of working frequencies from the
National Telecommunications Oversight Agency.
12. The use of foreign-manufactured switching equipment is allowed subject to a
permit for the
2
<PAGE> 4
application of such type of equipment within the public network of the given
region.
13. The numbering in the Licence Holder's network shall match the numbering plan
of the public network of the Russian Federation.
14. The Licence Holder shall honour any demands by the Ministry of
Communications of the Russian Federation relating to the procedure of traffic
transit and discharge of services. In cases stipulated by the Legislation of the
Russian Federation, centralised management of the Licence Holder's network shall
be conducted directly by the Ministry of Communications of the Russian
Federation.
15. Long-distance and international telecommunications services to the Licence
Holder's network subscribers shall be discharged only via the public network.
Long distance and international telecommunications services may be discharged
via the Licence Holder's network if both ends are subscribers of the Licence
Holder's network.
16. Pay-phones shall be installed within the territory of operations with a
total capacity of no less than 2 percent of the numbering capacity enjoying the
right to access the public network.
17. Mutual settlements for traffic shall be conducted by the Licence Holder in
accordance with the procedure established by the Ministry of Communications of
the Russian Federation for the public network of the Russian Federation.
18. The Licence Holder shall discharge the telecommunications services provided
for under the present Licence twenty-four hours a day, every day without
intervals, except for the duration of essential maintenance work which shall be
planned in advance when minimum damage is likely to be caused to the customers.
19. The Licence Holder shall discharge to the customers telecommunications
services whose quality meets the standards, technical norms, certificates and
conditions of the agreement for the discharge of telecommunications services.
20. The Licence Holder is answerable to its customers if it fails to meet its
obligations, or if it meets them unduly, in accordance with procedure stipulated
by the current legislation of the Russian Federation.
21. The Licence Holder's network may be crated subject to the availability of
designed documents drafted in accordance with the construction norms and rules
(SNiP) and the Departmental Technological Design Norms (VNTP) applied in the
Russian Federation and co-ordinated in accordance with established procedure.
3
<PAGE> 5
22. Tariffs for telecommunications services shall be set on a negotiable basis.
In cases stipulated by the legislation of the Russian Federation, tariffs for
some telecommunications services discharged by telecommunications enterprises,
could be regulated by the government.
Emergency calls (fire brigade, police, ambulance service, emergency gas service,
mountain rescue service, etc.) shall be free of charge for all persons and legal
entities. Payments for inter-network connections are established in accordance
with agreements, conditions and provisions agreed between the appropriate
telecommunications enterprises. Disputes arising on these matters are heard in
court or arbitration. A subscriber shall not be billed for a call if no
connection was established.
23. All costs connected with the design and construction of the Licence Holder's
network, its connection to the public network of the Russian Federation and
settlements with Russian public network operators shall be borne by the License
Holder.
24. In case of natural calamities, quarantine and other force majeure situations
stipulated by the legislation of the Russian Federation, the authorised state
bodies shall enjoy top priority for use as well as suspension of the operations
of the Licence Holder's network and equipment.
25. The Licence Holder shall give overriding priority to all messages concerning
the safety of human lives at sea, on land, in the air and in space, the conduct
of emergency measures in the sphere of defence, security and law and order
protection in the Russian Federation, and also to messages of major accidents,
disasters, epidemics, epizootics and natural calamities.
26. Individual categories of civil servants, diplomatic and consulate
representatives of foreign states, representatives of international
organisations and also individual groups of citizens are entitled to discounts
and benefits in terms of priority, procedures and tariffs when using
telecommunications services.
The list of benefits as well as categories of civil servants and members of the
public entitled to discounts and benefits is determined by the legislation of
the Russian Federation and normative acts of its republics and regions, and also
by international agreements and treaties of the Russian Federation.
27. The Licence Holder shall honour the confidentiality of communications.
Information on any messages passed through the Licence Holder's
telecommunications network as well as the messages themselves, may be disclosed
only to senders or addressees or their legal representatives. Monitoring of
telephone conversations and other messages, receiving information about them,
and also other infringements of the confidentiality of telecommunications may be
permitted solely in accordance with the current legislation of the Russian
Federation.
