SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/ X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-8807
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GST TELECOMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
CANADA NOT APPLICABLE
(State or Other Jurisdiction (IRS Employer Identification
of Incorporation or Organization) Number)
4317 NE THURSTON WAY, VANCOUVER, WA 98662
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (360) 254-4700
N/A
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: At August
5, 1997 there were outstanding 27,199,004 Common Shares, without par value, of
the Registrant.
<PAGE>
GST TELECOMMUNICATIONS, INC.
INDEX
PAGE(S)
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Consolidated Condensed Balance Sheets - June 30, 3
1997 (unaudited) and September 30, 1996
Consolidated Condensed Statements of Operations- 4
Three Months Ended June 30, 1997 and 1996, Nine
Months Ended June 30, 1997 and 1996 (unaudited)
Consolidated Condensed Statements of Cash Flows 5
- Nine Months Ended June 30, 1997 and 1996
(unaudited)
Notes to Consolidated Condensed Financial 6-10
Statements (unaudited)
ITEM 2. Management's Discussion and Analysis of Financial 11-15
Condition and Results of Operations
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings 16
ITEM 2. Changes in Securities 16-17
ITEM 6. Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
ITEM 1. FINANCIAL INFORMATION
GST TELECOMMUNICATIONS, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1997 (UNAUDITED) AND SEPTEMBER 30, 1996
(in thousands)
<TABLE>
<CAPTION>
ASSETS June 30, 1997 September 30, 1996(1)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 38,350 $ 61,343
Restricted cash and investments 128,479 16,000
Accounts receivable, net 22,212 9,472
Investments 2,315 5,176
Inventories 2,852 2,406
Prepaid expenses and other current assets 11,760 6,151
------------------ -------------
Total current assets 205,968 100,548
------------------ -------------
Restricted investments 80,695 -
Property, plant and equipment 314,986 134,714
less accumulated depreciation (14,630) (7,139)
------------------ --------------
300,356 127,575
Other assets 108,338 79,424
less accumulated amortization (13,331) (5,846)
------------------ --------------
95,007 73,578
$ 682,026 301,701
================== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 15,010 $ 12,443
Accrued liabilities 21,085 26,743
Current portion of capital lease obligations 4,640 722
Current portion of long term debt 3,700 4,832
Other current liabilities 106 726
------------------ -----------
Total current liabilities 44,541 45,466
------------------ -----------
Deferred compensation 158 158
Capital lease obligation, less current portion 11,427 1,453
Long term debt, less current portion 567,405 232,674
Minority interest in subsidiaries 12,065 182
Preference shares 52,968 -
Shareholders' equity
Common shares 132,400 72,647
Commitment to issue shares 4,707 25,454
Deficit (143,645) (76,333)
------------------ ------------------
Total shareholders' equity (6,538) $ 21,768
------------------ ------------------
$ 682,026 $ 301,701
================== ==================
</TABLE>
(1) The information in this column was derived from the Company's audited
financial statements as of September 30, 1996.
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<PAGE>
GST TELECOMMUNICATIONS, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
JUNE 30, 1997 AND 1996 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
----------------------------------- --------------------------------------
1997 1996 1997 1996
----------- --------------------- -------------------- ---------------
Revenue:
<S> <C> <C> <C> <C>
Telecommunication services $ 20,682 $ 7,918 $ 58,738 $ 19,452
Telecommunication products 6,333 2,444 16,186 5,772
---------- ------------ ----------- ------------
27,015 10,362 74,924 25,224
---------- ------------ ----------- ------------
Operating costs and expenses:
Network expenses 15,593 5,043 48,250 14,922
Facilities administration and maintenance 3,388 3,582 9,833 5,793
Cost of product revenues 1,873 1,133 5,557 2,803
Selling, general and administrative 18,772 8,946 49,395 20,689
Research and development 713 310 1,739 910
Depreciation and amortization 5,663 2,107 14,833 5,385
---------- ------------- ----------- -----------
46,002 21,121 129,607 50,502
---------- ------------- ------------ -------------
Loss from operations (18,987) (10,759) (54,683) (25,278)
---------- ------------ ----------- ------------
Other expenses (income)
Interest income (2,000) (1,812) (3,377) (4,209)
Interest expense 10,503 6,833 21,321 14,801
Loss from joint venture - 384 - 987
Other 271 511 (6,549) 547
---------- ------------ ------------ -------------
8,774 5,916 11,395 12,126
---------- ------------ ------------ -------------
Loss before income taxes
and minority interest (27,761) (16,675) (66,078) (37,404)
---------- ------------ ----------- ------------
Income Taxes (729) (13) (843) (31)
Minority interest in (income)
loss of subsidiaries (404) 96 (391) 335
---------- ------------ ----------- -----------
(1,133) 83 (1,234) 304
Net loss $(28,894) $ (16,592) $ (67,312) $ (37,100)
========== ============ =========== ===========
Net loss per common and common
equivalent share $ (1.15) $ (0.86) $ (2.87) $ (2.00)
========== ============ =========== ===========
Weighted average common and common
equivalent shares outstanding 25,164,628 19,220,694 23,460,468 18,512,988
========== ============ ========== ==========
</TABLE>
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<PAGE>
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
JUNE 30, 1997 AND JUNE 30, 1996 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months
Ended June 30,
-------------------------------------------------
1997 1996
-------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (67,312) $ (37,100)
Adjustment to reconcile net loss to net cash used in operating activities
Write off of fixed and other assets - 486
Minority interest in income (loss) of subsidiaries 391 (335)
Loss on investments in affiliates 796 986
Accretion of interest 13,981 13,312
Amortization and depreciation 16,070 6,218
Stock compensation 446 -
Issuance of stock for financing commitments - 396
Gain on sale of subsidiary shares (7,424) -
Changes in non-cash operating working capital:
Receivables (8,457) (1,113)
Inventory 151 (1,238)
Prepaid expenses and other (5,435) (1,150)
Accounts payable and accrued liabilities 5,698 (1,427)
Deferred revenue (370) 233
----------------- --------------------
NET CASH USED IN OPERATING ACTIVITIES (51,465) (20,732)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of subsidiary shares 27,365 -
Proceeds from the sale of marketable securities 5,176 -
Purchase of marketable securities (3,065) (4,452)
Acquisition of subsidiaries, net of cash acquired (1,564) 11
Acquisition of property and equipment (159,736) (40,971)
Cash and investments restricted for purchase of property and equipment (110,203) -
Purchase of other assets (12,151) (9,025)
Proceeds from the sale of fixed assets 5,774 -
----------------- --------------------
NET CASH USED IN INVESTING ACTIVITIES (248,404) (54,437)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares 24,652 9,918
Issuance of preference shares 50,000 -
Deferred financing costs (11,313) (9,330)
Principal payments on capital leases (1,686) (52)
Principal payments on long term debt (5,079) (974)
Proceeds from long term debt 314,850 193,109
Purchase of securities to finance interest payments (94,548) -
----------------- --------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 276,876 192,671
----------------- --------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (22,993) 117,502
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 61,343 6,024
----------------- --------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 38,350 $ 123,526
================= ====================
</TABLE>
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<PAGE>
GST TELECOMMUNICATIONS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles. However, certain information or
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed, or
omitted, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the statements include all the
adjustments necessary (which are of normal and recurring nature) for the fair
presentation of the results of the interim period presented. These financial
statements should be read in conjunction with the Company's audited consolidated
financial statements for the year ended September 30, 1996, as included in the
Company's Annual Report on Form 10-K.
2. NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE
Net loss per common and common equivalent share is computed using the
weighted average number of common and dilutive common equivalent shares assumed
to be outstanding during the period. Common equivalent shares consist of options
and warrants to purchase common shares.
3. INVENTORIES
Inventories, net of reserves, stated at the lower of cost or market
consist of:
June 30, 1997 September 30, 1996
------------- ------------------
Raw Material $ 1,139 $ 378
Work in Progress 361 346
Finished Goods 601 317
Refurbished Inventory Held for Sale 751 1,365
--------- -------
Total Inventories 2,852 2,406
========= =======
4. SHAREHOLDERS' EQUITY
Shares issued and outstanding are as follows:
June 30, 1997 September 30, 1996
------------- ------------------
Common Shares, no par value 27,076,169 21,257,697
Unlimited number of
common shares authorized
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<PAGE>
5. SUPPLEMENTAL CASH FLOW INFORMATION
As a result of acquisitions, the Company recorded $15,988 in assets and
$4,369 in liabilities during the nine months ended June 30, 1997. The Company
purchased $15,576 in assets through capital leases during the nine months ended
June 30, 1997. Accounts payable and accrued liabilities include $10,988 in fixed
asset purchases at June 30, 1997. During the nine months ended June 30, 1997,
the Company made $2,596 in interest payments.
6. RECENT DEVELOPMENTS
In May 1997, the Company issued $265 million in senior secured notes
due May 1, 2007. The notes bear interest at a rate of 13.25% with semi-annual
interest payments due beginning November 1, 1997. Approximately $93.8 million of
the proceeds have been set aside to fund the first six scheduled interest
payments. The remainder of the net proceeds will be used to purchase and install
telecommunications equipment.
Effective May 31, 1997, the Company acquired 100% of the outstanding
capital stock of Action Telcom, Inc. (Action), a Texas company which provides
long distance and ancillary telecommunications services, and produces software
used in the the telecommunications industry. The Company acquired Action for
consideration of $12,046, consisting of $8,161 in common shares, $1,290 in cash,
$2,580 in notes payable and $16 in acquisition costs. In connection with this
acquisition, the Company recorded $13,457 of assets, including $4,500 of
purchased software technology and $3,622 of goodwill, and $3,991 in liabilities.
-7-
<PAGE>
7.
GST USA, INC. (A)
CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1997 (UNAUDITED) AND SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, 1997 September 30, 1996
ASSETS
<S> <C> <C>
Current assets $ 180,892 $ 77,506
Non-current assets 434,996 168,882
----------------- --------------
TOTAL ASSETS $ 615,888 $ 246,388
================= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 101,487 $ 34,286
Non-current liabilities 551,899 210,243
Minority interest 12,066 182
Total shareholders' equity (49,564) 1,677
----------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 615,888 $ 246,388
================= ==============
</TABLE>
(A) GST USA, Inc. ("GUS") is a wholly-owned subsidiary of the Company. The
summarized financial information of GUS is as of and for the three months ended
June 30, 1997 and the comparable 1996 period. The total outstanding indebtedness
of GUS includes its senior discount notes with an accreted value of $196.5
million as of June 30, 1997, which the Company fully and unconditionally
guaranteed, and senior secured notes of $265 million as of June 30, 1997, which,
on May 13, 2000 or earlier if permitted, will be fully and unconditionally
guaranteed by the Company. Separate financial statements and other disclosures
concerning GUS are not presented because management has determined that such
information is not materially different than the information already provided.
-8-
<PAGE>
GST USA, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
-------------------------------------------- -------------------------------------------
1997 1996 1997 1996
---------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenue $ 16,736 $ 10,362 $ 47,985 $ 25,224
Operating costs and expenses $ 35,287 $ 20,645 $ 101,185 $ 49,143
---------------- --------------- ------------- ------------
Loss from operations $ (18,551) $ (10,283) $ (53,200) $ (23,919)
Other expenses $ (8,051) $ 4,997 $ (6,530) $ 10,120
---------------- --------------- ------------- ------------
Net Loss $ (26,602) $ (15,280) $ (59,730) $ (34,039)
================ =============== ============= ============
</TABLE>
-9-
<PAGE>
GST USA, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months
Ended June 30,
------------------------------------
1997 1996
--------------- -------------
<S> <C> <C>
Cash used in operations $ (49,717) $ (18,647)
Cash used in investing (244,429) (53,945)
Cash provided by financing 271,835 172,478
------------- -----------
Increase (decrease) in cash and cash equivalents (22,311) 99,886
Cash and cash equivalents, beginning of period 41,420 3,894
------------- -----------
Cash and cash equivalents, end of period $ 19,109 $ 103,780
============= ===========
</TABLE>
-10-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following management's discussion and analysis of financial
condition and results of operations contains forward looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward looking statements as a
result of certain factors discussed herein.
OVERVIEW
GST Telecommunications, Inc. (the "Company") provides a broad range of
integrated telecommunications products and services, primarily to customers
located in the western continental United States and Hawaii. As a competitive
local exchange carrier ("CLEC"), the Company operates state-of-the-art, digital
telecommunications networks that provide an alternative to incumbent local
exchange carriers. The Company provides, through its established sales channels,
telecommunications services that include long distance, Internet access and data
transmission services and recently introduced local dial tone services. In
addition, the Company produces advanced telecommunications switching platforms
with integrated applications software and network telemanagement capabilities
through its equipment subsidiary, NACT Telecommunications, Inc. ("NACT").
Through the recent acquisition of Action Telcom, Inc. ("Action Telcom"), the
Company also develops and markets an industry-leading network management and
fraud protection system.
The Telecommunications Act of 1996 and state regulatory initiatives
have substantially changed the telecommunications regulatory environment in the
United States. As a result of these regulatory changes, the Company is permitted
in certain states to provide local dial tone in addition to existing
telecommunications service offerings. In order to capitalize on these
opportunities, the Company has accelerated the development of additional
networks within its region while significantly expanding its product and service
offerings, primarily with respect to the provision of local services.
RESULTS OF OPERATIONS
REVENUES. Total revenues for the three and nine month periods ended
June 30, 1997 increased $16.7 million, or 160.7%, and $49.7 million, or 197.0%,
respectively, over the comparable three and nine month periods ended June 30,
1996. Telecommunications services revenues for the three and nine month periods
ended June 30, 1997 increased $12.8 million, or 161.2%, and $39.3 million, or
202.0%, respectively, over the comparable periods in the previous year. The
increase in telecommunications services revenues resulted from the inclusion of
revenues from strategic acquisitions, including GST Call America, Inc. and
TotalNet Communications, Inc., as well as increased CLEC service revenues
generated by the Company's networks. To a lesser extent, the increase in
telecommunications services revenues resulted from increased Internet, shared
tenant and data services. Telecommunications products revenues for the three and
nine month periods ended June 30, 1997 increased $3.9 million, or 159.1%, and
$10.4 million, or 180.4%, respectively, over the three and nine months ended
June 30, 1996. The increase in telecommunication products revenues resulted
primarily from the introduction in April 1996 of NACT's STX switch and
subsequent increased unit sales. To a lesser extent the increase in product
revenues is
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<PAGE>
due to the inclusion of newly acquired Action Telcom's sales of network
management and fraud protection systems.
OPERATING EXPENSES. Total operating expenses for the three and nine
month periods ended June 30, 1997 increased $24.9 million, or 117.8%, and $79.1
million, or 156.6%, respectively, over the three and nine month periods ended
June 30, 1996. Network expenses, which include direct local and long distance
circuit costs, were 75.4% and 82.1%, respectively, of telecommunications
services revenues for the three and nine month periods ended June 30, 1997,
compared to 63.7% and 76.7% for the comparable periods in the previous year.
Facilities administration and maintenance expenses (consisting primarily of
costs related to personnel providing maintenance, monitoring and technical
assistance for the Company's networks) for the three and nine month periods
ended June 30, 1997 were 16.4% and 16.7%, respectively, of telecommunications
services revenues compared to 45.2% and 29.8% for the comparable periods ended
June 30, 1996. The primary reason for the increase in network expenses as a
percent of telecommunications services revenues and the decrease in facilities
administration and maintenance expenses as a percent of telecommunications
services revenues is the inclusion of revenue from 1996 strategic acquisitions,
a significant portion of which are generated from the resale of other carriers'
networks.
Cost of product revenues, which includes the costs associated with
product revenues of NACT and Action Telcom, were 29.6% and 34.3% of
telecommunications products revenues for the three and nine month periods ended
June 30, 1997, respectively, compared to 46.4% and 48.6% for the comparable
periods ended June 30, 1996. The decrease results primarily from economies of
scale related to increased unit sales of NACT's STX switch. Research and
development costs for the three and nine months ended June 30, 1997 increased
$.4 million and $.8 million, respectively, over the comparable periods in the
previous year. The increase is due to the addition of personnel to enhance the
current switch product line and to facilitate the development of new switching
products and applications.
Selling, general and administrative expenses for the three and nine
month periods ended June 30, 1997 increased $9.8 million, or 109.8%, and $28.7
million, or 138.8%, respectively, over the three and nine months ended June 30,
1996. The increase is due to the expansion of the Company's CLEC and enhanced
services operations, and to the acquisition of four companies over the past 12
months. The implementation of the Company's integrated services strategy has
resulted in additional marketing, management information and sales staff.
Depreciation and amortization for the three and nine month periods
ended June 30, 1997 increased $3.6 million and $9.5 million, respectively, over
the comparable periods in the previous year. The increase is attributable to
newly-constructed networks becoming operational and to the amortization of
intangible assets related to the Company's acquisitions. The Company expects
that depreciation will continue to increase as it expands its networks and
increases switched services.
OTHER EXPENSES/INCOME. For the three and nine months ended June 30,
1997, the Company recorded net other expense of $8.8 million and $11.4 million,
respectively, compared to net other expense of $5.9 million and $12.1 million
for the comparable periods ended June 30, 1996. For the nine month period, the
reason for the improvement in net other expenses as compared to the previous
year was a $7.4 million gain recognized on the sale of one million of the
Company's shares of NACT in February 1997. If the gain had been excluded, other
expenses for the nine month period ended June 30, 1997 would have increased $6.7
million over the nine month period ended June 30, 1996. Such increase primarily
resulted from increased interest expense due to the issuance of $180 million in
debt securities in December 1995 and the issuance of $265 million in debt
securities in May 1997. For the three month period, the increase in other
expenses as compared to the same period of the previous year is primarily due to
the interest related to the May 1997 debt offering.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred significant operating and net losses as a
result of the development and operation of its networks. The Company expects
that such losses will continue as the Company emphasizes the development,
construction and expansion of its networks and builds its customer base, and
that cash provided by operations will not be sufficient to fund the expansion of
its networks and services.
Net cash provided by financing activities from borrowings and equity
issuances to fund capital expenditures, acquisitions and operating losses was
$276.9 million and $192.7 million for the nine month periods ended June 30, 1997
and 1996, respectively. The Company's net cash used in operating and investment
activities was $299.9 million and $75.2 million for the nine month periods ended
June 30, 1997 and 1996, respectively.
Capital expenditures for the nine months ended June 30, 1997 and 1996
were $168.4 million and $44.0 million, respectively. The Company estimates
capital expenditures of between $225 million and $250 million for fiscal 1997
and $150 million for fiscal 1998. The majority of these expenditures is expected
to be made for network construction and the purchase of switches and related
equipment to facilitate the offering of the Company's services. Continued
significant capital expenditures are expected to be made thereafter. In
addition, the Company expects to continue to incur operating losses while it
expands its business and builds its customer base. Actual capital expenditures
and operating losses will depend on numerous factors beyond the Company's
control, including economic conditions, competition, regulatory developments and
the availability of capital.
In October 1996, the Company completed a private placement to non-U.S.
investors of two million common shares and warrants to purchase up to an
additional one million common shares at $13.00 per share for one year from the
date of issuance. The Company received $20.8 million in net proceeds conjunction
with the sale of the two million common shares.
In September 1996, the Company entered into a loan agreement with
Siemens Stromberg-Carlson ("Siemens") that provides for loans by Siemens of up
to an aggregate of $226 million to finance the purchase of Siemens equipment and
certain equipment from other suppliers. $116 million of such loan proceeds is
presently available to the Company. The Company may seek to obtain the balance
of such proceeds on an as needed basis, subject to the negotiation and execution
of mutually satisfactory documentation. In December 1996, the Company entered
into an agreement with Northern Telecom Finance Company ("NTFC"), which provides
for $50 million of equipment financing to finance the purchase of equipment and
products from Northern Telecom, Inc. As of June 30, 1997, the Company has
borrowed $4.5 million and $44.6 million from Siemens and NTFC, respectively,
pursuant to these agreements.
In February 1997, the Company consummated a private placement of $50
million of redeemable preferred shares (the "Preferred Shares"). The Preferred
Shares, which are convertible at any time after February 28, 2000 at an imputed
price of $11.375 per share, will not pay dividends in cash, except to the extent
cash dividends are paid on common shares. In addition, the liquidation and
redemption prices of the Preferred Shares will accrete at a semi-annual rate of
11.875%. On February 28, 2004, and under certain circumstances, the Preferred
Shares will also be subject to mandatory conversion or redemption, provided that
to the extent the Company is prohibited from paying the redemption price in
cash, holders of the Preferred Shares may elect to convert such shares into
Common Shares and if such election is not made, the Company may extend the
mandatory redemption date to August 28, 2007.
In February 1997, NACT completed an initial public offering of its
common stock pursuant to which the Company and NACT sold one million and two
million shares, respectively, of NACT's
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<PAGE>
common stock, resulting in net proceeds to the Company and NACT of approximately
$9.1 million and $18.2 million, respectively.
In May 1997, the Company completed the offering of $265 million in
senior secured notes (the "1997 Notes"). The net proceeds from the issuance of
the 1997 Notes, $255.8 million, will be used to purchase and install
telecommunications equipment such as fiber optic cable, switches and other
related equipment, to pay the first six scheduled interest payments on the 1997
Notes and to refinance approximately $40 million of previously purchased capital
equipment. The indenture and the indentures associated with the 1995 Notes,
include restrictive covenants which, among other items, limit or restrict
additional indebtedness incurred by the Company, investment in certain
subsidiaries, the sale of assets and the payment of dividends.
The Company proposes to incur significant additional indebtedness to
purchase telecommunications equipment such as switches and fiber optic cable and
to finance related design, development, construction, installation and
integration costs. The Company may make public and private offerings of its debt
and equity securities and may negotiate additional credit facilities.
At June 30, 1997, the Company had cash, cash equivalents, and
investments, including restricted cash and investments, of $249.8 million,
compared to $82.5 million at September 30, 1996. Management believes that the
cash on hand, borrowings expected to be available under the Tomen Facility, the
NTFC agreement and the Siemens agreement, and proceeds from securities
offerings, if any, will provide sufficient funds for the Company to expand its
business as presently planned and to fund its operating expenses through June
1998. Thereafter, the Company expects to require additional financing. In the
event that the Company's plans or assumptions change or prove to be inaccurate,
or its cash resources, together with borrowings under the current financing
arrangements prove to be insufficient to fund the Company's growth and
operations, or if the Company consummates additional acquisitions, the Company
may be required to seek additional sources of capital sooner than currently
anticipated. There can be no assurance that the Tomen Facility or other
financing will be available to the Company or, if available, that it can be
concluded on terms acceptable to the Company or within the limitations contained
within the Company's financing arrangements. Failure to obtain such financing
could result in the delay or abandonment of some or all of the Company's
development or expansion plans and could have material adverse effect on the
Company's business. Such failure could also limit the ability of the Company to
make principal and interest payments on its outstanding indebtedness. The
Company has no working capital or other credit facility under which it may
borrow for working capital and other general corporate purposes. There can be no
assurance that such a facility will be available to the Company in the future or
that if such a facility were available, that it would be available on terms and
conditions acceptable to the Company.
The Company's liquidity substantially improved as a result of the 1995
Notes offering and the 1997 Notes offering because the 1995 Notes do not require
the payment of cash interest prior to June 2001 and the 1995 Notes and 1997
Notes do not require the payment of principal until maturity in 2005 and 2007,
respectively. However, a portion of the indebtedness under the Tomen Facility
and a portion of the equipment financing will mature prior to 2005. Accordingly,
the Company may need to refinance a substantial amount of indebtedness. In
addition, the Company anticipates that cash flow from operations will be
insufficient to repay the 1995 Notes and 1997 Notes in full at maturity and that
such notes will need to be refinanced. The ability of the Company to effect such
refinancings will be dependent upon the future performance of the Company, which
will be subject to prevailing economic conditions and to financial, business and
other factors, including factors beyond the control of the Company.
There can be no assurance that the Company will be able to improve its earnings
before fixed charges or that the Company will be able to meet its debt service
obligations, including its obligations under the Tomen Facility, the 1995 Notes,
the 1997 Notes or its equipment financing.
-14-
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard No. 128. "Earnings per Share"
("SFAS 128"). This statement establishes a different method of computing net
income per share than is currently required under the provisions of Accounting
Principles Board Opinion No. 15. Under SFAS 128. the Company will be required to
present both basic net income per share and diluted net income per share. Basic
net income per share is expected to be comparable or slightly higher than the
currently presented net income per share as the effect of dilutive stock options
will not be considered in computing basic net income per share. Diluted net
income per share is expected to be comparable or slightly lower than the
currently presented net income per share since the diluted calculation will also
use the average market price instead of the higher of the average or ending
market price for its calculations. The Company expects to adopt SFAS 128 in the
first quarter of fiscal 1998 and, at that time, all historical net income per
share data presented will be restated to conform to the provisions of SFAS 128.
-15-
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On or about April 8, 1997, U S WEST filed a state court proceeding
against the Arizona Corporation Commission (the "ACC"), individual members of
the ACC and GST Net (AZ), Inc. ("GST Net"), which holds a certificate of
convenience and necessity ("CCN") to provide local exchange service in Arizona.
In its complaint appealing the ACC's February 6, 1997 decision and order
granting GST Net its CCN, U S WEST alleged that the ACC's action violates
certain requirements of the Arizona Constitution relating to rate of return
regulation, carrier of last resort obligations and equal protection. The appeal
seeks to subject GST Net and U S WEST to identical forms of regulation, treating
both carriers as either traditional monopoly carriers or as co-equal competitive
companies. GST Net answered U S WEST's complaint on August 6, 1997, alleging,
among other things, that U S WEST's complaint is preempted by the
Telecommunications Act of 1996. Should U S WEST prevail in its appeal, it could
have a material adverse effect on the Company's operations in Arizona.
Reference is made to Item 3 "Legal Proceedings" of the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996 and to Item 1
"Legal Proceedings" of the Company's Quarterly Report on Form 10-Q for the three
months ended December 31, 1996, and to the descriptions therein of an action
commenced by GST Tucson Lightwave, Inc. ("GST Tucson") against the City of
Tucson in the Superior Court of Arizona, County of Pima and a second action
commenced by GST Tucson against the City of Tucson in the United States District
Court for the District of Arizona. On August 5, 1997, the Tucson City Council
approved a settlement agreement that resolves the Tucson litigation. Under the
terms of the settlement agreement, GST Tucson agreed to pay the City the annual
license fee called for by the Tucson Code that amounts to 5 1/2% of gross
revenues, and the City permit GST Tucson to modify its current route map and
serve customers throughout the City limits. While dismissing the pending state
court appeal, the parties agreed to allow the United States Court of Appeals for
the Ninth Circuit to decide the pending legal issue relating to whether
companies like GST Tucson enjoy a private right of action to assert right-of-way
claims under Section 253(c) of the Telecommunications Act of 1996 in the United
States District Courts.
ITEM 2. CHANGES IN SECURITIES
1. On June 5, 1997, the Registrant issued an aggregate of 903,000
Common Shares to 3 individuals as consideration for the Registrant's acquisition
of Action Telcom, Co.
-16-
<PAGE>
2. On June 19, 1997, the Registrant issued an aggregate of 41,750
Common Shares to four individuals as an installment payment in consideration for
the Registrant's acquisition in September 1996 of Tri-Star Residential
Communications Corp.
There were no underwriters involved in any of the foregoing
issuances of equity securities and such issuances were exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended, as transactions
not involving a public offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.1 Placement Agreement dated May 8, 1997, by
and among GST Telecommunications, Inc., GST
USA, Inc., GST Funding, Inc. and Morgan
Stanley & Co. Incorporated
Exhibit 10.2 Indenture dated as of May 13, 1997, by and
among GST Telecommunications, Inc., GST USA,
Inc., GST Funding, Inc. and United States
Trust Company of New York, as Trustee
Exhibit 10.3 Registration Rights Agreement dated May 13,
1997, by and among GST Telecommunications,
Inc., GST USA, Inc., GST Funding, Inc.,
Morgan Stanley & Co. Incorporated, Dillon,
Read & Co., Inc. and TD Securities (USA)
Inc.
Exhibit 10.4 Collateral Pledge and Security Agreement
dated as of May 13, 1997, by and among GST
Funding, Inc., United States Trust Company
of New York and the holders of the Notes as
defined therein.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None
-17-
<PAGE>
S I G N A T U R E S
Pursuant to the requirements 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.
GST TELECOMMUNICATIONS, INC.
(Registrant)
/S/ Daniel L. Trampush
----------------------
Daniel L. Trampush
(Senior Vice President and Chief
Financial Officer)
Date: August 12, 1997
-18-
GST TELECOMMUNICATIONS, INC.
GST USA, INC.
GST EQUIPMENT FUNDING, INC.
PLACEMENT AGREEMENT
May 8, 1997
Morgan Stanley & Co. Incorporated,
for itself and the other Placement
Agents named below
1585 Broadway
New York, New York 10036-8293
Ladies and Gentlemen:
GST Equipment Funding, Inc., a Delaware corporation ("GST
Funding"), proposes to issue and sell to the several Placement Agents named in
Schedule I hereto (the "Placement Agents") $265,000,000 principal amount of GST
Funding's 13 1/4% Senior Secured Notes Due 2007 (the "Notes") to be issued
pursuant to the provisions of an Indenture dated as of May 13, 1997 (the
"Indenture") among GST Funding, GST Telecommunications, Inc., a federally
chartered Canadian corporation ("GST"), GST USA, Inc., a Delaware corporation
("GST USA"), and United States Trust Company of New York, as trustee (the
"Trustee"). GST Funding will use all of the net proceeds from the offering of
the Notes to purchase U.S. Government Securities (the "Pledged Securities") and
pledge the Pledged Securities to the Trustee for the benefit of the holders of
the Notes pursuant to the provisions of a Collateral Pledge and Security
Agreement, dated as of the date of the Indenture (the "Pledge Agreement"), made
by GST Funding in favor of the Trustee. On the Closing Date (as defined below),
GST Funding will use a portion of the net proceeds from the offering of the
Notes to purchase Pledged Securities to fund the first six scheduled interest
payments on the Notes. GST Funding will use the remaining net proceeds of the
offering of the Notes to purchase Pledged Securities which will be sold from
time to time to acquire funds to pay the Acquired Equipment Cost in respect of
Acquired Equipment or to refinance on the Closing Date up to $50 million of
indebtedness of GST USA and its subsidiaries secured by Acquired Equipment (as
such terms are defined in the Pledge Agreement). All Acquired Equipment will be
subject to a first priority security interest in favor of the Trustee for the
benefit of holders of the Notes. From time to time after the purchase of
Acquired Equipment, such Acquired Equipment will be sold by GST Funding to
<PAGE>
GST USA in exchange for Intercompany Notes (as defined in the Pledge Agreement)
from GST USA. Each Intercompany Note will be guaranteed by GST (the "Note
Guarantee"), will be secured by a security interest in the Acquired Equipment
purchased with such Intercompany Note and will be pledged to the Trustee for the
benefit of holders of the Notes. On May 13, 2000, or earlier if permitted by the
terms of GST USA's and GST's outstanding indebtedness, GST USA will assume and
become the direct obligor on the Notes and GST will guarantee the Notes.
GST Funding, GST and GST USA understand that the Notes will be
offered without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), to qualified institutional buyers in compliance with the
exemption from registration provided by Rule 144A under the Securities Act, in
offshore transactions in reliance on Regulation S under the Securities Act
("Regulation S") and to institutional accredited investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that deliver a letter in
the form annexed to the Final Memorandum (as defined below).
The Placement Agents and their direct and indirect transferees
will be entitled to the benefits of a Registration Rights Agreement, to be dated
the Closing Date and to be substantially in the form attached hereto as Exhibit
A.
In connection with the sale of the Notes, GST Funding and GST
have prepared a preliminary private placement memorandum (the "Preliminary
Memorandum") and will prepare a final private placement memorandum (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") setting
forth or including a description of the terms of the Notes, the terms of the
offering and a description of each of GST Funding, GST and GST USA and their
business.
1. REPRESENTATIONS AND WARRANTIES. (i) Each of GST Funding,
GST and GST USA jointly and severally represents and warrants to, and agrees
with, each of the Placement Agents that as of the date hereof:
(a) The Preliminary Memorandum does not contain, and the Final
Memorandum in the form used by the Placement Agents to confirm sales and on the
Closing Date will not contain, any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(i)(a) do not apply to
statements or omissions in either Memorandum based upon information relating to
any Placement Agent furnished to GST Funding or GST in writing by such Placement
Agent through you expressly for use therein.
(b) GST Funding has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has the corporate
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<PAGE>
power and authority to own or lease its property and to conduct its business as
described in each Memorandum and is duly qualified or licensed to transact
business and is in good standing as a foreign corporation in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification or licensing, except to the extent that the failure
to be so qualified or licensed or be in good standing would not have a material
adverse effect on GST and its subsidiaries, taken as a whole.
(c) GST has been duly incorporated under the laws of Canada,
is validly existing as a corporation in good standing with respect to all
filings of annual returns required to be made under the laws of Canada, has the
corporate power and authority to own or lease its property and to conduct its
business as described in each Memorandum and is duly qualified or licensed to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or licensing, except to the extent that the
failure to be so qualified or licensed or be in good standing would not have a
material adverse effect on GST and its subsidiaries, taken as a whole.
(d) GST USA has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own or lease its property and to conduct its
business as described in each Memorandum and is duly qualified or licensed to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or licensing, except to the extent that the
failure to be so qualified or licensed or be in good standing would not have a
material adverse effect on GST and its subsidiaries, taken as a whole.
(e) Each subsidiary of GST and GST USA listed on Schedule II
hereto (each a "Specified Subsidiary", and together the "Specified
Subsidiaries") has been duly incorporated, is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own or lease property and to conduct its
business as described in each Memorandum and is duly qualified or licensed to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or licensing, except to the extent that the
failure to be so qualified or licensed or be in good standing would not have a
material adverse effect on GST and its subsidiaries, taken as a whole. The only
direct subsidiaries of GST are GST USA, GST Call America, Inc. ("Call America")
and TotalNet Communications, Inc. ("TotalNet") and GST owns all of the
outstanding capital stock of such subsidiaries, free and clear of any claims,
liens, pledges or other encumbrance. GST USA owns all of the outstanding capital
stock of GST Funding, free and clear of any claims, liens, pledges or other
encumbrance. The total assets and revenues of GST's direct and indirect
subsidiaries other than the Specified Subsidiaries, in the aggregate, comprised
less than 5% of GST's total consolidated assets and
3
<PAGE>
revenues, respectively, at and for the year ended September 30, 1996 and at and
for the quarter ended March 31, 1997.
(f) This Agreement has been duly authorized, executed and
delivered by each of GST Funding, GST and GST USA.
(g) The Notes have been duly authorized and, when executed,
authenticated and delivered to and paid for by the Placement Agents in
accordance with the terms of the Indenture and this Agreement, will be (i) valid
and binding obligations of GST Funding enforceable against GST Funding in
accordance with their terms, except as (A) the enforceability thereof may be
limited by the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and (B) rights
of acceleration, if applicable, and the availability of equitable remedies may
be limited by equitable principles of general applicability and (ii) entitled to
the benefits of the Indenture.
(h) Each of the Indenture and the Registration Rights
Agreement has been duly authorized, executed and delivered by, and is a valid
and binding agreement of, each of GST Funding, GST and GST USA, enforceable in
accordance with its terms, except as (i) the enforceability thereof may be
limited by the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and (ii) rights
of acceleration, if applicable, and the availability of equitable remedies may
be limited by equitable principles of general applicability.
(i) The Pledge Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, GST Funding,
enforceable in accordance with its terms, except as (i) the enforceability
thereof may be limited by the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
(j) The execution and delivery by each of GST Funding, GST and
GST USA of, and the performance by each of GST Funding, GST and GST USA of its
obligations under, this Agreement (including the issuance, sale and delivery of
the Notes), the Indenture, the Registration Rights Agreement and the Notes to
which it is a party will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of any of GST Funding, GST or GST USA or
any agreement or other instrument binding upon GST Funding, GST or GST USA that
is material to GST and its subsidiaries taken as a whole, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over GST
Funding, GST or GST USA and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by any of GST Funding, GST or GST USA of its obligations under this
Agreement (including the issuance, sale and delivery of the Notes), the
Indenture, the
4
<PAGE>
Registration Rights Agreement or the Notes to which it is a party, except such
as may be required by the securities laws or Blue Sky laws of the various states
in connection with the offer and sale of the Notes or by the federal and state
securities laws in connection with the registration obligations under the
Registration Rights Agreement.
(k) The execution and delivery by GST Funding of, and the
performance by GST Funding of its obligations under, the Pledge Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of GST Funding or any agreement or other instrument
binding upon GST Funding or GST USA that is material to GST and its
subsidiaries, taken as whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over GST Funding or GST
USA, and no consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by GST Funding
of its obligations under the Pledge Agreement.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of GST and
its subsidiaries, taken as a whole, from that set forth in the Preliminary
Memorandum.
(m) There are no legal or governmental proceedings pending or,
to the best of GST Funding's, GST's or GST USA's knowledge, threatened to which
GST Funding, GST, GST USA or any of the Specified Subsidiaries is a party or to
which any of the properties of GST Funding, GST, GST USA or any of the Specified
Subsidiaries is subject other than proceedings accurately described in all
material respects in each Memorandum and proceedings that would not have a
material adverse effect on GST and its subsidiaries, taken as a whole, or on the
power or ability of any of GST Funding, GST or GST USA to perform its
obligations under this Agreement, the Indenture, the Registration Rights
Agreement, the Notes or the Pledge Agreement to which it is a party or to
consummate the transactions contemplated by the Final Memorandum.
(n) None of GST Funding, GST or GST USA or any affiliate (as
defined in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate")
of GST Funding, GST or GST USA has directly or through any agent (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the sale of the Notes in a manner that would require the registration under
the Securities Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering (as such
terms are used in Regulation D under the Securities Act) of the Notes or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
5
<PAGE>
(o) None of GST Funding, GST or GST USA is an "investment
company" or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(p) It is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner contemplated by this
Agreement and each Memorandum to register the Notes under the Securities Act or
to qualify the Indenture under the Trust Indenture Act of 1939, as amended.