28. The Licence Holder shall not obstruct the conduct by the National
Telecommunications Oversight Agency of audits into the technical parameters of
the telecommunications network and, if necessary, shall grant the Agency access
to its measuring equipment with a view to its use in the said work.
4
<PAGE> 6
29. In developing, constructing and operating its telecommunications network,
the Licence Holder shall, in accordance with the legislation of the Russian
Federation, assist organs conducting operational and search activities in
conducting such activities inside the network, and take measures aimed at
preventing the divulgence of organisational and tactical measures in the conduct
of the said activities. In the event of the use of the equipment for criminal
purposes resulting in damage to the interests of the individual, society and the
state, authorised government bodies, in accordance with the legislation of the
Russian Federation, may suspend the Licence Holder's networks and equipment. The
connection of subscribers may go ahead only after the requirements have been met
in accordance with the Law of the Russian Federation On Operational and Search
Activity in the Russian Federation.
30. The Licence Holder shall take all necessary measures to prevent any
unauthorised intervention in the management of the network under construction
and unauthorised control over its operation.
31. Use of telecommunications equipment is subject to the availability of a
certificate from the Ministry of Communications of the Russian Federation.
32. The discharge of telecommunications services may commence subject to the
availability of a permit for operating the network from the National
Telecommunications Oversight Agency.
33. The Licence Holder shall make available gratis official telecommunications
in accordance with procedure established by the Ministry of Communications of
the Russian Federation.
34. The Licence Holder shall, upon the Licensor's request, make available
information relating to the network's technical state and development prospects,
the conditions for the discharge of services and current tariffs.
35. The License shall be regulated, interpreted and implemented in accordance
with the current legislation of the Russian Federation.
36. The License Holder shall conduct its operations in accordance with the
current legislation of the Russian Federation and the normative acts issued by
the Ministry of Communications of the Russian Federation.
37. The Licensor reserves the right to introduce amendments to the present
Licence due to changes in the current legislation of the Russian Federation.
38. The Licence Holder shall provide local statistical bodies and the Ministry
of Communications of the Russian Federation with periodic and annual statistical
reports relating to telecommunications in accordance with procedure established
by the State Committee for Statistics. Any breach in the procedure of the
presentation of the statistical reports shall entail an administrative
5
<PAGE> 7
penalty in accordance with current legislation.
39. The Licence is non-transferable.
40. The Licence shall be registered within thirty days of its issue with the
territorial directorate of the National Telecommunications Oversight Agency. The
Licence Holder shall, in the event of any change to its postal address, banking
details or telephone number, within seven days advise the Ministry of
Communications of the Russian Federation and the territorial directorate of the
National Telecommunications Oversight Agency.
41. Territory of operations
<TABLE>
<CAPTION>
Regions Capacity
<S> <C> <C>
1 Republic of Bashkortostan 1000
2 Republic of Buriatia 1000
3 Republic of Kalmykia 500
4 Republic of Karelia 5000
5 Republic of Saha (Yakutia) 5000
6 Republic of Udmurtia 1000
7 Altai Territory 1000
8 Primorskiy (Maritime) Territory 5000
9 Krasnodar Territory 15000
10 Krasnoyarsk Territory 2000
11 Krasnoyarsk Territory 5000
12 Arkhangelsk (Archangel) Oblast 1000
13 Astrakhan Oblast 500
14 Volgograd Oblast 2000
15 Voronezh Oblast 1000
16 Irkutsk Oblast 10000
17 Kaliningrad Oblast 2000
18 Leningradskaya Oblast (St. Petersburg Region) 2000
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
Regions Capacity
<S> <C> <C>
19 Moscow Oblast 2000
20 Murmansk Oblast 1000
21 Nizhniy Novgorod Oblast 1000
22 Novosibirsk Oblast 1000
23 Omsk Oblast 1000
24 Orenburgh Oblast 1000
25 Perm Oblast 1000
26 Rostov Oblast 1000
27 Samara Oblast 3000
28 Sverdlovskaya Oblast (Yekaterinburg Region) 5000
29 Tomsk Oblast 1000
30 Tyumen Oblast 1000
31 Chelyabinsk Oblast 2000
32 Nenetskiy Autonomous Okrug 1000
33 City of Moscow 8000
34 City of St. Petersburg 10000
</TABLE>
Deputy Federal
Minister of Communications N. S. Marder
Head of Licencing
Department N. M. Popov
(Signatures and Ministerial Seal applied.)