(q) GST Funding, GST, GST USA and the Specified Subsidiaries
have all necessary permits, licenses, authorizations, consents and approvals and
have made all necessary filings required under any federal, state, local or
foreign supranational, national or regional law, regulation or rule, and have
obtained all necessary authorizations, consents and approvals from other
persons, material to the conduct of their respective businesses, in each case
except to the extent that the failure to obtain such permits, licenses,
authorizations, consents or approvals or to make such filings would not, singly
or in the aggregate, have a material adverse effect on the properties, assets,
prospects, condition, financial or otherwise, business or operations of GST and
its subsidiaries, taken as a whole; except as accurately described in all
material respects in each Memorandum, GST Funding, GST, GST USA and their
subsidiaries have not received any notice of proceedings which remain unresolved
relating to the revocation or modification of any such permits, licenses,
authorizations, consents or approvals, nor is GST Funding, GST, GST USA or any
of the Specified Subsidiaries in violation of, or in default under, any such
license, authorization, consent or approval or any federal, state, local or
foreign supranational, national or regional law, regulation or rule or any
decree, order or judgment applicable to GST Funding, GST, GST USA or any of the
Specified Subsidiaries the effect of which could have a material adverse effect
on the properties, assets, prospects, condition, financial or otherwise,
business or operations of GST and its subsidiaries, taken as a whole.
(r) GST Funding, GST, GST USA and the Specified Subsidiaries
(i) are in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, individually or in the
aggregate, have a material adverse effect on GST and its subsidiaries, taken as
a whole.
6
<PAGE>
(s) Each of GST Funding, GST and GST USA has complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida).
(t) None of GST Funding, GST, GST USA, their Affiliates or any
person acting on its or their behalf (other than the Placement Agents) has
engaged in any directed selling efforts (as such term is defined in Regulation
S) with respect to the Notes and GST Funding, GST, GST USA, their Affiliates and
any person acting on its or their behalf (other than the Placement Agents) have
complied with the offering restrictions requirement of Regulation S.
(u) The terms of the Notes and the Indenture conform in all
material respects to the description thereof contained in the Final Memorandum
under the heading "Description of the Notes."
(v) The financial statements contained in each Memorandum
comply with the requirements of Regulation S-X of the Securities and Exchange
Commission.
(w) Upon delivery to the Trustee of the certificates or
instruments, if any, representing the Pledged Securities (as defined in the
Final Memorandum) and the filing of financing statements, if any, required by
the Uniform Commercial Code in the appropriate offices in the State of New York,
the pledge of and grant of a security interest in the Pledged Securities for the
benefit of the Trustee and the holders of the Notes will constitute a first
priority security interest in the Pledged Securities, enforceable as against all
creditors of GST Funding (and any persons purporting to purchase any of the
Pledged Securities from GST Funding).
(x) The $35 million principal amount Promissory Note, dated
the Closing Date, made by GST USA for the benefit of GST Funding (the "Initial
Note") has been duly authorized, executed and delivered by, and is a valid and
binding agreement of, GST USA, enforceable in accordance with its terms, except
as (i) the enforceability thereof may be limited by the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and (ii) rights of acceleration, if applicable, and
the availability of equitable remedies may be limited by equitable principles of
general applicability.
(y) The Promissory Note, dated the Closing Date, made by GST
USA for the benefit of GST Funding (the "Initial Intercompany Note") to
refinance certain intercompany indebtedness on the Closing Date has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
GST USA, enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
7
<PAGE>
creditors' rights generally and (ii) rights of acceleration, if applicable, and
the availability of equitable remedies may be limited by equitable principles of
general applicability.
(z) The Intercompany Security Agreement, dated as of the
Closing Date, made by GST USA for the benefit of GST Funding (the "Intercompany
Security Agreement") has been duly authorized, executed and delivered by, and is
a valid and binding agreement of, GST USA, enforceable in accordance with its
terms, except as (i) the enforceability thereof may be limited by the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability.
(aa) Each of the Guaranty, dated the Closing Date, made by GST
for the benefit of GST Funding with respect to the Initial Note (the "Initial
Note Guaranty") and the Guaranty, dated the Closing Date, made by GST for with
benefit of GST Funding with respect to the Initial Intercompany Note (the
"Intercompany Note Guaranty") has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, GST, enforceable in accordance with
its terms, except as (i) the enforceability thereof may be limited by the effect
of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability.
(bb) Schedule A to the Certificate of Responsible Officer
dated May 13, 1997 signed by John Warta and delivered in connection with the
opinion of Swidler & Berlin delivered pursuant to Section 4(c) hereof lists all
of the telecommunications services provided by the Specified Subsidiaries (other
than NACT Telecommunications, Inc. and Wasatch International Network Services,
Inc.), other than services which are not, singly or in the aggregate, material
to GST and its subsidiaries, taken as a whole.
(ii) Each of the Placement Agents represents and warrants to,
and agrees with, GST Funding, GST, GST USA and each of the Specified
Subsidiaries that as of the date hereof:
(a) each of the Placement Agents has the necessary power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
(b) each of the Placement Agents will deliver to each
purchaser, prior to any submission by such person of a written offer
relating to the purchase of Notes, a copy of the Final Memorandum.
2. OFFERING. Each of the Placement Agents has advised GST
Funding, GST and GST USA that it will make an offering of the Notes purchased by
it hereunder on
8
<PAGE>
the terms set forth in the Final Memorandum as soon as practicable after this
Agreement is entered into as in its judgment is advisable.
3. PURCHASE AND DELIVERY. GST Funding hereby agrees to sell to
the several Placement Agents, and the Placement Agents, upon the basis of the
representations and warranties contained herein but subject to the conditions
stated herein, agree, severally and not jointly, to purchase from GST Funding,
the respective principal amount of Notes set forth in Schedule I hereto opposite
their names at a purchase price of 96.75% of the principal amount thereof, plus
accrued interest, if any, from May 13, 1997 to the date of payment and delivery.
Payment for the Notes shall be made against delivery of the
Notes at a closing (the "Closing") to be held at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York, at 9:00 A.M., local time, on
May 13, 1997, or at such other time on the same or such other date, not later
than May 28, 1997, as shall be designated in writing by you. The time and date
of such payment are herein referred to as the "Closing Date". Payment for the
Notes shall be made to GST Funding by wire transfer to an account previously
designated to the Placement Agents by GST Funding in immediately available
funds.
Certificates for the Notes shall be in definitive form and
registered in such names and in such denominations as you shall request in
writing not less than one full business day prior to the Closing Date. The
certificates evidencing the Notes shall be delivered to you on the Closing Date
for the respective accounts of the several Placement Agents, with any transfer
taxes payable in connection with the transfer of the Notes to the Placement
Agents duly paid, against payment of the purchase price therefor.
4. CONDITIONS TO CLOSING. The several obligations of the
Placement Agents under this Agreement to purchase the Notes will be subject to
the following conditions:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of GST
Funding's, GST's or GST USA's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings,
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business or operations, of GST and its subsidiaries, taken as a whole,
from that set forth in the Preliminary Memorandum that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Notes on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing
Date certificates, dated the Closing Date and signed, respectively, by an
executive officer of GST Funding, GST and GST USA, to the effect set forth in
clause (a)(i) of this Section 4 and to the effect that the representations and
warranties of GST Funding, GST and GST USA contained in this Agreement are true
and correct in all material respects as of the Closing Date and that each of GST
Funding, GST and GST USA has complied in all material respects with all of the
agreements and satisfied in all material respects all of the conditions on its
part to be performed or satisfied in connection with the transactions
contemplated hereby or by the Memorandum on or before the Closing Date.
The officers signing and delivering such certificates may rely
upon the best of their knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion,
dated the Closing Date, of (i) Olshan Grundman Frome & Rosenzweig LLP, counsel
for GST Funding, GST and GST USA, in the form attached hereto as Exhibit B, (ii)
O'Neill & Company, Canadian counsel for GST, in the form attached hereto as
Exhibit C, (iii) Thorsteinssons, Canadian tax counsel for GST, in the form
attached hereto as Exhibit D, (iv) Swidler & Berlin, Chartered, special
regulatory counsel for GST Funding, GST and GST USA, in the form attached hereto
as Exhibit E and (v) local regulatory counsel in the forms attached hereto as
Exhibit F.
(d) You shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Placement Agents, dated the Closing Date,
with respect to such matters as you may reasonably request.
(e) You shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof and the Closing Date,
respectively, in form and substance satisfactory to you, from KPMG Peat Marwick
LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Final Memorandum.
(f) GST Funding, GST and GST USA shall have complied with the
provisions of subsection (a) of Section 5 hereof with respect to the furnishing
of Final Memoranda on the business day next following the date of this
Agreement, in such quantities as you shall have reasonably requested.
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<PAGE>
(g) GST Funding shall have received from GST USA a capital
contribution in cash of a least $1 million.
(h) You shall have received such other documents and
certificates as are reasonably requested by you or your counsel.
5. COVENANTS OF GST FUNDING, GST AND GST USA. In further
consideration of the agreements of the Placement Agents contained in this
Agreement, each of GST Funding, GST and GST USA covenants as follows:
(a) To furnish to you, without charge, during the period
mentioned in subsection (c) of this Section 5, as many copies of the
Final Memorandum and any supplements and amendments thereto as you may
reasonably request and to use its best efforts to deliver as many
copies of the Final Memorandum as you may request to you by 5:00 P.M.
(New York City time) on the business day next following the execution
of this Agreement.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Notes shall have been sold by the
Placement Agents, any event shall occur or condition shall exist as a
result of which it is necessary in your reasonable judgment to amend or
supplement the Final Memorandum in order to make the statements
therein, in the light of the circumstances when such Memorandum is
delivered to a purchaser, not misleading, or if, in the reasonable
opinion of counsel to the Placement Agents, it is necessary to amend or
supplement such Memorandum to comply with applicable law, forthwith to
prepare and furnish, at its own expense, to the Placement Agents,
either amendments or supplements to such Memorandum so that the
statements in such Memorandum as so amended or supplemented will not,
in the light of the circumstances when such Memorandum is delivered to
a purchaser, be misleading or omit to state a material fact or so that
such Memorandum, as so amended or supplemented, will comply with
applicable law.
(d) To endeavor to qualify the Notes for offer and sale under
the securities laws or Blue Sky laws of such jurisdictions as you shall
reasonably request; PROVIDED that none of GST Funding, GST USA or GST
shall be required to (A) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph (d), (B) file any general
consent to service of process or (C) subject itself to taxation in any
such jurisdiction if it is not otherwise so subject.
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<PAGE>
(e) To use the net proceeds received by GST Funding from the
sale of the Notes in the manner specified in the Final Memorandum under
the heading "Use of Proceeds."
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all
costs and expenses incident to the performance of its obligations under
this Agreement, including, without limitation: (i) the preparation of
each Memorandum and all amendments and supplements thereto, (ii) the
preparation, issuance and delivery of the Notes, including any transfer
or other taxes payable thereon, (iii) the fees and disbursements of GST
Funding's, GST's and GST USA's counsel and accountants required to
provide "comfort letters" hereunder and the Trustee and its counsel,
(iv) the qualification of the Notes under securities laws or Blue Sky
laws in accordance with the provisions of Section 5(d), including
filing fees and the fees and disbursements of counsel for the Placement
Agents in connection therewith and in connection with the preparation
of any Blue Sky or legal investment memoranda, (v) the printing and
delivery to the Placement Agents in quantities as herein stated of
copies of the Final Memorandum and any amendments or supplements
thereto, (vi) the costs and expenses of GST Funding, GST and GST USA
relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Notes, including, without
limitation, expenses associated with the production of the road show
slides and graphics, fees and expenses of any consultants engaged, with
the approval of GST Funding, GST and GST USA, in connection with the
road show presentations, travel and lodging expenses of the
representatives and officers of GST Funding, GST and GST USA and any
such consultants, and the cost of any aircraft chartered in connection
with the road show, (vii) all document production charges and expenses
of counsel to the Placement Agents (but not including their fees for
professional services) in connection with the preparation of this
Agreement and the Pledge Agreement and the documents and agreements
contemplated thereby, (viii) the fees and expenses, if any, incurred in
connection with the admission of the Notes for trading in PORTAL and
any other appropriate market system and (ix) the preparation of the
Pledge Agreement and the Intercompany Security Agreement and the
instruments, documents and agreements contemplated thereby, including
the fees and disbursements of counsel for the Placement Agents in
connection therewith.
(g) None of GST Funding, GST and GST USA or any of their
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the Notes in
a manner which would require the registration under the Securities Act
of the Notes.
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(h) Not to solicit any offer to buy or offer or sell the Notes
by means of any form of general solicitation or general advertising (as
such terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(i) While any of the Notes remain outstanding, GST Funding,
GST and GST USA shall make available, upon request, to any seller of
such Notes the information specified in Rule 144A(d)(4) under the
Securities Act, unless GST Funding, GST and GST USA, as applicable, is
then subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(j) To use its best efforts to permit the Notes to be
designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(k) None of GST Funding, GST, GST USA, their Affiliates or any
person acting on its or their behalf (other than the Placement Agents)
will engage in any directed selling efforts (as such term is defined in
Regulation S) with respect to the Notes, and GST Funding, GST, GST USA,
their Affiliates and each person acting on its or their behalf (other
than the Placement Agents) will comply with the offering restrictions
of Regulation S.
(l) As soon as permissible under all agreements of GST in
existence on the date hereof, GST will transfer all of the capital
stock of Call America and TotalNet to GST USA, and thereafter such
companies will be wholly owned subsidiaries of GST USA.
(m) To use its best efforts to have the Notes listed on the
Luxembourg Stock Exchange as soon as practicable after the date hereof.
6. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with GST Funding, GST and GST USA that (i) it will not solicit offers
for, or offer or sell, the Notes by any form of general solicitation or general
advertising (as such terms are used in Regulation D under the Securities Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act and (ii) it will solicit offers for the Notes only from, and
will offer the Notes only to, persons that it reasonably believes to be (A) in
the case of offers inside the United States, (1) QIBs or (2) other institutional
accredited investors (as defined in Rule 501(a) (1), (2), (3) or (7) under the
Securities Act) ("institutional accredited investors") that, prior to their
purchase of any Notes, deliver to such Placement Agent a letter containing
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<PAGE>
the representations and agreements set forth in Annex A to the Final Memorandum
and (B) in the case of offers outside the United States, to persons other than
U.S. persons ("foreign purchasers", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) that, in each
case, in purchasing such Notes are deemed to have represented and agreed as
provided in the Final Memorandum under the heading "Transfer Restrictions."
(b) Each Placement Agent, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) it understands that no action has been or will be taken in
any jurisdiction by GST Funding, GST or GST USA that would permit a
public offering of the Notes, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Notes, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Notes or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Notes have not been and will not be registered under
the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Notes and will offer
and sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or another exemption from the registration requirements of
the Securities Act. Accordingly, no such Placement Agent, nor any
Affiliates of such Placement Agent, nor any persons acting on its or
their behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes,
and any such Placement Agent, its Affiliates and any such persons have
complied and will comply with the offering restrictions requirements of
Regulation S;
(v) each Placement Agent represents and, during the period of
six months from the date hereof, agrees that (i) it has not offered or
sold and will not offer or sell any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in
14
<PAGE>
circumstances which have not resulted and will not result in an offer
to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has
complied and will comply with all applicable provisions of the
Financial Services Act 1986 and the Regulations with respect to
anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on
and will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issue of the Notes if
that person is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued
or passed on;
(vi) such Placement Agent understands that the Notes have not
been and will not be registered under the Securities and Exchange Law
of Japan, and represents that it has not offered or sold, and agrees
that it will not offer or sell, any Notes, directly or indirectly in
Japan or to any resident of Japan except (A) pursuant to an exemption
from the registration requirements of the Securities and Exchange Law
of Japan and (B) in compliance with any other applicable requirements
of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases any Notes from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Notes covered hereby have not been registered
under the U.S. Securities Act of 1933 (the "Securities
Act") and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except
in either case in accordance with Regulation S (or Rule
144A, if available) under the Securities Act. Terms used
above have the meaning given to them by Regulation S."
Terms used in this Section 6 have the meanings given to them
by Regulation S.
7. INDEMNIFICATION AND CONTRIBUTION. (a) Each of GST Funding,
GST and GST USA agrees, jointly and severally, to indemnify and hold harmless
each Placement Agent, and each person, if any, who controls such Placement Agent
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, or is under common control with, or is controlled by, such
Placement Agent, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Placement Agent or any such controlling or affiliated
15
<PAGE>
person in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in either Memorandum (as amended or supplemented if GST Funding and
GST shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Placement
Agent furnished to GST Funding or GST in writing by such Placement Agent through
you expressly for use therein.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless GST Funding, GST and GST USA, their directors, their
officers and each person, if any, who controls GST Funding, GST or GST USA
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from GST Funding,
GST and GST USA to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to GST Funding or GST in writing by
such Placement Agent through you expressly for use in either Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either subsection (a) or (b) of this Section
7, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated in the case of parties indemnified pursuant to
subsection (a) above and by GST Funding, GST and GST USA in the case of parties
indemnified pursuant to subsection (b) above. The indemnifying party shall not
be liable for any settlement of any proceeding effected without
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<PAGE>
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this subsection (c), the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected without its
written consent if (A) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (B) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in
subsection (a) or (b) of this Section 7 is unavailable to an indemnified party
or insufficient in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such subsection, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by GST Funding, GST and GST USA, on the one hand, and the
Placement Agents, on the other hand, from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of GST Funding, GST
and GST USA on the one hand and the Placement Agents on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by GST Funding, GST and GST USA
on the one hand and the Placement Agents on the other hand in connection with
the offering of the Notes shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Notes (before deducting
expenses) received by GST Funding, GST and GST USA and the total discounts and
commissions received by the Placement Agents in respect thereof bear to the
aggregate offering price of the Notes. The relative fault of GST Funding, GST
and GST USA on the one hand and of the Placement Agents on the other hand shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by GST Funding, GST and GST USA
or by the Placement Agents and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Placement Agents' respective obligations to contribute pursuant to this
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Section 7 are several in proportion to the respective principal amount at
maturity of Notes they have purchased hereunder, and not joint.
(e) GST Funding, GST and GST USA, and the Placement Agents
agree that it would not be just or equitable if contribution pursuant to this
Section 7 were determined by PRO RATA allocation (even if the Placement Agents
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in subsection (d) of this Section 7. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in subsection (d) of this Section 7 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes resold by it in
the initial placement of the Notes were offered to investors exceeds the amount
of any damages that such Placement Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
indemnity and contribution provisions contained in this Section 7 and the
representations and warranties of GST Funding, GST and GST USA and the Placement
Agents contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Placement Agents or any person
controlling the Placement Agents or by or on behalf of GST Funding, GST or GST
USA, their officers or directors or any person controlling GST Funding, GST or
GST USA and (iii) acceptance of and payment for any of the Notes. The remedies
provided for in this Section 7 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to GST Funding and GST, if (a) after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Vancouver
Stock Exchange, (ii) trading of any securities of GST Funding, GST or GST USA
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities or (iv) there
shall have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events
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specified in clauses (a)(i) through (iv), such event individually or together
with any other such event makes it, in your judgment, impracticable to market
the Notes on the terms and in the manner contemplated in the Final Memorandum.
9. MISCELLANEOUS. (a) If, on the Closing Date, any one
Placement Agent shall fail or refuse to purchase Notes that it agreed to
purchase hereunder on such date, and the principal amount of Notes which such
defaulting Placement Agent agreed but failed or refused to purchase is not more
than one-tenth of the total principal amount of the Notes to be purchased on
such date, the other Placement Agents shall be obligated to purchase the Notes
which such defaulting Placement Agent agreed but failed or refused to purchase
on such date; PROVIDED that in no event shall the principal amount of Notes that
any Placement Agent has agreed to purchase pursuant to Section 3 be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such principal
amount of Notes without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Notes which it or they have agreed to purchase hereunder on such date
and the principal amount of Notes with respect to which such default occurs is
more than one-tenth of the principal amount of Notes to be purchased on such
date and arrangements satisfactory to you and GST Funding and GST for the
purchase of such Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Placement Agent or of GST Funding, GST and GST USA. In any such case either you
or GST Funding and GST shall have the right to postpone the Closing Date, but in
no event for longer than seven days, in order that the required changes, if any,
in the Final Memorandum or in any other documents or arrangements may be
effected. Any action taken under this subsection shall not relieve any
defaulting Placement Agent from liability in respect of any default of such
Placement Agent under this Agreement.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(b) If this Agreement shall be terminated by the Placement
Agents, or any of them, because of any failure or refusal on the part of GST
Funding, GST or GST USA to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason GST Funding, GST or GST USA
shall be unable to perform its obligations under this Agreement, GST Funding,
GST and GST USA will reimburse such Placement Agents as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Placement Agents in connection with this Agreement or the offering
contemplated hereunder.
(c) Each of GST Funding, GST, and GST USA hereby (i)
acknowledges that it has irrevocably designated and appointed Olshan Grundman
Frome & Rosenzweig
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LLP, 505 Park Avenue, New York, New York 10022, Attention: David Adler, Esq.
(together with any successor, the "Process Agent"), as its authorized agent upon
which process may be served in any suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated herein, the
Indenture, the Registration Rights Agreement, the Pledge Agreement, the Notes or
the Note Guarantee that may be instituted in any federal or state court in the
State of New York, or brought under federal or state securities laws, and
acknowledges that the Process Agent has accepted such designation, (ii) agrees
that service of process upon the Process Agent and written notice of such
service to GST Funding, GST or GST USA, as the case may be (mailed or delivered
to GST's Chief Executive Officer at GST's principal office at 4317 N.E. Thurston
Way, Vancouver, Washington 98662), shall be deemed in every respect effective
service of process upon GST Funding, GST or GST USA, as the case may be, in any
suit, action or proceeding and (iii) agrees to take any and all action,
including the execution and filing of any and all such documents and instruments
as may be necessary to continue such designation and appointment of the Process
Agent in full force and effect so long as any of the Notes shall be outstanding.
Each of GST Funding, GST and GST USA hereby agrees to submit to the nonexclusive
jurisdiction of any federal or state court in the State of New York in any such
suit, action or proceeding arising out of or relating to this Agreement or the
transactions contemplated herein, the Indenture, the Registration Rights
Agreement, the Pledge Agreement, the Notes or the Note Guarantee.
(d) To the extent that GST has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, it hereby
irrevocably waives such immunity in respect of its obligations under this
Agreement, the Indenture, the Registration Rights Agreement or the Note
Guarantee, to the extent permitted by law.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(f) The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
(g) Any notice required or permitted to be given hereunder
shall be given in writing and shall be deemed effective three days after deposit
in the United States mail (certified or registered, return receipt requested),
postage prepaid, or when received if personally delivered, addressed as follows:
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To the Placement Agents: To GST Funding, GST or GST USA:
Morgan Stanley & Co. GST Telecommunications, Inc.
Incorporated 4317 N.E. Thurston Way
1585 Broadway Vancouver, Washington 98662
New York, New York 10036 Attention: Chief Executive Officer
Attention: James Avery
with a copy to: with a copy to:
Shearman & Sterling Olshan Grundman Frome &
599 Lexington Avenue Rosenzweig LLP
New York, New York 10022 505 Park Avenue
Attention: Jerry V. Elliott, Esq. New York, New York 10022-1170
Attention: Stephen Irwin, Esq.
or to such other address of which written notice is given to the other.
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Please confirm your agreement to the foregoing by signing in
the space provided below for that purpose and returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.
Very truly yours,
GST EQUIPMENT FUNDING, INC.
By: /S/ STEPHEN IRWIN
------------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST TELECOMMUNICATIONS, INC.
By: /S/ STEPHEN IRWIN
------------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST USA, INC.
By: /S/ STEPHEN IRWIN
------------------------------------
Name: Stephen Irwin
Title: Senior Vice President
Agreed as of the date first above written
MORGAN STANLEY & CO. INCORPORATED
Acting severally on behalf of itself
and the several Placement Agents named
herein.
By Morgan Stanley & Co. Incorporated
By: /S/ JAMES AVERY
--------------------------
Name: James Avery
Title: Vice President
<PAGE>
SCHEDULE I
Principal Amount
PLACEMENT AGENT TO BE PURCHASED
--------------- ---------------
Morgan Stanley & Co. Incorporated.............. $206,700,000
Dillon, Read & Co. Inc......................... $ 45,050,000
TD Securities (USA) Inc........................ $ 13,250,000
Total................. $265,000,000
============
<PAGE>
SCHEDULE II
Specified Subsidiaries
GST Telecom Inc., a Delaware corporation
GST Pacific Lightwave, Inc., a Washington corporation
GST Pacwest Telecom Hawaii Incorporated, a Hawaii corporation
GST Telecom Hawaii, Inc., a Hawaii corporation
GST Tucson Lightwave, Inc., an Arizona corporation
GST Telecom New Mexico, Inc., a New Mexico corporation
GST Telecom California, Inc., a Delaware corporation
NACT Telecommunications, Inc., a Delaware corporation
Wasatch International Network Services, Inc., a Utah corporation
GST Net, Inc., a Delaware corporation
International Telemanagement Group, Inc., an Ohio corporation
TotalNet Communications, Inc., a Texas corporation
GST Call America, Inc., a California corporation
GST USA, Inc., a Delaware corporation
Tri Star Residential Communications Corp., a Washington corporation
GST EquipCo, Inc., a Washington corporation
GST Internet, Inc., a Delaware corporation
GST EQUIPMENT FUNDING, INC.
GST USA, INC.
GST TELECOMMUNICATIONS, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
Indenture
Dated as of May 13, 1997
13 1/4% Senior Secured Notes due 2007
<PAGE>
CROSS-REFERENCE TABLE
TIA SECTIONS INDENTURE SECTIONS
ss. 310(a)(1)............................................. 7.10
(a)(2)............................................. 7.10
(b)................................................ 7.08
ss. 313(c)................................................ 7.06; 12.02
ss. 314(a)................................................ 4.20; 12.02
(a)(4)............................................. 4.19; 12.02
(c)(1)............................................. 12.03
(c)(2)............................................. 12.03
(e)................................................ 12.04
ss. 315(b)................................................ 7.05; 12.02
ss. 316(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(b)................................................ 6.07
ss. 317(a)(1)............................................. 6.08
(a)(2)............................................. 6.09
ss. 318(a)................................................ 12.01
(c)................................................ 12.01
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY......................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS...................................................1
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT............20
SECTION 1.03. RULES OF CONSTRUCTION........................................20
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM AND DATING..............................................21
SECTION 2.02. RESTRICTIVE LEGENDS..........................................22
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS..................24
SECTION 2.04. REGISTRAR AND PAYING AGENT...................................25
SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST..........................26
SECTION 2.06. TRANSFER AND EXCHANGE........................................27
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES..................28
SECTION 2.08. SPECIAL TRANSFER PROVISIONS..................................29
SECTION 2.09. REPLACEMENT SECURITIES.......................................33
SECTION 2.10. OUTSTANDING SECURITIES.......................................33
SECTION 2.11. TEMPORARY SECURITIES.........................................33
SECTION 2.12. CANCELLATION.................................................34
SECTION 2.13. CUSIP, CINS AND ISIN NUMBERS.................................34
SECTION 2.14. DEFAULTED INTEREST...........................................
SECTION 2.15. ISSUANCE OF ADDITIONAL SECURITIES............................35
ARTICLE THREE
REDEMPTION
SECTION 3.01. RIGHT OF REDEMPTION..........................................
SECTION 3.02. MANDATORY REDEMPTION.........................................35
SECTION 3.03. NOTICES TO TRUSTEE...........................................35
SECTION 3.04. SELECTION OF SECURITIES TO BE REDEEMED.......................36
SECTION 3.05. NOTICE OF REDEMPTION.........................................36
SECTION 3.06. EFFECT OF NOTICE OF REDEMPTION...............................37
SECTION 3.07. DEPOSIT OF REDEMPTION PRICE..................................37
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Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
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SECTION 3.08. PAYMENT OF SECURITIES CALLED FOR REDEMPTION...................37
SECTION 3.09. SECURITIES REDEEMED IN PART...................................38
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.........................................38
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY...............................38
SECTION 4.03. LIMITATION ON INDEBTEDNESS....................................39
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS.............................41
SECTION 4.05. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.............................44
SECTION 4.06. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.......................................45
SECTION 4.07. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED
SUBSIDIARIES..................................................46
SECTION 4.08. LIMITATION ON TRANSACTIONS
WITH SHAREHOLDERS AND AFFILIATES..............................46
SECTION 4.09. LIMITATION ON LIENS...........................................47
SECTION 4.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS.....................48
SECTION 4.11. LIMITATION ON INVESTMENTS.....................................49
SECTION 4.12. LIMITATION ON ASSET SALES.....................................49
SECTION 4.13. IMPAIRMENT OF SECURITY
INTEREST OR ABILITY TO ASSUME THE
SECURITIES....................................................50
SECTION 4.14. REPURCHASE OF SECURITIES UPON A CHANGE OF CONTROL.............51
SECTION 4.15. EXISTENCE.....................................................51
SECTION 4.16. PAYMENT OF TAXES AND OTHER CLAIMS.............................51
SECTION 4.17. MAINTENANCE OF PROPERTIES AND INSURANCE.......................51
SECTION 4.18. NOTICE OF DEFAULTS............................................52
SECTION 4.19. COMPLIANCE CERTIFICATES.......................................52
SECTION 4.20. COMMISSION REPORTS AND REPORTS TO HOLDERS.....................53
SECTION 4.21. WAIVER OF STAY, EXTENSION OR USURY LAWS.......................53
SECTION 4.22. ADDITIONAL AMOUNTS............................................53
SECTION 4.23. ASSUMPTION OF SECURITIES BY GST USA...........................54
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. CONSOLIDATION, MERGER AND SALE OF ASSETS......................55
SECTION 5.02. SUCCESSOR SUBSTITUTED.........................................56
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Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
ii
<PAGE>
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT..............................................57
SECTION 6.02. ACCELERATION...................................................58
SECTION 6.03. OTHER REMEDIES.................................................59
SECTION 6.04. WAIVER OF PAST DEFAULTS........................................59
SECTION 6.05. CONTROL BY MAJORITY............................................59
SECTION 6.06. LIMITATION ON SUITS............................................60
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT...........................60
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.....................................60
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM...............................61
SECTION 6.10. PRIORITIES.....................................................61
SECTION 6.11. UNDERTAKING FOR COSTS..........................................61
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.............................62
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE.................................62
SECTION 6.14. DELAY OR OMISSION NOT WAIVER...................................62
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. GENERAL........................................................62
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE......................................62
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE...................................64
SECTION 7.04. TRUSTEE'S DISCLAIMER...........................................64
SECTION 7.05. NOTICE OF DEFAULT..............................................64
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS..................................64
SECTION 7.07. COMPENSATION AND INDEMNITY.....................................64
SECTION 7.08. REPLACEMENT OF TRUSTEE.........................................65
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC...............................66
SECTION 7.10. ELIGIBILITY....................................................66
SECTION 7.11. MONEY HELD IN TRUST............................................66
SECTION 7.12. WITHHOLDING TAXES..............................................66
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS...........................66
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE..........................67
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS..............................70
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Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
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SECTION 8.04. APPLICATION OF TRUST MONEY.....................................71
SECTION 8.05. REPAYMENT TO ISSUER............................................72
SECTION 8.06. REINSTATEMENT..................................................72
SECTION 8.07. INSIDERS.......................................................72
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.....................................72
SECTION 9.02. WITH CONSENT OF HOLDERS........................................73
SECTION 9.03. REVOCATION AND EFFECT OF CONSENT...............................74
SECTION 9.04. NOTATION ON OR EXCHANGE OF SECURITIES..........................75
SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC................................75
SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT............................75
ARTICLE TEN
MEETINGS OF HOLDERS
SECTION 10.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.....................75
SECTION 10.02. MANNER OF CALLING MEETINGS....................................76
SECTION 10.03. CALL OF MEETINGS BY ISSUER OR HOLDERS.........................76
SECTION 10.04. WHO MAY ATTEND AND VOTE AT MEETINGS...........................76
SECTION 10.05. QUORUM; ACTION................................................77
SECTION 10.06. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE
MEETING; VOTING RIGHTS; ADJOURNMENT...........................77
SECTION 10.07. VOTING AT THE MEETING AND RECORD TO BE KEPT...................78
SECTION 10.08. EXERCISE OF RIGHTS OF TRUSTEE OR HOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING........................79
SECTION 10.09. PROCEDURES NOT EXCLUSIVE......................................79
ARTICLE ELEVEN
SECURITY
SECTION 11.01. SECURITY......................................................79
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT OF 1939...................................81
SECTION 12.02. NOTICES.......................................................81
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of the Indenture.
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SECTION 12.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............82
SECTION 12.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.................83
SECTION 12.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR...................83
SECTION 12.06. PAYMENT DATE OTHER THAN A BUSINESS DAY........................83
SECTION 12.07. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE............83
SECTION 12.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.................84
SECTION 12.09. NO RECOURSE AGAINST OTHERS....................................84
SECTION 12.10. SUCCESSORS....................................................84
SECTION 12.11. DUPLICATE ORIGINALS...........................................84
SECTION 12.12. SEPARABILITY..................................................84
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC..............................84
SUPPLEMENTAL INDENTURE
SECTION 1.1 CERTAIN TERMS DEFINED IN THE INDENTURE..........................E-1
SECTION 1.2 ASSUMPTION OF THE SECURITIES BY GST USA.........................E-1
SECTION 1.3. SECURITY GUARANTEE..............................................E-1
SECTION 1.4. OBLIGATIONS UNCONDITIONAL.......................................E-3
SECTION 1.5. NOTICE TO TRUSTEE...............................................E-3
SECTION 1.6. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT...................E-3
SECTION 1.7. NET WORTH LIMITATION............................................E-3
SECTION 2. GOVERNING LAW; SUBMISSION TO JURISDICTION;
AGENT FOR SERVICE...............................................E-4
SECTION 3. COUNTERPARTS....................................................E-4
SECTION 4. RATIFICATION....................................................E-4
EXHIBIT A Form of Security................................................A-1
EXHIBIT B Form of Certificate.............................................B-1
EXHIBIT C Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S..............................C-1
EXHIBIT D Form of Certificate to be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.......................D-1
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Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
v
<PAGE>
INDENTURE, dated as of May 13, 1997, among GST EQUIPMENT
FUNDING, INC., a Delaware corporation (the "COMPANY"), GST USA, INC., a Delaware
corporation ("GST USA"), GST TELECOMMUNICATIONS, INC., a federally chartered
Canadian corporation ("GST"), and UNITED STATES TRUST COMPANY OF NEW YORK (the
"TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance initially of up to $265,000,000
aggregate principal amount of the Company's 13 1/4% Senior Secured Notes due
2007 (the "SECURITIES") issuable as provided in this Indenture.
All things necessary to make this Indenture a valid agreement
of the Company, GST USA and GST, in accordance with its terms, have been done,
and the Company, GST USA and GST have done all things necessary to make the
Securities, when executed by the Company and authenticated and delivered by the
Trustee hereunder and duly issued by the Company, the valid obligations of the
Company as hereinafter provided.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act of
1939, as amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED EQUIPMENT" has the meaning provided in Section 11.01.
"ACQUIRED EQUIPMENT COST" has the meaning specified in Section
11.01.
"ADDITIONAL AMOUNTS" has the meaning provided in Section 4.22.
"ADJUSTED CONSOLIDATED NET INCOME" means, for any period, the
aggregate net income (or loss) of GST and its Restricted Subsidiaries for such
period determined in conformity with GAAP; PROVIDED that the following items
shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income of any Person (other than net income
attributable to a Restricted Subsidiary) in which any Person (other than GST or
any of
<PAGE>
its Restricted Subsidiaries) has an interest and the net income of any
Unrestricted Subsidiary, except to the extent of the amount of dividends or
other distributions actually paid to GST or any of its Restricted Subsidiaries
by such other Person, or such Unrestricted Subsidiary, during such period; (ii)
solely for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of Section 4.04 (and
in such case, except to the extent includable pursuant to clause (i) above), the
net income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with GST or any of its
Restricted Subsidiaries or all or substantially all of the property and assets
of such Person are acquired by GST or any of its Restricted Subsidiaries; (iii)
the net income of any Restricted Subsidiary to the extent that the declaration
or payment of dividends or similar distributions by such Restricted Subsidiary
of such net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Restricted Subsidiary; (iv) any
gains or losses (on an after-tax basis) attributable to Asset Sales; (v) except
for purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of Section 4.04, any amount paid
or accrued as dividends on Preferred Stock of GST or any Restricted Subsidiary
owned by Persons other than GST and any of its Restricted Subsidiaries; and (vi)
all extraordinary gains and extraordinary losses.
"ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" means the total
amount of assets of GST and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of GST and its Restricted Subsidiaries
(excluding intercompany items) and (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles, all
as set forth on the quarterly or annual consolidated balance sheet of GST and
its Restricted Subsidiaries, prepared in conformity with GAAP and most recently
filed with the Commission pursuant to Section 4.20.
"AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGENT" means any Registrar, Paying Agent, authenticating agent
or co-Registrar.
"AGENT MEMBERS" has the meaning provided in Section 2.07(a).
"ASSET ACQUISITION" means (i) an investment by GST or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of GST or shall be merged into or
consolidated with GST or any of its Restricted Subsidiaries; PROVIDED that such
Person's primary business is related, ancillary or complementary
2
<PAGE>
to the businesses of GST and its Restricted Subsidiaries on the date of such
investment or (ii) an acquisition by GST or any of its Restricted Subsidiaries
of the property and assets of any Person other than GST or any of its Restricted
Subsidiaries that constitute substantially all of a division or line of business
of such Person; PROVIDED that the property and assets acquired are related,
ancillary or complementary to the businesses of GST and its Restricted
Subsidiaries on the date of such acquisition.
"ASSET SALE" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by GST or any of its
Restricted Subsidiaries to any Person other than GST or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of GST or any of its Restricted Subsidiaries or (iii)
any other property or assets of GST or any of its Restricted Subsidiaries
outside the ordinary course of business of GST or such Restricted Subsidiary
and, in each case, that is not governed by the provisions of Article Five;
PROVIDED that "Asset Sale" shall not include (A) sales or other dispositions of
inventory, receivables and other current assets; or (B) sales or other
dispositions of assets with a fair market value (as certified in an Officers'
Certificate) not in excess of $1 million; or (C) sales of Acquired Equipment by
the Company to GST USA in accordance with the terms of this Indenture; or (D)
sales or other dispositions of assets to the extent GST or a Restricted
Subsidiary receives consideration at least equal to the fair market value of the
assets sold or disposed of, PROVIDED that the consideration received consists of
property or assets (other than current assets) of a nature or type or that are
used in a business (or a company having property or assets of a nature or type,
or engaged in a business) similar or related to the nature or type of the
property and assets of, or business of, GST and its Restricted Subsidiaries
existing on the date of such sale or other disposition.