7
<PAGE> 9
THIS DOCUMENT WAS ORIGINALLY DRAFTED IN RUSSIAN. THE COMPANY REPRESENTS THAT
THIS ENGLISH TRANSLATION REPRESENTS A FAIR AND ACCURATE TRANSLATION OF THE
ORIGINAL.
/S/ CONOR CARROLL
--------------------------------------------
CONOR CARROLL
VICE PRESIDENT - BUSINESS DEVELOPMENT
8
<PAGE> 1
Exhibit 10.6
Ministry of Communications
of the Russian Federation
LICENCE
NO. 4207
In accordance with the Law on Communications,
the Ministry of Communications of the Russian Federation allows
the conduct of telecommunications operations to the
CLOSED JOINT-STOCK COMPANY
"TELEPORT-TP"
Registered address:
VVTs [National Exhibition Centre], Prospekt Mira, Moscow 129223
Type of Activity:
PROVIDING INTERNATIONAL TELEPHONE COMMUNICATIONS
SERVICES VIA DEDICATED NETWORK
The terms and conditions for conducting the said type of activity
and territory of operations are contained in an addendum
which is an inalienable part of the present Licence.
Licence Expiry date 20.10.2004
Commencement of operations
(no later than) 04.10.1996
Date of licence registration
in the Unified Register for
Telecoms Licences 04.10.1996
FIRST DEPUTY FEDERAL MINISTER
OF COMMUNICATIONS A. E. KRUPNOV
<PAGE> 2
Exhibit 10.6
TERMS AND CONDITIONS FOR CONDUCTING OPERATIONS
UNDER LICENCE NO. 4207
1. The Closed Joint-Stock Company, Teleport-TP (Licence Holder), is
authorised by the present Licence to discharge international
telecommunication services via dedicated network on the territory of
the City of Moscow.
The total installed capacity of the Licence Holder's network is no less
than 15000 numbers.
2. The Licence Holder shall, by the end of the third year of
operations, have in operation at least 70 percent of total capacity
cited in Clause 1 of the present Licence.
3. The Licence Holder's network is created without interconnection to
the public network of the Russian Federation, business and other
networks having access to the public network.
The decision on the location of earth stations on the territories of
foreign countries is taken in accordance with the existing legislation.
The Licence Holder may lease telecommunications circuits and physical
public networks at tariffs applicable to the given category of
customers.
4. Discharge of telecommunications services using radio-electronic
equipment is allowed only upon a receipt from the National
Telecommunications Oversight Agency of the Russian Federation for the
use of working frequencies and to provision of electromagnetic
compatibility with existing radio-electronic equipment.
The use of frequency bands for earth stations of the Licence Holder's
satellite network is allowed only on the basis of a decision by the
State Radio-Frequency Committee (GKRCh) under the Ministry of
Communications of the Russian Federation.
5. Procedure for gaining access to the space segment of the Eutelsat
satellite communications system and settlements for its use are
conducted through the state enterprise Kosmicheskaya Sviaz (Space
Communication) at an agreed rate and at the Licence Holder's expense;
procedure for gaining access to space segments of other systems of
satellite communications and settlements for their use are conducted by
the Licence Holder independently.
6. Co-ordination of the working modes of the earth stations with the
telecommunications authorities concerned and provision of their
electromagnetic compatibility is conducted in accordance with the
established procedure at the expense of the Licence Holder.
7. When using the space segments of the international satellite
organisations Intelsat, Eutelsat, Inmarsat and Intersputnic, the
Licence Holder shall honour the rules and regulations stated in the
appropriate international agreements entered into by the Russian
2
<PAGE> 3
Exhibit 10.6
Federation relating to the use of the space segments of these
organisations.
8. When using the space segments constructed and operated by the
organisations other than the international satellite organisations
Intelsat, Eutelsat, Inmarsat and Intersputnic, the Licence Holder shall
honour the recommendations adopted by the competent bodies of
international satellite organisations within the co-ordinating
framework of the said space segments.
9. The use of radio-extensions operating only within the 330 MHz
frequency band is allowed subject to a permit for the use of working
frequencies from the National Telecommunications Oversight Agency of
the Russian Federation.
10. The numbering in the Licence Holder's network shall match the
numbering plan of the Russian Federation.
11. The Licence Holder shall honour any demands by the Ministry of
Communications of the Russian Federation relating to the procedure of
traffic transit and discharge of services.
In cases stipulated by the legislation of the Russian Federation,
centralised management of the Licence Holder's network shall be
conducted directly by the Ministry of Communications of the Russian
Federation.
12. Settlements with foreign communications authorities (international
telecommunications operators) shall be conducted by the Licence Holder
independently. Settlement rates shall not be lower than the rates
established by the Communications Authority of the Russian Federation
for the public network operator.
The Licence Holder shall compensate the Communications Authority of the
Russian Federation for any losses it incurred through the international
legal protection of its rights.
13. The Licence Holder's network shall be managed from the territory of
the Russian Federation.
14. The Licence Holder shall discharge the telecommunications services
provided for under the present Licence twenty-four hours a day, every
day without intervals, except for the duration of essential maintenance
work and check-ups which shall be planned in advance for the period
when minimum damage is likely to be caused to the customers.
15. The Licence Holder shall discharge to the customers
telecommunications services whose quality meets the standards,
technical norms, certificates and conditions of the agreement for the
discharge of telecommunications services.
16. The Licence Holder is answerable to its customers if it fails to
meet its obligations
3
<PAGE> 4
Exhibit 10.6
or if it does not meet them up to the required standard, in accordance
with procedure stipulated by the existing legislation of the Russian
Federation.
17. The Licence Holder's network may be created subject to the
availability of designed documents drafted in accordance with the
Construction Standards and Rules (SNiP) and the Departmental
Technological Design Standards (VNTP) applied in the Russian Federation
and co-ordinated in accordance with the established procedure.
18. Tariffs for telecommunications services shall be set on negotiable
basis. In cases stipulated by the legislation of the Russian
Federation, tariffs for some telecommunications services discharged by
telecommunications enterprises could be regulated by the government.
In cases of connection's failure, customers are not billed.
19. All costs connected with design and construction of Licence
Holder's technical communication means, shall be borne by the Licence
Holder.
20. In case of natural calamities, quarantine and other force majeure
situations stipulated by the legislation of the Russian Federation, the
authorised state bodies shall enjoy top priority for the use as well as
the suspension of the operations of the Licence Holder's network and
equipment.
21. The Licence Holder shall give overriding priority to all messages
concerning the safety of human lives at sea, on land, in the air and in
space, the conduct of emergency measures in the sphere of defense,
security and law and order protection in the Russian Federation, and
also to messages of major accidents, disasters, epidemics, epizootics
and natural calamities.
22. Individual categories of civil servants, diplomatic and consulate
representatives of foreign states, representatives of international
organisations and also individual groups of citizens are entitled to
discounts and benefits in terms of priority, procedures and tariffs
when using telecommunications services.
The list of benefits as well as the categories of civil servants and
members of the public entitled to discounts and benefits is determined
by the legislation of the Russian Federation and normative and legal
acts of its republics and regions, and also by the international
agreements and treaties entered into by the Russian Federation.
23. The Licence Holder shall honour the confidentiality of
communications. Information on any messages passed through the Licence
Holder's telecommunications network as well as the messages themselves,
may be disclosed only to the senders or addressees or their legal
representatives.