"ASSUMPTION DATE" means the date on which GST USA and GST
execute and deliver the supplemental indenture required by Section 4.23(a).
"AVERAGE LIFE" means, at any date of determination with respect
to any debt security, the quotient obtained by dividing (i) the sum of the
products of (a) the number of years from such date of determination to the dates
of each successive scheduled principal payment of such debt security and (b) the
amount of such principal payment by (ii) the sum of all such principal payments.
"BOARD OF DIRECTORS" means, with respect to any Person, the
Board of Directors of such Person or any committee of such Board of Directors
duly authorized to act with respect to this Indenture.
"BOARD RESOLUTION" means, with respect to any Person, a copy of
a resolution, certified by the Secretary or Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
3
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"BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized by law to close.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether now outstanding
or issued after the date of this Indenture, including, without limitation, all
Common Stock and Preferred Stock.
"CAPITALIZED LEASE" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and "Capitalized Lease Obligations" means the discounted present value of the
rental obligations under such lease.
"CHANGE OF CONTROL" means such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of Voting Stock representing more than 30% of the total voting
power of the Voting Stock of GST on a fully diluted basis; (ii) individuals who
on the Closing Date constitute the Board of Directors of GST (together with any
new directors whose election by the Board of Directors of GST or whose
nomination for election by GST's shareholders was approved by a vote of at least
two-thirds of the members of the Board of Directors then in office who either
were members of the Board of Directors of GST on the Closing Date or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the Board of Directors of GST
then in office; or (iii) all of the Common Stock of GST USA or the Company is
not beneficially owned by GST.
"CLOSING DATE" means the date on which the Securities are
originally issued under this Indenture.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"COMMON SHARES" means the common shares of GST.
"COMMON STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
4
<PAGE>
"COMPANY" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"COMPANY ORDER" means a written request or order signed in the
name of the Issuer (i) by its Chairman, a Vice Chairman, its President or a Vice
President and (ii) by its Chief Financial Officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee;
PROVIDED, HOWEVER, that such written request or order may be signed by any two
of the officers or directors listed in clause (i) above in lieu of being signed
by one of such officers or directors listed in such clause (i) and one of the
officers listed in clause (ii) above.
"CONSOLIDATED EBITDA" means, for any period, the sum of the
amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, (iii) income taxes, to the extent
such amount was deducted in calculating Adjusted Consolidated Net Income (other
than income taxes (either positive or negative) attributable to either
extraordinary and non-recurring gains or losses or sales of assets), (iv)
depreciation expense, to the extent such amount was deducted in calculating
Adjusted Consolidated Net Income, (v) amortization expense, to the extent such
amount was deducted in calculating Adjusted Consolidated Net Income, and (vi)
all other non-cash items reducing Adjusted Consolidated Net Income (other than
items that will require cash payments and for which an accrual or reserve is, or
is required by GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for GST and
its Restricted Subsidiaries in conformity with GAAP; PROVIDED that, if any
Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated
EBITDA shall be reduced (to the extent not otherwise reduced in accordance with
GAAP) by an amount equal to (A) the amount of the Adjusted Consolidated Net
Income attributable to such Restricted Subsidiary multiplied by (B) the quotient
of (1) the number of shares of outstanding Common Stock of such Restricted
Subsidiary not owned on the last day of such period by GST or any of its
Restricted Subsidiaries divided by (2) the total number of shares of outstanding
Common Stock of such Restricted Subsidiary on the last day of such period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including amortization
of original issue discount on any Indebtedness and the interest portion of any
deferred payment obligation, calculated in accordance with the effective
interest method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by GST or any of its Restricted
Subsidiaries) and all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by GST and its Restricted Subsidiaries during such period; excluding,
however, (i) any amount of such interest of any Restricted Subsidiary if the net
income of such Restricted Subsidiary is excluded in the calculation of Adjusted
Consolidated Net Income pursuant to clause (iii) of the definition thereof (but
only in the same proportion as the net income of such
5
<PAGE>
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Securities, all as determined on a consolidated basis
(without taking into account Unrestricted Subsidiaries) in conformity with GAAP.
"CONSOLIDATED NET WORTH" means, at any date of determination,
shareholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of GST and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of
Capital Stock of GST or any of its Restricted Subsidiaries, each item to be
determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"CONVERTIBLE NOTES" means the 13 7/8% Convertible Senior
Subordinated Discount Notes due 2005 of GST issued pursuant to the Convertible
Notes Indenture.
"CONVERTIBLE NOTES INDENTURE" means the convertible notes
indenture dated December 19, 1995 among GST, as issuer, GST USA, as guarantor,
and United States Trust Company of New York, as trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular time,
be principally administered, which office is, at the date of this Indenture,
located at 114 West 47th Street, New York, New York 10036-1532.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect GST or any of its Restricted Subsidiaries against fluctuations in
currency values to or under which GST or any of its Restricted Subsidiaries is a
party or a beneficiary on the date of this Indenture or becomes a party or a
beneficiary thereafter.
"DEFAULT" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"DEPOSITARY" means The Depository Trust Company, its nominees,
and their respective successors.
"DEVELOPMENT COMPANY" means a Restricted Subsidiary whose
primary business is the development, ownership and operation of alternative
access telecommunications networks.
"EVENT OF DEFAULT" has the meaning provided in Section 6.01.
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"EXCESS PROCEEDS" has the meaning provided in Section 4.12.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE SECURITIES" means any securities of the Issuer
containing terms identical to the Securities (except that such Exchange
Securities (i) shall be registered under the Securities Act, (ii) will not
provide for an increase in the rate of interest (other than with respect to
overdue amounts) and (iii) will not contain terms with respect to transfer
restrictions) that are issued and exchanged for the Securities pursuant to the
Registration Rights Agreement and this Indenture.
"FAIR MARKET VALUE" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors of GST (whose
determination shall be conclusive) and evidenced by a Board Resolution.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained in this
Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants contained herein and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the offering of the Securities and (ii)
except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"GLOBAL SECURITIES" has the meaning provided in Section 2.01.
"GST" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"GST USA" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"GUARANTEE" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by
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virtue of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); PROVIDED that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTEED INDEBTEDNESS" has the meaning provided in Section
4.07.
"HOLDER" or "SECURITYHOLDER" means the then registered holder
of any Security.
"INCUR" means, with respect to any Indebtedness, to incur,
create, issue, assume, guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "incurrence" of Indebtedness by reason of a Person
becoming a Restricted Subsidiary; PROVIDED that neither the accrual of interest
nor the accretion of original issue discount shall be considered an Incurrence
of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; PROVIDED that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, PROVIDED (A)
that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the unamortized
portion of the original issue discount of such Indebtedness at the time of its
issuance as determined in conformity with GAAP, (B) money borrowed and set aside
at the time of the Incurrence of any Indebtedness in order to pre-fund the
payment of interest as such Indebtedness shall be deemed not to be
"Indebtedness" and (C) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
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"INDEBTEDNESS TO EBITDA RATIO" means, as at any date of
determination, the ratio of (i) the aggregate amount of Indebtedness of GST and
its Restricted Subsidiaries on a consolidated basis as at the date of
determination (the "TRANSACTION DATE") to (ii) the Consolidated EBITDA of GST
for the then most recent four full fiscal quarters for which reports have been
filed pursuant to Section 4.20 (such four full fiscal quarter period being
referred to herein as the "FOUR QUARTER PERIOD"); PROVIDED that (x) pro forma
effect shall be given to any Indebtedness Incurred from the beginning of the
Four Quarter Period through the Transaction Date (including any Indebtedness
Incurred on the Transaction Date), to the extent outstanding on the Transaction
Date, (y) if during the period commencing on the first day of such Four Quarter
Period through the Transaction Date (the "REFERENCE PERIOD"), GST or any of its
Restricted Subsidiaries shall have engaged in any Asset Sale, Consolidated
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive), or increased by an amount equal to the EBITDA (if negative), directly
attributable to the assets which are the subject of such Asset Sale as if such
Asset Sale had occurred on the first day of such Reference Period or (z) if
during such Reference Period GST or any of the Restricted Subsidiaries shall
have made any Asset Acquisition, Consolidated EBITDA of GST shall be calculated
on a pro forma basis as if such Asset Acquisition and any Incurrence of
Indebtedness to finance such Asset Acquisition had taken place on the first day
of such Reference Period.
"INDENTURE" means this Indenture as originally executed or as
it may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"INITIAL NOTE" means the $35 million principal amount
promissory note due May 13, 2000 issued to the Company by GST USA and guaranteed
by GST; PROVIDED that the principal amount shall be reduced to the extent the
principal amount exceeds the principal amount of the Securities less (x) the
principal amount of Pledged Securities and cash then held in the Pledge Account
(other than the Interest Collateral), together with accrued interest thereon and
(y) the principal amount of all Intercompany Notes then held as security for the
Securities plus the amount of interest that will accrue on such Intercompany
Notes by May 13, 2000.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act.
"INTERCOMPANY NOTES" means the promissory notes due May 13,
2000 issued to the Company by GST USA and guaranteed by GST.
"INTEREST COLLATERAL" has the meaning provided in Section
11.01.
"INTEREST PAYMENT DATE" means each semiannual interest payment
date on May 1 and November 1 of each year, commencing November 1, 1997.
"INTEREST RATE AGREEMENT" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate
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cap agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect GST or any of its
Restricted Subsidiaries against fluctuations in interest rates in respect of
Indebtedness to or under which GST or any of its Restricted Subsidiaries is a
party or a beneficiary on the date of this Indenture or becomes a party or a
beneficiary hereafter; PROVIDED that the notional principal amount thereof does
not exceed the principal amount of the Indebtedness of GST and its Restricted
Subsidiaries that bears interest at floating rates.
"INTERNATIONAL ASSET" has the meaning provided in Section 4.11.
"INTERNATIONAL BUSINESS" has the meaning provided in Section
4.11.
"INVESTMENT" in any Person means any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement; but excluding advances to customers in
the ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of GST or its Restricted Subsidiaries)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other similar instruments issued by, such Person and shall include
(i) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary and
(ii) the fair market value of the Capital Stock (or any other Investment) held
by GST and its Restricted Subsidiaries of any Person that has ceased to be a
Restricted Subsidiary by reason of any transaction permitted by clause (iii) of
Section 4.06. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.04, (i) "Investment" shall include the fair market value of the assets
(net of liabilities to GST or any of its Restricted Subsidiaries) of any
Restricted Subsidiary of GST at the time that such Restricted Subsidiary of GST
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the assets (net of liabilities) of any Unrestricted Subsidiary at the time
that such Unrestricted Subsidiary is designated a Restricted Subsidiary of GST
and (ii) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, in each case as
determined by the Board of Directors of GST in good faith.
"ISSUER" means the Company, until GST USA becomes the obligor
on the Securities on the Assumption Date, after which the term "Issuer" means
GST USA.
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
"NACT" means NACT Telecommunications, Inc., a Delaware
corporation.
"NET CASH PROCEEDS" means, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest,
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component thereof) when received in the form of cash or cash equivalents (except
to the extent such obligations are financed or sold with recourse to GST or any
Restricted Subsidiary) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale, (ii) provisions for all
taxes (whether or not such taxes will actually be paid or are payable) as a
result of such Asset Sale without regard to the consolidated results of
operations of GST and its Restricted Subsidiaries, taken as a whole, (iii)
payments made to repay Indebtedness or any other obligation outstanding at the
time of such Asset Sale that either (A) is secured by a Lien on the property or
assets sold or (B) is required to be paid as a result of such sale and (iv)
appropriate amounts to be provided by GST or any Restricted Subsidiary as a
reserve against any liabilities associated with such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as determined
in conformity with GAAP and (b) with respect to any issuance or sale of Capital
Stock, the proceeds of such issuance or sale in the form of cash or cash
equivalents, including payments in respect of deferred payment obligations (to
the extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to GST or any Restricted
Subsidiary) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
"1995 INDENTURES" means, collectively, the Convertible Notes
Indenture and the Senior Notes Indenture.
"NON-U.S. PERSON" means a person who is not a U.S. person, as
defined in Regulation S.
"OFFER TO PURCHASE" means an offer to purchase Securities by
the Issuer from the Holders commenced by mailing a notice to the Trustee and
each Holder stating: (i) the covenant pursuant to which the offer is being made
and that all Securities validly tendered will be accepted for payment on a pro
rata basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "PAYMENT DATE"); (iii) that any Security not tendered
will continue to accrue interest pursuant to its terms; (iv) that, unless the
Issuer defaults in the payment of the purchase price, any Security accepted for
payment pursuant to the Offer to Purchase shall cease to accrue interest on and
after the Payment Date; (v) that Holders electing to have a Security purchased
pursuant to the Offer to Purchase will be required to surrender such Security,
together with the form entitled "Option of the Holder to Elect Purchase" on the
reverse side thereof completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day immediately
preceding the Payment Date; (vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the third Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission
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or letter setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; and (vii) that
Holders whose Securities are being purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion thereof;
PROVIDED that each Security purchased and each new Security issued shall be in a
principal amount of $1,000 or integral multiples thereof. On the Payment Date,
the Issuer shall (i) accept for payment on a pro rata basis Securities or
portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with
the Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee all Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions thereof accepted for
payment by the Issuer. The Paying Agent shall promptly mail to the Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered; PROVIDED that each Security purchased and each new Security issued
shall be in a principal amount of $1,000 or integral multiples thereof. The
Issuer will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Issuer will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Issuer is
required to repurchase Securities pursuant to an Offer to Purchase.
"OFFICER" means, with respect to any Person, (i) the Chairman
of the Board, the Vice Chairman of the Board, the President, any Vice President,
the Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer,
or the Secretary or any Assistant Secretary, in each case of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed by one
Officer listed in clause (i) of the definition thereof and one Officer listed in
clause (ii) of the definition thereof; PROVIDED, HOWEVER, that any such
certificate may be signed by any two of the Officers listed in clause (i) of the
definition thereof in lieu of being signed by one Officer listed in clause (i)
of the definition thereof and one Officer listed in clause (ii) of the
definition thereof. Each Officers' Certificate (other than certificates provided
pursuant to TIA Section 314(a)(4)) shall include the statements provided for in
TIA Section 314(e).
"OFFSHORE GLOBAL SECURITY" has the meaning provided in Section
2.01.
"OFFSHORE PHYSICAL SECURITIES" has the meaning provided in
Section 2.01.
"OPINION OF COUNSEL" means a written opinion signed by legal
counsel who may be an employee of or counsel to the Company, GST USA or GST.
Each such Opinion of Counsel shall include the statements provided for in TIA
Section 314(e).
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"PAYING AGENT" has the meaning provided in Section 2.04, except
that, for the purposes of Article Eight, the Paying Agent shall not be GST or a
Subsidiary of GST or an Affiliate of any of them. The term "Paying Agent"
includes any additional Paying Agent.
"PAYMENT DATE" has the meaning provided in the definition of
"Offer to Purchase."
"PERMITTED INVESTMENT" means (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, GST or a Restricted Subsidiary;
PROVIDED that such person's primary business is related, ancillary or
complementary to the businesses of GST and its Restricted Subsidiaries on the
date of such Investment; (ii) a Temporary Cash Investment; (iii) payroll, travel
and similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP; (iv)
loans or advances to employees made in the ordinary course of business that do
not exceed $1 million in the aggregate at any time outstanding; and (v) stock,
obligations or securities received in satisfaction of judgments.
"PERMITTED LIENS" means (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made; (ii) statutory Liens of landlords
and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or
other similar Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
legal proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; (iii) Liens incurred or deposits made
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (iv) Liens incurred
or deposits made to secure the performance of tenders, bids, leases, statutory
or regulatory obligations, bankers' acceptances, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of GST or any of its Restricted
Subsidiaries; (vi) Liens (including extensions and renewals thereof) upon real
or personal property acquired after the Closing Date; PROVIDED that (a) such
Lien is created solely for the purpose of securing Indebtedness Incurred, in
accordance with Section 4.03, (1) to finance the cost (including, without
limitation, the cost of design, development, construction, acquisition,
installation or integration) of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the commencement of
full operation of such property or (2) to refinance any Indebtedness previously
so secured, (b) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of such cost and (c) any such Lien shall not extend to or
cover any property or assets other than such item of property or assets and any
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improvements on such item; (vii) leases or subleases granted to others that do
not materially interfere with the ordinary course of business of GST and its
Restricted Subsidiaries, taken as a whole; (viii) Liens encumbering property or
assets under construction arising from progress or partial payments by a
customer of GST or its Restricted Subsidiaries relating to such property or
assets; (ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens on property
of, or on shares of stock or Indebtedness of, any corporation existing at the
time such corporation becomes, or becomes a part of, any Restricted Subsidiary;
PROVIDED that such Liens do not extend to or cover any property or assets of GST
or any Restricted Subsidiary other than the property or assets acquired; (xii)
Liens in favor of GST or any Restricted Subsidiary; (xiii) Liens arising from
the rendering of a final judgment or order against GST or any Restricted
Subsidiary that does not give rise to an Event of Default; (xiv) Liens securing
reimbursement obligations with respect to letters of credit that encumber
documents and other property relating to such letters of credit and the products
and proceeds thereof; (xv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (xvi) Liens encumbering customary initial
deposits and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed to protect GST or any of
its Restricted Subsidiaries from fluctuations in interest rates or the price of
commodities; (xvii) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by GST or
any of its Restricted Subsidiaries in the ordinary course of business in
accordance with the past practices of GST and its Restricted Subsidiaries prior
to the Closing Date; and (xviii) Liens on or sales of receivables.
"PERSON" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PHOENIX FIBER" means Phoenix Fiber Access, Inc., a subsidiary
of GST USA.
"PHYSICAL SECURITIES" has the meaning provided in Section 2.01.
"PLEDGE ACCOUNT" means the accounts established with the
Trustee pursuant to the terms of the Pledge Agreement for the deposit of the
Pledged Securities purchased by the Company with the net proceeds from the sale
of the Securities.
"PLEDGE AGREEMENT" means the Collateral Pledge and Security
Agreement, dated as of the Closing Date, made by the Company in favor of the
Trustee, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.
"PLEDGED SECURITIES" means the securities which shall consist
of U.S. Government Obligations, purchased by the Company with the proceeds from
the sale of the Securities or the
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proceeds from such securities, to be held in the Pledge Account, all in
accordance with the terms of the Pledge Agreement.
"PREFERRED STOCK" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of this Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
"PRINCIPAL" of a debt security, including the Securities, means
the principal amount due on the Stated Maturity as shown on such debt security.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth
on the Securities in the form set forth in Section 2.02(a).
"PROTECTED PROPERTY" has the meaning provided in Section 4.09.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"REDEEMABLE PREFERRED SHARES" means the Series A Convertible
Preference Shares of GST outstanding on the Closing Date.
"REDEEMABLE STOCK" means any class or series of Capital Stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Securities, (ii) redeemable at the option of
the holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Securities or (iii) convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the Securities; PROVIDED that
any Capital Stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the Stated Maturity of the Securities shall not
constitute Redeemable Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Section 4.12 and Section
4.14 and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Issuer's repurchase of such Securities as are required to be repurchased
pursuant to Section 4.12 and Section 4.14.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to
be redeemed, means the price at which such Security is to be redeemed pursuant
to this Indenture.
"REGISTRAR" has the meaning provided in Section 2.04.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated May 13, 1997, among the Company, GST USA, GST, Morgan Stanley &
Co. Incorporated, Dillon, Read & Co. Inc. and TD Securities (USA) Inc.
"REGISTRATION STATEMENT" means the Registration Statement as
defined and described in the Registration Rights Agreement.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date means the April 15 or October 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"REGULATION S" means Regulation S under the Securities Act.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means the chairman or any vice chairman of the board of directors, the chairman
or any vice chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, any
assistant vice president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and in each case having direct
responsibility for the administration of this Indenture or the Pledge Agreement
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"RESTRICTED PAYMENTS" has the meaning provided in Section 4.04.
"RESTRICTED SUBSIDIARY" means any Subsidiary of GST other than
an Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"SECURITIES" means any of the securities, as defined in the
first paragraph of the recitals hereof, that are authenticated and delivered
under this Indenture. For all purposes of this Indenture, the term "Securities"
shall include the Securities initially issued on the Closing Date, any Exchange
Securities to be issued and exchanged for any Securities pursuant to the
Registration Rights Agreement and this Indenture and any other Securities issued
after the Closing Date under this Indenture. For purposes of this Indenture, all
Securities shall vote together as one series of Securities under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITY GUARANTEE" means the full and unconditional Guarantee
by GST of (x) the Initial Note and the Intercompany Notes prior to the
Assumption Date and (y) the Securities
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after the Assumption Date, as set forth in the supplemental indenture to be
delivered under Section 4.23.
"SECURITY REGISTER" has the meaning provided in Section 2.04.
"SENIOR NOTES" means the 13 7/8% Senior Discount Notes due 2005
of GST USA issued pursuant to the Senior Notes Indenture.
"SENIOR NOTES INDENTURE" means the senior notes indenture dated
December 19, 1995 among GST USA, as issuer, GST, as guarantor, and United States
Trust Company of New York, as trustee.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined and described in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of GST, accounted for more than 10% of the consolidated
revenues of GST and its Restricted Subsidiaries or (ii) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of GST
and its Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of GST for such fiscal year.
"STATED MATURITY" means, (i) with respect to any debt security,
the date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"SUBSIDIARY" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
voting power of the outstanding Voting Stock is owned, directly or indirectly,
by such Person and one or more other Subsidiaries of such Person.
"SUBSIDIARY GUARANTEE" has the meaning provided in Section
4.07.
"SUBSIDIARY GUARANTOR" means a Restricted Subsidiary that
executes and delivers a Subsidiary Guarantee.
"TEMPORARY CASH INVESTMENT" means any of the following: (i)
direct obligations of the United States of America or any agency thereof or
obligations fully and unconditionally guaranteed by the United States of America
or any agency thereof, (ii) time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating
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in excess of $50 million (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker-dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) commercial paper, maturing
not more than 90 days after the date of acquisition, issued by a corporation
(other than an Affiliate of the Issuer) organized and in existence under the
laws of the United States of America, any state thereof or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard & Poor's
Ratings Service, and (v) securities with maturities of six months or less from
the date of acquisition issued or fully and unconditionally guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Service or Moody's Investors Service, Inc.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06.
"TOMEN" means Tomen Corporation or its Affiliates.
"TOMEN FACILITY" means, collectively, the Tomen Master
Agreement together with all other agreements (including credit agreements),
instruments and documents executed or delivered pursuant thereto or in
connection therewith, in each case as such agreements, instruments or documents
may be amended, supplemented, extended, renewed, replaced or otherwise modified
from time to time.
"TOMEN MASTER AGREEMENT" means the Master Agreement dated
October 24, 1994, among Tomen America Inc., GST (formerly known as Greenstar
Telecommunications Inc.), GST Telecom Inc., Pacwest Network, Inc., Pacwest
Network L.L.C. and Pacific Lightwave, Inc.
"TRADE PAYABLES" means any accounts payable or any other
indebtedness or monetary obligations to trade creditors created, assumed or
Guaranteed by GST or any of its Restricted Subsidiaries arising in the ordinary
course of business in connection with the acquisition of goods or services by
GST or its Restricted Subsidiaries.
"TRANSACTION DATE" means, with respect to the Incurrence of any
Indebtedness by GST or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
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"TRUSTEE" means the party named as such in the first paragraph
of this Indenture until a successor replaces it in accordance with the
provisions of Article Seven of this Indenture and thereafter means such
successor.
"UNITED STATES BANKRUPTCY CODE" means the Bankruptcy Reform Act
of 1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"UNRESTRICTED SUBSIDIARY" means (i) NACT or any other
Subsidiary of GST that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors of GST in the manner provided
below and (ii) any Subsidiary of an Unrestricted Subsidiary; PROVIDED that NACT
shall be deemed to be a Restricted Subsidiary for purposes of Section 4.04
(except that NACT shall be an Unrestricted Subsidiary for purposes of the
limitation on Investments by GST and its Restricted Subsidiaries) and the
definition of "Asset Sale." The Board of Directors of GST may designate any
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary),
other than GST USA or a Subsidiary Guarantor, to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, GST or any Restricted Subsidiary; PROVIDED that (A) any
Guarantee by GST or any Restricted Subsidiary of any Indebtedness of the
Subsidiary being so designated shall be deemed an Incurrence of such
Indebtedness and an Investment by GST or such Restricted Subsidiary at the time
of such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, that such designation would be permitted under Section 4.04 and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) above would be permitted under Section 4.03 and Section 4.04. The
Board of Directors of GST may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary of GST; PROVIDED that immediately after giving effect to
such designation (x) the Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation are permitted to be Incurred for
all purposes of this Indenture and (y) no Default or Event of Default shall have
occurred and be continuing. Any such designation by the Board of Directors of
GST shall be evidenced to the Trustee by promptly filing with the Trustee a copy
of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. GLOBAL SECURITY" has the meaning provided in Section
2.01.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Securities, and shall also include a depository
receipt issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such
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custodian for the account of the holder of a depository receipt; PROVIDED that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. PERSON" has the meaning ascribed thereto in Rule 902
under the Securities Act.
"U.S. PHYSICAL SECURITIES" has the meaning provided in Section
2.01.
"VOTING STOCK" means with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"WHOLLY OWNED" means, with respect to any Subsidiary of any
Person, such Subsidiary if all of the outstanding Capital Stock in such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by applicable law) is owned by such Person or one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Holder or a Securityholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee; and
"OBLIGOR" on the indenture securities means the Company, and
after the Assumption Date, GST USA and GST or any other obligor on the
Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(vii) all references to Sections or Articles refer to Sections
or Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's
certificate of authentication shall be substantially in the form annexed hereto
as Exhibit A with such appropriate insertions, substitutions and other
variations as are required or permitted under this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange
agreements to which the Issuer is subject or usage. The Issuer shall approve the
form of the Securities and any notation, legend or endorsement on the
Securities. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of the
Securities annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Indenture. Each of the Company, GST USA, GST and
the Trustee, by its execution and delivery of this Indenture, expressly agrees
to the terms and provisions of the Securities applicable to it and to be bound
thereby.
Securities offered and sold in reliance on Rule 144A shall be
issued in the form of permanent global Securities in registered form,
substantially in the form set forth in Exhibit A (the "U.S. GLOBAL SECURITY"),
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Issuer and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the U.S. Global Security may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Securities offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of one or more temporary
global Securities in registered form substantially in the form set forth in
Exhibit A (each a "TEMPORARY OFFSHORE GLOBAL SECURITY")
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deposited with the Trustee, as custodian for the Depositary, duly executed by
the Issuer and authenticated by the Trustee as hereinafter provided. At any time
following June 22, 1997 (the "OFFSHORE SECURITIES EXCHANGE DATE"), upon receipt
by the Trustee and the Issuer of a certificate substantially in the form of
Exhibit B hereto, on or more permanent global Securities in registered form
substantially in the form set forth in Exhibit A (the "PERMANENT OFFSHORE GLOBAL
SECURITY"; and together with the Temporary Offshore Global Security, the
"OFFSHORE GLOBAL SECURITIES") duly executed by the Issuer and authenticated by
the Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depositary, and the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Temporary
Offshore Global Security in an amount equal to the principal amount of the
beneficial interest in the Temporary Offshore Global Security transferred.
Securities which are offered and sold to Institutional
Accredited Investors which are not QIBs (excluding Non-U.S. Persons) shall be
issued in the form of permanent certificated Securities in registered form in
substantially the form set forth in Exhibit A (the "U.S. PHYSICAL SECURITIES").
Securities issued pursuant to Section 2.07 in exchange for interests in the
Offshore Global Security shall be in the form of permanent certificated
Securities in registered form substantially in the form set forth in Exhibit A
(the "OFFSHORE PHYSICAL SECURITIES").
The Offshore Physical Securities and U.S. Physical Securities
are sometimes collectively herein referred to as the "PHYSICAL SECURITIES". The
U.S. Global Security and the Offshore Global Security are sometimes referred to
as the "GLOBAL SECURITIES".
The definitive Securities shall be typed, printed, lithographed
or engraved or produced by any combination of these methods or may be produced
in any other manner permitted by the rules of any securities exchange on which
the Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
SECTION 2.02. RESTRICTIVE LEGENDS. (a) Unless and until a
Security is exchanged for an Exchange Security in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the U.S.
Global Security, the Temporary Offshore Global Security and each U.S. Physical
Security shall bear the legend set forth below on the face thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN
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"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER
OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO GST FUNDING,
GST OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO GST FUNDING OR GST USA, AS THE
CASE MAY BE, THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND GST FUNDING OR GST USA, AS THE CASE MAY BE,
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
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PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Each Global Security, whether or not an Exchange Security,
shall also bear the following legend on the face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF THE INDENTURE.
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS.
Subject to Article Four, the aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is unlimited. Two Officers
shall execute the Securities for the Issuer by facsimile or manual signature in
the name and on behalf of the Issuer.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee or authenticating agent authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
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At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of a
Company Order authenticate for original issue Securities in the aggregate
principal amount specified in such Company Order; PROVIDED that the Trustee
shall be entitled to receive an Officers' Certificate and an Opinion of Counsel
of the Company in connection with such authentication of Securities. The Opinion
of Counsel shall, if requested by the Trustee, be to the effect that:
(a) the form and terms of such Securities have been
established by or pursuant to a Board Resolution or, if applicable, an
indenture supplemental hereto in conformity with the provisions of this
Indenture;
(b) such supplemental indenture, if any, when executed and
delivered by the Company, GST USA, GST and the Trustee, will constitute
a valid and binding obligation of the Company, GST USA and GST;
(c) such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and binding obligations of the Company in accordance with their terms
and will be entitled to the benefits of this Indenture, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equitable principles; and
(d) the Company has been duly incorporated in, and is a
validly existing corporation in good standing under the laws of, the
State of Delaware.
Such Company Order shall specify the amount of Securities to be authenticated
and the date on which the original issue of Securities is to be authenticated
and in case of an issuance of Securities pursuant to Section 2.15, shall certify
that such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such authenticating
agent. An authenticating agent has the same rights as an Agent to deal with the
Issuer or an Affiliate of the Issuer. The Trustee shall not be liable for the
misconduct or negligence of any authenticating agent appointed with due care.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 in principal amount and any
integral multiple of $1,000 in excess thereof.
SECTION 2.04. REGISTRAR AND PAYING AGENT. The Issuer shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "REGISTRAR"), an office or agency where
Securities may be presented for payment (the "PAYING
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AGENT") and an office or agency where notices and demands to or upon the Issuer
in respect of the Securities and this Indenture may be served, which shall be in
the Borough of Manhattan, The City of New York and, in the event the Securities
are listed on the Luxembourg Stock Exchange, in Luxembourg. The Issuer shall
cause the Registrar to keep a register of the Securities and of their transfer
and exchange (the "SECURITY REGISTER"). The Issuer may have one or more
co-Registrars and one or more additional Paying Agents.
The Issuer shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Issuer shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Issuer fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue and shall be
entitled to compensation therefor pursuant to Section 7.07. The Issuer may
remove any Agent upon written notice to such Agent and the Trustee; PROVIDED
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Issuer and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Issuer, any Subsidiary of the
Issuer, or any Affiliate of any of them may act as Paying Agent, Registrar or
co- Registrar, and/or agent for service of notice and demands; PROVIDED,
HOWEVER, that neither the Issuer, a Subsidiary of the Issuer nor an Affiliate of
any of them shall act as Paying Agent in connection with the defeasance of the
Securities or the discharge of this Indenture under Article Eight.
The Company initially appoints the Trustee as Registrar,
Paying Agent, authenticating agent and agent for service of notice and demands.
The Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Holders and shall
otherwise comply with TIA ss.312(a). If, at any time, the Trustee is not the
Registrar, the Registrar shall make available to the Trustee before each
Interest Payment Date and at such other times as the Trustee may reasonably
request, the names and addresses of the Holders as they appear in the Security
Register.
SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Not later
than 11:00 a.m. New York City time on each due date of the principal, premium,
if any, and interest on any Securities, the Issuer shall deposit, or cause to be
deposited, with the Paying Agent money in immediately available funds sufficient
to pay such principal, premium, if any, and interest so becoming due. The Issuer
shall require each Paying Agent, if any, other than the Trustee to agree in
writing that such Paying Agent shall hold in trust for the benefit of the
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, and interest on the Securities (whether such
money has been paid to it by the Issuer or any other obligor on the Securities),
and that such Paying Agent shall promptly notify the Trustee in writing of any
default by the Issuer (or any other obligor on the Securities) in making any
such payment. The Issuer at any time may require a Paying Agent to pay all money
held by it to the
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Trustee and account for any funds disbursed, and the Trustee may at any time
during the continuance of any payment default, upon written request to a Paying
Agent, require such Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed. Upon doing so, the Paying Agent shall have
no further liability for the money so paid over to the Trustee. If the Issuer or
any Subsidiary of the Issuer or any Affiliate of any of them acts as Paying
Agent, it will, on or before each due date of any principal of, premium, if any,
or interest on the Securities, segregate and hold in a separate trust fund for
the benefit of the Holders a sum of money sufficient to pay such principal,
premium, if any, or interest so becoming due until such sum of money shall be
paid to such Holders or otherwise disposed of as provided in this Indenture, and
will promptly notify the Trustee in writing of its action or failure to act as
required by this Section 2.05.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities are
issuable only in registered form. A Holder may transfer a Security by written
application to the Registrar stating the name of the proposed transferee and
otherwise complying with the terms of this Indenture. No such transfer shall be
effected until, and such transferee shall succeed to the rights of a Holder only
upon registration of the transfer by the Registrar in the Security Register.
Prior to the registration of any transfer by a Holder as provided herein, the
Issuer, the Trustee, and any agent of the Issuer shall treat the person in whose
name the Security is registered as the owner thereof for all purposes whether or
not the Security shall be overdue, and neither the Issuer, the Trustee, nor any
such agent shall be affected by notice to the contrary. Furthermore, any Holder
of or beneficial owner of an interest in a Global Security shall, by acceptance
of such Global Security, be deemed to have agreed that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depositary (or its agent), and that ownership of a
beneficial interest in the Security shall be required to be reflected in a book
entry. When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Securities of other authorized denominations (including on exchange of
Securities for Exchange Securities), the Registrar shall register the transfer
or make the exchange as requested if its requirements for such transactions are
met (including that such Securities are duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Trustee and Registrar
duly executed by the Holder thereof or by an attorney who is authorized in
writing to act on behalf of the Holder); PROVIDED that no exchanges of
Securities for Exchange Securities shall occur until a Registration Statement
shall have been declared effective by the Commission and that any Securities
that are exchanged for Exchange Securities shall be cancelled by the Trustee. To
permit registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Issuer shall execute and the Trustee
shall authenticate Securities at the Registrar's request. No service charge
shall be made to any Holder for any registration of transfer or exchange or
redemption of the Securities, but the Issuer may require payment by the Holder
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or other
similar governmental charge payable upon transfers, exchanges or redemptions
pursuant to Section 2.11, 3.09, 4.12, 4.14 or 9.04).
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The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 3.04 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES. (a)
The U.S. Global Security and Offshore Global Security initially shall (i) be
registered in the name of the Depositary for such Global Securities or the
nominee of such Depositary, (ii) be delivered to the Trustee as custodian for
such Depositary and (iii) bear legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("AGENT
MEMBERS") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under any Global Security, and the Depositary may be treated by
the Issuer, the Trustee and any agent of the Issuer or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the
Trustee or any agent of the Issuer or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Security.
(b) Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the applicable rules and
procedures of the Depositary and the provisions of Section 2.08. In addition,
Physical Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in the U.S. Global Security or the Offshore
Global Security, respectively, if (i) the Depositary notifies the Issuer that it
is unwilling or unable to continue as Depositary for the U.S. Global Security or
the Offshore Global Security, as the case may be, and a successor depositary is
not appointed by the Issuer within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a request
to the foregoing effect from the Depositary.
(c) Any beneficial interest in one of the Global Securities
that is transferred to a person who takes delivery in the form of an interest in
the other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Security for as long as it remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b)
of this Section 2.07 of a portion of the beneficial interests in the U.S. Global
Security to beneficial owners who are required to hold Physical Securities, the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the
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principal amount of the beneficial interest in the Global Security to be
transferred, and the Issuer shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Securities of like tenor and amount.
(e) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to paragraph (b) of this Section 2.07,
the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Issuer shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the Global Security an equal aggregate principal
amount of Physical Securities of authorized denominations.
(f) Any U.S. Physical Security delivered in exchange for an
interest in the U.S. Global Security pursuant to paragraph (b) or (d) of this
Section 2.07 shall, except as otherwise provided by paragraph (d) of Section
2.08, bear the legend regarding transfer restrictions applicable to the U.S.
Physical Security set forth in Section 2.02.
(g) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
(h) QIBs that are beneficial owners of interests in a Global
Security may receive Physical Securities (which shall bear the Private Placement
Legend if required by Section 2.02) in accordance with the procedures of the
Depositary. In connection with the execution, authentication and delivery of
such Physical Securities, the Registrar shall reflect on its books and records a
decrease in the principal amount of the relevant Global Security equal to the
principal amount of such Physical Securities and the Issuer shall execute and
the Trustee shall authenticate and deliver one or more Physical Securities
having an equal aggregate principal amount.
(i) Any Offshore Physical Security delivered in exchange for
an interest in the Offshore Global Security pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (d) of Section 2.08,
bear the legend regarding transfer restrictions applicable to the Offshore
Physical Security set forth in Section 2.02.
SECTION 2.08. SPECIAL TRANSFER PROVISIONS. Unless and until a
Security is exchanged for an Exchange Security in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the
following provisions shall apply:
(a) TRANSFERS TO QIBS. The following provisions shall apply
with respect to the registration of any proposed transfer of a U.S. Physical
Security or an interest in the U.S. Global Security to a QIB (excluding Non-U.S.
Persons):
(i) If the Security to be transferred consists of (A) U.S.
Physical Securities, the Registrar shall register the transfer if such
transfer is being made by a proposed
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transferor who has checked the box provided for on the form of Security
stating, or has otherwise advised the Issuer and the Registrar in
writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided
for on the form of Security stating, or has otherwise advised the
Issuer and the Registrar in writing, that it is purchasing the Security
for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a QIB
within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Issuer as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A or (B) an interest in the U.S. Global Security,
the transfer of such interest may be effected only through the book
entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the
Security to be transferred consists of U.S. Physical Securities, upon
receipt by the Registrar of the documents referred to in clause (i) and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of the U.S.
Physical Securities to be transferred, and the Trustee shall cancel the
U.S. Physical Security so transferred.
(b) TRANSFERS OF INTERESTS IN THE TEMPORARY OFFSHORE GLOBAL
SECURITY. The following provisions shall apply with respect to registration of
any proposed transfer of interests in the Temporary Offshore Global Security:
(i) The Registrar shall register the transfer of any Security
(A) if the proposed transferee is a Non-U.S. Person and the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit C hereto or (B) if the proposed transferee is a
QIB and the proposed transferor has checked the box provided for on the
form of Security stating, or has otherwise advised the Issuer and the
Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Security stating, or has
otherwise advised the Issuer and the Registrar in writing, that it is
purchasing the Security for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer
as it has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, upon
receipt by the Registrar of the documents referred to in clause (i)(B)
above and instructions given in
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accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an
increase in the principal amount of the U.S. Global Security, in an
amount equal to the principal amount of the Temporary Offshore Global
Security to be transferred, and the Trustee shall decrease the amount
of the Temporary Offshore Global Security.
(c) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following
provisions shall apply with respect to any transfer of a Security to a
Non-U.S. Person:
(i) Prior to June 22, 1997, the Registrar shall register any
proposed transfer of a Security to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit C hereto from the
proposed transferor.
(ii) On and after June 22, 1997, the Registrar shall register
any proposed transfer to any Non-U.S. Person if the Security to be
transferred is a U.S. Physical Security or an interest in the U.S.
Global Security, upon receipt of a certificate substantially in the
form of Exhibit C from the proposed transferor.
(iii) (A) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security, upon receipt
by the Registrar of (1) the documents required by paragraph (i) and (2)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of the U.S. Global Security
in an amount equal to the principal amount of the beneficial interest
in the U.S. Global Security to be transferred, and (B) if the proposed
transferee is an Agent Member, upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the
Offshore Global Security in an amount equal to the principal amount of
the U.S. Physical Securities or the U.S. Global Security, as the case
may be, to be transferred, and the Trustee shall cancel the Physical
Security, if any, so transferred or decrease the amount of the U.S.
Global Security.
(d) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the circumstances contemplated by
the fourth paragraph of Section 2.01 or paragraph (f)(i)(A) or (c)(ii) of this
Section 2.08 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel reasonably satisfactory to the Issuer and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
(e) GENERAL. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of, or beneficial owner of an interest in,
such Security acknowledges the restrictions on transfer of such Security set
forth in this Indenture and in the Private Placement
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Legend and agrees that it will transfer such Security only as provided in this
Indenture. The Registrar shall not register a transfer of any Security unless
such transfer complies with the restrictions on transfer of such Security set
forth in this Indenture. In connection with any transfer of Securities to an
Institutional Accredited Investor, each such Holder or beneficial owner agrees
by its acceptance of Securities to furnish to the Registrar or to the Issuer
such certifications, legal opinions or other information as such Person may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; PROVIDED that the Registrar shall not be required to
determine (but may rely on a determination made by the Issuer with respect to)
the sufficiency of any such certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.07 or this Section
2.08. The Issuer shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
(f) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
The following provisions shall apply with respect to the registration of any
proposed transfer of a Security to any Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Security,
whether or not such Security bears the Private Placement Legend, if (A)
the requested transfer is after the time period referred to in Rule
144(k) under the Securities Act as in effect at the time of such
transfer or (B) the proposed transferee has delivered to the Registrar
(1) a certificate substantially in the form of Exhibit D hereto and (2)
if such transfer is in respect of an aggregate principal amount of
Securities of less than $100,000 an Opinion of Counsel acceptable to
the Issuer that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Registrar of (A) the documents, if any, required by paragraph (i) and
(B) instructions given in accordance with the Depositary's and the
Registrar's procedures the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Security to be transferred, and
the Issuer shall execute, and the Trustee shall authenticate and
deliver, one or more U.S. Physical Securities of like tenor and amount.
(g) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL
SECURITY OR OFFSHORE PHYSICAL SECURITIES TO U.S. PERSONS. The following
provisions shall apply with respect to any transfer of interests in the
Permanent Offshore Global Security or Offshore Physical Securities to U.S.
Persons: The Registrar shall register the transfer of any such Security without
requiring any additional certification.
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SECTION 2.09. REPLACEMENT SECURITIES. If a mutilated Security
is surrendered to the Trustee or if the Holder claims that the Security has been
lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee
shall authenticate a replacement Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding; PROVIDED that the
requirements of the second paragraph of Section 2.10 are met. If required by the
Trustee or the Issuer, an indemnity bond must be furnished that is sufficient in
the judgment of both the Trustee and the Issuer to protect the Issuer, the
Trustee or any Agent from any loss that any of them may suffer if a Security is
replaced. The Issuer may charge such Holder for its expenses and the expenses of
the Trustee in replacing a Security. In case any such mutilated, lost, destroyed
or wrongfully taken Security has become or is about to become due and payable,
the Issuer in its discretion may pay the principal of, premium, if any, and
interest accrued on such Security instead of issuing a new Security in
replacement thereof.
Every replacement Security is an additional obligation of the
Issuer and shall be entitled to the benefits of this Indenture.
SECTION 2.10. OUTSTANDING SECURITIES. Securities outstanding
at any time are all Securities that have been authenticated by the Trustee
except for those cancelled by it, those delivered to it for cancellation and
those described in this Section 2.10 as not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases
to be outstanding unless and until the Trustee and the Issuer receive proof
satisfactory to them that the replaced Security is held by a BONA FIDE
purchaser.
If the Paying Agent (other than the Issuer or an Affiliate of
the Issuer) holds on the maturity date money sufficient to pay the principal of,
premium, if any, and interest accrued on Securities payable on that date, then
on and after that date such Securities cease to be outstanding and interest on
them shall cease to accrue.
A Security does not cease to be outstanding because the Issuer
or one of its Affiliates holds such Security, PROVIDED, HOWEVER, that, in
determining whether the Holders of the requisite principal amount of the
outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Issuer or any other
obligor upon the Securities or any Affiliate of the Issuer or of such other
obligor shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Issuer or any other obligor upon the Securities or any
Affiliate of the Issuer or of such other obligor.
SECTION 2.11. TEMPORARY SECURITIES. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have
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insertions, substitutions, omissions and other variations determined to be
appropriate by the Officers executing the temporary Securities, as evidenced by
their execution of such temporary Securities. If temporary Securities are
issued, the Issuer will cause definitive Securities to be prepared without
unreasonable delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive Securities upon
surrender of the temporary Securities at the office or agency of the Issuer
designated for such purpose pursuant to Section 4.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities
the Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall be entitled to
the same benefits under this Indenture as definitive Securities.
SECTION 2.12. CANCELLATION. The Issuer at any time may deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and may deliver to the Trustee for cancellation any Securities previously
authenticated hereunder which the Issuer has not issued and sold. The Registrar
and the Paying Agent shall forward to the Trustee any Securities surrendered to
them for transfer, exchange or payment. The Trustee shall cancel all Securities
surrendered for transfer, exchange, payment or cancellation and shall destroy
them in accordance with its normal procedure. The Issuer shall not issue new
Securities to replace Securities it has paid in full or delivered to the Trustee
for cancellation.
SECTION 2.13. CUSIP, CINS AND ISIN NUMBERS. The Issuer in
issuing the Securities may use "CUSIP", "CINS", "ISIN" or other identification
numbers (if then generally in use), and, if so, the Trustee shall use CUSIP
numbers, CINS numbers, ISIN numbers or other identification numbers, as the case
may be, in notices of redemption or exchange as a convenience to Holders;
PROVIDED that any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption or exchange and that reliance may be
placed only on the other identification numbers printed on the Securities;
PROVIDED FURTHER that failure to use "CUSIP", "CINS", "ISIN" or other
identification numbers in any notice of redemption or exchange shall not effect
the validity or sufficiency of such notice.
SECTION 2.14. DEFAULTED INTEREST. If the Issuer defaults in a
payment of interest on the Securities, it shall pay, or shall deposit with the
Paying Agent money in immediately available funds sufficient to pay the
defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest, to the Persons who are Holders on a subsequent special
record date. A special record date, as used in this Section 2.14 with respect to
the payment of any defaulted interest, shall mean the 15th day next preceding
the date fixed by the Issuer for the payment of defaulted interest, whether or
not such day is a Business Day. At least 15 days before the subsequent special
record date, the Issuer shall mail to each Holder and to the Trustee a notice
that states the subsequent special record date, the payment date and the amount
of defaulted interest to be paid.
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SECTION 2.15. ISSUANCE OF ADDITIONAL SECURITIES. The Issuer
may, subject to Article Four of this Indenture, issue additional Securities
under this Indenture. The Securities issued on the Closing Date and any
additional Securities subsequently issued shall be treated as a single class for
all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. RIGHT OF REDEMPTION. (a) The Securities may be
redeemed at the option of GST USA in whole or in part, at any time or from time
to time, on or after May 1, 2002 and prior to maturity, at the following
Redemption Prices (expressed in percentages of their principal amount), plus
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date that is on or
prior to the Redemption Date to receive interest due on an Interest Payment
Date) if redeemed during the 12-month period commencing May 1 of the years set
forth below:
YEAR REDEMPTION PRICE
2002 106.6250%
2003 103.3125%
2004 and thereafter 100.0000%
(b) In addition, the Securities may be redeemed as a whole,
but not in part, at the option of GST, at any time after the Assumption Date, at
100% of their principal amount on the Redemption Date, together with accrued
interest thereon, if any, to the Redemption Date, in the event GST has become or
would become obligated to pay, on the next date on which any amount would be
payable with respect to the Security Guarantee, any Additional Amounts as a
result of a change in the laws (including any regulations promulgated
thereunder) of Canada (or any political subdivision or taxing authority thereof
or therein), or change in any official position regarding the application or
interpretation or such laws or regulations, which change is announced or becomes
effective on or after the Closing Date.
SECTION 3.02. MANDATORY REDEMPTION. If on May 13, 2000 GST USA
is prohibited by the 1995 Indentures from assuming all indebtedness represented
by, and becoming the direct obligor on, the Securities or GST is prohibited by
the 1995 Indentures from guaranteeing the Securities as required by Section
4.23, the Company will redeem on such date the portion of the Securities that
cannot be assumed or guaranteed at 101% of their principal amount plus accrued
and unpaid interest to the date of redemption.
SECTION 3.03. NOTICES TO TRUSTEE. If GST USA elects to redeem
Securities pursuant to Section 3.01(a), GST elects to redeem the Securities
pursuant to Section 3.01(b) or the Company is required to redeem Securities
pursuant to Section 3.02, the Company, GST USA
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or GST, as the case may be, shall notify the Trustee in writing of the
Redemption Date and the principal amount of Securities to be redeemed.
The Company, GST USA or GST, as the case may be, shall give
each notice provided for in this Section 3.03 in an Officers' Certificate at
least 25 days before mailing the notice to Holders required pursuant to Section
3.05 (unless a shorter period shall be satisfactory to the Trustee).
SECTION 3.04. SELECTION OF SECURITIES TO BE REDEEMED. If less
than all of the Securities are to be redeemed at any time pursuant to Section
3.01(a) or Section 3.02, the Trustee shall select the Securities to be redeemed
in compliance with the requirements, as certified to it by the Issuer, of the
principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed on a national securities exchange,
on a PRO RATA basis, by lot or by such other method as the Trustee in its sole
discretion shall deem fair and appropriate; PROVIDED, HOWEVER, that no
Securities of $1,000 in principal amount or less shall be redeemed in part.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption. Securities in
denominations of $1,000 in principal amount may only be redeemed in whole. The
Trustee may select for redemption portions (equal to $1,000 in principal amount
or any integral multiple thereof) of Securities that have denominations larger
than $1,000 in principal amount. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Issuer and the Registrar promptly in
writing of the Securities or portions of Securities to be called for redemption.
SECTION 3.05. NOTICE OF REDEMPTION. With respect to any
redemption of Securities, at least 30 days but not more than 60 days before a
Redemption Date in the case of the redemption under Section 3.01 and at least 10
but not more than 30 days prior to May 13, 2000 in the case of a redemption
under Section 3.02, the Issuer shall mail a notice of redemption by first class
mail to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered
to the Paying Agent in order to collect the Redemption Price;
(e) that, unless the Issuer defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date
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and the only remaining right of the Holders is to receive payment of
the Redemption Price plus accrued interest to the Redemption Date upon
surrender of the Securities to the Paying Agent;
(f) that, if any Security is being redeemed in part, the
portion of the principal amount (equal to $1,000 in principal amount or
any integral multiple thereof) of such Security to be redeemed and
that, on and after the Redemption Date, upon surrender of such
Security, a new Security or Securities in principal amount equal to the
unredeemed portion thereof will be reissued; and
(g) that, if any Security contains a CUSIP, CINS, ISIN or
other identification number as provided in Section 2.13, no
representation is being made as to the correctness of the CUSIP, CINS,
ISIN or other identification number either as printed on the Securities
or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the
Securities.
At the Issuer's request (which request may be revoked by the
Issuer at any time prior to the time at which the Trustee shall have given such
notice to the Holders), made in writing to the Trustee at least five days before
mailing the notice to Holders referred to in Section 3.01 or 3.02, the Trustee
shall give such notice of redemption in the name and at the expense of the
Issuer. If, however, the Issuer gives such notice to the Holders, the Issuer
shall concurrently deliver to the Trustee an Officers' Certificate stating that
such notice has been given.
SECTION 3.06. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the Redemption Date and at the Redemption Price. Upon surrender of any
Securities to the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued interest, if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of Securities held by Holders to whom such notice
was properly given.
SECTION 3.07. DEPOSIT OF REDEMPTION PRICE. Prior to any
Redemption Date, the Issuer shall deposit, or cause to be deposited, with the
Paying Agent (or, if the Issuer is acting as its own Paying Agent, shall
segregate and hold in trust as provided in Section 2.05) money sufficient to pay
the Redemption Price of and accrued interest on all Securities to be redeemed on
that date other than Securities or portions thereof called for redemption on
that date that have been delivered by the Issuer to the Trustee for
cancellation.
SECTION 3.08. PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If
notice of redemption has been given in the manner provided above, the Securities
or portion of Securities specified in such notice to be redeemed shall become
due and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest to such Redemption Date,
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and on and after such date (unless the Issuer shall default in the payment of
such Securities at the Redemption Price and accrued interest to the Redemption
Date, in which case the principal, until paid, shall bear interest from the
Redemption Date at the rate prescribed in the Securities), such Securities shall
cease to accrue interest. Upon surrender of any Security for redemption in
accordance with a notice of redemption, such Security shall be paid and redeemed
by the Issuer at the Redemption Price, together with accrued interest, if any,
to the Redemption Date; PROVIDED that installments of interest shall be payable
to the Holders registered as such at the close of business on the relevant
Regular Record Date that is on or prior to the Redemption Date.
SECTION 3.09. SECURITIES REDEEMED IN PART. Upon surrender of
any Security that is redeemed in part, the Issuer shall execute and the Trustee
shall authenticate and deliver to the Holder a new Security equal in principal
amount to the unredeemed portion of such surrendered Security.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Issuer shall pay the
principal of, premium, if any, and interest on the Securities on the dates and
in the manner provided in the Securities and this Indenture. An installment of
principal, premium, if any, or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Issuer, a Subsidiary of the
Issuer, or any Affiliate of any of them) holds on that date money designated for
and sufficient to pay the installment. If the Issuer or any Subsidiary of the
Issuer or any Affiliate of any of them, acts as Paying Agent, an installment of
principal, premium, if any, or interest shall be considered paid on the due date
if the entity acting as Paying Agent complies with the last sentence of Section
2.05. As provided in Section 6.09, upon any bankruptcy or reorganization
procedure relative to the Issuer, the Trustee shall serve as the Paying Agent
and conversion agent, if any, for the Securities.
The Issuer shall pay interest on overdue principal, premium,
if any, and interest on overdue installments of interest, to the extent lawful,
at the rate per annum specified in the Securities.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in the Borough of Manhattan, the City of New York, an office or agency
(which may be an office of the Trustee, Registrar or co-Registrar or any
Affiliate of any of them) where Securities may be surrendered for registration
of transfer or exchange or for presentation for payment and where notices and
demands to or upon the Issuer in respect of the Securities and this Indenture
may be served. The Issuer will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 12.02.
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The Issuer may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations. The Issuer will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee, located in the Borough of Manhattan, the City of New
York, as such office of the Issuer in accordance with Section 2.04.
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) GST will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the Securities and Indebtedness existing on the Closing
Date); PROVIDED that GST and GST USA may Incur Indebtedness if, after giving
effect to the Incurrence of such Indebtedness and the receipt and application of
the proceeds therefrom, the Indebtedness to EBITDA Ratio would be greater than
zero and less than 5:1. The Company may not Incur any Indebtedness other than
the Securities.
Notwithstanding the foregoing, GST and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness outstanding at any time (including, but not
limited to, Indebtedness under the Tomen Facility) in an aggregate
principal amount not to exceed $320 million, less any amount of
Indebtedness permanently repaid as provided under Section 4.12;
(ii) Indebtedness (A) to GST evidenced by a promissory note or
(B) to any of its Restricted Subsidiaries; PROVIDED that any subsequent
event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness
(other than to GST or another Restricted Subsidiary) shall be deemed,
in each case, to constitute an Incurrence of such Indebtedness not
permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds
of which are used to refinance or refund, then outstanding
Indebtedness, other than Indebtedness Incurred under clause (i), (ii),
(iv), (v), (vii) or (viii) of this paragraph, and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses); PROVIDED that
Indebtedness the proceeds of which are used to refinance or refund the
Securities and Security Guarantee or Indebtedness that is PARI PASSU
with, or subordinated in right of payment to, the Securities and
Security Guarantee shall only be permitted under this clause (iii) if
(A) in case the Securities and Security Guarantee are refinanced in
part, or the Indebtedness to be refinanced is PARI PASSU with the
Securities or Security Guarantee, such new Indebtedness, by its terms
or by the terms of any agreement or instrument pursuant to which such
new Indebtedness is outstanding, is expressly made PARI PASSU with, or
subordinate in right of payment to, the remaining Securities or
Security Guarantee, (B) in case the Indebtedness to be
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refinanced is subordinated in right of payment to the Securities or
Security Guarantee, such new Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to which such new Indebtedness
is outstanding, is expressly made subordinate in right of payment to
the Securities or Security Guarantee at least to the extent that the
Indebtedness to be refinanced is subordinated to the Securities or
Security Guarantee and (C) such new Indebtedness, determined as of the
date of Incurrence of such new Indebtedness, does not mature prior to
the Stated Maturity of the Indebtedness to be refinanced or refunded,
and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or
refunded; and PROVIDED FURTHER that in no event may Indebtedness of GST
or GST USA be refinanced by means of any Indebtedness of any Restricted
Subsidiary of GST USA pursuant to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or
appeal bonds provided in the ordinary course of business, (B) under
Currency Agreements and Interest Rate Agreements; PROVIDED that such
agreements do not increase the Indebtedness of the obligor outstanding
at any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of GST or any of the
Restricted Subsidiaries pursuant to such agreements, in any case
Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary of GST (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business,
assets or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds
actually received by GST or any Restricted Subsidiary in connection
with such disposition;
(v) Indebtedness of GST not to exceed, at any one time
outstanding, two times the Net Cash Proceeds received by GST after the
Closing Date from the issuance and sale of its Capital Stock (other
than Redeemable Stock) to a Person other than a Subsidiary of GST to
the extent such Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clauses (iii), (iv) or (vi) of the
second paragraph of Section 4.04 to make a Restricted Payment; PROVIDED
that such Indebtedness does not mature prior to the Stated Maturity of
the Securities and has an Average Life longer than the Securities;
(vi) Indebtedness Incurred to finance the cost (including,
without limitation, the cost of design, development, construction,
acquisition, installation or integration) of network assets (including,
without limitation, equipment and real property and leasehold
improvements that are necessary to install or operate network assets;
PROVIDED that in no event shall the cost of any such real property and
leasehold improvements financed hereby exceed 20% of the total cost of
the related network assets) or inventory purchased or leased by GST or
any of its Restricted Subsidiaries after the Closing Date;
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(vii) Indebtedness of GST or GST USA under one or more
revolving credit or working capital facilities in an aggregate
principal amount outstanding at any time not to exceed the lesser of
(A) $50 million and (B) 75% of the consolidated book value of the
accounts receivable of GST and its Restricted Subsidiaries; and
(viii) Indebtedness of GST or GST USA to the extent the
proceeds thereof are promptly (a) used to purchase Securities tendered
in an Offer to Purchase made as a result of a Change of Control or (b)
deposited to defease the Securities under Article Eight.
(b) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) Indebtedness Incurred under the Tomen
Facility on or prior to the Closing Date shall be treated as Incurred pursuant
to clause (i) of the second paragraph of this Section 4.03 and (2) Guarantees,
Liens or obligations with respect to letters of credit supporting Indebtedness
otherwise included in the determination of such particular amount shall not be
included. For purposes of determining compliance with this Section 4.03, in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described in the above clauses, GST, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. GST will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on its Capital Stock (other
than dividends or distributions payable solely in shares of its or such
Restricted Subsidiary's Capital Stock (other than Redeemable Stock) of the same
class held by such holders or in options, warrants or other rights to acquire
such shares of Capital Stock) held by Persons other than GST or any of its
Restricted Subsidiaries (and other than pro rata dividends or distributions on
Common Stock of Restricted Subsidiaries), (ii) purchase, redeem, retire or
otherwise acquire for value any shares of Capital Stock of GST (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by Persons other than any Wholly Owned Restricted Subsidiaries of GST, (iii)
make any voluntary or optional principal payment, or voluntary or optional
redemption, repurchase, defeasance, or other acquisition or retirement for
value, of Indebtedness of GST USA or GST that is subordinated in right of
payment to the Securities or the Security Guarantee, as the case may be, or (iv)
make any Investment, other than a Permitted Investment, in any Person (such
payments or any other actions described in clauses (i) through (iv) being
collectively "RESTRICTED PAYMENTS") if, at the time of, and after giving effect
to, the proposed Restricted Payment: (A) a Default or Event of Default shall
have occurred and be continuing, (B) GST could not Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03 or (C) the aggregate
amount of all Restricted Payments (the amount, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution) made after the Closing Date
shall exceed the sum of (1) 50% of the aggregate amount of the Adjusted
Consolidated Net Income (or, if the Adjusted Consolidated Net Income is a loss,
minus 100% of such amount) (determined by excluding income resulting from
transfers of assets by GST or a Restricted Subsidiary to an Unrestricted
Subsidiary) accrued on a cumulative basis during the period (taken as one
accounting period) beginning on
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the first day of the fiscal quarter immediately following the Closing Date and
ending on the last day of the last fiscal quarter preceding the Transaction Date
for which reports have been filed pursuant to Section 4.20 plus (2) the
aggregate Net Cash Proceeds received by GST after the Closing Date from the
issuance and sale permitted by this Indenture of its Capital Stock (other than
Redeemable Stock) to a Person who is not a Subsidiary of GST, or from the
issuance to a Person who is not a Subsidiary of GST of any options, warrants or
other rights to acquire Capital Stock of GST (in each case, exclusive of any
Redeemable Stock or any options, warrants or other rights that are redeemable at
the option of the holder, or are required to be redeemed, prior to the Stated
Maturity of the Securities), in each case except to the extent such Net Cash
Proceeds are used to Incur Indebtedness pursuant to clause (v) of the second
paragraph of Section 4.03, plus (3) an amount equal to the net reduction in
Investments (other than reductions in Permitted Investments and reductions in
Investments made pursuant to clause (vi) of the second paragraph of this Section
4.04) in any Person resulting from payments of interest on Indebtedness,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to GST or any Restricted Subsidiary (except to the extent any such
payment is included in the calculation of Adjusted Consolidated Net Income), or
from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"), not to
exceed the amount of Investments previously made by GST and its Restricted
Subsidiaries in such Person.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date
of declaration thereof if, at said date of declaration, such payment
would comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Intercompany Notes or, after
GST USA assumes the Securities, the Securities or Security Guarantee,
including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause
(iii) of the second paragraph of Section 4.03;
(iii) the repurchase, redemption or other acquisition of
Capital Stock of GST in exchange for, or out of the proceeds of a
substantially concurrent offering of, shares of Capital Stock (other
than Redeemable Stock) of GST;
(iv) the acquisition of Indebtedness of GST USA or GST which
is subordinated in right of payment to the Intercompany Notes or, after
GST USA assumes the Securities, the Securities or Security Guarantee,
in exchange for, or out of the proceeds of, a substantially concurrent
offering of, shares of the Capital Stock of GST (other than Redeemable
Stock);
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(v) payments or distributions, in the nature of satisfaction
of dissenters' rights, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with Article
Five;
(vi) Investments in any Person or Persons (other than an
Affiliate (other than a Subsidiary) of the Company), the primary
business of which is related, ancillary or complementary to the
business of GST and its Restricted Subsidiaries on the date of such
Investments, in an aggregate amount not to exceed $50 million plus, (a)
in any fiscal year, an amount not to exceed 10% of GST's Consolidated
EBITDA (if positive) for the immediately preceding fiscal year, (b) an
amount not to exceed the Net Cash Proceeds received by GST after the
Closing Date from the issuance and sale permitted by this Indenture of
its Capital Stock (other than Redeemable Stock) to a Person that is not
a Subsidiary of GST, except to the extent such Net Cash Proceeds are
used to Incur Indebtedness pursuant to clause (v) under Section 4.03 or
to make Restricted Payments pursuant to clause (C)(2) of the first
paragraph or clause (iii) or (iv) of this paragraph of this Section
4.04 and (c) the net reduction in Investments in any Person made
pursuant to this clause (vi), except to the extent such reduction is
included in the calculation of Adjusted Consolidated Net Income;
PROVIDED that the net reduction in any such Investment shall not exceed
the amount of Investments previously made in such Person;
(vii) Investments by GST or a Restricted Subsidiary made
pursuant to the second paragraph of Section 4.11, in an aggregate
amount not to exceed $25 million; and
(viii) cash payments in lieu of the issuance of fractional
Common Shares upon conversion (including mandatory conversion) of the
Convertible Notes provided for in the Convertible Notes Indenture or
the Redeemable Preferred Shares; PROVIDED that, except in the case of
clauses (i) and (iii), no Default or Event of Default shall have
occurred and be continuing or occur as a consequence of the actions or
payments set forth herein.
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof
and an exchange of Capital Stock for Capital Stock or Indebtedness referred to
in clause (iii) or (iv) thereof), and the Net Cash Proceeds from any issuance of
Capital Stock referred to in clauses (iii), (iv) and (vi) shall be included in
calculating whether the conditions of clause (C) of the first paragraph of this
Section 4.04 have been met with respect to any subsequent Restricted Payments.
In the event the proceeds of an issuance of Capital Stock of GST are used for
the redemption, repurchase or other acquisition of the Securities or
Indebtedness that is PARI PASSU with the Securities or Security Guarantee, then
the Net Cash Proceeds of such issuance shall be included in clause (C) of the
first paragraph of this Section 4.04 only to the extent such proceeds are not
used for such redemption, repurchase or other acquisition of Indebtedness.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make any Restricted Payment other than
Investments in Pledged Securities, cash, the Initial Note and Intercompany
Notes, in each case pledged to secure the Securities.
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SECTION 4.05. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. GST will not, and will not
permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary to (i) pay dividends or make any
other distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by GST or any other Restricted Subsidiary, (ii) pay
any Indebtedness owed to GST or any other Restricted Subsidiary, (iii) make
loans or advances to GST or any other Restricted Subsidiary or (iv) transfer any
of its property or assets to GST or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances
or restrictions:
(i) existing on the Closing Date in this Indenture or any
other agreement in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; PROVIDED
that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any
material respect to the Holders than those encumbrances or restrictions
that are then in effect and that are being extended, refinanced,
renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or
assets of such Person acquired by GST or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other
than such Person or the property or assets of such Person so acquired;
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of GST or any
Restricted Subsidiary not otherwise prohibited by this Indenture or (C)
arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of GST or any Restricted
Subsidiary in any manner material to GST or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary;
(vi) with respect to any Development Company, imposed pursuant
to or in connection with any Indebtedness Incurred by such Development
Company to finance at least 50% of the total financing required for the
development and construction of all of such Development Company's
alternative access networks or any Indebtedness Incurred
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to refinance or replace such Indebtedness; PROVIDED that (a) such
Indebtedness (including such refinancing Indebtedness) is permitted to
be Incurred under Section 4.03, (b) such encumbrances and restrictions
are no more restrictive in any material respect than those encumbrances
and restrictions existing under the Tomen Facility as in effect on the
Closing Date and (c) such encumbrances and restrictions shall only
apply to such Development Company for so long as such Indebtedness (or
such refinancing Indebtedness) remains outstanding; or
(vii) with respect to any Development Company (a "RESTRICTED
DEVELOPMENT COMPANY"), imposed pursuant to or in connection with any
Indebtedness Incurred by another Development Company to finance at
least 50% of the total financing required for the development and
construction of all of such other Development Company's alternative
access networks or any Indebtedness Incurred to refinance or replace
such Indebtedness; PROVIDED that (a) such encumbrances and restrictions
shall not apply to such Restricted Development Company prior to the
occurrence of an event of default under such Indebtedness (or
refinancing Indebtedness), (b) such Indebtedness (including such
refinancing Indebtedness) is permitted to be Incurred under Section
4.03, (c) such encumbrances and restrictions are no more restrictive in
any material respect than those contemplated by the Tomen Facility as
in effect on the Closing Date and (d) at least 50% of the total
financing required for the development and construction of all of such
Restricted Development Company's alternative access networks was
provided by the holder of the Indebtedness of such other Development
Company.
The Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any of the matters referred to in the first paragraph of this section.
Nothing contained in this Section 4.05 shall prevent GST or
any Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 or (2) restricting the sale
or other disposition of property or assets of GST or any of its Restricted
Subsidiaries that secure Indebtedness of GST or any of its Restricted
Subsidiaries.
SECTION 4.06. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL
STOCK OF RESTRICTED SUBSIDIARIES. GST will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except
(i) to GST or a Wholly Owned Restricted Subsidiary;
(ii) issuances or sales to foreign nationals of shares of
Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law;
(iii) if, immediately after giving effect to such issuance or
sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary; or
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(iv) a sale of Common Stock of Phoenix Fiber, and in
connection and concurrently with such sale, a sale of Common Stock of
GST Tucson Lightwave, Inc.; PROVIDED that the proceeds of any such sale
under this clause (iv) shall be applied in accordance with clause (A)
or (B) of the first paragraph of Section 4.12.
The Company will not sell, and will not permit any of its
Subsidiaries, directly or indirectly, to issue or sell any shares of Capital
Stock of a Subsidiary of the Company (including options, warrants or other
rights to purchase shares of such Capital Stock).
SECTION 4.07. LIMITATION ON ISSUANCES OF GUARANTEES BY
RESTRICTED SUBSIDIARIES. GST will not permit any Restricted Subsidiary, directly
or indirectly, to Guarantee any Indebtedness of GST or any Indebtedness of GST
USA ("GUARANTEED INDEBTEDNESS"), unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee (a "SUBSIDIARY GUARANTEE") of payment of the
Securities by such Restricted Subsidiary and (ii) such Restricted Subsidiary
waives and will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against the Company, GST or GST USA as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee; PROVIDED that this
paragraph shall not be applicable to any Guarantee of any Restricted Subsidiary
that (x) existed at the time such Person became a Restricted Subsidiary and (y)
was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) PARI
PASSU with the Intercompany Notes, the Securities or the Security Guarantee,
then the Guarantee of such Guaranteed Indebtedness shall be PARI PASSU with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the
Intercompany Notes, the Securities or the Security Guarantee, then the Guarantee
of such Guaranteed Indebtedness shall be subordinated to the Subsidiary
Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Intercompany Notes, the Securities or Security Guarantee, as
the case may be.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of GST of all of GST's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
The Company will not permit any of its Subsidiaries to,
directly or indirectly, Guarantee any Indebtedness.
SECTION 4.08. LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND
AFFILIATES. GST will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate
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of such holder) of 5% or more of any class of Capital Stock of GST or any
Restricted Subsidiary or with any Affiliate of GST or any Restricted Subsidiary,
except upon fair and reasonable terms no less favorable to GST or such
Restricted Subsidiary than could be obtained, at the time of such transaction
or, if such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply
to (i) transactions (A) approved by a majority of the disinterested members of
the Board of Directors of GST or (B) for which GST or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to GST or such Restricted
Subsidiary from a financial point of view; (ii) any transaction solely between
GST and any of its Wholly Owned Restricted Subsidiaries or solely between Wholly
Owned Restricted Subsidiaries; (iii) the payment of reasonable and customary
regular fees (including through the issuance of shares of Common Stock of GST or
options, warrants or other rights to acquire such shares) to directors of GST
who are not employees of GST or any of its Subsidiaries; (iv) any payments or
other transactions pursuant to any tax-sharing agreement between GST and any
other Person with which GST files a consolidated tax return or with which GST is
part of a consolidated group for tax purposes; or (v) any Restricted Payments
not prohibited by Section 4.04. Notwithstanding the foregoing, any transaction
or series of transactions covered by the first paragraph of this Section 4.08
and not covered by clauses (ii) through (vi) of this paragraph, the aggregate
amount of which exceeds $500,000 in value, must be approved or determined to be
fair in the manner provided for in clause (i)(A) or (B) above.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into, renew or extend any of the
transactions described in the first paragraph of this section other than any
transaction between the Company and GST or any of its Restricted Subsidiaries
required or permitted by this Indenture and Pledge Agreement.
SECTION 4.09. LIMITATION ON LIENS. GST will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist
any Lien on any of its assets or properties of any character, or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary (collectively,
"PROTECTED PROPERTY"), without making effective provision for all of the
Securities (or in the case of a Lien on Protected Property of GST, the Security
Guarantee) and all other amounts due under this Indenture to be directly secured
equally and ratably with (or, if the obligation or liability to be secured by
such Lien is subordinated in right of payment to the Securities or the Security
Guarantee, prior to) the obligation or liability secured by such Lien; provided
that neither GST nor any Restricted Subsidiary will create, Incur, assume or
suffer to exist any Lien on the Pledged Securities, the Pledge Account or any
Acquired Equipment, except Liens securing the Securities and the Intercompany
Notes.
The foregoing limitation does not apply to
(i) Liens existing on the Closing Date;
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(ii) Liens granted after the Closing Date on any assets or
Capital Stock of GST or its Restricted Subsidiaries securing the
Initial Note, the Intercompany Notes or created in favor of the
Company, the Trustee or the Holders of the Securities;
(iii) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to GST or a Wholly
Owned Restricted Subsidiary to secure Indebtedness owing to GST or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under
clause (iii) of the second paragraph of Section 4.03; PROVIDED that
such Liens do not extend to or cover any property or assets of GST or
any Restricted Subsidiary other than the property or assets securing
the Indebtedness being refinanced;
(v) Liens upon or Capital Leases with respect to inventory,
property or equipment acquired or held by GST or any of its Restricted
Subsidiaries to secure all or a part of the purchase price therefor or
GST's or such Restricted Subsidiary's obligations under such lease;
PROVIDED that such Liens do not extend to or cover any property or
assets of GST or any Restricted Subsidiary other than the inventory,
property or equipment acquired;
(vi) Liens on assets or property of, or the Capital Stock of,
a Development Company securing Indebtedness Incurred under clause (i)
of the second paragraph of Section 4.03 to finance at least 50% of the
total financing for the development and construction of the alternative
access networks owned by such Development Company; PROVIDED such Liens
do not extend to or cover any other property or assets of GST or any of
its Restricted Subsidiaries; or
(vii) Permitted Liens.
The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its
assets or properties of any character other than Liens granted in favor of the
Trustee or the Holders of the Securities.
SECTION 4.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. GST
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby GST or a Restricted Subsidiary sells or
transfers such assets or properties and then or thereafter leases such assets or
properties or any part thereof or any other assets or properties which GST or
such Restricted Subsidiary, as the case may be, intends to use for substantially
the same purpose or purposes as the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if
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(i) the lease is for a period, including renewal rights, of
not in excess of three years;
(ii) the lease secures or relates to industrial revenue or
pollution control bonds;
(iii) the transaction is solely between GST and any Wholly
Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or
(iv) GST or such Restricted Subsidiary, within 12 months after
the sale or transfer of any assets or properties is completed, applies
an amount not less than the net proceeds received from such sale in
accordance with clause (A) or (B) of the first paragraph of Section
4.12.
The Company will not, and will not permit any of its
Subsidiaries to, enter into any sale-leaseback transaction.
SECTION 4.11. LIMITATION ON INVESTMENTS. GST will not, and
will not permit any Restricted Subsidiary to, (i) make any Investment in any
Person (including an Unrestricted Subsidiary) that during its most recent fiscal
year derived or in its current fiscal year is expected by the Board of Directors
of GST to derive more than $250,000 in revenues from, or in its most recent
fiscal year spent or in its current fiscal year is expected by the Board of
Directors of GST to spend more than $250,000 on, operations or activities
located outside the continental United States (other than in the State of Hawaii
or between the continental United States and the State of Hawaii) (an
"INTERNATIONAL BUSINESS") or (ii) acquire or own (directly or indirectly), other
than through an Unrestricted Subsidiary, any entity, business or asset that is
primarily located outside the continental United States (other than in the State
of Hawaii) or any right with respect to any of the foregoing (an "INTERNATIONAL
ASSET").