Monitoring of telephone conversations and other messages, receiving
information about them, and also other infringements of the
confidentiality of telecommunications may be
4
<PAGE> 5
Exhibit 10.6
permitted solely in accordance with the existing legislation of the
Russian Federation.
24. The Licence Holder shall not obstruct the audits by the National
Telecommunications Oversight Agency of the Russian Federation of the
technical parameters of the telecommunications network and, when
necessary, shall grant the Agency access to its measuring equipment
with a view to its use in the said audits.
25. In developing, constructing and operating its telecommunications
network, the Licence Holder shall, in accordance with the legislation
of the Russian Federation, assist all bodies conducting operational and
search activities by allowing them to conduct such activities inside
the network, and take all necessary measures to prevent the disclosure
of organisational and tactical methods used during the conduct of the
said activities.
In the event of the use of the communications equipment for criminal
purposes resulting in damage to the interests of the individual,
society and the state, authorised government bodies, in accordance with
the legislation of the Russian Federation, may suspend the work of the
Licence Holder's networks and equipment.
The leasing out of telecommunications circuits may go ahead only after
the requirements have been met in accordance with the Law of the
Russian Federation on Operational and Search Activity in the Russian
Federation.
26. The Licence Holder shall take all necessary measures to prevent any
unauthorized interference in the management of the created network and
unauthorized control over its operation.
27. The discharge of telecommunications services may commence subject
to the availability of a permit for operating the network from the
National Telecommunications Oversight Agency of the Russian Federation.
28. The Licence Holder shall provide business telecommunications free
of charge in accordance with the procedure established by the Ministry
of Communications of the Russian Federation.
29. The Licence Holder shall, upon the Ministry of Communications'
request, make available information relating to the network's technical
state and development prospects, the conditions for the discharge of
services and current tariffs.
30. The Licence shall be regulated, interpreted and implemented in
accordance with the existing legislation of the Russian Federation.
31. The Licence Holder shall conduct its operations in accordance with
the existing legislation of the Russian Federation and normative acts
issued by the Ministry of Communications of the Russian Federation.
5
<PAGE> 6
Exhibit 10.6
32. The Ministry of Communications of the Russian Federation reserves
the right to introduce amendments to the present Licence due to changes
in the existing legislation of the Russian Federation.
33. The Licence Holder shall provide local statistical bodies and the
Ministry of Communications of the Russian Federation with periodic and
annual statistical reports relating to telecommunications in accordance
with the procedures established by the State Committee for Statistics.
Any breach in the procedure of the presentation of the statistical
reports shall entail an administrative penalty in accordance with the
existing legislation.
34. The Licence is non-transferable.
35. The Licence shall be registered within thirty days of issue with
the territorial directorate of the National Telecommunications
Oversight Agency of the Russian Federation.
The Licence Holder shall, in the event of any change to its postal
address, banking details or telephone number, within seven days advise
the Ministry of Communications of the Russian Federation and the
territorial directorate of the National Telecommunications Oversight
Agency of the Russian Federation.
36. The validity of the Licence No. 1661 of 14 November 1994 is
terminated from the day of registration of the present Licence.
First-Deputy
Federal
Minister of Communications. A. E. Krupnov
Head of Licensing
Department N. M. Popov
(Signatures and Ministerial Seal applied)
THIS DOCUMENTS WAS ORIGINALLY DRAFTED IN RUSSIAN. THE COMPANY REPRESENTS THAT
THIS ENGLISH TRANSLATION REPRESENTS A FAIR AND ACCURATE TRANSLATION OF THE
ORIGINAL.