Notwithstanding the foregoing, and subject to Section 4.04,
GST and its Restricted Subsidiaries may make an Investment in an Unrestricted
Subsidiary which owns, intends to acquire or has rights with respect to an
International Business or International Asset provided that the aggregate amount
of such Investments does not exceed (i) $25 million plus, (A) in any fiscal
year, an amount not to exceed 10% of GST's Consolidated EBITDA (if positive) for
the immediately preceding fiscal year and (B) an amount not to exceed the Net
Cash Proceeds received by GST after the Closing Date from the issuance and sale
permitted by this Indenture of its Capital Stock (other than Redeemable Stock)
to a Person who is not a Subsidiary of GST, less (ii) the amount of any
Investments made pursuant to the first paragraph, or the amount of any
Restricted Payment made pursuant to clause (iii), (iv) or (vi) of the second
paragraph, of Section 4.04; PROVIDED that the International Business or
International Assets are related, ancillary or complementary to the primary
business of GST and its Restricted Subsidiaries on the date of such Investment.
SECTION 4.12. LIMITATION ON ASSET SALES. GST will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by GST or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold
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or disposed of and (ii) at least 85% of the consideration received consists of
cash or Temporary Cash Investments; PROVIDED, HOWEVER, that clause (ii) shall
not apply to long-term assignments of capacity in a network. In the event and to
the extent that the Net Cash Proceeds received by GST or its Restricted
Subsidiaries from one or more Asset Sales occurring on or after the Closing Date
in any period of 12 consecutive months exceed 10% of Adjusted Consolidated Net
Tangible Assets (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of GST and its
Subsidiaries has been prepared), then GST shall or shall cause the relevant
Restricted Subsidiary to (i) within 12 months after the date Net Cash Proceeds
so received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay
unsubordinated Indebtedness of GST or GST USA or Indebtedness of any Restricted
Subsidiary (other than GST USA), in each case owing to a Person other than GST
or any of its Restricted Subsidiaries or (B) invest an equal amount, or the
amount not so applied pursuant to clause (A) (or enter into a definitive
agreement committing to so invest within 12 months after the date of such
agreement), in property or assets of a nature or type or that are used in a
business (or in a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, GST and its Restricted Subsidiaries existing
on the date of such investment (as determined in good faith by the Board of
Directors of GST, whose determination shall be conclusive and evidenced by a
Board Resolution) and (ii) apply (no later than the end of the 12-month period
referred to in clause (i)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraph of this
Section 4.12. The amount of such excess Net Cash Proceeds required to be applied
(or to be committed to be applied) during such 12-month period as set forth in
clause (i) of the preceding sentence and not applied as so required by the end
of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to Purchase
pursuant to this Section 4.12 totals at least $5.0 million, the Issuer must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Securities equal to the Excess Proceeds on such
date, at a purchase price equal to 101% of the principal amount of the
Securities, plus, in each case, accrued interest to the Payment Date.
The Company will not, and will not permit any Subsidiary to,
consummate any Asset Sale except as permitted under the Pledge Agreement.
SECTION 4.13. IMPAIRMENT OF SECURITY INTEREST OR ABILITY TO
ASSUME THE SECURITIES. Except as specifically provided in the Pledge Agreement,
none of GST, GST USA nor the Company shall, nor shall they permit any Subsidiary
to, take or knowingly omit to take any action which (i) might or would have the
result of materially impairing the security interest with respect to the Pledged
Securities, any Acquired Equipment, the Initial Note or Intercompany Notes for
the benefit of the Trustee and the Holders of the Securities, (ii) grant to any
Person other than the Trustee or the Holders of the Securities, any interest
whatsoever in the Pledged Securities, other amounts in the Pledge Account, any
Acquired Equipment, the
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Initial Note or any Intercompany Note or (iii) would prevent, or restrict GST
USA from assuming, or GST from guaranteeing, the Securities on May 13, 2000 or
earlier if permitted by the 1995 Indentures.
SECTION 4.14. REPURCHASE OF SECURITIES UPON A CHANGE OF
CONTROL. The Issuer must commence, within 30 days of the occurrence of a Change
of Control, and consummate an Offer to Purchase for all Securities then
outstanding, at a purchase price equal to 101% of the principal amount thereof,
plus accrued interest to the Payment Date. Prior to the mailing of the notice to
Holders commencing such Offer to Purchase, but in any event within 30 days
following any Change of Control, the Issuer covenants to (i) repay in full all
indebtedness of the Issuer that would prohibit the repurchase of the Securities
pursuant to such Offer to Purchase or (ii) obtain any requisite consents under
instruments governing any such indebtedness of the Issuer to permit the
repurchase of the Securities. The Issuer shall first comply with the covenant in
the preceding sentence before it shall repurchase Securities pursuant to this
Section 4.14.
SECTION 4.15. EXISTENCE. Subject to compliance with the terms
of Articles Four and Five of this Indenture, GST will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence and
the existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of GST and each such Subsidiary and the
rights (whether pursuant to charter, partnership certificate, agreement, statute
or otherwise), material licenses and franchises of GST and each such Subsidiary;
PROVIDED that GST shall not be required to preserve any such right, license or
franchise, or the existence of any Restricted Subsidiary (other than of the
Issuer), if the maintenance or preservation thereof is no longer desirable in
the conduct of the business of GST and its Restricted Subsidiaries taken as a
whole.
SECTION 4.16. PAYMENT OF TAXES AND OTHER CLAIMS. GST will pay
or discharge and shall cause each of its Subsidiaries to pay or discharge, or
cause to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon (a)
GST or any such Subsidiary, (b) the income or profits of any such Subsidiary
which is a corporation or (c) the property of GST or any such Subsidiary and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a lien upon the property of GST or any such
Subsidiary; PROVIDED that GST shall not be required to pay or discharge, or
cause to be paid or discharged, any such tax, assessment, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
SECTION 4.17. MAINTENANCE OF PROPERTIES AND INSURANCE. GST
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
reasonable condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the reasonable
business judgment of GST may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED that nothing in this Section 4.17 shall prevent GST or any such
Subsidiary from discontinuing the use, operation or maintenance
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of any of such properties or disposing of any of them, if such discontinuance or
disposal is, in the reasonable business judgment of GST, desirable in the
conduct of the business of GST or such Subsidiary.
GST will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which GST or such Restricted Subsidiary, as the case may be, is then
conducting business.
SECTION 4.18. NOTICE OF DEFAULTS. In the event that GST or the
Issuer becomes aware of any Default or Event of Default, GST or the Issuer,
promptly after it becomes aware thereof, will give written notice thereof to the
Trustee.
SECTION 4.19. COMPLIANCE CERTIFICATES. (a) GST shall deliver
to the Trustee, within 90 days after the end of GST's fiscal year, an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that occurred during such fiscal year. Such certificates shall contain a
certification from the principal executive officer, principal financial officer
or principal accounting officer of GST that a review has been conducted of the
activities of GST and the Restricted Subsidiaries and GST's and the Restricted
Subsidiaries' performance under this Indenture and that, to the best knowledge
of such officer, GST has complied with all conditions and covenants under this
Indenture. For purposes of this Section 4.19, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. If any such officer knows of such a Default or
Event of Default, the certificate shall describe any such Default or Event of
Default and its status.
(b) GST shall deliver to the Trustee, within 90 days after the
end of its fiscal year, a certificate signed by GST's independent certified
public accountants stating (i) that their audit examination has included a
review of the terms of this Indenture and the Securities as they relate to
accounting matters, (ii) that they have read the most recent Officers'
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.19 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that GST or the Issuer was
not in compliance with any of the terms, covenants, provisions or conditions of
Article Four and Section 5.01 of this Indenture as they pertain to accounting
matters and, if any Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; PROVIDED that such
independent certified public accountants shall not be liable in respect of such
statement by reason of any failure to obtain knowledge of any such Default or
Event of Default that would not be disclosed in the course of an audit
examination conducted in accordance with generally accepted auditing standards
in effect at the date of such examination.
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(c) Within 90 days of the end of each of GST's fiscal years,
GST shall deliver to the Trustee a list of all Significant Subsidiaries. The
Trustee shall have no duty with respect to any such list except to keep it on
file and make it available for inspection by the Holders upon reasonable notice
to the Trustee and during normal business hours.
SECTION 4.20. COMMISSION REPORTS AND REPORTS TO HOLDERS. At
all times from and after the earlier of (i) the date of the commencement of an
Exchange Offer or the effectiveness of the Shelf Registration Statement (the
"REGISTRATION") and (ii) six months after the Closing Date, in either case,
whether or not the Company is then required to file reports with the Commission,
the Company shall file with the Commission all such reports and other
information as it would be required to file with the Commission by Sections
13(a) or 15(d) under the Exchange Act if it were subject thereto. In addition,
at all times prior to the earlier of the date of the Registration and six months
after the Closing Date, the Company shall, at cost, deliver to each Holder of
the Securities quarterly and annual reports substantially equivalent to those
which would be required by the Exchange Act. In addition, at all times prior to
the Registration, upon the request of any Holder or any prospective purchaser of
the Securities designated by a Holder, the Company shall supply to such Holder
or such prospective purchaser the information required under Rule 144A under the
Securities Act. Whether or not GST is required to file reports with the
Commission, if any Securities are outstanding, GST shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Exchange Act. The
Company and GST shall supply the Trustee and each Holder of Securities or shall
supply to the Trustee for forwarding to each Holder, without cost to such Holder
or the Trustee, copies of such reports or other information.
SECTION 4.21. WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of
the Issuer and GST covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Issuer or GST, as the case may be,
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) each of the Issuer and
GST hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.22. ADDITIONAL AMOUNTS. Any payments made by GST
under or respect to the Securities pursuant to the Security Guarantee will be
made free and clear of and without withholding or deduction for or on account of
any present or future tax, duty, levy, impost, assessment or other governmental
charge (including penalties, interest and other liabilities related thereto)
imposed or levied by or on behalf of the Government of Canada or of any province
or territory thereof or by any authority or agency therein or thereof having
power to tax (hereinafter "TAXES"), unless GST is required to withhold or deduct
Taxes by law or by the interpretation or administration thereof. If GST is
required to withhold or deduct any
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amount for or on account of Taxes from any payment made under or with respect to
the Securities, GST will pay such additional amounts ("ADDITIONAL AMOUNTS") as
may be necessary, so that the net amount received by each Holder of Securities
(including Additional Amounts) after such withholding or deduction will not be
less than the amount such Holder would have received if such Taxes had not been
withheld or deducted; PROVIDED, HOWEVER, that no Additional Amounts will be
payable with respect to a payment made to a Holder (an "EXCLUDED HOLDER") (i)
with which GST does not deal at arm's length (within the meaning of the Income
Tax Act (Canada)) at the time of making such payment, or (ii) which is subject
to such Taxes by reason of its being connected with Canada or any province or
territory thereof otherwise than solely by reason of the Holder's activity in
connection with purchasing the Securities, by the mere holding of Securities or
by reason of the receipt of payments thereunder. GST will, upon written request
of any Holder (other than an Excluded Holder), reimburse such Holder, for the
amount of (i) any Taxes so levied or imposed and paid by such Holder as a result
of payments made under or with respect to the Securities and (ii) any Taxes so
levied or imposed with respect to any reimbursement under the foregoing clause
(i), but excluding any such Taxes on such Holder's net income so that the net
amount received by such Holder after such reimbursement will not be less than
the net amount the Holder would have received if Taxes on such reimbursement had
not been imposed.
At least 30 days prior to each date on which any payment under
or with respect to the Securities is due and payable, if GST will be obligated
to pay Additional Amounts with respect to such payment, GST will deliver to the
Trustee an Officers' Certificate stating the fact that such Additional Amounts
will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
Holders on the payment date. Whenever in this Indenture there is mentioned, in
any context, the payment of principal (or premium, if any), Redemption Price,
interest or any other amount payable under or with respect to any Security, such
mention shall be deemed to include mention of the payment of Additional Amounts
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof.
SECTION 4.23. ASSUMPTION OF SECURITIES BY GST USA. (a) On May
13, 2000, or earlier if permitted under the terms of the 1995 Indentures, GST
USA and GST will execute and deliver a supplemental indenture to this Indenture
in the form attached hereto as Exhibit E and GST USA will execute and deliver a
Collateral Pledge and Security Agreement substantially in the form of the Pledge
Agreement in favor of the Trustee granting to the Trustee for the benefit of the
Holders of the Securities a first priority security interest in all Acquired
Equipment that secured the Intercompany Notes or was held by the Company on the
Assumption Date.
(b) On the Assumption Date, GST USA will deliver to the
Trustee an Opinion of Counsel to the effect that, after giving effect to the
assumption of the Securities by GST USA pursuant to the supplemental indenture
delivered pursuant to clause (a) above:
(i) each of the Securities and this Indenture constitutes a
valid and binding obligation of GST USA in accordance with its terms
and the Securities are entitled to the benefits of this Indenture,
subject to bankruptcy, insolvency, fraudulent transfer,
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reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles;
(ii) each of this Indenture and the indenture supplement
delivered under clause (a) above constitutes a valid and binding
obligation of GST in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equitable principles; and
(iii) GST USA has granted to the Trustee for the benefit of
the holders of the Securities a valid and perfected first priority
security interest in all Acquired Equipment that secured the
Intercompany Notes or was held by the Company on the Assumption Date to
secure the payment of principal of and interest on, and any other
amounts owing in respect of, the Securities.
(c) On the Assumption Date, upon delivery of the Opinion of
Counsel pursuant to clause (b) above, GST USA will liquidate the Company and
will cause the Company to distribute all of its assets (if any) to GST USA.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. CONSOLIDATION, MERGER AND SALE OF ASSETS.
Neither GST nor GST USA shall consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person (other than a
consolidation or merger with or into a Wholly Owned Restricted Subsidiary with a
positive net worth; PROVIDED that, in connection with any such merger or
consolidation, no consideration (other than Common Stock in the surviving
Person, GST or GST USA) shall be issued or distributed to the stockholders of
GST or GST USA) or permit any Person to merge with or into GST or GST USA
unless:
(i) GST or GST USA shall be the continuing Person, or the
Person (if other than GST or GST USA) formed by such consolidation or
into which GST or GST USA is merged or that acquired or leased such
property and assets of GST or GST USA shall be a corporation organized
and validly existing under the laws of the United States of America or
any jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the
obligations of GST or GST USA, as the case may be, on all of the
Securities, the Intercompany Notes and the Security Guarantee and under
this Indenture;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
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(iii) immediately after giving effect to such transaction on a
PRO FORMA basis, GST, GST USA or any Person becoming the successor
obligor of the Securities or the Security Guarantee, as the case may
be, shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of GST or GST USA, as the case may be,
immediately prior to such transaction;
(iv) immediately after giving effect to such transaction on a
PRO FORMA basis GST or GST USA, as the case may be, or any Person
becoming the successor obligor of the Securities or the Security
Guarantee, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03(a); and
(v) GST or GST USA, as the case may be, delivers to the
Trustee an Officers' Certificate (attaching the arithmetic computations
to demonstrate compliance with clauses (iii) and (iv)) and Opinion of
Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision
and that all conditions precedent provided for herein relating to such
transaction have been complied with; PROVIDED, HOWEVER, that clauses
(iii) and (iv) above do not apply if, in the good faith determination
of the Board of Directors of GST or GST USA, as the case may be, whose
determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the jurisdiction of
incorporation of GST to a state in the United States or of GST USA to
another state of the United States; and PROVIDED FURTHER that any such
transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
The restrictions and conditions described in the preceding
paragraph shall also apply to the Company except that clauses (iii) and (iv)
shall not apply to a merger or consolidation of GST USA and the Company or the
sale, conveyance or other disposition of all or substantially all of the assets
of the Company to GST USA.
SECTION 5.02. SUCCESSOR SUBSTITUTED. Upon any consolidation or
merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company, GST USA or GST in
accordance with Section 5.01 of this Indenture, the successor Person formed by
such consolidation or into which the Company, GST USA or GST is merged or to
which such sale, conveyance, transfer or other disposition is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company, GST USA or GST, as the case may be, under this Indenture with the same
effect as if such successor Person had been named as the Company, GST USA or
GST, as the case may be, herein; PROVIDED that the Company, GST USA or GST, as
the case may be, shall not be released from its obligations to pay the principal
of, premium, if any, or interest on the Securities in the case of a lease of all
or substantially all of its property and assets.
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall
occur with respect to the Securities if:
(a) the Issuer defaults in the payment of principal of (or
premium, if any, on) any Security when the same becomes due and payable
at maturity, upon acceleration, redemption or otherwise;
(b) the Issuer defaults in the payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days; PROVIDED that a failure to make any
of the first six scheduled interest payments on the Securities on the
applicable Interest Payment Date will constitute an Event of Default
with no grace or cure period;
(c) the Company, GST USA or GST defaults in the performance of
or breaches any other covenant or agreement of the Company, GST USA or
GST in this Indenture or under the Securities, the Security Guarantee,
the Initial Note or any Intercompany Note and such default or breach
continues for a period of 30 consecutive days after written notice by
the Trustee or the Holders of 25% or more in aggregate principal amount
of Securities;
(d) there occurs with respect to any issue or issues of
Indebtedness of GST or any Significant Subsidiary having an outstanding
principal amount of $5 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the
holder thereof to declare such Indebtedness to be due and payable prior
to its Stated Maturity and such Indebtedness has not been discharged in
full or such acceleration has not been rescinded or annulled within 30
days of such acceleration and/or (II) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such
defaulted payment shall not have been made, waived or extended within
30 days of such payment default;
(e) any final judgment or order (not covered by insurance) for
the payment of money in excess of $5 million in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company, GST USA, GST or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any
period of 30 consecutive days following entry of the final judgment or
order that causes the aggregate amount for all such final judgments or
orders outstanding and not paid or discharged against all such Persons
to exceed $5 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
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(f) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company, GST USA, GST
or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company,
GST USA, GST or any Significant Subsidiary (other than a liquidation of
the Company into GST USA in connection with the assumption of the
Securities) or for all or substantially all of the property and assets
of the Company, GST USA, GST or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company, GST USA, GST
or any Significant Subsidiary (other than a liquidation of the Company
into GST USA in connection with the assumption of the Securities) and,
in each case, such decree or order shall remain unstayed and in effect
for a period of 30 consecutive days;
(g) the Company, GST USA, GST or any Significant Subsidiary
(A) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents
to the entry of an order for relief in an involuntary case under any
such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company, GST USA, GST or any Significant
Subsidiary (other than a liquidation of the Company into GST USA in
connection with the assumption of the Securities) or for all or
substantially all of the property and assets of the Company, GST USA,
GST or any Significant Subsidiary or (C) effects any general assignment
for the benefit of creditors;
(h) the Trustee or the Company does not have at all times a
first priority perfected security interest in all Pledged Securities,
the Pledge Account, all Acquired Equipment, the Initial Note and
Intercompany Notes or the Company, GST USA or GST asserts in writing
that the security arrangements under this Indenture, the Pledge
Account, the Initial Note and the Intercompany Notes are not in full
force and effect; or
(i) GST USA shall not have become a direct obligor on the
Securities (other than Securities to be redeemed as described under
Section 3.02 for which the Company shall have deposited the redemption
price) and GST shall not have become a guarantor of the Securities by
May 13, 2000.
SECTION 6.02. ACCELERATION. If an Event of Default (other than
an Event of Default specified in clause (f) or (g) of Section 6.01 that occurs
with respect to the Company, GST USA or GST or clause (h)) occurs and is
continuing under this Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the outstanding Securities, by written notice to
the Issuer (and to the Trustee if such notice is given by the Holders), may, and
the Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued interest, on the Securities to be immediately due
and payable. Upon a declaration of acceleration, such principal, premium, if
any, and accrued interest shall be immediately due and payable. In the event of
a declaration of acceleration because an Event of Default set forth in clause
(d) of Section 6.01 has occurred and is continuing, such declaration of
acceleration shall
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be automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (d) shall be remedied or cured by GST or the
relevant Significant Subsidiary or waived by the holders of the relevant
Indebtedness within 60 days after the declaration of acceleration with respect
thereto. If an Event of Default specified in clause (f) or (g) of Section 6.01
occurs with respect to the Company, GST USA or GST or an Event of Default
specified in clause (h) occurs, the principal of, premium, if any, and accrued
interest on the Securities then outstanding shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs
and is continuing, the Trustee may, and at the direction of the Holders of not
less than a majority of the outstanding principal amount of the Securities
shall, pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of, premium, if any, or interest on the Securities or
to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Sections
6.02, 6.07 and 9.02, the Holders of at least a majority in principal amount of
the outstanding Securities, by written notice to the Issuer and to the Trustee,
may waive all past Defaults and Events of Default and rescind and annul a
declaration of acceleration (except a Default in the payment of principal of,
premium, if any, or interest on any Security as specified in clause (a) or (b)
of Section 6.01 or in respect of a covenant or provision of this Indenture which
cannot be modified or amended without the consent of the holder of each
outstanding Security affected) if (i) all existing Events of Default, other than
the nonpayment of principal of, premium, if any, or interest on the Securities
that have become due solely by such declaration of acceleration, have been cured
or waived and (ii) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of at least a
majority in aggregate principal amount of the outstanding Securities may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture, that may involve the Trustee in personal liability, or that
the Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of Securities not joining in the giving of such direction and may take
any other action it deems proper that is not inconsistent with any such
direction received from Holders of Securities pursuant to this Section 6.05.
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SECTION 6.06. LIMITATION ON SUITS. A Holder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(i) the Holder gives the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of outstanding Securities make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer and, if requested provide,
the Trustee indemnity satisfactory to the Trustee against any costs,
liabilities or expenses which may be incurred in compliance with such
request;
(iv) the Trustee does not comply with the request within 60
days after receipt of the written request and the offer of indemnity;
and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Securities do not give
the Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this
Section 6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Securities have concurred in any request or direction of the
Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Securities or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of the principal of, premium, if any, or
interest on such Security, or to bring suit for the enforcement of any such
payment, on or after the due date expressed in such Security, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of
Default in payment of principal, premium or interest specified in clause (a),
(b) or (c) of Section 6.01 occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Issuer
or any other obligor of the Securities for the whole amount of principal,
premium, if any, and accrued interest remaining unpaid, together with interest
on overdue principal, premium, if any, and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each case
at the rate specified in the Securities, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Issuer (or any other obligor of the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Securities or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES. If the Trustee collects any money
pursuant to this Article Six, it shall pay out the money in the following order:
FIRST: to the Trustee for all amounts due under Section 7.07;
SECOND: to the Holders for amounts then due and unpaid for
principal of, premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium, if any, and interest, respectively; and
THIRD: to the Issuer or any other obligors of the Securities,
as their interests may appear, or as a court of competent jurisdiction
may direct.
The Trustee, upon prior written notice to the Issuer, may fix
a record date and payment date for any payment to Holders pursuant to this
Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court may
require any party litigant in such suit to file an undertaking to pay the costs
of the suit, and the court may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount of the outstanding Securities.
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SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then, and in every such case, subject to any determination in such
proceeding, the Issuer, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Issuer, Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Securities in Section 2.09, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.14. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Six or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. GENERAL. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not herein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Article Seven.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to TIA
Sections 315(a) through (d):
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness
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or other paper or 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 and may in good
faith conclusively rely as to the truth of the statements and the
correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate, opinion and/or an accountants'
certificate;
(iii) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders, unless such Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory to
it against the costs, expenses and liabilities that might be incurred
by it in compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within
its rights or powers or for any action it takes or omits to take in
accordance with the direction of the Holders of a majority in principal
amount of the outstanding Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture; PROVIDED that the Trustee's conduct does not
constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(vii) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, GST USA or GST personally
or by agent or attorney; and
(viii) any request or direction of the Company, GST USA or GST
mentioned herein shall be sufficiently evidenced by a Company Order and
any resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Company, GST USA, GST or their
Affiliates with the same rights it would have if it were not the Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to TIA
Sections 310(b) and 311.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Securities, (ii) shall not be accountable for the Company's use or application
of the proceeds from the Securities and (iii) shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT. If any Default or any Event
of Default occurs and is continuing and if such Default or Event of Default is
known to an officer assigned to administer corporate trust matters of the
Trustee, the Trustee shall mail to each Holder in the manner and to the extent
provided in TIA Section 313(c) notice of the Default or Event of Default within
45 days after it occurs, unless such Default or Event of Default has been cured;
PROVIDED, HOWEVER, that, except in the case of a default in the payment of the
principal of, premium, if any, or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days
after each May 15, beginning with May 15, 1998, the Trustee shall mail to each
Holder as provided in TIA Section 313(c) a brief report that complies with TIA
Section 313(a) dated as of such May 15, if required by TIA Section 313(a).
SECTION 7.07. COMPENSATION AND INDEMNITY. The Issuer shall pay
to the Trustee from time to time such compensation as shall be agreed upon in
writing for its services. The compensation of the Trustee shall not be limited
by any law on compensation of a trustee of an express trust. The Company, and
after the Assumption Date, GST USA and GST, jointly and severally, shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
(including costs of collection) and advances incurred or made by the Trustee.
Such expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.
The Issuer shall indemnify the Trustee for, and hold it
harmless against, any loss or liability or expense incurred by it without
negligence or bad faith on its part in connection with the acceptance or
administration of this Indenture and its duties under this Indenture and the
Securities, including, without limitation, the costs and expenses of defending
itself against any claim or liability and of complying with any process served
upon it or any of its officers in connection with the exercise or performance of
any of its powers or duties under this Indenture and the Securities.
To secure the Issuer's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, in
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its capacity as Trustee, except money or property held in trust to pay principal
of, premium, if any, and interest on particular Securities.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (f) or (g) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal
of the Trustee and appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in this
Section 7.08.
The Trustee may resign at any time by so notifying the Issuer
in writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Issuer. The Issuer may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date of
the proposed removal if: (i) the Trustee is no longer eligible under Section
7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver
or other public officer takes charge of the Trustee or its property; or (iv) the
Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists
in the office of Trustee for any reason, the Issuer shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuer. If the successor Trustee does not deliver its written acceptance
required by the next succeeding paragraph of this Section 7.08 within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuer or the Holders of a majority in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any
Holder who satisfies the requirements of TIA Section 310(b) may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
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The Issuer shall give notice of any resignation and any
removal of the Trustee and each appointment of a successor Trustee to all
Holders. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Issuer's obligations under Section 7.07 shall continue
indefinitely for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. ELIGIBILITY. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee
shall have a combined capital and surplus of at least $25,000,000 as set forth
in its most recent published annual report of condition.
SECTION 7.11. MONEY HELD IN TRUST. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
in writing with the Issuer. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 7.12. WITHHOLDING TAXES. The Trustee, as agent for the
Issuer, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Securities any and all withholding
taxes applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Securities, to withhold such amounts and timely pay
the same to the appropriate authority in the name of and on behalf of the
holders of the Securities, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each holder of a Security appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such holders may reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS. Except as
otherwise provided in this Section 8.01, the Issuer may terminate the Company's,
GST USA's and GST's obligations under the Securities and this Indenture if:
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(i) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities that are paid pursuant to Section 4.01 or
Securities for whose payment money or securities have theretofore been
held in trust and thereafter repaid to the Issuer, as provided in
Section 8.05) have been delivered to the Trustee for cancellation and
the Issuer has paid all sums payable by it hereunder; or
(ii) (A) the Securities mature within one year or all of them
are to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B)
the Issuer irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if, any, and interest on the Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder, (C) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, (D) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Company, GST USA or GST is a party or by which
it is bound and (E) the Issuer has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, in each case stating
that all conditions precedent provided for herein relating to the
satisfaction and discharge of this Indenture have been complied with.
With respect to the foregoing clause (i), the Issuer's
obligations under Section 7.07 shall survive. With respect to the foregoing
clause (ii), the Issuer's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 4.22, 7.07, 7.08, 8.04, 8.05 and 8.06 and
Article Eleven shall survive until the Securities are no longer outstanding.
Thereafter, only the Issuer's obligations in Sections 7.07, 8.05 and 8.06 shall
survive. After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's, GST USA's and GST's
obligations under the Securities and this Indenture except for those surviving
obligations specified above.
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE. The
Issuer will be deemed to have paid and the Company, GST USA and GST will be
discharged from any and all obligations in respect of the Securities on the
123rd day (or, to the extent applicable under clause (B) below, one year) after
the deposit referred to in clause (A) of this Section 8.02 if:
(A) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10) and conveyed all right, title and
interest for the benefit of the Holders, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee as trust funds in trust, specifically pledged to the Trustee
for the benefit of the Holders as
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security for payment of the principal of, premium, if any, and
interest, if any, on the Securities, and dedicated solely to, the
benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (A), money in an amount or (3) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee, the
principal of, premium, if any, and accrued interest on the outstanding
Securities at the Stated Maturity of such principal or interest;
PROVIDED that the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations to
the payment of such principal, premium, if any, and interest with
respect to the Securities;
(B) the Issuer shall have delivered to the Trustee (i) either
(x) an Opinion of Counsel to the effect that Holders will not recognize
income, gain or loss for United States federal income tax purposes as a
result of the Issuer's exercise of its option under this Section 8.02
and will be subject to United States federal income tax on the same
amount and in the same manner and at the same times as would have been
the case if such option had not been exercised, which Opinion of
Counsel must be based upon (and accompanied by a copy of) a ruling of
the United States Internal Revenue Service to the same effect unless
there has been a change in applicable United States federal income tax
law after the Closing Date such that a ruling is no longer required or
(y) a ruling directed to the Trustee received from the United States
Internal Revenue Service to the same effect as the aforementioned
Opinion of Counsel; (ii) an Opinion of Counsel or a ruling from Revenue
Canada, Taxation to the effect that Holders will not recognize income,
gain or loss for Canadian federal, provincial or territorial income tax
or other tax purposes as a result of such deposit and defeasance and
will be subject to Canadian federal or provincial income tax and other
tax on the same amounts, in the same manner and at the same times as
would have been the case had such deposit and defeasance not occurred
(and for purposes of such opinion, such Canadian counsel shall assume
that Holders of the Securities include Holders who are not resident in
Canada); and (iii) an Opinion of Counsel to the effect that (x) the
creation of the defeasance trust does not violate the Investment
Company Act of 1940 and (y) after the passage of 123 days following the
deposit (except, with respect to any trust funds for the account of any
Holder who may be deemed to be an "insider" for purposes of the United
States Bankruptcy Code, after one year following the deposit), the
trust funds will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Company, GST USA or
GST under either such statute, and either (I) the trust funds will no
longer remain the property of the Issuer or GST (and therefore will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally)
or (II) if a court were to rule under any such law
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in any case or proceeding that the trust funds remained property of the
Issuer or GST (a) assuming such trust funds remained in the possession
of the Trustee prior to such court ruling to the extent not paid to the
Holders, the Trustee will hold, for the benefit of the Holders, a valid
and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise (except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust
funds accruing after the commencement of a case under such statute),
(b) the Holders will be entitled to receive adequate protection of
their interests in such trust funds if such trust funds are used in
such case or proceeding and (c) no property, rights in property or
other interests granted to the Trustee or the Holders in exchange for,
or with respect to, such trust funds will be subject to any prior
rights of holders of other Indebtedness of the Company, GST USA, GST,
or any of its Subsidiaries;
(C) immediately after giving effect to such deposit on a PRO
FORMA basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on
the 123rd day (or one year) after the date of such deposit, and such
deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company,
GST USA, GST or any of their respective Subsidiaries is a party or by
which the Company, GST USA, GST or any of their respective Subsidiaries
is bound;
(D) if the Securities are then listed on a national securities
exchange, the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Securities will not be delisted as a
result of such deposit, defeasance and discharge; and
(E) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day
(or one year) period referred to in clause (B)(iii)(y) of this Section 8.02,
none of the Company's, GST USA's or GST's obligations under this Indenture shall
be discharged. Subsequent to the end of such 123-day (or one year) period with
respect to this Section 8.02, the Company's, GST USA's and GST's obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 4.22,
7.07, 7.08, 8.05 and 8.06 and Article Eleven shall survive until the Securities
are no longer outstanding. Thereafter, only the Issuer's obligations in Sections
7.07, 8.05 and 8.06 shall survive. If and when a ruling from the United States
Internal Revenue Service or an Opinion of Counsel referred to in clause (B)(i)
of this Section 8.02 may be provided specifically without regard to, and not in
reliance upon, the continuance of the Issuer's obligations under Section 4.01
and GST's obligations under the Security Guarantee, then the Issuer's
obligations under such Section 4.01 and GST's obligations under the Security
Guarantee shall cease upon delivery to the Trustee of such ruling or Opinion of
Counsel and compliance with the other conditions precedent provided for herein
relating to the defeasance contemplated by this Section 8.02.
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After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's, GST USA's and GST's
obligations under the Securities and this Indenture except for those surviving
obligations in the immediately preceding paragraph.
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS. The Company,
GST USA and GST may omit to comply with any term, provision or condition set
forth in clauses (iii) and (iv) of Section 5.01 and Sections 4.03 through 4.21,
and clause (c) of Section 6.01 with respect to clauses (iii) and (iv) of Section
5.01 and Sections 4.03 through 4.21, and clauses (d), (e) and (h) of Section
6.01 shall be deemed not to be Events of Default, in each case with respect to
the outstanding Securities if:
(i) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10) and conveyed all right, title and
interest to the Trustee for the benefit of the Holders, under the terms
of an irrevocable trust agreement in form and substance satisfactory to
the Trustee as trust funds in trust, specifically pledged to the
Trustee for the benefit of the Holders as security for payment of the
principal of, premium, if any, and interest, if any, on the Securities,
and dedicated solely to, the benefit of the Holders, in and to (A)
money in an amount, (B) U.S. Government Obligations that, through the
payment of interest and principal in respect thereof in accordance with
their terms, will provide, not later than one day before the due date
of any payment referred to in this clause (i), money in an amount or
(C) a combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee, the
principal of, premium, if any, and interest on the outstanding
Securities on the Stated Maturity of such principal or interest;
PROVIDED that the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations to
the payment of such principal, premium, if any, and interest with
respect to the Securities;
(ii) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Company, GST USA, GST or any of their
respective Subsidiaries is a party or by which it is bound;
(iii) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(iv) the Issuer has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940, (B) the Holders
have a valid first-priority security interest in the trust funds, (C)
the Holders will not recognize income, gain or loss for United States
federal income tax purposes as a result of such deposit and the
defeasance of the obligations referred to in
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the first paragraph of this Section 8.03 and will be subject to United
States federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and
defeasance had not occurred, (D) the Holders will not recognize income,
gain or loss for Canadian federal, provincial or territorial income tax
or other tax purposes as a result of such deposit and the defeasance of
the obligations referred to in the first paragraph of this Section 8.03
and will be subject to Canadian federal or provincial income tax and
other tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had
not occurred and (E) after the passage of 123 days following the
deposit (except, with respect to any trust funds for the account of any
Holder who may be deemed to be an "insider" for purposes of the United
States Bankruptcy Code, after one year following the deposit), the
trust funds will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Issuer or GST under
either such statute, and either (1) the trust funds will no longer
remain the property of the Issuer (and therefore will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (2) if a court
were to rule under any such law in any case or proceeding that the
trust funds remained property of the Issuer (x) assuming such trust
funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold,
for the benefit of the Holders, a valid and perfected security interest
in such trust funds that is not avoidable in bankruptcy or otherwise
(except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (y) the Holders will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding and
(z) no property, rights in property or other interests granted to the
Trustee or the Holders in exchange for, or with respect to, such trust
funds will be subject to any prior rights of holders of other
Indebtedness of GST, GST USA, the Company or any of its Subsidiaries;
(v) if the Securities are then listed on a national securities
exchange, the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit and defeasance will not cause
the Securities to be delisted; and
(vi) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. APPLICATION OF TRUST MONEY. Subject to Section
8.06, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Securities and this Indenture to
the payment of principal of, premium, if any, and interest on the Securities;
but such money need not be segregated from other funds except to the extent
required by law.
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SECTION 8.05. REPAYMENT TO ISSUER. Subject to Sections 7.07,
8.01, 8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Issuer upon request any excess money held by them at any time and thereupon
shall be relieved from all liability with respect to such money. The Trustee and
the Paying Agent shall pay to the Issuer any money held by them for the payment
of principal, premium, if any, or interest that remains unclaimed for two years;
PROVIDED that the Trustee or such Paying Agent before being required to make any
payment may cause to be published at the expense of the Issuer once in a
newspaper of general circulation in the City of New York and, in the event the
Securities are listed on the Luxembourg Stock Exchange, in Luxembourg or mail to
each Holder entitled to such money at such Holder's address (as set forth in the
Security Register) notice that such money remains unclaimed and that after a
date specified therein (which shall be at least 30 days from the date of such
publication or mailing) any unclaimed balance of such money then remaining will
be repaid to the Issuer. After payment to the Issuer, Holders entitled to such
money must look to the Issuer for payment as general creditors unless an
applicable law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03, as the case may be, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's, GST USA's and GST's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01, 8.02 or 8.03, as the case may be, until such time as
the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.01, 8.02 or 8.03, as the
case may be; PROVIDED that, if the Company, GST USA or GST has made any payment
of principal of, premium, if any, or interest on any Securities because of the
reinstatement of its obligations, the Company, GST USA or GST, as the case may
be, shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
SECTION 8.07. INSIDERS. With respect to the determination of
the Persons constituting beneficial owners of Securities and whether any such
Person is an "insider" for purposes of Sections 8.02(B)(iii)(y) and 8.03(iv)(E),
the Trustee may rely on an Officers' Certificate.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, GST USA
and GST, when authorized by resolutions of their Boards of Directors, and the
Trustee may amend or supplement this Indenture or the Securities without notice
to or the consent of any Holder:
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(a) to cure any ambiguity, defect or inconsistency in this
Indenture; PROVIDED that such amendments or supplements shall not
adversely affect the interests of the Holders in any material respect;
(b) to comply with Article Five;
(c) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(e) to make any change that, in the opinion of the Board of
Directors of GST evidenced by a Board Resolution, does not materially
and adversely affect the rights of any Holder.
SECTION 9.02. WITH CONSENT OF HOLDERS. Subject to Sections
6.04 and 6.07 and without prior notice to the Holders, the Company, GST USA and
GST, when authorized by their Boards of Directors (as evidenced by a Board
Resolution), and the Trustee may amend this Indenture and the Securities with
the written consent of the Holders of a majority in aggregate principal amount
of the outstanding Securities, and the Holders of a majority in aggregate
principal amount of the outstanding Securities by written notice to the Trustee
may waive future compliance by the Company, GST USA or GST with any provision of
this Indenture or the Securities.