/s/ CONOR CARROLL
- ----------------------------------------------
CONOR CARROLL
VICE PRESIDENT - BUSINESS DEVELOPMENT
6
<PAGE> 1
Exhibit No. 10.7
Ministry of Communications
of the Russian Federation
LICENCE
NO. 4437
In accordance with the Law on Communications,
the Ministry of Communications of the Russian Federation allows
the conduct of telecommunications operations to the
CLOSED JOINT-STOCK COMPANY
"TELEPORT-TP"
-----------------------------------
Registered address:
VVTs [National Exhibition Centre], Prospekt Mira, Moscow 129223
Type of activity:
LEASING OUT OF TELECOMMUNICATION CIRCUITS
The terms and conditions for conducting the said type of activity
and territory of operations are contained in an addendum
which is an inalienable part of the present Licence.
Licence Expiry date 28.10.20014
Commencement of operations
(no later than) 04.10.1996
Date of licence registration
in the Unified Register for
Telecoms Licenses 04.10.1996
FIRST DEPUTY FEDERAL MINISTER
OF COMMUNICATIONS A. E. KRUPNOV
<PAGE> 2
Exhibit No. 10.7
TERMS AND CONDITIONS FOR CONDUCTING OPERATIONS
UNDER LICENCE NO. 4437
1. The Closed Joint-Stock Company, Teleport-TP (Licence Holder), is
authorised by the present Licence to lease out long-distance and
international communication circuits and trunks, and channels for TV
signal transmission on the territory stated in Clause 34. The total
number of voice frequency (main digital) circuits, including those
forming the part of digital trunks and channels for the TV transmission
is 1000.
The Regions of the Russian Federation connected by the long-distance
communication circuits and which are terminals for organisation of
international communication circuits and trunks are cited in Clause 34.
2. The Licence Holder shall, by the end of the third year of
operations, provide the possibility of leasing out at least 70 percent
of the total number of communication circuits, cited in Clause 1 of the
present Licence.
3. The Licence Holder shall lease out communication circuits and trunks
only for the purpose of creation of telecommunication networks, subject
to their owners holding relevant licences granted by the Ministry of
Communications of the Russian Federation; as well as possessing
business networks lacking access to the public network of the Russian
Federation.
4. Discharge of telecommunication services using radio-electronic
equipment is allowed only upon a receipt of a permit from the National
Telecommunications Oversight Agency of the Russian Federation for the
use of working frequencies and for the provision of electromagnetic
compatibility with existing radio-electronic equipment.
The use of frequency bands for earth stations of the Licence Holder's
satellite network is allowed only on the basis of a decision by the
State Radio-Frequency Committee (GKRCh) under the Ministry of
Communications of the Russian Federation.
5. Procedure for gaining access to the space segment of the Eutelsat
satellite communications system and settlements for its use are
conducted through the state enterprise Kosmicheskaya Sviaz (Space
Communication) at an agreed rate and at the Licence Holder's expense;
procedure for gaining access to space segments of other systems of
satellite communications and settlements for their use are conducted by
the Licence Holder independently.
6. Co-ordination of the working modes of the earth stations with the
telecommunications authorities concerned and provision of their
electromagnetic compatibility is conducted in accordance with the
established procedure at the expense of the Licence Holder.
2
<PAGE> 3
Exhibit No. 10.7
7. When using the space segments of the international satellite
organisations Intelsat, Eutelsat, Inmarsat and Intersputnic, the
Licence Holder shall honour the rules and regulations stated in the
appropriate international agreements entered into by the Russian
Federation relating to the use of the space segments of these
organisations.
8. When using the space segments constructed and operated by the
organisations other than the international satellite organisations
Intelsat, Eutelsat, Inmarsat and Intersputnic, the Licence Holder shall
honour the recommendations adopted by the competent bodies of
international satellite organisations within the co-ordinating
framework of the said space segments.
9. The Licence Holder may lease telecommunication circuits and physical
public network lines at tariffs applicable to the given category of
customers.
10. The Licence Holder's network shall be managed from the territory of
the Russian Federation.
11. The Licence Holder shall discharge the telecommunication services
provided for under the present Licence twenty-four hours a day, every
day without intervals, except for the duration of essential maintenance
work and check-ups which shall be planned in advance for the period
when minimum damage is likely to be caused to the customers.
12. The Licence Holder shall discharge to the customers
telecommunication services whose quality meets the standards, technical
norms, certificates and conditions of the agreement for the discharge
of telecommunication services.
13. The Licence Holder is answerable to its customers if it fails to
meet its obligations or if it does not meet them up to the required
standard, in accordance with the procedures stipulated by the existing
legislation of the Russian Federation.
14. The Licence Holder shall honour any demands by the Ministry of
Communications of the Russian Federation relating to the procedure of
traffic transit and discharge of services.
In cases stipulated by the Legislation of the Russian Federation,
centralised management of the Licence Holder's network shall be
conducted directly by the Ministry of Communications of the Russian
Federation.
15. The Licence Holder shall, upon the Ministry of Communications'
request, make available information relating to the network's technical
state and development prospects, the conditions for the discharge of
services and current tariffs.
16. In case of natural calamities, quarantine and other force majeure
situations
3
<PAGE> 4
Exhibit No. 10.7
stipulated by the legislation of the Russian Federation, the authorised
state bodies shall enjoy top priority for the use as well as the
suspension of the operations of the Licence Holder's network and
equipment.
17. The Licence Holder shall give overriding priority to all messages
concerning the safety of human lives at sea, on land, in the air and in
space, the conduct of emergency measures in the spheres of defence,
security and law and order protection in the Russian Federation, and
also to the messages of major accidents, disasters, epidemics,
epizootics and natural calamities.
18. The Licence Holder's technical means may be created subject to the
availability of designed documents drafted in accordance with the
Construction Standards and Rules (SNiP) and the Departmental
Technological Design Standards (VNTP) applied in the Russian Federation
and co-ordinated in accordance with the established procedure.
19. The operation of the technical equipment of the Licence Holder
shall be conducted in accordance with the existing standards and
regulations of the Ministry of Communications of the Russian
Federation.
20. Tariffs for telecommunications services shall be set on negotiable
basis. In cases stipulated by the legislation of the Russian
Federation, tariffs for some telecommunications services discharged by
telecommunications enterprises could be regulated by the government.
21. All costs connected with the design and construction of Licence
Holder's technical communication equipment, shall be borne by the
Licence Holder.
22. Individual categories of civil servants, diplomatic and consulate
representatives of foreign states, representatives of international
organisations and also individual groups of citizens are entitled to
discounts and benefits in terms of priority, procedures and tariffs
when using telecommunications services.
The list of benefits as well as the categories of civil servants and
members of the public entitled to discounts and benefits is determined
by the legislation of the Russian Federation and normative and legal
acts of its republics and regions, and also by the international
agreements and treaties entered into by the Russian Federation.
23. Use of telecommunications equipment is subject to the availability
of a certificate from the Ministry of Communications of the Russian
Federation.
The discharge of telecommunications services may commence subject to
the availability of a permit for operating the network from the
National Telecommunications Oversight Agency of the Russian Federation.
4
<PAGE> 5
Exhibit No. 10.7
24. The Licence Holder shall not obstruct the audits by the National
Telecommunications Oversight Agency of the Russian Federation of the
technical parameters of the telecommunications network and, when
necessary, shall grant the Agency access to its measuring equipment
with a view to its use in the said audits.
25. The Licence Holder shall honour the confidentiality of
communications. Information on any messages passed through the Licence
Holder's telecommunications network as well as the messages themselves,
may be disclosed only to the senders or addressees or their legal
representatives.
Monitoring of telephone conversations and other messages, receiving
information about them, and also other infringements of the
confidentiality of telecommunications may be permitted solely in
accordance with the existing legislation of the Russian Federation.
26. In developing, constructing and operating its telecommunications
network, the Licence Holder shall, in accordance with the legislation
of the Russian Federation, assist all bodies conducting operational and
search activities by allowing them to conduct such activities inside
the network, and take all necessary measures to prevent the disclosure
of organisational and tactical methods used during the conduct of the
said activities.