Notwithstanding the provisions of this Section 9.02, without
the consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security;
(ii) reduce the principal of, or premium, if any, or interest
on, any Security or adversely affect any right of repayment at the
option of any Holder of any Security;
(iii) change the place or currency of payment of principal of,
or premium, if any, or interest on, any Security;
(iv) impair the right to institute suit for the enforcement of
any payment on or after the Stated Maturity (or, in the case of a
redemption, on or after the Redemption Date) of any Security;
(v) reduce the percentage of outstanding Securities the
consent of whose Holders is required for any such supplemental
indenture or for any waiver of compliance with certain provisions of
this Indenture or certain Defaults and their consequences provided for
in this Indenture;
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(vi) waive a default in the payment of principal of, premium,
if any, or interest on the Securities;
(vii) amend or modify the terms of the Pledge Agreement;
(viii) release GST from its Security Guarantee; or
(ix) modify any of the provisions of this Section 9.02, except
to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Issuer shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Issuer will
mail supplemental indentures to Holders upon request. Any failure of the Issuer
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. REVOCATION AND EFFECT OF CONSENT. Until an
amendment or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the Security of the
consenting Holder, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to its
Security or portion of its Security. Such revocation shall be effective only if
the Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver shall
become effective on receipt by the Trustee of written consents from the Holders
of the requisite percentage in principal amount of the outstanding Securities.
The Issuer may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last two sentences of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies) and only those persons shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it is of the type described in any of clauses (i)
through (ix) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (ix) of Section 9.02,
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the amendment or waiver shall bind each Holder who has consented to it and every
subsequent Holder of a Security that evidences the same indebtedness as the
Security of the consenting Holder.
SECTION 9.04. NOTATION ON OR EXCHANGE OF SECURITIES. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder to deliver such Security to the Trustee. At the Issuer's
expense the Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder and the Trustee may place an
appropriate notation on any Security thereafter authenticated. Alternatively, if
the Issuer or the Trustee so determines, the Issuer in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture. Subject to the preceding sentence, the Trustee shall sign such
amendment, supplement or waiver if the same does not adversely affect the rights
of the Trustee. The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
MEETINGS OF HOLDERS
SECTION 10.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders may be called at any time and from time
to time pursuant to the provisions of this Article Ten for any of the following
purposes:
(a) to give any notice to the Issuer or to the Trustee, or to
give any directions to the Trustee, or to waive or to consent to the
waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Holders pursuant to any of the provisions of Article Six;
(b) to remove the Trustee or appoint a successor Trustee
pursuant to the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant
to the provisions of Section 9.02; or
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(d) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of
the Securities under any other provision of this Indenture, or
authorized or permitted by law.
SECTION 10.02. MANNER OF CALLING MEETINGS.
The Trustee may at any time call a meeting of Holders to take
any action specified in Section 10.01, to be held at such time and at such place
in The City of New York, New York or elsewhere as the Trustee will determine.
Notice of every meeting of Holders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
will be mailed by the Trustee, first-class postage prepaid, to the Issuer and to
the Holders at their last addresses as they will appear on the registration
books of the Registrar not less than 10 nor more than 60 days prior to the date
fixed for a meeting.
Any meeting of Holders will be valid without notice if the
Holders of all outstanding Securities are present in Person or by proxy, or if
notice is waived before or after the meeting by the Holders of all outstanding
Securities, and if the Issuer and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 10.03. CALL OF MEETINGS BY ISSUER OR HOLDERS.
In case at any time the Issuer, pursuant to a Board
Resolution, or the Holders of not less than 10% in aggregate principal amount of
the outstanding Securities will have requested the Trustee to call a meeting of
Holders to take any action specified in Section 10.01, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee will not have mailed the notice of such meeting within
20 days after receipt of such request, then the Issuer or the Holders of
Securities in the amount above specified may determine the time and place in The
City of New York, New York or elsewhere for such meeting and may call such
meeting for the purpose of taking such action, by mailing or causing to be
mailed notice thereof as provided in Section 10.02, or by causing notice thereof
to be published at least once in each of two successive calendar weeks (on any
Business Day during such week) in a newspaper or newspapers printed in the
English language, customarily published at least five days a week of a general
circulation in The City of New York, State of New York and, in the event the
Securities are listed on the Luxembourg Stock Exchange, in Luxembourg, the first
such publication to be not less than 10 nor more than 60 days prior to the date
fixed for the meeting.
SECTION 10.04. WHO MAY ATTEND AND VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders, a Person
will (i) be a registered Holder of one or more Securities, or (ii) be a Person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only Persons who will be entitled to be present or to
speak at any meeting of Holders will be the Persons entitled to vote at such
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meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Issuer or GST and their counsel.
SECTION 10.05. QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of
the outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 10.02, except that such notice need be given only
once and not less than five days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage of the principal amount of the outstanding
Securities which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the Persons entitled to vote 25% in principal
amount of the outstanding Securities at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid, any action or matter, except as
otherwise specified herein, shall be effectively passed and decided if passed or
decided by the Persons entitled to vote not less than a majority in principal
amount of outstanding Securities represented and voting at such meeting.
Any action or matter passed or decision taken at any meeting
of Holders of Securities duly held in accordance with this Section 10.05 shall
be binding on all the Holders of Securities, whether or not present or
represented at the meeting.
SECTION 10.06. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF
THE MEETING; VOTING RIGHTS; ADJOURNMENT.
Notwithstanding any other provision of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
action by or any meeting of Holders, in regard to proof of the holding of
Securities and of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, and submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it will think appropriate. Such
regulations may fix a record date and time for determining the Holders of record
of Securities entitled to vote at such meeting, in which case those and only
those Persons who are Holders of Securities at the record date and
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time so fixed, or their proxies, will be entitled to vote at such meeting
whether or not they will be such Holders at the time of the meeting.
The Trustee will, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting will have been called by
the Issuer or by Holders as provided in Section 10.03, in which case the Issuer
or the Holders calling the meeting, as the case may be, will in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting will be elected by vote of the Holders of a majority in principal
amount of the Securities represented at the meeting and entitled to vote.
At any meeting each Holder or proxy will, subject to the
provisions of Section 10.04 hereof, be entitled to one vote for each $1,000
principal amount of Securities held or represented by him or her; PROVIDED,
HOWEVER, that no vote will be cast or counted at any meeting in respect of any
Securities challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman may adjourn any such meeting if he
is unable to determine whether any Holder or proxy will be entitled to vote at
such meeting. The chairman of the meeting will have no right to vote other than
by virtue of Securities held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Holders. Any meeting of
Holders duly called pursuant to the provisions of Section 10.02 or Section 10.03
may be adjourned from time to time by vote of the Holders of a majority in
aggregate principal amount of the Securities represented at the meeting and
entitled to vote, and the meeting may be held as so adjourned without further
notice.
SECTION 10.07. VOTING AT THE MEETING AND RECORD TO BE KEPT.
The vote upon any resolution submitted to any meeting of
Holders will be by written ballots on which will be subscribed the signatures of
the Holders of Securities or/of their representatives by proxy and the principal
amount of the Securities voted by the ballot. The permanent chairman of the
meeting will appoint two inspectors of votes, who will count all votes cast at
the meeting for or against any resolution and will make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Holders will be prepared by the secretary of the meeting and there
will be attached to such record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more Persons having
knowledge of the facts, setting forth a copy of the notice of the meeting and
showing that such notice was mailed as provided in Section 10.02. The record
will be signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates will be delivered to the
Issuer and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified will be conclusive evidence
of the matters therein stated.
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SECTION 10.08. EXERCISE OF RIGHTS OF TRUSTEE OR HOLDERS MAY
NOT BE HINDERED OR DELAYED BY CALL OF MEETING.
Nothing contained in this Article Ten will be deemed or
construed to authorize or permit, by reason of any call of a meeting of Holders
or any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Holders under any of the provisions of this
Indenture or of the Securities.
SECTION 10.09. PROCEDURES NOT EXCLUSIVE.
The procedures set forth in this Article Ten are not exclusive
and the rights and obligations of the Issuer, GST, the Trustee and the Holders
under other Articles of this Indenture (including, without limitation, Articles
Six, Seven, Eight and Nine) will in no way be limited by the provisions of this
Article Ten.
ARTICLE ELEVEN
SECURITY
SECTION 11.01. SECURITY. (a) On the Closing Date, the Company
shall (i) enter into the Pledge Agreement and comply with the terms and
provisions thereof and (ii) purchase the Pledged Securities to be pledged to the
Trustee for the benefit of the Holders in an amount equal to the net proceeds to
be received by the Company from the sale of the Securities (plus all cash owned
by the Company on the Closing Date). On the Closing Date, the Company shall use
a portion of the net proceeds of the initial issuance of the Securities to
purchase Pledged Securities sufficient to fund the first six scheduled interest
payments on the Securities (the "INTEREST COLLATERAL"). The Pledged Securities
shall be pledged by the Company to the Trustee for the benefit of the Holders
and shall be held by the Trustee in the Pledge Account pending disposition
pursuant to the Pledge Agreement.
(b) Each Holder, by its acceptance of a Security, consents and
agrees to the terms of the Pledge Agreement (including, without limitation, the
provisions providing for foreclosure and release of the Pledged Securities) as
the same may be in effect or may be amended from time to time in accordance with
its terms, and authorizes and directs the Trustee to enter into the Pledge
Agreement and to perform its respective obligations and exercise its respective
rights thereunder in accordance therewith. The Company will do or cause to be
done all such acts and things as may be necessary or proper, or as may be
required by the provisions of the Pledge Agreement, to assure and confirm to the
Trustee the security interest in the Pledged Securities contemplated hereby, by
the Pledge Agreement or any part thereof, as from time to time constituted, so
as to render the same available for the security and benefit of this Indenture
and of the Securities secured hereby, according to the intent and purposes
herein expressed. The Company shall take, or shall cause to be taken, any and
all actions reasonably required (and any action requested by the Trustee) to
cause the Pledge Agreement to create and maintain, as security for the
obligations of the Company
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under this Indenture and the Securities, valid and enforceable first priority
security interests in and on all the Pledged Securities, the Pledge Account, the
Initial Note, the Intercompany Notes and the Acquired Equipment in favor of the
Trustee, superior to and prior to the rights of third Persons and subject to no
other Liens.
(c) Upon written request by the Company to the Trustee,
Pledged Securities (other than Interest Collateral) shall be released from the
Pledge Account to the Company in order to finance the cost (including, without
limitation, the cost of design, development, construction, acquisition,
installation or integration) (collectively, "ACQUIRED EQUIPMENT COST") of
telecommunications inventory or equipment purchased or leased by the Company
("ACQUIRED EQUIPMENT") or to refinance on the Closing Date up to $50 million of
indebtedness of GST USA and its subsidiaries secured by Acquired Equipment.
Immediately upon the acquisition of Acquired Equipment, the Company shall grant
a first priority security interest in such Acquired Equipment to the Trustee for
the benefit of the Holders of the Securities. GST USA shall purchase all
Acquired Equipment from the Company at a purchase price equal to the Acquired
Equipment Cost for such Acquired Equipment and the purchase price shall be paid
in the form of an Intercompany Note in a principal amount equal to the Acquired
Equipment Cost, issued by GST USA and fully and unconditionally guaranteed by
GST. Each Intercompany Note shall be secured by a first priority security
interest in all Acquired Equipment purchased by GST USA. The Company shall grant
a first priority security interest in all Intercompany Notes to the Trustee for
the benefit of the Holders of the Securities. On the Assumption Date, GST USA
shall grant a first priority security interest in all Acquired Equipment
securing Intercompany Notes or then held by the Company to the Trustee for the
benefit of the Holders of the Securities.
(d) The release of any Pledged Securities pursuant to the
Pledge Agreement will not be deemed to impair the security under this Indenture
in contravention of the provisions hereof if and to the extent the Pledged
Securities are released pursuant to this Indenture and the Pledge Agreement. To
the extent applicable, the Company shall cause TIA Section 314(d) relating to
the release of property or securities from the Lien and security interest of the
Pledge Agreement (other than pursuant to Sections 8(b), 8(c) or 8(d) thereof)
and relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Pledge Agreement to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company, except in cases where TIA Section 314(d)
requires that such certificate or opinion be made by an independent Person,
which Person shall be an independent engineer, appraiser or other expert
selected by the Company.
(e) The Company shall cause TIA Section 314(b), relating to
opinions of counsel regarding the Lien under the Pledge Agreement, to be
complied with. The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such instruments.
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(f) The Trustee may, and at the request of the Holders of at
least 25% in aggregate principal amount of Securities then outstanding shall, on
behalf of the Holders, take all actions it deems necessary or appropriate in
order to (i) enforce any of the terms of the Pledge Agreement and (ii) collect
and receive any and all amounts payable in respect of the obligations of the
Company thereunder. The Trustee shall have power to institute and to maintain
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Pledged Securities
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest hereunder or be prejudicial to the interests of the
Holders or of the Trustee).
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT OF 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required to be part of and
to govern indentures qualified under the TIA. After the effectiveness of the
Registration Statement, this Indenture shall be subject to the provisions of the
TIA that are required to be a part of this Indenture and shall, to the extent
applicable, be governed by such provisions.
SECTION 12.02. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail addressed as follows:
IF TO THE COMPANY:
GST Equipment Funding, Inc.
4317 N.E. Thurston Way
Vancouver, Washington 98662
Attention: Chief Executive Officer
IF TO GST USA:
GST USA, Inc.
4317 N.E. Thurston Way
Vancouver, Washington 98662
Attention: Chief Executive Officer
IF TO GST:
GST Telecommunications, Inc.
4317 N.E. Thurston Way
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Vancouver, Washington 98662
Attention: Chief Executive Officer
IF TO THE TRUSTEE:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
The Company, GST USA, GST or the Trustee by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Security Register by first class mail
and shall be sufficiently given to him if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
and except as otherwise provided in this Indenture, if a notice or communication
is mailed in the manner provided in this Section 12.02, it is duly given,
whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 12.03. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company, GST USA or GST to the
Trustee to take any action under this Indenture, the Company, GST USA or GST
shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
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SECTION 12.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
PROVIDED, HOWEVER, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 12.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of Holders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 12.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of
maturity of any Security shall not be a Business Day, then payment of principal
of, premium, if any, or interest on such Security, as the case may be, need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date, Payment Date,
Redemption Date, or at the Stated Maturity or date of maturity of such Security;
PROVIDED that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 12.07. GOVERNING LAW; CONSENT TO JURISDICTION AND
SERVICE. This Indenture and the Securities shall be governed by the laws of the
State of New York. Each of the Company, GST USA and GST will appoint Olshan
Grundman Frome & Rosenzweig LLP, 505 Park Avenue, New York, New York 10022,
Attention: David Adler, Esq. as its agent for service of process in any suit,
action or proceeding with respect to this Indenture or the Securities and for
actions brought under federal or state securities laws brought in any federal or
state court located in The City of New York and each of the Company, GST USA and
GST agrees to submit to the jurisdiction of any such court.
SECTION 12.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the
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Company, GST USA, GST or any of their Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 12.09. NO RECOURSE AGAINST OTHERS. No recourse for the
payment of the principal of, premium, if any, or interest on any of the
Securities, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Company,
GST USA or GST contained in this Indenture, or in any of the Securities, or
because of the creation of any Indebtedness represented thereby, shall be had
against any incorporator or against any past, present or future partner,
shareholder, other equityholder, officer, director, employee or controlling
person, as such, of the Company, GST USA or GST or of any successor Person,
either directly or through the Company, GST USA or GST or any successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
SECTION 12.10. SUCCESSORS. All agreements of the Company, GST
USA and GST in this Indenture and the Securities shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 12.11. DUPLICATE ORIGINALS. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.
SECTION 12.12. SEPARABILITY. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
GST EQUIPMENT FUNDING, INC.
By:/s/ Stephen Irwin
---------------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST USA, INC.
By:/s/ Stephen Irwin
---------------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST TELECOMMUNICATIONS, INC.
By: /s/ Stephen Irwin
---------------------------------------
Name: Stephen Irwin
Title: Vice-Chairman and Secretary
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Louis P. Young
---------------------------------------
Name: Louis P. Young
Title: Vice President
<PAGE>
EXHIBIT A
[FACE OF NOTE]
GST EQUIPMENT FUNDING, INC.
13 1/4% Senior Secured Note due 2007
[CUSIP _______] [CINS ________]
No. ____________ $_________
GST EQUIPMENT FUNDING, INC., a Delaware corporation (the
"COMPANY" or together with any successor under the Indenture hereinafter
referred to, the "ISSUER") for value received, promises to pay to __________, or
its registered assigns, the principal sum of $__________ on May 1, 2007.
Interest Payment Dates: May 1 and November 1, commencing
November 1, 1997.
Regular Record Dates: April 15 and October 15.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officer.
Date: ____________ GST EQUIPMENT FUNDING, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 13 1/4% Senior Secured Notes due 2007 described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
------------------------------
Authorized Signatory
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[REVERSE SIDE OF NOTE]
GST EQUIPMENT FUNDING, INC.
13 1/4% Senior Secured Note due 2007
1. PRINCIPAL AND INTEREST.
On or after May 13, 2000, or earlier if permitted by the 1995
Indentures (the "ASSUMPTION DATE"), the Notes will be unconditionally and
irrevocably assumed by GST USA, Inc. a Delaware corporation ("GST USA"), and
guaranteed (the "NOTE GUARANTEE") by GST Telecommunications, Inc., a federally
chartered Canadian corporation ("GST"). As used in this Note, the term issuer
means the Company until GST USA becomes the obligor hereunder, after which the
term "Issuer" means GST USA or any successor thereto. Upon GST USA's assumption
of this note, the Company will be liquidated and all of its assets distributed
to its sole stockholder, GST USA.
The Issuer will pay the principal of this Note on May 1, 2007.
The Issuer promises to pay interest on the principal amount of
this Note on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Interest on the Notes shall accrue at the rate of 13 1/4% per
annum (the "INTEREST RATE") and will be payable in U.S. dollars semiannually (to
the Holders of record of the Notes at the close of business on the April 15 or
October 15 immediately preceding the Interest Payment Date) on May 1 and
November 1 of each year, commencing November 1, 1997.
If an exchange offer registered under the Securities Act is
not consummated, and a shelf registration statement under the Securities Act
with respect to resales of the Notes is not declared effective by the
Commission, on or before November 13, 1997 in accordance with the terms of the
Registration Rights Agreement dated May 13, 1997 among the Company, GST USA,
GST, Morgan Stanley & Co. Incorporated, Dillon, Read & Co. Inc. and TD
Securities (USA) Inc., interest (in addition to the interest otherwise due on
the Notes) will accrue, at an annual rate of 0.5%, from November 13, 1997;
PROVIDED that failure to cause such exchange offer to be consummated or such
shelf registration statement to be declared effective shall be deemed not to be
a default or breach of a covenant for purposes of Section 6.01(c) of the
Indenture. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement. To the extent there is a conflict between this
Note and such Registration Rights Agreement, such Registration Rights Agreement
shall control to the extent permitted by applicable law.
Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from May 13,
1997; PROVIDED that, if there is no existing default in the payment of interest
and this Note is authenticated between a Regular Record
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Date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such Interest Payment Date. Interest will be
computed on the basis of a 360-day year of 12 30-day months.
The Issuer shall pay interest on overdue principal and
premium, if any, and (to the extent lawful) interest on overdue installments of
interest at the rate per annum borne by the Notes.
2. METHOD OF PAYMENT.
The Issuer will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each May 1 and November 1 to the persons who are Holders (as reflected
in the Security Register at the close of business on the April 15 and October 15
immediately preceding the Interest Payment Date), in each case, even if the Note
is cancelled on registration of transfer or registration of exchange after such
record date; PROVIDED that, with respect to the payment of principal, the Issuer
will not make payment to the Holder unless this Note is surrendered to a Paying
Agent.
The Issuer will pay principal, premium, if any, and as
provided above, interest in money of the United States of America that at the
time of payment is legal tender for payment of public and private debts. If a
payment date is a date other than a Business Day at a place of payment, payment
may be made at that place on the next succeeding day that is a Business Day and
no interest shall accrue for the intervening period.
3. PAYING AGENT AND REGISTRAR.
Initially, the Trustee will act as authenticating agent,
Paying Agent and Registrar. The Issuer may change any authenticating agent,
Paying Agent or Registrar without notice. The Issuer, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. INDENTURE; LIMITATIONS.
The Company issued the Notes under an Indenture dated as of
May 13, 1997 (the "INDENTURE"), among the Company, GST USA, GST
Telecommunications, Inc., and United States Trust Company of New York, as
trustee (the "TRUSTEE"). Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act. The Notes are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
The Notes are general secured, unsubordinated indebtedness of
the Issuer, will rank PARI PASSU in right of payment with all existing and
future secured, unsubordinated indebtedness
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of the Issuer and will be senior in right of payment to all existing and future
subordinated indebtedness of the Issuer.
5. REDEMPTION.
The Notes will be redeemable, at the Issuer's option, in whole
or in part, at any time and from time to time on or after May 1, 2002 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of their
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date) if redeemed
during the 12-month period commencing on May 1 of the applicable year set forth
below:
YEAR REDEMPTION PRICE
2002 106.6250%
2003 103.3125%
2004 and thereafter 100.0000%
In addition, the Securities may be redeemed as a whole, but
not in part, at the option of GST, at any time after GST USA has become the
obligor on the Notes and GST has guaranteed the Notes, at 100% of their
principal amount on the Redemption Date, together with accrued interest thereon,
if any, to the Redemption Date, in the event GST has become or would become
obligated to pay, on the next date on which any amount would be payable with
respect to the Note Guarantee any Additional Amounts as a result of a change in
the laws (including any regulations promulgated thereunder) of Canada (or any
political subdivision or taxing authority thereof or therein), or change in any
official position regarding the application or interpretation or such laws or
regulations, which change is announced or becomes effective on or after the
Closing Date.
If on May 13, 2000, GST USA is prohibited by the 1995
Indentures from assuming all of the indebtedness represented by, and becoming
direct obligor on, the Notes, or GST is prohibited by the 1995 Indentures from
issuing the Note Guarantee, the Company will redeem the portion of the Notes
that can not be assumed or guaranteed at 101% of their principal amount plus
accrued and unpaid interest to the applicable Redemption Date.
6. NOTICE OF REDEMPTION.
Notice of any optional redemption will be mailed at least 30
days but not more than 60 days before the Redemption Date, and notice of any
mandatory redemption will be mailed at least 10 days but not more than 30 days
before the Redemption Date, in each case, to each Holder of Notes to be redeemed
at such Holder's last address as it appears in the Security Register. Notes in
original denominations larger than $1,000 may be redeemed in part; PROVIDED that
Notes will only be issued in denominations of $1,000 principal amount or
integral multiples thereof.
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On and after the Redemption Date, interest ceases to accrue on Notes or portions
of Notes called for redemption, unless the Issuer defaults in the payment of the
Redemption Price.
7. REPURCHASE UPON CHANGE IN CONTROL.
Upon the occurrence of any Change of Control, each Holder
shall have the right to require the repurchase of its Notes by the Issuer in
cash pursuant to the offer described in the Indenture at a purchase price equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (the "CHANGE OF CONTROL PAYMENT").
A notice of such Change of Control will be mailed within 30
days after any Change of Control occurs to each Holder at his last address as it
appears in the Security Register. Notes in original denominations larger than
$1,000 may be sold to the Issuer in part; PROVIDED that Notes will only be
issued in denominations of $1,000 principal amount or integral multiples
thereof. On and after the applicable Payment Date, interest ceases to accrue on
Notes or portions of Notes surrendered for purchase by the Issuer , unless the
Issuer defaults in the payment of the Change of Control Payment.
8. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in
denominations of $1,000 of principal amount and integral multiples thereof. A
Holder may register the transfer or exchange of Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer or exchange of any Notes selected for redemption. Also, it need not
register the transfer or exchange of any Notes for a period of 15 days before a
selection of Notes to be redeemed is made.
9. PERSONS DEEMED OWNERS.
A Holder shall be treated as the owner of a Note for all
purposes.
10. UNCLAIMED MONEY.
If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, Holders entitled to the money must
look to the Issuer for payment, unless an applicable law designates another
Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Issuer deposits with the Trustee money or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the
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Notes (a) to redemption or maturity, the Company, GST USA and GST will be
discharged from the Indenture and the Notes, except in certain circumstances for
certain sections thereof, and (b) to the Stated Maturity, the Company, GST USA
and GST will be discharged from certain covenants set forth in the Indenture.
12. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
13. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of
GST and its Restricted Subsidiaries, among other things, to incur additional
indebtedness; create liens; engage in sale-leaseback transactions; pay dividends
or make distributions in respect of their capital stock; make investments or
make certain other restricted payments; sell assets; issue or sell stock of
Restricted Subsidiaries; enter into transactions with stockholders or
affiliates; acquire assets or businesses located outside the continental United
States and Hawaii; or, with respect to GST, GST USA and the Company consolidate,
merge or sell all or substantially all of its assets. Within 90 days after the
end of the last quarter of each fiscal year, GST must report to the Trustee on
compliance with such limitations.
14. SUCCESSOR PERSONS.
Generally, when a successor person or other entity assumes all
the obligations of its predecessor under the Notes and the Indenture, the
predecessor person will be released from those obligations.
15. DEFAULTS AND REMEDIES.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; PROVIDED that a failure to make any of the first six scheduled interest
payments on the Notes on the applicable Interest Payment Date will constitute an
Event of Default with no grace or cure period; (c) the Company, GST USA or GST
defaults in the performance of or breaches any other covenant or agreement of
the Company, GST USA or GST in the Indenture or under the Notes, the Note
Guarantee, the Initial Note or the Intercompany
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Notes and such default or breach continues for a period of 30 consecutive days
after written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the Notes; (d) there occurs with respect to any issue or
issues of Indebtedness of GST or any Significant Subsidiary having an
outstanding principal amount of $5,000,000 or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (e) any final judgment or order (not
covered by insurance) for the payment of money in excess of $5,000,000 in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company, GST USA, GST or any Significant Subsidiary and
shall not be paid or discharged, and there shall be any period of 30 consecutive
days following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $5,000,000 during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (f) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company, GST
USA, GST or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (B) appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company, GST USA, GST or any Significant
Subsidiary (other than a liquidation of the Company into GST USA in connection
with the assumption of the Notes) or for all or substantially all of the
property and assets of the Company, GST USA, GST or any Significant Subsidiary
or (C) the winding up or liquidation of the affairs of the Company, GST USA, GST
or any Significant Subsidiary (other than a liquidation of the Company into GST
USA in connection with the assumption of the Notes) and, in each case, such
decree or order shall remain unstayed and in effect for a period of 30
consecutive days; or (g) the Company, GST USA, GST or any Significant Subsidiary
(A) commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company, GST USA,
GST or any Significant Subsidiary (other than a liquidation of the Company into
GST USA in connection with the assumption of the Notes) or for all or
substantially all of the property and assets of the Company, GST USA, GST or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors; (h) the Trustee or the Company does not have at all times a first
priority perfected security interest in all Pledged Securities, the Pledge
Account, all Acquired Equipment, the Initial Note and Intercompany Notes or GST,
GST USA or the Company asserts in writing that the security arrangements under
the Indenture, the Pledge Account, the Initial Note and the Intercompany Notes
are not in full force and effect; or (i) GST USA shall not have become a direct
obligor on the Notes (other than Notes to be redeemed as described under
"Mandatory Redemption" for which the Company shall have deposited the redemption
price) and GST shall not have become a guarantor of the Notes by May 13, 2000.
A-8
<PAGE>
If an Event of Default (other than an Event of Default
specified in clause (f) or (g) above that occurs with respect to the Company,
GST USA, or GST or clause (h)) occurs and is continuing under the Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes, then outstanding, by written notice to the Company (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal amount of, premium, if any, and
accrued interest, if any, on the Notes to be immediately due and payable. If a
bankruptcy or insolvency default with respect to the Company, GST USA or GST
occurs and is continuing, the principal of the Notes automatically becomes due
and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of at least a majority in principal amount of the Notes then outstanding
may direct the Trustee in its exercise of any trust or power.
16. ADDITIONAL AMOUNTS.
Any payments by GST under or with respect to the Notes may
require the payment of Additional Amounts as may become payable under Section
4.22 of the Indenture.
17. TRUSTEE DEALINGS WITH COMPANY OR GUARANTOR.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from and perform services for
GST or the Issuer or their Affiliates and may otherwise deal with GST or the
Issuer or their Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS.
No incorporator or any past, present or future partner,
shareholder, other equity holder, officer, director, employee or controlling
person as such, of the Company, GST USA or GST or of any successor Person shall
have any liability for any obligations of the Company, GST USA or GST under the
Notes or the Indenture or for any claim based on, in respect of or by reason of,
such obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
A-9
<PAGE>
19. AUTHENTICATION.
This Note shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Note.
21. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to GST
Equipment Funding, Inc., 4317 N.E. Thurston Way, Vancouver, Washington 98662,
Attention: Chief Executive Officer.
A-10
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
INSERT TAXPAYER IDENTIFICATION NO.
Please print or typewrite name and address including zip code of assignee the
within Note and all rights thereunder, hereby irrevocably constituting and
appointing attorney to transfer said Note on the books of the Company with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES,
PERMANENT OFFSHORE GLOBAL SECURITIES AND
PERMANENT OFFSHORE PHYSICAL SECURITIES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[CHECK ONE]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
OR
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
A-11
<PAGE>
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:
------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or
any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------------------------------
NOTICE: To be executed by an
executive officer
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company
pursuant to Section 4.12 or Section 4.14 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 4.12 or Section 4.14 of the Indenture, state the
amount (in principal amount):
$----------------.
Date:
Your Signature:
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE>
FORM OF CERTIFICATE
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
Re: GST Equipment Funding, Inc. (the "COMPANY")
13 1/4% Senior Secured Notes
DUE 2007 (THE "SECURITIES")
Ladies and Gentlemen:
This letter relates to U.S. $_________ principal amount of
Securities represented by a Note (the "LEGENDED NOTE") which bears a legend
outlining restrictions upon transfer of such Legended Note. Pursuant to Section
2.02 of the Indenture (the "INDENTURE") dated as of May 13, 1997 relating to the
Securities, we hereby certify that we are (or we will hold such Securities on
behalf of) a person outside the United States to whom the Securities could be
transferred in accordance with Rule 904 of Regulation S promulgated under the
U.S. Securities Act of 1933, as amended. Accordingly, you are hereby requested
to exchange the legended certificate for an unlegended certificate representing
an identical principal amount of Securities, all in the manner provided for in
the Indenture.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
---------------------------------
Authorized Signature
<PAGE>
EXHIBIT C
Form of Certificate to be Delivered
in Connection with Transfers
PURSUANT TO REGULATION S
------ --, ----
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
Re: GST Equipment Funding, Inc. (the "COMPANY")
13 1/4% Senior Secured Notes
DUE 2007 (THE "SECURITIES")
Ladies and Gentlemen:
In connection with our proposed sale of U.S.$__________
aggregate principal amount of the Securities, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act of 1933.
<PAGE>
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------
Authorized Signature
C-2
<PAGE>
EXHIBIT D
Form of Certificate to be
Delivered in Connection with
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
------ --, ----
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
Re: GST Equipment Funding, Inc. (the "COMPANY")
13 1/4% Senior Secured Notes
DUE 2007 (THE "SECURITIES")
Ladies and Gentlemen:
In connection with our proposed purchase of $___________
aggregate principal amount of the Securities, we confirm that:
1. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the
Indenture dated as of May 13, 1997 relating to the Securities (the
"INDENTURE") and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Securities except in
compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities
may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell any
Securities, we will do so only (A) to GST, the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined
therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities
Act or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide
D-1
<PAGE>
to any person purchasing any of the Securities from us a notice
advising such purchaser that resales of the Securities are restricted
as stated herein.
3. We understand that, on any proposed resale of any Securities,
we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Securities purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its
investment.
5. We are acquiring the Securities purchased by us for our own
account or for one or more accounts (each of which is an institutional
"ACCREDITED INVESTOR") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
---------------------------------------------
Authorized Signature
D-2
<PAGE>
EXHIBIT E
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (the "SUPPLEMENTAL INDENTURE"), dated as
of _______, 19__ among GST USA, INC., a Delaware corporation ("GST USA"), GST
TELECOMMUNICATIONS, INC., a federally chartered Canadian corporation ("GST") and
UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the "TRUSTEE").
W I T N E S S E T H:
WHEREAS, in accordance with Section 4.23(a) of the Indenture,
dated as of May 13, 1997, among GST Equipment Funding, Inc., GST USA, GST and
the Trustee (the "INDENTURE"), relating to the 13 1/4% Senior Secured Notes due
2007 of the Company (the "SECURITIES"), GST USA and GST are required to deliver
this Supplemental Indenture providing for GST USA to assume the indebtedness
represented by, and become the direct obligor on, the Securities and for GST to
guarantee (the "SECURITY GUARANTEE") the performance of all of GST USA's
obligations under the Securities and the Indenture;
WHEREAS, the terms of the 1995 Indenture do not prohibit GST
USA's assuming the indebtedness represented by, and becoming the direct obligor
on, the Securities or GST's issuance of the Security Guarantee;
WHEREAS, the Boards of Directors of each of GST USA and GST have
authorized and approved delivery of this Supplemental Indenture; and
WHEREAS, all other things necessary to make this Supplemental
Indenture a valid supplement to the Indenture according to its terms and the
terms of the Indenture have been done.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1.1 CERTAIN TERMS DEFINED IN THE INDENTURE. All
capitalized terms used herein without definition herein shall have the meanings
ascribed thereto in the Indenture.
SECTION 1.2 ASSUMPTION OF THE SECURITIES BY GST USA. GST USA
hereby, effective on the date of this Indenture Supplement, unconditionally and
irrevocably assumes the indebtedness represented by, and agrees to become the
direct obligor on, the Securities.
SECTION 1.3. SECURITY GUARANTEE. Subject to the provisions of
this Indenture Supplement, effective on the date of this Indenture Supplement,
GST hereby fully, unconditionally and irrevocably guarantees to each Holder and
to the Trustee on behalf of the
E-1
<PAGE>
Holders: (i) the due and punctual payment of the principal of, premium, if any,
on and interest on each Security, when and as the same shall become due and
payable, whether at maturity, by acceleration or otherwise, the due and punctual
payment of interest on the overdue principal of and interest, if any, on the
Securities, to the extent lawful, and the due and punctual performance of all
other obligations of GST USA to the Holders or the Trustee, all in accordance
with the terms of such Security and the Indenture and (ii) in the case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, at Stated Maturity, by
acceleration or otherwise. GST hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
GST USA, any right to require a proceeding first against GST USA, the benefit of
discussion, protest or notice with respect to any such Security or the debt
evidenced thereby and all demands whatsoever, and covenants that this Security
Guarantee will not be discharged as to any such Security except by payment in
full of the principal thereof and interest thereon and as provided in Section
8.01 and Section 8.02 of the Indenture (subject to Section 8.06 of the
Indenture). The maturity of the obligations guaranteed hereby may be accelerated
as provided in Article Six of the Indenture for the purposes of this Security
Guarantee. In the event of any declaration of acceleration of such obligations
as provided in Article Six of the Indenture, such obligations (whether or not
due and payable) shall forthwith become due and payable by GST for the purpose
of this Security Guarantee. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article Six of the
Indenture, the Trustee shall promptly make a demand for payment on the
Securities under the Security Guarantee provided for in this Indenture
Supplement.
If the Trustee or the Holder of any Security is required by any
court or otherwise to return to GST USA or GST, or any custodian, receiver,
liquidator, trustee, sequestrator or other similar official acting in relation
to GST USA or GST, any amount paid to the Trustee or such Holder in respect of a
Security, this Security Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect. GST further agrees, to the fullest
extent that it may lawfully do so, that, as between it, on the one hand, and the
Holders and the Trustee, on the other hand, the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six of the Indenture
for the purposes of this Security Guarantee, notwithstanding any stay,
injunction or other prohibition extant under any applicable bankruptcy law
preventing such acceleration in respect of the obligations Guaranteed hereby.
GST hereby irrevocably waives any claim or other rights which it
may now or hereafter acquire against GST USA that arise from the existence,
payment, performance or enforcement of its obligations under this Security
Guarantee and the Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of the Holders against GST USA or
any collateral which any such Holder or the Trustee on behalf of such Holder
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including, without limitation, the
right to take or receive
E-2
<PAGE>
from GST USA, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to GST in violation of the preceding
sentence and the principal of, premium, if any, and accrued interest on the
Securities shall not have been paid in full, such amount shall be deemed to have
been paid to GST for the benefit of, and held in trust for the benefit of, the
Holders, and shall forthwith be paid to the Trustee for the benefit of the
Holders to be credited and applied upon the principal of, premium, if any, and
accrued interest on the Securities. GST acknowledges that it received direct and
indirect benefits from the issuance of the Securities pursuant to the Indenture,
and that such Securities were issued, in part, on the promise that this Security
Guarantee would be issued, and that the waivers set forth in this Indenture
Supplement are knowingly made in consideration of such benefits.
SECTION 1.4. OBLIGATIONS UNCONDITIONAL. Subject to Section 1.7
of this Indenture Supplement, nothing contained in this Indenture Supplement or
elsewhere in the Indenture or in the Securities is intended to or shall impair,
as among GST and the holders of the Securities, the obligation of GST, which
will be absolute and unconditional, upon failure by GST USA, to pay to the
holders of the Securities the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
holders of the Securities and creditors of GST, nor shall anything herein or
therein prevent the holder of any Security or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default under
the Indenture.
Without limiting the foregoing, nothing contained in this
Indenture Supplement will restrict the right of the Trustee or the holders of
the Securities to take any action to declare the Security Guarantee to be due
and payable prior to the Stated Maturity of the Securities pursuant to Section
6.02 of the Indenture or to pursue any rights or remedies hereunder or under the
Indenture.
SECTION 1.5. NOTICE TO TRUSTEE. GST shall give prompt written
notice to the Trustee of any fact known to GST which would prohibit the making
of any payment to or by the Trustee in respect of the Security Guarantee
pursuant to the provisions of this Indenture Supplement.