In the event of the use of the communications equipment for criminal
purposes resulting in damage to the interests of the individual,
society and the state, authorised government bodies, in accordance with
the legislation of the Russian Federation, may suspend the work of the
Licence Holder's networks and equipment.
The leasing out of telecommunications circuits may go ahead only after
the requirements have been met in accordance with the Law of the
Russian Federation on Operational and Search Activity in the Russian
Federation.
27. The Licence Holder shall take all necessary measures to prevent any
unauthorised interference in the management of the created network and
unauthorised control over its operation.
28. The Licence shall be regulated, interpreted and implemented in
accordance with the existing legislation of the Russian Federation.
29. The Licence Holder shall conduct its operations in accordance with
the existing legislation of the Russian Federation and normative acts
issued by the Ministry of Communications of the Russian Federation.
30. The Ministry of Communications of the Russian Federation reserves
the right to introduce amendments to the present Licence due to changes
in the existing legislation of the Russian Federation.
31. The Licence Holder shall provide local statistical bodies and the
Ministry of
5
<PAGE> 6
Exhibit No. 10.7
Communications of the Russian Federation with periodic and annual
statistical reports relating to telecommunications in accordance with
the procedures established by the State Committee for Statistics.
Any breach in the procedure of the presentation of the statistical
reports shall entail an administrative penalty in accordance with the
existing legislation.
32. The Licence is non-transferable.
33. The Licence shall be registered within thirty days of issue with
the territorial directorate of the National Telecommunications
Oversight Agency of the Russian Federation.
The Licence Holder shall, in the event of any change to its postal
address, banking details or telephone number, within seven days advise
the Ministry of Communications of the Russian Federation and the
territorial directorate of the National Telecommunications Oversight
Agency of the Russian Federation.
34. Territory of operations.
<TABLE>
<CAPTION>
No. Regions Capacity
--- ------- --------
<S> <C> <C>
Republics:
1. Bashkortostan 50
2. Buriatia 30
3. Kalmykia 50
4. Karelia 50
5. Sakha (Yakutia) 20
6. Udmurtia 20
Krais (Territories)
7. Altaiskiy 20
8. Primorskiy 20
9. Krasnodarskiy 60
10. Krasnoyarskiy 30
11. Khabarovskiy 20
Oblasts (Regions)
</TABLE>
6
<PAGE> 7
Exhibit No. 10.7
<TABLE>
<S> <C> <C>
12. Archangel 20
13. Astrakhan 30
14. Volgograd 30
15. Voronezh 20
16. Irkutsk 30
17. Kaliningrad 20
18. Murmansk 30
19. Nizhniy Novgorod 30
20. Novossibirsk 20
21. Omsk 20
22. Orenburg 30
23. Perm 30
24. Rostov 50
25. Samara 50
26. Sverdlovsk 50
27. Tomsk 20
28. Tyumen 20
29. Cheliabinsk 20
Cities
30. Moscow 150
31. St. Petersburg 30
</TABLE>
35. The validity of the Licence No. 386 of 28 October 1994 is terminated from
the day of registration of the present Licence.
First Deputy
Federal
Minister of Communications A. E. Krupnov
7
<PAGE> 8
Exhibit No. 10.7
Head of Licensing
Department N.M. Popov
(Signatures and Ministerial Seal applied)
8
<PAGE> 9
Exhibit No. 10.7
THIS DOCUMENT WAS ORIGINALLY DRAFTED IN RUSSIAN. THE COMPANY REPRESENTS THAT
THIS ENGLISH TRANSLATION REPRESENTS A FAIR AND ACCURATE TRANSLATION OF THE
ORIGINAL.
/s/ CONOR CARROLL
- ----------------------------------------------
CONOR CARROLL
VICE PRESIDENT - BUSINESS DEVELOPMENT
9
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES
Name Jurisdiction
- ---- ------------
AO PeterStar Company Limited Russia
BECET International Kazakstan
NWE Capital (Cyprus) Ltd. Cyprus
Technocom Company Limited Ireland
Teleport-TP Russia
Wireless Technology Corporations
Limited British Virgin Islands