SECTION 1.6. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of, premium, if any, or
interest on the Securities by reason of any provision of this Indenture
Supplement will not be construed as preventing the occurrence of an Event of
Default.
SECTION 1.7. NET WORTH LIMITATION. Notwithstanding any other
provision of this Indenture Supplement, the Indenture or the Securities, the
Security Guarantee shall not be enforceable against GST in an amount in excess
of the net worth of GST at the time that determination of such net worth is,
under applicable law, relevant to the enforceability of such guarantee. Such net
worth shall include any claim of GST against GST USA for reimbursement and any
claim against any grantor of a Subsidiary Guarantee for contribution.
E-3
<PAGE>
SECTION 2. GOVERNING LAW; SUBMISSION TO JURISDICTION; AGENT FOR
SERVICE. This Indenture Supplement shall be governed by the laws of the State of
New York. GST and GST USA each hereby appoints Olshan Grundman Frome &
Rosenzweig LLP, 505 Park Avenue, New York, New York 10022, Attention: David
Adler, Esq. as its agent for service of process in any suit, action or
proceeding with respect to this Indenture Supplement and for actions brought
under federal or state securities laws brought in any federal or state court
located in The City of New York and each of GST USA and GST agrees to submit to
the jurisdiction of any such court.
SECTION 3. COUNTERPARTS. This Supplemental Indenture may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 4. RATIFICATION. Except that GST USA has become the
direct obligor on the Securities and GST has provided the Security Guarantee,
each provision of the Indenture shall remain in full force and effect and the
Indenture is in all respects agreed to, ratified and confirmed by each of GST
USA, GST and the Trustee.
E-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
GST USA, INC.
By:
-----------------------------------
Name:
Title:
GST TELECOMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
-----------------------------------
Name:
Title:
E-5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into May 13, 1997 among GST EQUIPMENT FUNDING, INC., a Delaware
corporation ("GST Funding"), GST USA, INC., a Delaware corporation ("GST USA"),
GST TELECOMMUNICATIONS, INC., a Canadian corporation ("GST"), and MORGAN STANLEY
& CO. INCORPORATED, DILLON, READ & CO. INC. and TD SECURITIES (USA) INC.
(collectively referred to as the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement
dated May 8, 1997 (the "Placement Agreement"), among GST Funding, GST USA, GST
and the Placement Agents, which provides for the sale by GST Funding to the
Placement Agents of $265,000,000 principal amount of GST Funding's 13 1/4%
Senior Secured Notes Due 2007 (the "Notes") to be issued by GST Funding pursuant
to the provisions of an Indenture dated as of May 13, 1997 (the "Indenture")
among GST Funding, GST USA, GST and United States Trust Company of New York, as
trustee (the "Trustee"). In order to induce the Placement Agents to enter into
the Placement Agreement, GST Funding, GST USA and GST have agreed to provide to
the Placement Agents and their direct and indirect transferees the registration
rights with respect to the Notes set forth in this Agreement. The execution of
this Agreement is a condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"CLOSING DATE" shall mean the Closing Date as defined in the
Placement Agreement.
"EXCHANGE DATE" shall have the meaning set forth in Section
2(a)(ii) hereof.
"EXCHANGE NOTES" shall mean securities issued under the
Indenture by GST Funding or by GST USA, as the case may be, containing
terms identical to the Notes (except that the Exchange Notes will not
contain terms with respect to transfer restrictions) to be offered to
Holders of Notes in exchange for Notes pursuant to the Exchange Offer.
"EXCHANGE OFFER" shall mean the exchange offer by GST Funding
or GST USA, as the case may be, of Exchange Notes for Registrable Notes
pursuant to Section 2(a) hereof.
<PAGE>
"EXCHANGE OFFER REGISTRATION" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
"GST" shall have the meaning set forth in the preamble and
shall also include GST's successors.
"GST FUNDING" shall have the meaning set forth in the preamble
and shall also include GST Funding's successors.
"GST USA" shall have the meaning set forth in the preamble and
shall also include GST USA's successors.
"HOLDER" shall mean the Placement Agents, for so long as they
own any Registrable Notes, and each of their successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Notes under the Indenture; PROVIDED that for purposes of
Sections 4 and 5 hereof, the term "Holder" shall include Participating
Broker-Dealers.
"INDENTURE" shall have the meaning set forth in the preamble.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes; PROVIDED
that whenever the consent or approval of Holders of a specified
percentage of Registrable Notes is required hereunder, Registrable
Notes held by GST Funding or any of its affiliates (as such term is
defined in Rule 405 under the 1933 Act) (other than the Placement
Agents or subsequent holders of Registrable Notes if such subsequent
holders are deemed to be such affiliates solely by reason of their
holding of such Registrable Notes) shall not be counted in determining
whether such consent or approval was given by the Holders of such
required percentage or amount.
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth
in Section 4(a) hereof.
"PERSON" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"PLACEMENT AGENTS" shall have the meaning set forth in the
preamble.
"PLACEMENT AGREEMENT" shall have the meaning set forth in the
preamble.
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"PROSPECTUS" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Notes covered by a
Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, and in each case including all material
incorporated by reference therein.
"REGISTRABLE NOTES" shall mean the Notes; PROVIDED, HOWEVER,
that the Notes shall cease to be Registrable Notes (i) when a
Registration Statement with respect to such Notes shall have been
declared effective under the 1933 Act and such Notes shall have been
disposed of or exchanged pursuant to such Registration Statement, (ii)
when such Notes have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the
1933 Act or (iii) when such Notes shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses
incident to performance of or compliance by GST Funding, GST USA and
GST with this Agreement, including without limitation: (i) all SEC,
stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
Underwriters or Holders in connection with blue sky qualification of
any of the Exchange Notes or Registrable Notes), (iii) all expenses of
any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus,
any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating
agency fees, if any, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for GST Funding, GST USA and GST and,
in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of GST Funding, GST USA and GST,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but
excluding fees and expenses of counsel to the Underwriters (other than
fees and expenses set forth in clause (ii) above) or the Holders and
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Notes by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement
of GST Funding, GST USA or GST that covers any of the Exchange Notes or
Registrable Notes pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
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"SEC" shall mean the Securities and Exchange Commission.
"SHELF REGISTRATION" shall mean a registration effected
pursuant to Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf"
registration statement of GST Funding, GST USA or GST pursuant to the
provisions of Section 2(b) hereof which covers all of the Registrable
Notes (but no other securities unless approved by the Holders whose
Registrable Notes are covered by such Shelf Registration Statement) on
an appropriate form under Rule 415 under the 1933 Act, or any similar
rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"TRUSTEE" shall have the meaning set forth in the preamble and
its successors under the Indenture.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall
mean a registration in which Registrable Notes are sold to an
Underwriter for reoffering to the public.
"UNDERWRITERS" shall have the meaning set forth in Section 3
hereof.
2. REGISTRATION UNDER THE 1933 ACT.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, GST Funding, GST USA and GST
shall cause to be filed an Exchange Offer Registration Statement covering the
offer by GST Funding or GST USA, as the case may be, to the Holders to exchange
all of the Registrable Notes for Exchange Notes, to have such Registration
Statement remain effective until the closing of the Exchange Offer and to
consummate the Exchange Offer on or prior to the date that is six months after
the Closing Date. GST Funding or GST USA, as the case may be, shall commence the
Exchange Offer promptly after the Exchange Offer Registration Statement has been
declared effective by the SEC and use its best efforts to have the Exchange
Offer consummated not later than 60 days after such effective date. GST Funding
or GST USA, as the case may be, shall commence the Exchange Offer by mailing the
related exchange offer Prospectus and accompanying documents to each Holder
stating, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Registrable Notes validly tendered will be
accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (each such date being an "Exchange Date");
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(iii) that any Registrable Note not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Agreement;
(iv) that Holders electing to have a Registrable Note
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Note, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Notes delivered for
exchange and a statement that such Holder is withdrawing his election
to have such Notes exchanged.
As soon as practicable after the last Exchange Date, GST
Funding or GST USA, as the case may be, shall:
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by GST Funding or GST USA, as the case may be, and issue, and
cause the Trustee to promptly authenticate and mail, to each Holder an
Exchange Note of equal principal amount.
GST Funding, GST USA and GST shall use their best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
GST Funding or GST USA, as the case may be, shall inform the Placement Agents of
the names and addresses of the Holders to whom the Exchange Offer is made, and
the Placement Agents shall have the right, subject to applicable law, to contact
such Holders and otherwise facilitate the tender of Registrable Notes in the
Exchange Offer.
(b) In the event that (i) GST Funding, GST USA or GST
determines that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be consummated as soon as practicable after
the last Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by November 13, 1997 or (iii) the Exchange Offer has
been completed and in the opinion of counsel for the Placement Agents, a
Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable Notes,
GST Funding, GST USA and GST shall use their best
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<PAGE>
efforts to cause to be filed as soon as practicable after such determination,
date or notice of such opinion of counsel is given to GST Funding, GST USA or
GST, as the case may be, a Shelf Registration Statement providing for the sale
by the Holders of all of the Registrable Notes and to have such Shelf
Registration Statement declared effective by the SEC. In the event GST Funding,
GST USA or GST, as the case may be, is required to file a Shelf Registration
Statement solely as a result of the matters referred to in clause (iii) of the
preceding sentence, GST Funding, GST USA or GST, as the case may be, shall file
and have declared effective by the SEC both an Exchange Offer Registration
Statement pursuant to Section 2(a) with respect to all Registrable Notes and a
Shelf Registration Statement (which may be a combined Registration Statement
with the Exchange Offer Registration Statement) with respect to offers and sales
of Registrable Notes held by the Placement Agents after completion of the
Exchange Offer. GST Funding, GST USA and GST agree to use their best efforts to
keep the Shelf Registration Statement continuously effective until the
expiration of the period referred to in Rule 144(k) for the Registrable Notes
covered by such Shelf Registration Statement or such shorter period that will
terminate when all of the Registrable Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement. GST
Funding, GST USA and GST further agree to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by GST Funding or GST USA, as the case
may be, for such Shelf Registration Statement or by the 1933 Act or by any other
rules and regulations thereunder for shelf registration or if reasonably
requested by a Holder with respect to information relating to such Holder, and
to use their best efforts to cause any such amendment to become effective and
such Shelf Registration Statement to become usable as soon as thereafter
practicable. GST Funding, GST USA and GST agree to furnish to the Holders of
Registrable Notes copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
(c) GST Funding, GST USA and GST shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) or Section
2(b) hereof. Each Holder shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Notes pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been declared
effective, the offering of Registrable Notes pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Notes pursuant to
such Registration Statement may legally resume. As provided for in the
Indenture, in the event the Exchange Offer is not consummated and the Shelf
Registration Statement is not declared effective on or prior to November 13,
1997, interest (in addition to the interest otherwise due on the Notes) on the
Notes will accrue, at an annual rate of 0.5%, from November 13, 1997.
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(e) Without limiting the remedies available to the Placement
Agents and the Holders, GST Funding, GST USA and GST acknowledge that any
failure by GST Funding, GST USA and GST to comply with their obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Placement Agents or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agents or any Holder
may obtain such relief as may be required to specifically enforce GST Funding's,
GST USA's and GST's obligations under Section 2(a) and Section 2(b) hereof.
(f) During any consecutive 365-day period, GST Funding, GST
USA and GST may suspend availability of any Shelf Registration Statement for no
more than two periods of up to 45 consecutive days (except for the consecutive
45-day period immediately prior to the maturity of the Notes) and for no more
than an aggregate of 60 days during any 365-day period, if GST's Board of
Directors determines in good faith that there is a valid purpose for such
suspension.
3. REGISTRATION PROCEDURES.
In connection with the respective obligations of GST Funding,
GST USA and GST with respect to the Registration Statements pursuant to Section
2(a) and Section 2(b) hereof, GST Funding, GST USA and GST shall, as
expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form shall (i) be
selected by GST Funding or GST USA, (ii) in the case of a Shelf
Registration, be available for the sale of the Registrable Notes by the
selling Holders thereof and (iii) comply as to form in all material
respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith, and use
their best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; and keep each Prospectus
current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Notes, to counsel for the Placement Agents, to
counsel for the Holders and to each Underwriter of an Underwritten
Offering of Registrable Notes, if any, without charge, as many copies
of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder
or Underwriter may reasonably request, in order to facilitate the
public sale or other
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<PAGE>
disposition of the Registrable Notes; and GST Funding, GST USA and GST
consent to the use of such Prospectus and any amendment or supplement
thereto in accordance with applicable law by each of the selling
Holders of Registrable Notes and any such Underwriters in connection
with the offering and sale of the Registrable Notes covered by and in
the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use their best efforts (i) to register or qualify, by the
time the applicable Registration Statement is declared effective by the
SEC, the Registrable Notes under all applicable state securities laws
or blue sky laws of such jurisdictions as any Holder of Registrable
Notes covered by a Registration Statement shall reasonably request in
writing and (ii) to cooperate with such Holder in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in each such jurisdiction of such Registrable Notes
owned by such Holder; PROVIDED, HOWEVER, that none of GST Funding, GST
USA or GST shall be required to (A) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (B) file
any general consent to service of process or (C) subject itself to
taxation in any such jurisdiction if it is not otherwise so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Notes covered
thereby, the representations and warranties of GST Funding, GST USA or
GST contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to
be true and correct in all material respects or if GST Funding, GST USA
or GST receives any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or
the initiation of any proceeding for such purpose, (v) of the happening
of any event during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement
or the related Prospectus untrue in any material respect or which
requires the making of any changes in such Registration Statement or
Prospectus in order to make the statements therein not misleading and
(vi) of any determination by GST Funding, GST USA or GST that a
post-effective amendment to a Registration Statement would be
appropriate;
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(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment and provide immediate notice to each
Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Notes, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Notes to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold and not bearing any restrictive legends and enable such
Registrable Notes to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the
selling Holders may reasonably request at least one business day prior
to the closing of any sale of Registrable Notes;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use their best
efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Notes, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. GST Funding, GST USA and GST agree to notify the
Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to
suspend use of the Prospectus until GST Funding, GST USA or GST, as the
case may be, has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) within a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document
which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement,
provide copies of such document to the Placement Agents and its counsel
(and, in the case of a Shelf Registration Statement, the Holders and
their counsel) and make such of the representatives of GST Funding, GST
USA and GST as shall be reasonably requested by the Placement Agents or
its counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) available for discussion of such document,
and shall not at any time file or make any amendment to the
Registration Statement, any Prospectus or any amendment of or
supplement to a Registration Statement or a Prospectus or any document
which is to be incorporated by reference into a Registration Statement
or a Prospectus, of which the Placement Agents and its counsel (and, in
the case of a Shelf Registration Statement, the Holders and their
counsel) shall not have previously been advised and furnished a copy
or, other than with respect to documents filed pursuant to the 1934
Act, to which the Placement Agents or their counsel (and, in
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the case of a Shelf Registration Statement, the Holders or their
counsel) shall reasonably object, except for any amendment or
supplement or document, a copy of which has been previously furnished
to the Placement Agents and its counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel), which counsel
for GST Funding, GST USA and GST shall advise GST Funding, GST USA and
GST, in the form of a written legal opinion, is required in order to
comply with applicable law;
(k) obtain a CUSIP number for all Exchange Notes or
Registrable Notes, as the case may be, not later than the effective
date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Notes or Registrable Notes, as the case
may be, cooperate with the Trustee and the Holders to effect such
changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and execute, and use
their best efforts to cause the Trustee to execute all documents as may
be required to effect such changes and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable Notes,
any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the
Holders, at reasonable times and in a reasonable manner, all financial
and other records, pertinent documents and properties of GST Funding,
GST USA and GST, and cause the respective officers, directors and
employees of GST Funding, GST USA and GST to supply all information
reasonably requested by any such representative, Underwriter, attorney
or accountant in connection with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, use their best
efforts to cause all Registrable Notes to be listed on any securities
exchange or any automated quotation system on which similar securities
issued by GST USA or GST are then listed if requested by the Majority
Holders, to the extent such Registrable Notes satisfy applicable
listing requirements;
(o) use their best efforts to cause the Exchange Notes or
Registrable Notes, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in
Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable Notes
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as GST Funding, GST
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USA or GST has received notification of the matters to be incorporated
in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the Registrable Notes being sold) in order to expedite or facilitate
the disposition of such Registrable Notes including, but not limited
to, an Underwritten Offering and in such connection, (i) to the extent
possible, make such representations and warranties to the Holders and
any Underwriters of such Registrable Notes with respect to the business
of GST Funding, GST USA and GST and their subsidiaries, the
Registration Statement, Prospectus and documents incorporated by
reference or deemed incorporated by reference, if any, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to GST Funding, GST USA and
GST (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Notes, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "cold comfort"
letters from the independent certified public accountants of GST
Funding, GST USA and GST (and, if necessary, any other certified public
accountant of any subsidiary of GST Funding, GST USA and GST, or of any
business acquired by GST Funding, GST USA or GST for which financial
statements and financial data are or are required to be included in the
Registration Statement) addressed to each selling Holder and
Underwriter of Registrable Notes, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings, and (iv) deliver
such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Notes
being sold or the Underwriters, and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of GST Funding, GST USA and GST made
pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, GST Funding,
GST USA or GST may require each Holder of Registrable Notes to furnish to GST
Funding, GST USA or GST such information regarding the Holder and the proposed
distribution by such Holder of such Registrable Notes as GST Funding, GST USA or
GST may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from GST Funding, GST USA or GST of the
happening of any event of the kind described in Section 3(e)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Notes pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by GST Funding, GST USA or GST, such Holder will deliver to GST
Funding, GST
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USA or GST (at its expense) all copies in its possession, other than permanent
file copies then in such Holder's possession, of the Prospectus covering such
Registrable Notes current at the time of receipt of such notice. If GST Funding,
GST USA or GST shall give any such notice to suspend the disposition of
Registrable Notes pursuant to a Registration Statement, GST Funding, GST USA and
GST shall extend the period during which the Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions.
The Holders of Registrable Notes covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Notes in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Notes included in such offering.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) GST Funding, GST USA and GST understand that the Staff of
the SEC has taken the position that any broker-dealer that receives Exchange
Notes for its own account in the Exchange Offer in exchange for Notes that were
acquired by such broker-dealer as a result of market-making or other trading
activities (a "Participating Broker-Dealer"), may be deemed to be an
"underwriter" within the meaning of the 1933 Act and must deliver a prospectus
meeting the requirements of the 1933 Act in connection with any resale of such
Exchange Notes.
GST Funding, GST USA and GST understand that it is the Staff's
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Notes, without naming the Participating Broker-Dealers or specifying
the amount of Exchange Notes owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Notes for their own
accounts, so long as the Prospectus otherwise meets the requirements of the 1933
Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, GST Funding, GST USA and GST agree that the
provisions of this Agreement as they relate to a Shelf Registration shall also
apply to an Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Placement Agent or
by one or more Participating Broker-Dealers, in each case as provided in clause
(ii) below, in order to expedite or facilitate the disposition of any Exchange
Notes by Participating Broker-Dealers consistent with the positions of the Staff
recited in Section 4(a) above; PROVIDED that:
(i) GST Funding, GST USA and GST shall not be required to
amend or supplement the Prospectus contained in the Exchange Offer
Registration Statement, as
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would otherwise be contemplated by Section 3(i) hereof, for a period
exceeding 180 days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of Section 3 hereof) and
Participating Broker-Dealers shall not be authorized by GST Funding,
GST USA or GST to deliver and shall not deliver such Prospectus after
such period in connection with the resales contemplated by this Section
4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 hereof to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the
1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to GST Funding, GST USA and GST
by the Placement Agents or with the reasonable request in writing to
GST Funding, GST USA and GST by one or more broker-dealers who certify
to the Placement Agents, GST Funding, GST USA and GST in writing that
they anticipate that they will be Participating Broker-Dealers; and
PROVIDED FURTHER that, in connection with such application of the Shelf
Registration procedures set forth in Section 3 hereof to an Exchange
Offer Registration, GST Funding, GST USA and GST shall be obligated (A)
to deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless
it elects not to act as such representative, (B) to pay the fees and
expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless
such counsel elects not to so act and (C) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in
the form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
(c) The Placement Agents shall have no liability to GST
Funding, GST USA, GST or any Holder with respect to any request that it may make
pursuant to Section 4(b) above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of GST Funding, GST USA and GST agrees, jointly and
severally, to indemnify and hold harmless the Placement Agents, each Holder and
each Person, if any, who controls the Placement Agents or any Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or
is under common control with, or is controlled by, the Placement Agents or any
Holder, from and against all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by the
Placement Agents, any Holder or any such controlling or affiliated Person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which Exchange
Notes or Registrable Notes were registered under the 1933 Act, including all
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if GST Funding, GST USA or GST shall have
furnished any amendments or supplements thereto), or caused by
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any omission or alleged omission to state therein a material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Placement
Agents or any Holder furnished to GST Funding, GST USA or GST in writing by the
Placement Agents or any selling Holder expressly for use therein. In connection
with any Underwritten Offering permitted by Section 3 hereof, GST Funding, GST
USA and GST will also indemnify the Underwriters, if any, selling brokers,
dealers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent
as provided above with respect to the indemnification of the Holders, if
requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless GST Funding, GST USA and GST, the Placement Agents
and the other selling Holders, and each of their respective directors, officers
who sign the Registration Statement and each Person, if any, who controls GST
Funding, GST USA or GST, the Placement Agents and any other selling Holder
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from GST Funding, GST USA
and GST to the Placement Agents and the Holders, but only with reference to
information relating to such Holder furnished to GST Funding, GST USA or GST in
writing by such Holder expressly for use in any Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control the Placement Agents within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
GST Funding, GST USA and GST, their directors, their officers who sign the
Registration Statement and each Person, if any, who controls GST Funding, GST
USA
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<PAGE>
or GST within the meaning of either such Section and (c) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Holders and all Persons, if any, who control any Holders within the meaning of
either such Section, and that all such fees and expenses shall be reimbursed as
they are incurred. In such case involving the Placement Agents and Persons who
control the Placement Agents, such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated. In such case involving the Holders and such Persons
who control Holders, such firm shall be designated in writing by the Majority
Holders. In all other cases, such firm shall be designated by GST. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party for such
fees and expenses of counsel in accordance with such request prior to the date
of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which such indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of GST
Funding, GST USA, GST and the Holders shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by GST Funding, GST USA, GST or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders' respective
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the respective principal amount of Registrable Notes of such
Holder that were registered pursuant to a Registration Statement.
(e) GST Funding, GST USA, GST, and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by PRO RATA allocation or by any other method of allocation that does
not take account of the equitable
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<PAGE>
considerations referred to in paragraph (d) above. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages and liabilities
referred to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5, no Holder
shall be required to indemnify or contribute any amount in excess of the amount
by which the total price at which Registrable Notes were sold by such Holder
exceeds the amount of any damages that such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 5 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) The indemnity and contribution provisions contained in
this Section 5 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of the Placement Agents, any Holder or any person controlling the
Placement Agents or any Holder, or by or on behalf of GST Funding, GST USA, GST,
their officers or directors or any person controlling GST Funding, GST USA or
GST, (iii) acceptance of any of the Exchange Notes and (iv) any sale of
Registrable Notes pursuant to a Shelf Registration Statement.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. None of GST Funding, GST USA
or GST has entered into, and on or after the date of this Agreement will enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
GST Funding's, GST USA's or GST's other issued and outstanding securities under
any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless GST Funding, GST USA and GST have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Notes affected by such amendment, modification,
supplement, waiver or consent; PROVIDED, HOWEVER, that no amendment,
modification, supplement, waiver or consents to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Notes unless consented to in writing by such Holder.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier,
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or any courier guaranteeing overnight delivery (i) if to a Holder, at the most
current address given by such Holder to GST Funding, GST USA and GST by means of
a notice given in accordance with the provisions of this Section 6(c), which
address initially is, with respect to the Placement Agents, the address set
forth in the Placement Agreement; and (ii) if to GST Funding, initially at GST
Funding's address set forth in the Indenture and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 6(c); and if to GST USA, initially at GST USA's address set forth in the
Indenture and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c); and if to GST, initially at
GST's address set forth in the Indenture and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have
been duly given at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee, at
the address specified in the Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; PROVIDED that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms of the Placement Agreement. If any transferee of
any Holder shall acquire Registrable Notes, in any manner, whether by operation
of law or otherwise, such Registrable Notes shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Notes such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof. The Placement Agents (in their capacity
as Placement Agents) shall have no liability or obligation to GST Funding, GST
USA or GST with respect to any failure by a Holder to comply with, or any breach
by any Holder of, any of the obligations of such Holder under this Agreement.
(e) PURCHASES AND SALES OF NOTES. GST Funding, GST USA and GST
shall not, and shall use their best efforts to cause their affiliates (as
defined in Rule 405 under the 1933 Act) not to, purchase and then resell or
otherwise transfer any Notes.
(f) RATING OF NOTES. GST Funding, GST USA and GST shall cause
the Notes or the Exchange Notes, as the case may be, to be rated by Moody's
Investors Service, Inc. or Standard & Poor's Corporation within 18 months of the
Closing Date.
(g) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between GST Funding, GST USA and
GST, on the one hand,
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<PAGE>
and the Placement Agents, on the other hand, and each Holder shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) DESIGNATION OF PROCESS AGENT; SUBMISSION TO JURISDICTION.
Each of GST Funding, GST USA and GST hereby (i) acknowledges that it has
irrevocably designated and appointed Olshan Grundman Frome & Rosenzweig LLP, 505
Park Avenue, New York, New York 10022, Attention: David Adler, Esq. (together
with any successor, the "Process Agent"), as its authorized agent upon which
process may be served in any suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated herein that may be
instituted in any federal or state court in the State of New York, or brought
under federal or state securities laws, and acknowledges that the Process Agent
has accepted such designation, (ii) agrees that service of process upon the
Process Agent and written notice of such service to GST Funding, GST USA or GST,
as the case may be (mailed or delivered to GST's Chief Executive Officer at its
principal office at 4317 N.E. Thurston Way, Vancouver, Washington 98662), shall
be deemed in every respect effective service of process upon GST Funding, GST
USA or GST, as the case may be, in any such suit, action or proceeding and (iii)
agrees to take any and all action, including the execution and filing of any and
all such documents and instruments as may be necessary to continue such
designation and appointment of the Process Agent in full force and effect so
long as any of the Notes shall be outstanding. Each of GST Funding, GST USA and
GST hereby agrees to submit to the nonexclusive jurisdiction of any federal or
state court in the State of New York in any such suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
herein.
(k) WAIVER OF IMMUNITY. To the extent that GST has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.
(l) GOVERNING LAW. This Agreement shall be governed by the
laws of the State of New York.
(m) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
GST TELECOMMUNICATIONS, INC.
By /s/ Stephen Irwin
---------------------------------
Name: Stephen Irwin
Title: Vice Chairman and Secretary
GST USA, INC.
By /s Stephen Irwin
---------------------------------
Name: Stephen Irwin
Title: Senior Vice President
GST EQUIPMENT FUNDING, INC.
By /s Stephen Irwin
---------------------------------
Name: Stephen Irwin
Title: Senior Vice President
Confirmed and accepted as
of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
DILLON, READ & CO. INC.
TD SECURITIES (USA) INC.
By Morgan Stanley & Co. Incorporated
By /s/ James Avery
---------------------------------
Name: James Avery
Title: Vice President
COLLATERAL PLEDGE
AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "PLEDGE
AGREEMENT") is made and entered into as of May 13, 1997 by and among GST
EQUIPMENT FUNDING, INC., a Delaware corporation (the "PLEDGOR"), having its
principal office at 4317 N.E. Thurston Way, Vancouver, Washington 98662, in
favor of United States Trust Company of New York ("U.S. TRUST"), a banking and
trust company duly organized and existing under the laws of the State of New
York, having an office at 114 West 47th Street, New York, N.Y. 10036, as trustee
(the "TRUSTEE") for the holders (the "HOLDERS") of the Notes (as defined herein)
issued by the Pledgor under the Indenture referred to below.
W I T N E S S E T H
WHEREAS, the Pledgor, GST Telecommunications, Inc., a
corporation organized under the federal laws of Canada ("GST"), GST USA, Inc., a
Delaware corporation ("GST USA") and the Trustee have entered into that certain
indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "INDENTURE"), pursuant to which the
Pledgor is issuing $265,000,000 in aggregate principal amount of its 13 1/4%
Senior Secured Notes due 2007 (the "NOTES") on the date hereof (the "OFFERING");
WHEREAS, in consideration for the Pledgor making the financing
from the Offering available to GST USA and for the Pledgor facilitating the
purchase of equipment for GST USA, GST USA has agreed to pay any fees or
expenses incurred by the Pledgor in connection therewith and in support of such
obligations GST USA has issued to Pledgor a $35 million principal amount
promissory note (the "INITIAL NOTE"), guaranteed by GST, which Initial Note
shall be pledged to the Trustee for the benefit of the Holders to secure the
Pledgor's obligations under the Indenture and the Notes;
WHEREAS, the Pledgor is required to apply approximately
$93,800,000 of the net proceeds of the Offering to acquire Collateral
Investments (as defined below) which will be pledged to the Trustee on the
Closing Date, to be held by the Trustee for the benefit of the Holders to secure
the Pledgor's obligations under the Indenture and the Notes;
WHEREAS, the Pledgor is permitted to use the proceeds of the
Collateral Investments (i) from time to time pay the cost (including, without
limitation, the cost of design, development, construction, acquisition,
installation and integration) (the "Acquired
<PAGE>
Equipment Cost") of the Acquired Equipment (as defined below) and sell the
Acquired Equipment to GST USA in exchange for indebtedness (the "PLEDGED DEBT")
of GST USA in a principal amount equal to the Acquired Equipment Cost to be
evidenced by one or more Intercompany Notes (as defined below) and (ii) on the
Closing Date to loan up to $50 million to GST USA to refinance indebtedness
("ACQUIRED EQUIPMENT DEBT") secured by Acquired Equipment initially purchased by
GST USA or its affiliates after November 1, 1996, in exchange for Intercompany
Notes in a principal amount equal to the Acquired Equipment Debt (provided that
the principal amount shall not exceed the Acquired Equipment Cost of the
Acquired Equipment securing the Acquired Equipment Debt); all of which
Intercompany Notes shall also be pledged to the Trustee for the benefit of the
Holders to secure the Pledgor's obligations under the Indenture and the Notes;
WHEREAS, the Pledgor is required to (i) purchase or cause the
purchase of Government Securities (as defined below) in an amount that will be
sufficient upon receipt of scheduled interest and principal payments in respect
thereof, in the opinion of a nationally recognized firm of independent
accountants selected by the Pledgor and delivered to the Trustee, to provide for
payment of the first six scheduled interest payments due on the Notes and (ii)
place such Government Securities (or cause them to be placed) in an account held
by the Trustee for the benefit of Holders of the Notes; and
WHEREAS, the Pledgor has opened a securities account (the
"COLLATERAL INVESTMENTS ACCOUNT") with Morgan Stanley Asset Management, Inc.
("MSAM") at its office at 1221 Avenue of the Americas, New York, NY 10020,
Account No. 030-815849 in the name of the Pledgor but under the sole dominion
and control of the Trustee and subject to the terms of this Pledge Agreement;
WHEREAS, the Pledgor has opened a securities account (the
"INTEREST ACCOUNT") with USTrust at its office at 114 W. 47th Street, New York,
NY 10036, Account No. 04713200 in the name of the Pledgor but under the sole
dominion and control of the Trustee and subject to the terms of this Pledge
Agreement; and
WHEREAS, to secure the obligations of the Pledgor now or
hereafter existing under the Indenture and the Notes whether for principal,
premium, interest, fees, expenses or otherwise (the "OBLIGATIONS"), the Pledgor
has agreed to (i) pledge to the Trustee for its benefit and the ratable benefit
of the Holders, a security interest in the Collateral (as hereinafter defined)
and (ii) execute and deliver this Pledge Agreement in order to secure the
payment and performance by the Pledgor of all the Obligations. Capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
such terms in the Indenture.
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AGREEMENT
NOW, THEREFORE, in consideration of the premises herein
contained, and in order to induce the Holders to purchase the Notes, the Pledgor
and the Trustee hereby agree, for the benefit of the Trustee and for the ratable
benefit of the Holders, as follows:
SECTION 1. DEFINITIONS; APPOINTMENT; DEPOSIT AND INVESTMENT.
1.1. DEFINITIONS.
"AMENDED BOOK-ENTRY REGULATIONS" means 31 C.F.R. Part 357 as
amended by the amendments thereto promulgated at 61 Fed. Reg.
43626-43638 (August 23, 1996).
"CASH EQUIVALENTS" means U.S. Government Obligations, as
defined in the Indenture.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
Chairman of the Board, the President or any Vice President of the
Pledgor (a)(i) stating (A) the amount of funds needed by the Pledgor to
pay the Acquired Equipment Cost of any Acquired Equipment to be
purchased by the Pledgor and confirming that the cost of design,
development, construction, installation and integration of all Acquired
Equipment will not exceed 50% of the aggregate Acquired Equipment Cost
of such Acquired Equipment; (B) that GST USA has entered into a legally
binding and enforceable agreement (a "PURCHASE AGREEMENT") with the
Pledgor to purchase promptly, but in no event later than the earliest
date such Acquired Equipment can be commercially operational, such
Acquired Equipment in exchange for indebtedness with a principal amount
equal to the Acquired Equipment Cost and that bears interest at 200
basis points above the rate equal to that of the Notes and evidenced by
an Intercompany Note in the form of Exhibit D hereto, guaranteed by GST
under a Guaranty in the form of Exhibit F, and (C) that the Pledgor
will pledge the Intercompany Note to the Trustee for the benefit of the
Holders, and (ii) having attached thereto, an invoice or other
appropriate documentation for the Acquired Equipment stating the
Acquired Equipment Cost to be paid or (b) in connection with the
refinancing on the date hereof of up to $50 million of Acquired
Equipment Debt stating (A) the principal amount of the Acquired
Equipment Debt to be refinanced by the Pledgor and confirming that (x)
the Acquired Equipment securing such Acquired Equipment Debt was
initially purchased by GST USA or its affiliates after November 1, 1996
and (y) the Acquired Equipment Cost of such Acquired Equipment was at
least equal to the principal amount of such Intercompany Notes.
"QUALIFIED FINANCIAL INSTITUTION" shall mean any person
meeting the minimum requirements imposed upon the Trustee pursuant to
Section 7.10 of the Indenture.
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"REVISED ARTICLE 8" has the meaning set forth in ss.357.2 of
the Amended Book- Entry Regulations.
"TRUSTEE" shall mean the Person named as the "Trustee" in the
first paragraph of this Agreement until a successor Trustee shall have
become such, and thereafter "Trustee" shall mean the Person who is then
the Trustee hereunder.
All defined terms used herein without definition shall have
the respective meanings ascribed to them in the Indenture. Unless otherwise
defined herein or in the Indenture, terms used in Articles 8 or 9 of the Uniform
Commercial Code as in effect in the State of New York (the "U.C.C."), Revised
Article 8 and the Amended Book-Entry Regulations are used herein as therein
defined.
1.2. APPOINTMENT OF THE TRUSTEE. The Pledgor hereby appoints
the Trustee as Trustee in accordance with the terms and conditions set
forth herein and the Trustee hereby accepts such appointment.
1.3. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby
assigns and pledges to the Trustee for its benefit and the ratable
benefit of the Holders, and hereby grants to the Trustee for its
benefit and the ratable benefit of the Holders a security interest in,
the following (collectively, the "COLLATERAL"):
(a) all of the Pledgor's right, title and interest,
whether now owned or hereafter acquired, in and to all
equipment in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, all
telecommunications equipment of every type), all fixtures and
all parts thereof and all accessions thereto (any and all such
equipment, fixtures, parts and accessions being the "ACQUIRED
EQUIPMENT");
(b) all of the Pledgor's right, title and interest,
whether now owned or hereafter acquired, in and to all
accounts, contract rights, chattel paper, instruments, deposit
accounts, general intangibles and other obligations of any
kind, now or hereafter existing, whether or not arising out of
or in connection with the sale or lease of Acquired Equipment
or other goods or the rendering of services, and all rights
now or hereafter existing in and to all security agreements,
leases and other contracts securing or otherwise relating to
any such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles or
obligations (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts, general
intangibles and obligations, to the extent not referred to in
clause (d), (e) or (f) below, being the "RECEIVABLES", and any
and all such leases, security agreements and other contracts
being the "RELATED CONTRACTS");
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(c) all of the following (the "SECURITY COLLATERAL"):
(i) the Initial Note and GST's guarantee
thereof, and all interest, cash, instruments and
other property from time to time received, receivable
or otherwise distributed in respect of or in exchange
for the Initial Note;
(ii) the Pledged Debt and the instruments
evidencing the Pledged Debt and GST's guarantee
thereof, and all interest, cash, instruments and
other property from time to time received, receivable
or otherwise distributed in respect of or in exchange
for any or all of the Pledged Debt; and
(iii) all additional indebtedness from time
to time owed to the Pledgor and the instruments
evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of such
indebtedness;
(d) all of the Pledgor's right, title and interest in
and to each of the Purchase Agreements entered into by the
Pledgor from time to time, and the Intercompany Security
Agreement, as such agreements may be amended or otherwise
modified from time to time (collectively, the "ASSIGNED
AGREEMENTS"), including, without limitation, (i) all rights of
the Pledgor to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (ii) all claims of the
Pledgor for damages arising out of or for breach of or default
under the Assigned Agreements and (iii) the right of the
Pledgor to terminate the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise
all remedies thereunder (all such Collateral being the
"AGREEMENT COLLATERAL");
(e) all of the following (collectively, the "ACCOUNT
COLLATERAL"):
(i) the Collateral Investments Account, all
funds held therein and all certificates and
instruments, if any, from time to time representing
or evidencing the Collateral Investments Account;
(ii) all other deposit accounts of the
Pledgor, all funds held therein and all certificates
and instruments, if any, from time to time
representing or evidencing such deposit accounts;
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6
(iii) all Collateral Investments (as
hereinafter defined) from time to time and all
certificates and instruments, if any, from time to
time representing or evidencing the Collateral
Investments;
(iv) all notes, certificates of deposit,
deposit accounts, checks and other instruments from
time to time hereafter delivered to or otherwise
possessed by MSAM for or on behalf of the Pledgor in
substitution for or in addition to any or all of the
then existing Account Collateral; and
(v) all interest, dividends, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then
existing Account Collateral;
(f) all of Pledgor's right, title and interest in, to
and under the following (hereinafter collectively referred to
as the "INTEREST COLLATERAL"), whether characterized as
investment property, general intangibles or otherwise: (i) the
United States Treasury securities identified by CUSIP No. in
ANNEX 1 to EXHIBIT B-2 to this Agreement (the "INTEREST
SECURITIES"), (ii) any and all applicable security
entitlements to such securities, (iii) the Interest Account
established and maintained by the Trustee pursuant to this
Agreement, (iv) any and all related securities accounts in
which security entitlements to the Interest Securities are
carried, (v) all certificates and other evidences of Pledgor's
ownership of or other interests in any of the foregoing
categories of Interest Collateral, and (vi) except as
otherwise provided herein, all proceeds of or other
distributions on or with respect to, any of the foregoing,
including, without limitation, all dividends, interest,
principal payments, cash, options, warrants, rights,
instruments, subscriptions and other property or proceeds from
time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of
the Interest Securities or any security entitlement thereto;
and
(g) all proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a) -
(f) of this Section 1.3) and, to the extent not otherwise
included, all (i) payments under insurance (whether or not the
Trustee is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and
(ii) cash.
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1.4. DEPOSIT OF PROCEEDS OF OFFERING. The Pledgor shall
deposit the net proceeds of the Offering and all other cash on hand on the date
hereof into the Collateral Investments Account and direct MSAM to purchase Cash
Equivalents to be held in the Collateral Investments Account and direct the
Trustee to purchase the Interest Securities to be held in the Interest Account.
SECTION 2. SECURITY FOR OBLIGATION. This Pledge Agreement
secures the payment of all Obligations of the Pledgor now or hereafter existing
under the Indenture and the Notes, whether for principal, premium, interest,
fees, expenses or otherwise (all such Obligations being the "SECURED
OBLIGATIONS"). Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Pledgor to the Trustee or the Holders under
the Indenture but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the Pledgor.
SECTION 3. DELIVERY OF COLLATERAL. All certificates or
instruments representing or evidencing the Security Collateral, Account
Collateral or Interest Collateral shall be delivered to and held by or on behalf
of the Trustee pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Trustee or
shall be credited to the Collateral Investments Account. For the better
perfection of the Trustee's rights in and to the Security Collateral, Account
Collateral and Interest Collateral, the Pledgor shall forthwith, upon the pledge
of any Security Collateral, Account Collateral or Interest Collateral hereunder,
cause all such Security Collateral, Account Collateral or Interest Collateral,
including the Collateral Investments Account and all other accounts representing
a security entitlement to or containing any Collateral (including, without
limitation, any Collateral Investments) to be registered in the name "GST
Equipment Funding, Inc. Collateral Account for the benefit of United States
Trust Company of New York, as Trustee," and to be under the sole dominion and
control of the Trustee, which dominion and control shall be agreed to and
acknowledged by MSAM or any other securities intermediary holding any such
account in an acknowledgement in the form of Exhibit B-1 hereto, subject only to
the revocable rights specified in Section 8. In addition, the Trustee or MSAM,
as the case may be, shall have the right at any time to exchange certificates or
instruments representing or evidencing any Security Collateral, Account
Collateral or Interest Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. MAINTAINING THE COLLATERAL ACCOUNTS. (a) So long as
any Obligation shall remain unpaid, the Pledgor will maintain the Collateral
Investments Account. So long as the first six scheduled interest payments on the
Notes have not been paid, the Pledgor will maintain the Interest Account.
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(b) It shall be a term and condition of the Collateral
Investments Account and the Interest Account, notwithstanding any term or
condition to the contrary in any other agreement relating to the Collateral
Investments Account or the Interest Account, as the case may be, and except as
otherwise provided by the provisions of Section 7, Section 8 and Section 17,
that no amount (including interest on Collateral Investments or Interest
Collateral) shall be paid or released to or for the account of, or withdrawn by
or for the account of, the Pledgor or any other Person from the Cash Collateral
Account.
(c) The Collateral Investments Account shall be subject to
such applicable laws, and such applicable regulations of the Board of Governors
of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.
(d) Notwithstanding the provisions of this Section 4 or any
other term of this Agreement, the Trustee shall relocate the Account Collateral
and Interest Collateral to accounts at a Qualified Financial Institution
designated by the Pledgor upon receipt of the following documentation: (i)
written instructions from a duly authorized officer of the Pledgor (A)
authorizing such relocation of the Collateral; and (B) designating the account
at the Qualified Financial Institution to which the Collateral is to be
relocated; (ii) a letter agreement in the form of Exhibit B-1 or Exhibit B-2, as
appropriate, duly executed by the Qualified Financial Institution; and (iii) an
opinion of counsel to the Pledgor, in form and substance satisfactory to the
Trustee, stating that the Trustee has a valid and perfected first priority
security interest in the Collateral relocated pursuant to this Section 4(d). In
the event of the relocation of an Account Collateral or Interest Collateral
pursuant to this Section 4(d), the accounts to which such Account Collateral or
Interest Collateral is relocated shall for all purposes under this Agreement
thereafter be the Collateral Investment Account and the Interest Account,
respectively.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL INVESTMENTS
ACCOUNT. The Pledgor will, subject to the provisions of Section 8 and Section
17, from time to time (a) invest amounts on deposit in the Collateral
Investments Account in such Cash Equivalents in the name of the Trustee as the
Pledgor may select and (b) invest interest paid on the Cash Equivalents referred
to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents
that may mature or be sold, in each case in such Cash Equivalents, as the
Pledgor may select (the Cash Equivalents referred to in clauses (a) and (b)
above being collectively "COLLATERAL INVESTMENTS"). Interest and proceeds that
are not invested or reinvested in Collateral Investments as provided above shall
be deposited and held in the Collateral Investments Account.
SECTION 6. DELIVERY OF COLLATERAL INVESTMENTS AND INTEREST
COLLATERAL; FILING. (a) The Trustee shall become the holder of the Interest
Collateral and of any and all security entitlements to the Interest Collateral,
through action by the Federal Reserve Bank of
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New York ("FRBNY") or another securities intermediary, as confirmed (in writing
or electronically or otherwise in accordance with standard industry practice) to
the Trustee by FRBNY or such other securities intermediary (i) indicating by
book-entry that the Interest Collateral or a security entitlement thereto has
been credited to the the Interest Account or (ii) acquiring the Interest
Collateral or a security entitlement thereto for the Trustee and accepting the
same for credit to the the Interest Account as the case may be.
(b) Subject to the other terms and conditions of this Pledge
Agreement, all Collateral Investments and Interest Collateral under this Pledge
Agreement shall be held in the Collateral Investments Account or Interest
Account, as the case may be, subject (except as expressly provided in
subsections 7(a), 7(b), 8(a), 8(b) and 8(c) hereof) to the exclusive dominion
and control of the Trustee and exclusively for the benefit of the Trustee and
for the ratable benefit of the Holders and segregated from all other funds or
other property otherwise held by the Trustee.
(c) All Account Collateral and Interest Collateral shall be
retained in the Collateral Investments Account and Interest Account pending
disbursement pursuant to the terms hereof and upon request from the Pledgor, the
Trustee shall report to the Pledgor the amount and type of assets contained in
each such account.
(d) Concurrently with the execution and delivery of this
Agreement, MSAM is delivering to the Pledgor a duly executed certificate, in the
form of EXHIBIT A-1 hereto, of an officer of MSAM, confirming MSAM's
establishment and maintenance of the Collateral Investment Account and its
receipt and holding of the Collateral Investments or a security entitlement
thereto and the crediting of the Collateral Investments or such security
entitlement to the Collateral Investment Account, all in accordance with this
Pledge Agreement.
(e) Concurrently with the execution and delivery of this
Agreement, the Trustee is delivering to the Pledgor a duly executed certificate,
in the form of EXHIBIT A-2 hereto, of an officer of the Trustee, confirming the
Trustee's establishment and maintenance of the Interest Account, and its receipt
and holding of the Interest Collateral or a security entitlement thereto and the
crediting of the Interest Collateral or such security entitlement to the
Interest Account, all in accordance with this Pledge Agreement.
(f) Concurrently with the execution and delivery of this
Agreement, the Pledgor is delivering to the Trustee duly executed financing
statements, in proper form for filing under the Uniform Commercial Code of the
State of New York and each state listed on Schedule I hereto covering the
Collateral described in this Pledge Agreement.
SECTION 7. DISBURSEMENTS RELATING TO INTEREST COLLATERAL. (a)
Immediately prior to the due date of any of the first six scheduled interest
payments on the Notes, the
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Trustee will release from the Interest Account and pay to the Holders of the
Notes proceeds of Interest Collateral Maturing at such time sufficient to
provide for payment in full of such interest then due on the Notes. The Trustee
will take any action necessary to provide for the payment of the interest on the
Notes in accordance with the payment provisions of the Indenture to the Holders
of the Notes from (and to the extent of) proceeds of the Interest Securities in
the Interest Account. Nothing in this Section 7 shall affect the Trustee's
rights to apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) If at any time the principal of and interest on the
Interest Securities exceeds 100% of the amount sufficient, in the written
opinion of a nationally recognized firm of independent accountants selected by
the Pledgor and delivered to the Trustee, to provide for payment in full of the
first six scheduled interest payments due on the Notes (or, in the event one or
more interest payments have been made thereon, an amount sufficient to provide
for the payment in full of any and all interest payments on the Notes then
remaining, up to and including the sixth scheduled interest payment), the
Pledgor may direct the Trustee to release any such overfunded amount to the
Collateral Investments Account.
SECTION 8. DISBURSEMENTS RELATING TO OTHER COLLATERAL. The
assets in the Collateral Investments Account shall be released only as follows:
(a) Three business days prior to the due date of any scheduled
cash interest payments on the Notes occurring after the sixth such due
date, any Payment Date with respect to an Offer to Purchase the Notes
under the Indenture or a Redemption Date with respect to the Notes, the
Pledgor may, pursuant to written instructions executed by the Pledgor
(an "ISSUER ORDER"), direct the Trustee to direct MSAM to release from
the Collateral Investments Account and, if necessary, to liquidate the
Collateral Investments indicated on the Issuer Order and pay to the
Holders proceeds sufficient to provide for payment in full of such
principal, premium or interest then due on the Notes. Upon receipt of
an Issuer Order, the Trustee will take any action necessary to provide
for the payment of the principal, premium or interest on the Notes in
accordance with the payment provisions of the Indenture to the Holders
from (and to the extent of) proceeds of the Collateral Investments
Account. Nothing in this Section 8 shall affect the Trustee's rights to
apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
(b) Upon receipt by the Trustee of an Issuer Order and an
Officer's Certificate with respect to the payment of any Acquired
Equipment Cost, the Trustee shall direct MSAM to immediately release
proceeds from the Collateral Investments Account and if necessary
liquidate the Collateral Investments indicated in the Officer's
Certificate or Issuer Order in such amount as will be sufficient to
provide for payment in full of the Acquired Equipment Cost. The Pledgor
agrees to use the disbursed
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proceeds to pay such Acquired Equipment Cost on the date of such
release, and any such released funds will be disbursed directly to the
supplier of the Acquired Equipment pursuant to the invoice attached to
the Officer's Certificate.
(c) Upon receipt on the Closing Date by the Trustee of an
Issuer Order and an Officer's Certificate with respect to the
refinancing of up to $50 million principal amount of Acquired Equipment
Debt, the Trustee shall instruct MSAM to release proceeds from the
Collateral Investments Account in an amount equal to the principal
amount of such Acquired Equipment Debt. The Pledgor agrees to use the
disbursed proceeds to repay such Acquired Equipment Debt on the Closing
Date.
(d) Upon receipt by the Trustee of an Issuer Order with
respect to the payment of fees or expenses, the Trustee shall release
proceeds from the Collateral Investments Account, and if necessary
liquidate Collateral Investments indicated in the Issuer Order, in such
amount as will be sufficient to pay fees and expenses incurred by the
Pledgor in connection with the Offering, this Agreement or the purchase
and sale of the Acquired Equipment; provided that in no event may the
aggregate amount of funds released pursuant to this paragraph (c)
exceed $1 million.
(e) Nothing contained in Section 1, Section 5, Section 7, this
Section 8 or any other provision of this Agreement shall (i) afford the
Pledgor any right to issue entitlement orders with respect to any
security entitlement to the Collateral Investments or any securities
account in which any such security entitlement may be carried, or
otherwise afford the Pledgor control of any such security entitlement
or (ii) otherwise give rise to any rights of Pledgor with respect to
the Collateral Investments, any security entitlement thereto or any
securities account in which any such security entitlement may be
carried, other than the Pledgor's rights under this Pledge Agreement as
the beneficial owner of collateral pledged to and subject to the
exclusive dominion and control (except as expressly provided in
Sections 8(a), (b) and (c) hereof) of the Trustee in its capacity as
such (and not as a securities intermediary). The Pledgor acknowledges,
confirms and agrees that the Trustee holds a security entitlement to
the Collateral Investments solely as trustee for the Holders and not as
a securities intermediary.
(f) The Pledgor shall prepare and deliver to the Trustee or
shall provide the Trustee with all information necessary for the
Trustee to prepare and deliver to MSAM, instructions to MSAM for the
release of funds from the Collateral Investments Account in accordance
with the terms of Section 8.
SECTION 9. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants, and in connection with each purchase or sale of
Acquired Equipment will be deemed to represent and warrant, that:
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(a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge
Agreement will not contravene any provision of applicable law or the
Certificate of Incorporation of the Pledgor or any material agreement
or other material instrument binding upon the Pledgor or any of its
subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on
any assets of the Pledgor, except for the security interests granted
under this Pledge Agreement; no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required (i) for the performance by the Pledgor of its obligations
under this Pledge Agreement, (ii) for the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement or (iii) except for any
such consents, approvals, authorizations or orders required to be
obtained by the Trustee (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Trustee of
the rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement.
(b) The Pledgor is the beneficial owner of the Collateral,
free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Pledge Agreement). No
financing statement covering the Pledgor's interest in the Collateral
is on file in any public office other than the financing statements, if
any, filed pursuant to this Pledge Agreement. The Pledgor has no trade
names.
(c) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and (assuming the due
authorization and valid execution and delivery of this Pledge Agreement
by the Trustee and enforceability of the Pledge Agreement against the
Trustee in accordance with its terms) constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as (i) the enforceability hereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting creditors' rights or remedies generally, (ii)
the availability of equitable remedies may be limited by equitable
principles of general applicability and the discretion of the court
before which any proceeding therefor may be brought, and (iii) the
exculpation provisions and rights to indemnification hereunder may be
limited by U.S. federal and state securities laws and public policy
considerations.
(d) Upon the delivery to the Trustee of the certificates or
instruments, if any, representing or evidencing the Collateral, the
filing of financing statements, if any, required by the UCC in the
appropriate offices in the State of New York, and the transfer and
pledge to the Trustee of the Account Collateral and the acquisition by
the Trustee of a security entitlement thereto, in accordance with
Section 3, the pledge
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of and grant of a security interest in the Collateral securing the
payment of the Secured Obligations for the benefit of the Trustee and
the Holders will constitute a first priority perfected security
interest in such Collateral, enforceable as such against all creditors
of the Pledgor (and any persons purporting to purchase any of the
Collateral from the Pledgor).
(e) There are no legal or governmental proceedings pending or,
to the best of the Pledgor's knowledge, threatened to which the Pledgor
or any of its subsidiaries is a party or to which any of the properties
of the Pledgor or any such subsidiary is subject that would materially
adversely affect the power or ability of the Pledgor to perform its
obligations under this Pledge Agreement or to consummate the
transactions contemplated hereby.
(f) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System) applicable to the Pledgor.
(g) All of the Acquired Equipment is or will be located at the
places specified in Schedule I hereto. The chief place of business and
chief executive office of the Pledgor and the office where the Pledgor
keeps its records concerning the Receivables, and the original copies
of each Assigned Agreement and all originals of all chattel paper that
evidence Receivables, are located at the address first specified above
for the Pledgor. Original copies of each Assigned Agreement and all
originals of all chattel paper that evidence Receivables have been
delivered to the Trustee. None of the Receivables or Agreement
Collateral is evidenced by a promissory note or other instrument. The
Pledgor has exclusive possession and control of the Acquired Equipment.
(h) The Initial Note has been duly authorized, executed or
issued and delivered, is the legal, valid and binding obligation of GST
USA and is not in default and each Intercompany Note issued to the
Pledgor hereunder will be duly authorized, executed or issued and
delivered by GST USA and will be the legal, valid and binding
obligation of GST USA.
(i) The guaranty of the Initial Note by GST has been duly
authorized executed and delivered and is the legal valid and binding
obligation of GST and each guaranty of an Intercompany Note issued to
the Pledgor will be duly authorized, executed and delivered by GST and
will be the legal valid and binding obligation of GST.
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(j) The Intercompany Security Agreement, a true and complete
copy of which has been furnished to the Trustee, has been duly
authorized, executed and delivered by all parties thereto, has not been
amended or otherwise modified, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance
with its terms. GST USA has executed and delivered to the Pledgor a
consent, in substantially the form of Exhibit C, to the assignment of
the Intercompany Security Agreement and all related Agreement
Collateral to the Trustee pursuant to this Agreement.
(k) Each Purchase Agreement delivered to the Pledgor will be
duly authorized, executed and delivered by GST USA and will be the
legal, valid and binding obligation of GST USA enforceable in
accordance with its terms.
(l) No Event of Default (as defined below) exists.
SECTION 10. FURTHER ASSURANCES. The Pledgor will, promptly
upon request by the Trustee (which request the Trustee may submit at the
direction of the Holders of a majority in principal amount of the Notes then
outstanding), execute and deliver or cause to be executed and delivered, or use
its reasonable best efforts to procure, all assignments, instruments and other
documents, all in form and substance reasonably satisfactory to the Trustee,
deliver any instruments to the Trustee and take any other actions that are
necessary or desirable to perfect, continue the perfection of, or protect the
first priority of the Trustee's security interest in and to the Collateral, to
protect the Collateral against the rights, claims, or interests of third persons
(other than any such rights, claims or interests created by or arising through
the Trustee) or to effect the purposes of this Pledge Agreement. The Pledgor
also hereby authorizes the Trustee to file any financing or continuation
statements in the United States with respect to the Collateral without the
signature of the Pledgor (to the extent permitted by applicable law). The
Pledgor will promptly pay all reasonable costs incurred in connection with any
of the foregoing within 45 days of receipt of an invoice therefor. The Pledgor
also agrees, whether or not requested by the Trustee, to take all actions that
are necessary to perfect or continue the perfection of, or to protect the first
priority of, the Trustee's security interest in and to the Collateral, including
the filing of all necessary financing and continuation statements, and to
protect the Collateral against the rights, claims or interests of third persons
(other than any such rights, claims or interests created by or arising through
the Trustee).
SECTION 11. COVENANTS. The Pledgor covenants and agrees with
the Trustee and the Holders that from and after the date of this Pledge
Agreement until the earlier of payment in full in cash of all Secured
Obligations due and owing under the Indenture and the Notes:
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(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Collateral and at times will be the sole beneficial owner of
the Collateral, except as contemplated by this Agreement or the
Indenture or (ii) it will not create or permit to exist any Lien upon
or with respect to any of the Collateral (except for the security
interests granted under this Pledge Agreement, the Intercompany
Security Agreement and any Lien created by or arising through the
Trustee under the Indenture); or
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or
inhibit the Trustee's rights or remedies hereunder, including, without
limitation, the Trustee's right to sell or otherwise dispose of the
Collateral or (ii) fail to pay or discharge any tax, assessment or levy
of any nature with respect to the Collateral not later than five days
prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to the Collateral;
(c) in the event the Pledgor is required to make an Offer to
Purchase the Notes under the Indenture, it will fund such Offer to
Purchase (i) first from funds (or the proceeds of Collateral
Investments) held in the Collateral Investments Account, (ii) second
from the proceeds of Intercompany Offers (as defined in the
Intercompany Notes) under the Intercompany Notes, (iii) third from the
proceeds of an Initial Note Offer (as defined in the Initial Note)
under the Initial Note and (iv) fourth, to the extent the principal and
interest on the Interest Securities would exceed the amount sufficient
to provide for the payment in full of the first six scheduled interest
payments due on the Notes to be outstanding after the Offer to
Purchase, the Interest Collateral held in the Interest Account. The
Pledgor covenants that it will not accept any Intercompany Offer or
Initial Note Offer except and to the extent required to fund an Offer
to Purchase in accordance with the terms of the preceding sentence; and
(d) it will deliver to the Trustee, true and complete copies
of each Purchase Agreement, promptly after each such agreement is
entered into by GST USA and the Pledgor, and will require as a
condition to its entry into any such Purchase Agreement that GST USA
execute and deliver to the Pledgor a consent, in substantially the form
of Exhibit C, to the assignment of the Purchase Agreement and all
related Agreement Collateral to the Trustee pursuant to this Agreement.
SECTION 12. AS TO ACQUIRED EQUIPMENT. (a) The Pledgor shall
keep the Acquired Equipment at the places therefor specified in Section 9(g) or,
upon 30 days' prior written notice to the Trustee, at such other places in a
jurisdiction where all action required by Section 9(g) or 10 or shall have been
taken with respect to the Acquired Equipment to perfect, continue the perfection
of or protect the first priority of the Trustee's security interest in and to
such Collateral.
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(b) The Pledgor shall cause the Acquired Equipment to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or in the case of any loss or damage to any of the
Acquired Equipment as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end. The Pledgor
shall promptly furnish to the Trustee a statement respecting any loss or damage
to any of the Acquired Equipment.
(c) The Pledgor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Acquired Equipment.
SECTION 13. INSURANCE. (a) The Pledgor shall, at its own
expense, maintain insurance with respect to the Acquired Equipment in such
amounts, against such risks, in such form and with such insurers, as is
reasonable and customary for persons in the telecommunications business. Each
policy for liability insurance shall provide for all losses to be paid on behalf
of the Trustee and the Pledgor as their interests may appear, and each policy
for property damage insurance shall provide for all losses (except for losses of
less than $1,000,000 per occurrence) to be paid directly to the Trustee. Each
such policy shall in addition (i) name the Pledgor and the Trustee as insured
parties thereunder (without any representation or warranty by or obligation upon
the Trustee) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to the Trustee notwithstanding
any action, inaction or breach of representation or warranty by the Pledgor,
(iii) provide that there shall be no recourse against the Trustee for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Trustee by the insurer. The Pledgor shall deliver to the Trustee original or
duplicate policies of such insurance and, on each anniversary of the Closing
Date, a report of a reputable insurance broker with respect to such insurance.
Further, the Pledgor shall, at the request of the Trustee, duly exercise and
deliver instruments of assignment of such insurance policies to comply with the
requirements of Section 10 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by
the Pledgor pursuant to this Section 13 may be paid directly to the Person who
shall have suffered a loss covered by such insurance. In case of any loss
involving damage to Acquired Equipment, the Pledgor shall make or cause to be
made the necessary repairs to or replacements of such Acquired Equipment, and
any proceeds of insurance maintained by the Pledgor which are received by the
Trustee pursuant to this Section 13 shall be paid to the Pledgor as
reimbursement for the costs of such repairs or replacements.
16
<PAGE>
SECTION 14. POWER OF ATTORNEY. In addition to all of the
powers granted to the Trustee pursuant to the Indenture, the Pledgor hereby
appoints and constitutes the Trustee as the Pledgor's attorney-in-fact (with
full power of substitution) to exercise to the fullest extent permitted by law
all of the following powers upon and at any time after the occurrence and during
the continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Trustee in its sole reasonable discretion, and such
payments made by the Trustee to become part of the Secured Obligations of the
Pledgor to the Trustee, due and payable immediately upon demand. The Trustee's
authority under this Section 14 shall include, without limitation, the authority
to endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Pledgor, execute and give receipt for any
certificate of ownership or any document constituting Collateral, transfer title
to any item of Collateral, sign the Pledgor's name on all financing statements
(to the extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or perfect the
security interest in the Collateral and to file the same, prepare, file and sign
the Pledgor's name on any notice of Lien, and to take any other actions arising
from or incident to the powers granted to the Trustee in this Pledge Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 15. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The
rights and powers granted to the Trustee hereunder are being granted in order to
preserve and protect the security interest of the Trustee and the Holders in and
to the Collateral granted hereby and shall not be interpreted to, and shall not
impose any duties on the Trustee in connection therewith other than those
expressly provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee as
collateral agent or other similar capacity, it being understood that the Trustee
in its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other matters relative to any Collateral, whether or not the Trustee has or is
deemed to have knowledge of such matters, (b) taking any necessary steps to
preserve rights against any parties with respect to any Collateral or (c)
investing or reinvesting any of the Collateral, PROVIDED, HOWEVER, that nothing
contained in this Agreement shall relieve the Trustee of any responsibilities as
a securities intermediary under applicable law. The Trustee shall have no duty
(a) to see to any recording, filing, or depositing of this Agreement, any
Indenture or any agreement referred to herein or therein or any financing
statement or continuation statement evidencing a security interest, or to see to
the maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (b) to
17
<PAGE>
see to any insurance or (c) to see to the payment or discharge of any tax
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Collateral.
The Trustee makes no representations as to the validity or sufficiency of any
Collateral, the Indenture or this Agreement. The Trustee shall not be
accountable for the use or application by the Pledgor of any of the proceeds of
the Collateral Investments Account or the Interest Account. The Trustee shall
not be responsible for the legality or validity of this Agreement or the
validity, priority, perfection or sufficiency of the Collateral.
SECTION 16. INDEMNITY. The Pledgor shall indemnify, hold
harmless and defend the Trustee and its directors, officers, agents and
employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including reasonable defense costs, reasonable
investigative fees and costs, and reasonable legal fees and damages arising from
the Trustee's performance as Trustee under this Pledge Agreement, except to the
extent that such claim, action, obligation, liability or expense is directly
attributable to the bad faith, gross negligence or wilful misconduct of such
indemnified person.
SECTION 17. REMEDIES UPON EVENT OF DEFAULT. If any Event of
Default under the Indenture or the Notes or default hereunder (any such Event of
Default or default being referred to in this Pledge Agreement as an "EVENT OF
DEFAULT") shall have occurred and be continuing:
(a) The Trustee and the Holders shall have, in addition to all
other rights given by law or by this Pledge Agreement or the Indenture,
all of the rights and remedies with respect to the Collateral of a
secured party under the UCC in effect in the State of New York at that
time. In addition, with respect to any Collateral that shall then be in
or shall thereafter come into the possession or custody of the Trustee,
the Trustee may sell or cause the same to be sold at any broker's board
or at public or private sale, in one or more sales or lots, at such
price or prices as the Trustee may deem best, for cash or on credit or
for future delivery, without assumption of any credit risk. The
purchaser of any or all Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through the Pledgor. Unless any of the
Collateral threatens, in the reasonable judgment of the Trustee, to
decline speedily in value or is or becomes of a type sold on a
recognized market, the Trustee will give the Pledgor reasonable notice
of the time and place of any public sale thereof, or of the time after
which any private sale or other intended disposition is to be made. Any
sale of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property
similar to the Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such
notice is mailed to the Pledgor as provided in Section 21.1 hereof at
least ten (10) days before
18
<PAGE>
the time of the sale or disposition. The Trustee or any Holder may, in
its own name or in the name of a designee or nominee, buy any of the
Collateral at any public sale and, if permitted by applicable law, at
any private sale. All expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident to, the
enforcement of any of the provisions hereof shall be recoverable from
the proceeds of the sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its reasonable best
efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the
Collateral pursuant to this Section 17 valid and binding and in
compliance with any and all other applicable requirements of law. The
Pledgor further agrees that a breach of any of the covenants contained
in this Section 17 will cause irreparable injury to the Trustee and the
Holders, that the Trustee and the Holders have no adequate remedy at
law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 17 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and
agrees not to assert any defenses against the remedy of specific
performance for the breach of any such covenants except for a defense
that no Event of Default has occurred. Any surplus of such cash or cash
proceeds held by the Trustee and remaining after payment in full of all
the Secured Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) All payments received by the Pledgor in respect of the
Collateral shall be received in trust for the benefit of the Trustee,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Trustee in the same form as so received
(with any necessary indorsement).
SECTION 18. EXPENSES. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable fees and expenses, including,
without limitation, the reasonable fees, expenses and disbursements of its
counsel, experts and agents retained by the Trustee, that the Trustee may incur
in connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders hereunder or (d)
the failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 19. SECURITY INTEREST ABSOLUTE. All rights of the
Trustee and the Holders and security interests hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
19
<PAGE>
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Indenture;
(c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral for all or any of the Secured
Obligations; or
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, the Pledgor in respect of the Secured Obligations or
of this Pledge Agreement.
SECTION 20. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no
Default under the Indenture shall have occurred and be continuing, the Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Security Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Indenture and the Notes;
PROVIDED, HOWEVER, that the Pledgor shall not exercise or refrain from
exercising any such right if such action would have a material adverse effect on
the value of the Security Collateral or any part thereof; and PROVIDED FURTHER
that the Pledgor shall give the Trustee at least five days' written notice of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right.
(b) Upon the occurrence and during the continuance of a
Default under the Indenture: all rights of the Pledgor to exercise or refrain
from exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 20(a) shall, upon notice to the
Pledgor by the Trustee, cease.
(c) All dividends and interest payments that are received by
the Pledgor in respect of Security Collateral shall be received in trust for the
benefit of the Trustee, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Trustee as Security Collateral in the same
form as so received (with any necessary indorsement).
SECTION 21. MISCELLANEOUS PROVISIONS.
21.1. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
20
<PAGE>
IF TO THE PLEDGOR:
GST Equipment Funding, Inc.
4317 N.E. Thurston Way
Vancouver, WA 98662
Attention: Chief Executive Officer
and
GST Telecommunications Inc.
4317 N.E. Thurston Way
Vancouver, WA 98662
Attention: Chief Executive Officer
WITH A COPY TO:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attention: David J. Adler
IF TO THE TRUSTEE:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Mr. Louis Young
21.2. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Pledge Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.
21.3. SEVERABILITY. The provisions of this Pledge Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.
21
<PAGE>
21.4. HEADINGS. The headings in this Pledge Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
21.5. COUNTERPART ORIGINALS. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
21.6. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Pledge Agreement.
21.7. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or
waiver of any provision of this Pledge Agreement and any consent to any
departure by the Pledgor from any provision of this Pledge Agreement shall be
effective only if made or duly given in compliance with all of the terms and
provisions of the Indenture, and neither the Trustee nor any Holder shall be
deemed, by any act, delay, indulgence, omission or otherwise, to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. Failure of
the Trustee or any Holder to exercise, or delay in exercising, any right, power
or privilege hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the Trustee
or any Holder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Trustee or such Holder would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
21.8. INTERPRETATION OF AGREEMENT. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
UCC, except where the context otherwise requires. To the extent a term or
provision of this Pledge Agreement conflicts with the Indenture, the Indenture
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Pledge Agreement shall not be relevant to determine the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
21.9. CONTINUING SECURITY INTEREST; TERMINATION; RELEASE. (a)
This Pledge Agreement shall create a continuing security interest in and to the
Collateral and shall, unless otherwise provided in the Indenture or in this
Pledge Agreement, remain in full force and effect until the payment in full in
cash of the Secured Obligations. This Pledge Agreement shall be binding upon the
Pledgor, its transferees, successors and assigns, and shall inure,
22
<PAGE>
together with the rights and remedies of the Trustee hereunder, to the benefit
of the Trustee, the Holders and their respective successors, transferees and
assigns.
(b) This Pledge Agreement shall terminate upon the earlier of
(i) the payment in full in cash of the Secured Obligations and (ii) the
assumption by GST USA of all the Obligations of Funding pursuant to Section 4.23
of the Indenture, the execution by GST USA of documentation and the taking of
all other actions necessary to provide the Trustee, for its benefit and the
ratable benefit of the Holders, with a perfected, first priority security
interest (subject only to the liens granted to the Trustee, for its benefit and
the benefit of the Holders, under this Agreement) in the Collateral, including
any collateral securing the Pledged Debt, to secure all of GST USA's obligations
under the Indenture and the Notes and the delivery by counsel to the Pledgor of
an opinion confirming the existence, perfection and priority of such security
interest. At such time, the Trustee shall, pursuant to an Issuer Order, execute
and deliver all documentation necessary or desirable to release its security
interest hereunder and under the Intercompany Security Agreement, reassign and
redeliver to the Pledgor all of the Collateral hereunder that has not been sold,
disposed of, retained or applied by the Trustee in accordance with the terms of
this Pledge Agreement and the Indenture. Such reassignment and redelivery shall
be without warranty by or recourse to the Trustee in its capacity as such,
except as to the absence of any Liens on the Collateral created by or arising
through the Trustee, and shall be at the reasonable expense of the Pledgor.
(c) Upon any sale of Acquired Equipment to GST USA in
accordance with the terms of this Agreement, the Trustee will, at the Pledgor's
expense, execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence the release of such item of Acquired Equipment
from the assignment and security interest granted hereby; PROVIDED, HOWEVER,
that (i) at the time of such request and such release no Default shall have
occurred and be continuing, (ii) the Pledgor shall have delivered to the
Trustee, at least five Business Days prior to the date of the proposed release,
a written request for release describing the item of Acquired Equipment together
with a form of release for execution by the Trustee and a certification by the
Pledgor to the effect that the transaction is in compliance with this Agreement
and as to such other matters as the Trustee may request, which written release
shall state that the price to be paid is at least equal to the Acquired
Equipment Cost, payable in the form an Intercompany Note with a principal amount
equal to the Acquired Equipment Cost and bearing interest at a rate at least
equal to the rate of interest on the Notes, and (iii) the Pledgor shall have
pledged and delivered to the Trustee such Intercompany Note and an opinion of
counsel that such Intercompany Note is secured by a perfected first priority
security interest in such Acquired Equipment (subject only to the liens granted
to the Trustee, for its benefit and the benefit of the Holders, under this
Agreement) and an opinion of counsel that the Pledgor has granted a valid and
perfected first priority security interest in the Intercompany Note to the
Trustee for its benefit and the benefit of the Holders.
23
<PAGE>
21.10. SURVIVAL PROVISIONS. All representations, warranties
and covenants of the Pledgor contained herein shall survive the execution and
delivery of this Pledge Agreement, and shall terminate only upon the termination
of this Pledge Agreement. The obligations of the Pledgor under Section 16 hereof
shall survive the termination of this Agreement.
21.11. WAIVERS. The Pledgor waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which the Pledgor might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
21.12. AUTHORITY OF THE TRUSTEE. (a) The Trustee shall have
and be entitled to exercise all powers hereunder that are specifically granted
to the Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Indenture, neither the Trustee nor any director,
officer, employee, attorney or agent of the Trustee shall be liable to the
Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document reasonably believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with respect to any
action taken by the Trustee or the exercise or non-exercise by the Trustee of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Trustee and the Holders, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Trustee and the Pledgor, the Trustee shall be conclusively
presumed to be acting as trustee for the Holders with full and valid authority
so to act or refrain from acting, and the Pledgor shall not be obligated or
entitled to make any inquiry respecting such authority.
21.13. FINAL EXPRESSION. This Pledge Agreement, together with
the Indenture and any other agreement executed in connection herewith, is
intended by the parties as a final expression of this Pledge Agreement and is
intended as a complete and exclusive statement of the terms and conditions
thereof.
24
<PAGE>
21.14. RIGHTS OF HOLDERS. No Holder shall have any independent
rights hereunder other than those rights granted to individual Holders pursuant
to Section 6.07 of the Indenture; PROVIDED that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture.
21.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS IN CONNECTION WITH
THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. NOTWITHSTANDING THE FOREGOING: THE MATTERS IDENTIFIED IN 31 C.F.R. ss.ss.
357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT) SHALL BE
GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN.
(b) THE PLEDGOR HAS APPOINTED OLSHAN GRUNDMAN FROME &
ROSENZWEIG LLP, 505 PARK AVENUE, NEW YORK, NY 10022 AS ITS AGENT FOR SERVICE OF
PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT
AND FOR ACTIONS BROUGHT UNDER U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN
ANY FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK AND AGREES TO SUBMIT
TO THE JURISDICTION OF ANY SUCH COURT.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS
THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY OF NEW YORK
ONCE THE
25
<PAGE>
TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE TRUSTEE IN ITS
CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE AGREEMENT, OR ANY ACT, OMISSION
OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL
AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH
HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDERS, AS THE CASE MAY BE,
CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER
IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT
OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN
THE PLEDGOR ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS ON THE OTHER
HAND.
[SIGNATURE PAGE FOLLOWS]
26
<PAGE>
IN WITNESS WHEREOF, the Pledgor, and the Trustee have each
caused this Pledge Agreement to be duly executed and delivered as of the date
first above written.
Pledgor:
GST EQUIPMENT FUNDING, INC.
By /s/ Stephen Irwin
---------------------------------
Name: Stephen Irwin
Title: Senior Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:/s/ Louis P. Young
----------------------------------------
Name: Louis P. Young
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the quarter ended June 30, 1997 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 38,350,101
<SECURITIES> 130,793,948
<RECEIVABLES> 27,335,027
<ALLOWANCES> (2,561,704)
<INVENTORY> 2,851,708
<CURRENT-ASSETS> 205,967,544
<PP&E> 314,986,397
<DEPRECIATION> 14,630,495
<TOTAL-ASSETS> 682,026,422
<CURRENT-LIABILITIES> 44,541,243
<BONDS> 486,066,138
<COMMON> 132,399,992
52,968,750
0
<OTHER-SE> 4,706,675
<TOTAL-LIABILITY-AND-EQUITY> 682,026,422
<SALES> 74,923,607
<TOTAL-REVENUES> 74,923,607
<CGS> 53,806,948
<TOTAL-COSTS> 129,607,148
<OTHER-EXPENSES> (9,533,192)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,321,039
<INCOME-PRETAX> (66,468,388)
<INCOME-TAX> 843,143
<INCOME-CONTINUING> (67,311,531)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,311,531)
<EPS-PRIMARY> (2.87)
<EPS-DILUTED> (2.87)
</TABLE>
